Germany: government and social partners cognizant of problems with partial unemployment in non-industrial sectors

As more or less indicated by Chancellor Angela Merkel in a televised broadcast on 18 March, Germany is on the brink of a total confinement phase, (with its Federal constitution, any ultimate Federal State decision instigating confinement means the Länders, as they hold sovereignty, will be tasked with implementing the conditions). One after the other, Germany’s big auto producers and sub-contractors have been closing their German and European facilities, initially for between one and three weeks. The Ministers for the Economy and Employment met with the social partners on 18 March to see how to cushion the effects of the partial unemployment situation that looks like being a great deal more widespread than in the 2008/2009 crisis, and where staff in a great number of businesses and sectors will have to meet with a sharp and sustained fall in salaries. While Germany’s parliament passed legislation in the week 09 March (c.f. article No. 11722) that implemented easier access to and broader measures for partial unemployment, the Ministers and social partners are concerned over the long-term effects of the lower income levels, especially in sectors where base salaries are sharply lower than those paid in the industrial sector. In effect, partial unemployment implies the Employment agency covers between 60% and 67% of net starting salary. Larger companies make up some portion of the remainder. However this is not the case for millions of SMEs that form the mainstay of Germany’s economic fabric. ‘During the 2008/2009 crisis, we above all had industrial companies with partial unemployment rates of between 30% and 50% of headcount. This time however the crisis will affect all sectors with businesses sometimes having 100% of headcount on partial unemployment, and possibly for several months,’ explained the Employment Minister Hubertus Heil during the ‘grand summit’ meeting with the social partners on 18 March. No provision has yet been presented that will improve the situation of partial unemployment, which relies in large part on employers’ contributions. The Economy Minister Peter Altmaier nonetheless has promised a quick answer. In the meantime, Berlin has announced fast-track financial aid for companies with cash flow problems. The Federal State will stand as guarantor for ‘bridging’ loans up to €460 billion in total. On 19 March the Federal government announced €40 billion in aid for independent workers and micro-businesses.