The corona crisis has had dramatic economic consequences: businesses and factories are shutting down, orders and sales are collapsing. Companies are worried about their existence, employees are worried about their jobs.
Politicians now want to work with employers and unions to put together additional emergency packages – also to prevent gross wage robberies. Expanded credit programs for companies are already underway.
Labor minister hubertus heil (SPD) sent a clear signal after a summit meeting with the social partners in berlin on wednesday: companies and employees should not be left in the lurch in this unprecedented crisis. Chancellor angela merkel (CDU) prepared economy and workers for tough weeks – she guaranteed in her televised speech, according to a text of the speech distributed in advance, that the federal government would do everything it could to cushion the economic impact. An overview of the measures:
CONTINUED PAYMENT OF WAGES FOR CHILDCARE:
In order to slow the spread of the coronavirus, daycare centers and schools in the countries are closed until after easter. This presents many employees with children with a major challenge: how to organize childcare? In many cases, employees can work from home offices. But others cannot. And if they have to look after the children at home, they often can’t go to work. In this case, wages continue to be paid, but unlike in the case of illness, this is only valid for a few days.
Heil announced that the federal cabinet is expected to pass a law next monday that would allow employers to extend wage continuation payments in the event of school and daycare closures. The companies will then be able to get the money back from the state. A graduated procedure is planned over a limited period of time, so that wages do not fall. It’s about children under the age of twelve. Heil did not give further details.
SUPPLEMENTING SHORT-TIME ALLOWANCE:
Bundestag and bundesrat pass extended short-time working allowance. This was already a key instrument in the financial crisis of 2008/2009 to prevent mass layoffs. In the corona crisis, there is already an onslaught of companies nationwide. In concrete terms, more companies than before can apply for benefits from the federal employment agency (BA). BA takes over 60 percent of the lost net wages if a company sends employees into short-time work. For employees with children, the figure is 67 percent. Heil pointed out that the money is there – the BA has a buffer of 26 billion euros.
The problem: unlike the financial crisis, the corona crisis cuts across all industries. In many companies, not 30 or 40 percent of employees were put on short-time work, as was the case at the time, but all of them, according to DGB head reiner hoffmann. This is a different dimension. Some collective agreements, such as those in the metal and electrical industry, provide for short-time allowances to be topped up to almost 100 percent of the net wage. Overall, however, only a minority of employees covered by collective bargaining agreements received a contractually agreed top-up in addition to the short-time allowance, according to the union WSI collective bargaining archive.
This is why countermeasures are now to be taken. Politicians and social partners wanted to work together to cushion the impact of wage swallowing on short-time working, said heil. The aim is to prevent wages from falling over a longer period of time and to avoid harsh wage increases. This could otherwise hit low-income earners in particular, hoffmann said. In a joint declaration by the ministries and the social partners, it is stated that they, with the participation of the government, will now discuss "in the short term" how a financial increase can be structured through collective bargaining agreements.
UNLIMITED CREDIT PROGRAMS:
Economics minister peter altmaier and finance minister olaf scholz (SPD) announced unlimited credit programs last friday – this is also unprecedented. This is intended to ensure the liquidity of companies that run into financial difficulties. The state assumes more risk. This could cost "tens of billions," said scholz. Companies can now apply for the aid loans through their house bank, as the state-owned forderbank k and the german credit industry announced on wednesday.
The k offers commercial banks to assume 70 to 80 percent of the risk with the help of state guarantees. This is intended to make it easier to grant loans. "In order to mitigate the economic consequences of the corona crisis, companies must now be helped quickly and without complications," said christian ossig, chief executive of the federal association of german banks. He assured that applications would be assessed quickly: "the banks can cope with this within a matter of weeks." many business associations called for the assistance to arrive in a streamlined and unbureaucratic manner.
LOCKING THE RULES FOR BANKS:
In order to give banks more scope to lend, the supervisors are taking additional pressure off the institutions: the so-called countercyclical capital buffer, which was increased to 0.25 percent only last year, will be reduced as of 1 january 2009. April lowered to zero percent. This will apply at least until the end of the year. The ECB’s banking supervisory authority is also temporarily allowing financial institutions to go below the capital and liquidity buffer requirements. This would result in a total of over 120 billion euros in capital relief for germany’s banks. At the same time, central banks around the world are providing the financial sector with huge amounts of fresh liquidity.
There is no need to worry about the banks in germany themselves, emphasized the committee for financial stability, which is made up of representatives of the federal ministry of finance, the federal bank and the financial supervisory authority bafin: "the german banking system is well capitalized overall and there are no liquidity bottlenecks."
EMERGENCY FUND:
In addition to the credit programs for companies, there will be direct aid for freelancers and the self-employed. According to the BDI, a fund could help mini-companies in particular, where emergency loans from banks are no longer possible for business reasons. Scholz had announced that the federal government was working on an emergency fund. Already on this thursday the fonds could stand with direct aids. That could once again cost billions.