In Germany they call it "short-time work". In France it is "Chômage partiel". The British refer to the acronym CJRS – short for "Coronavirus Job Retention Scheme".
Together, these political names form the backbone of the European plan to prevent unemployment from peaking at l & # 39; américaine.
US employers have cut some 22 million jobs in the past month. The number of unemployment claims next Thursday suggests that this is worse. It's a little better in Europe – 18 million workers across the continent are on leave, reports the Wall Street Journal, citing government statistics.
But there is a big difference: in Europe, most of them are on the payroll and get a wage. The government – essentially the taxpayer – takes care of the bill.
Europe is betting that the crisis will be short and sharp and that the wage subsidy will be a lifeline for workers and employers, preventing unemployment and the scale of social unrest from increasing.
"This subsidy makes it easier for companies to hold on to their employees," wrote Florian Hense, an economist at German bank Berenberg, in an investor note yesterday. "Workers benefit because they are not laid off and continue to receive compensation that is normally below their regular salary and is limited to a maximum, but exceeds the standard unemployment benefit."
Europeans are not reinventing these measures from scratch. German short-time work, for example, is generally credited with not causing German unemployment to skyrocket during the global financial crisis of 2008-2009.
According to Hense, German employment levels only fell 1% in this crisis a dozen years ago, although real German GDP fell by 7%. The opposite effect was observed in the USA – USA. GDP fell by 4%, but unemployment rose by 5.4%.
According to Hense's calculation, the wage subsidy system saved around 1.5 million German jobs at the time.
Hense expects something similar to happen this time as Europe uses the payouts to "minimize the risk of a sustained downturn caused by a sustained shock for high unemployment demand."
The programs vary from country to country depending on their generosity and duration. However, they are mostly based on short-time work. In other words, they should “cushion a strong but temporary drop in demand. The rules are comparatively generous in the Netherlands and less generous in Italy and Spain. "
This is how the plans look, from generous to least.
The Dutch pay up to 90% or € 9,538 (USD 10,371) of the gross monthly wages of a worker for a period of three months. Germany's plan lasts a full 12 months and pays two thirds of the net wage. It is quite generous.
In Italy, where wages are generally lower, the Italian government will cover gross wages up to € 1,129.
Aid cannot come early enough. There was a headline on the front page of La Repubblica: 10 million Italians are at risk of poverty.
every sixth Italian https://t.co/KWqCbiiQig
– Stephan Faris (@stephanfaris), April 23, 2020
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