Structural change in the industrial sectors – Linking the extension of short-time work compensation to further training measures

The short-time working compensation served as a significant cushioning mechanism for the consequences of the financial and economic crisis ten years ago.

According to the results of the coalition committee of 29.01.2020, there are to be changes in the area of short-time work allowances.

This is not happening due to a current recession, but with reference to a “partial disruption of the labour market” in industrial sectors which are subject to major structural change and which are struggling with the resulting problems. As an example, the order decline in the automotive industry as a result of digitalisation with subsequent staff reductions is cited.

It is envisaged that the Federal Government will be authorised to adjust the statutory regulations on short-time working compensation – limited to three years. This is intended to facilitate the possibility of extending the period of entitlement to short-time work compensation to a maximum of 24 months if the recipient of short-time work compensation undergoes appropriate vocational retraining during the extended period of entitlement. The further training measures themselves can be subsidised and social security contributions can be covered up to 50%.

Currently, § 104, Subsection 1, Sentence 1, SGB III, stipulates twelve months as the statutory maximum period of remuneration for the basic form of short-time work compensation in accordance with §§ 95 et seq. of SGB III. The Federal Ministry of Labour and Social Affairs is authorised in § 109, Subsection 1, No. 2, SGB III to extend the period of compensation for short-time work beyond the statutory period of compensation up to 24 months by means of a statutory instrument not requiring approval. The prerequisite for this are exceptional conditions on the entire labour market. This “gateway to the exceptional conditions of the overall labour market” is intended to ensure that the short-time work compensation scheme is effective in times of crisis. The trained employee should be protected from losing his or her job – especially through a dismissal for operational reasons – and remain available to the employer after the exceptional situation on the labour market has been overcome. The assessment of the conditions as “exceptional” is based on a comparison of the current situation with the normal situation of the labour market, measured by a long-term view of the labour market conditions. If there is a significant discrepancy, exceptional circumstances exist.

The innovation planned by the coalition government should now enable to react already to sector and region-specific changes in the labour market and not only to a negative situation of the entire labour market. In the best case scenario, the innovation can strengthen the function of the (extended) short-time working compensation as a cushioning measure even before a recessionary phase. The bridging measure “short-time work compensation” is combined with an opportunity for additional qualification without loss of time for employees and employers. This does not represent a new concept for the coalition, but one that is generally well accepted by employers and trade unions.

Dr. Tobias Brors, LL.M. and Lena Schauderna