The federal government has extended the financial aid for short-time work, which is intended to help companies and employees to better cope with the consequences of the Corona crisis, until 2021.

The cabinet approved a corresponding bill and two ordinances by Labor Minister Hubertus Heil (SPD) on Wednesday. 

This is intended to extend the reference period for short-time work benefits to up to 24 months, up to the end of 2021 at the latest. Before the crisis, it was twelve months.

The extension should apply to all companies with the start of short-time work by December 31, 2020.

Employers will also receive the full social security contributions due for short-time work from the Federal Employment Agency by mid-2021.

Heil puts the additional expenditure for the BA in the drafts available to the Reuters news agency for the coming year at around five billion euros.

The extension of the aid introduced in the Corona crisis was expected.

CDU politicians such as Wolfgang Steiger, Secretary General of the party's Economic Council, and Friedrich Merz, who is applying for party chairmanship, had criticized the plans in advance.

In the newspaper

Rheinische Post


Merz warned of

the "danger that employees in their current companies will be detained with short-time work, although they are urgently needed elsewhere".

Some economists also fear that the extension could inhibit necessary changes in companies with a view to structural change.

IG Metall demands consideration from employers

Federal Labor Minister Hubertus Heil (SPD) defended the extension.

Before the cabinet meeting, the minister said in the ARD morning magazine that the extension would also give companies an "innovation incentive".

Heil rejected allegations that the short-time allowance would also keep companies alive that were no longer competitive.

Some of those who talked “very theoretically in the academic room” “should go into business,” said Heil, pointing out that he wanted to visit a company from the event industry that afternoon.

"This is not a zombie company," said the SPD politician.

"They did everything right. They are real specialists. They just don't have a business at the moment because a lot is prohibited."

He called the short-time work allowance a "necessary bridge".

Not every job can be kept given the magnitude of the crisis, he added.

"But we will fight for every job."

IG Metall welcomed the extension and demanded that the federal government should decide whether to continue the crisis rules by June 2021 at the latest.

In addition, employers should also be made more responsible in the future.

"There should only be reimbursement of social security contributions if, in return, companies rule out operational dismissals during short-time work," demanded IG Metall chairman Jörg Hofmann.