THREAD: Why Kurzarbeit may not happen.

Kurzarbeit, or short work, is the German scheme from the 2008 financial crash widely credited with making Germany the only G7 country not to see an increase in unemployment then. It is rumoured to be what Sunak is considering now.

Germany have utilised Kurzarbeit again during covid at increased generosity - essentially, companies cut workers’ hours across these boards and then the government pays a part of their salary for the hours not worked. Companies also pay a bit, and the employees forgo a bit.

It is more generous for parents and increases in generosity the longer you are on it. However can a system designed for the highly unionised German manufacturing sector be utilised in the U.K’s low security hospitality sector? Unlikely.

You cannot uniformly cut hours in a restaurant or bar because the nature of U.K. employment practice means there are very few uniform working patterns. Allowances for dependents would make the scheme harder still to administer.

Other options for the Treasury could be a wage subsidy as a percentage of total wage bill for specific sectors. I dig in to this more below

But to summarise, don’t pin your hopes on Kurzarbeit https://www.politicshome.com/thehouse/article/rishi-sunak-economic-recovery-coronavirus