Germany to extend coronavirus furlough scheme to 24 months

Angela Merkel
POOL/AFP via Getty Images
Kit Heren19 August 2020

Germany has signalled it will extend coronavirus furlough scheme to 24 months, with Angela Merkel backing the proposals.

The country's furlough programme - called Kurzarbeit, or "short work" - is limited to 12 months at the moment, but ministers said it made sense to extend it with coronavirus still curbing much business activity.

Finance minister Olaf Scholz said on Sunday: "The coronavirus crisis won’t suddenly disappear in the next few weeks.

“Businesses and employees need a clear signal from the government: we’ve got your back for the long haul in this crisis, so that no one is being let go without need.”

A passenger wears a face mask at a tram stop in Gelsenkirchen, Germany
AP

A final decision on the fate of the scheme will be taken on August 25, but a spokesperson for Chancellor Merkel said the extension had her support.

Kurzarbeit allows companies to apply for funds if at least ten per cent of their workforce have lost at least ten per cent of working hours.

Companies are estimated to have signed up about 10.1 million workers to the scheme, which dates back originally to the financial crisis of 2008-2009.

It comes as the UK's furlough scheme, which pays 80 per cent of furloughed workers' wages up to £2,500 per month, has begun to wind down.

People relaxing by the sea in Rostock, northern Germany 
REUTERS

Companies are expected to pay furloughed staffs' pension and national insurance contributions from August, before taking on 10 per cent of wages in September and 20 per cent in October.

Opposition parties are campaigning for the scheme to be extended in some way at the end of October, to avoid the mass lay-offs feared by some commentators.

Labour's Shadow Chancellor Anneliese Dodds said: “The chancellor’s refusal to abandon his one-size-fits-all withdrawal of furlough is a historic mistake that risks a python-like squeeze on jobs in the worst-hit sectors.

"The reward for months of hard work and sacrifice by the British people cannot be a P45.”