Employers warn: Layoffs instead of short-time work soon

The metal employers are demanding more relief for companies in crisis. If the government were to end the reimbursement of social security contributions prematurely, it would appear “like refusing to wear a mask despite the increasing number of infections”.

Two employees manufacture an Opel in the Eisenach plant.

BAnd labor minister Hubertus Heil (SPD) has made extensive proposals to extend short-time working in the Corona crisis – but employers in the metal and electrical industry are far too short in the package on one central point: If companies would not reliably take up social security contributions by the end of 2021 the short-time work allowance relieves their employees, many crisis-plagued companies would have to switch from job security to layoffs in the coming year, warned the employers’ association Gesamtmetall. In this case, “there is a risk of a massive increase in unemployment not only in the metal and electrical industry,” said Gesamtmetall managing director Oliver Zander.

Zander responded to suggestions that Heil had announced in an interview with the FAZ (Monday edition) and that the coalition committee of the Union and SPD wants to discuss this Tuesday. One of the most important points is the so-called reimbursement of social contributions, which will burden the budget of the Federal Employment Agency with around ten billion euros in the current year alone – and according to Heils plans, it will only continue unchanged until spring 2021. You have to “keep an eye on the financial possibilities of the Federal Agency,” he argued.

Employers warn against layoffs

Normally, companies have to pay social contributions not only on the wages but also on the short-time work allowance of their employees – which, however, reduces the actually intended cost relief. Therefore, a special rule has been in effect since March, initially until December, according to which companies are reimbursed for these costs in full. Heil’s plan now envisages halving the reimbursement in spring 2021 and ending it in 2022.

The importance of this regulation is also shown by the fact that it accounts for a large part of the total expenditure this year: According to the employment agency, the ten billion euros for reimbursements are offset by a further 13.5 billion euros for the actual short-time allowance. However, the cost burden on affected companies would also increase correspondingly if the regulation expired.

“Short-time work without reimbursement of social expenses over long periods of time deprives companies of too much liquidity,” warned Gesamtmetall. So it is possible that Heil’s planned – and not very controversial – extension of the duration of short-time work from 12 to up to 24 months would come to nothing. “The government needs to know: then layoffs are inevitable.”

The warning came unexpectedly, because Heil had reported on “very constructive talks” with the German Trade Union Federation and the Federal Employers’ Association BDA about his plans. This suggested that agreement had also been reached on the reduction in the reimbursement.

When asked by the FAZ, however, Zander became even clearer: A premature exit from the reimbursement of social security contributions had the effect of “like refusing to wear a mask despite the increasing number of infections,” he said. “Now all those involved urgently need to live up to their responsibilities.”

The number of short-time workers in Germany had reached an all-time high of 6.7 million in May. According to estimates, it has fallen since then, but still far higher than in the financial crisis in 2009. The employment agency will provide an official projection for June on September 1st.