Germany's Labour Lifeline: Kurzarbeit Extension Proposed

German Labour Minister Hubertus Heil proposes extending the Kurzarbeit short-time work allowance to 24 months to prevent unemployment spikes. With rising unemployment and a fragile economy, the extension could save jobs. The regulation may pass without parliamentary approval amid impending elections.

Germany's Labour Minister Hubertus Heil is pushing to extend the short-time work allowance duration to 24 months, a move aimed at curbing rising unemployment. According to a draft regulation reviewed by Reuters, this extension is intended to avert potential staff cuts in companies affected by economic downturns.

The short-time work scheme, known as Kurzarbeit, allows businesses to temporarily reduce working hours instead of laying off employees, providing critical support during economic challenges. Recently, the unemployment rate in Germany has increased, reflecting the growing strain on the labour market as economic conditions worsen.

The German government faces increasing pressure, especially with early elections looming in February. The coalition of Social Democrats and Greens is expected to approve the expansion, circumventing parliamentary debate. This measure could add expenses of 260 million euros to the Federal Employment Agency's budget, offset by potential savings on unemployment benefits.

(With inputs from agencies.)