Kurzarbeitergeld

Kurzarbeitergeld is a German social security program that compensates a portion of workers’ lost earnings when an employer temporarily reduces employees’ working hours due to economic downturns. The aim is to preserve jobs and maintain business continuity by preventing layoffs during periods of reduced demand or disruption.

Eligibility and administration: Employers apply to the Federal Employment Agency (Bundesagentur für Arbeit) on behalf of affected staff. Eligible employees are those covered by compulsory social security and whose hours are reduced due to operational or economic reasons. The program is designed for temporary downturns, with the agency providing most of the funding and the employer continuing to pay wages to the extent possible. Kurzarbeitergeld replaces part of the lost net wages, while the remaining wage portion may still be paid by the employer.

Calculation and duration: The benefit is calculated as a share of the net wage loss caused by the reduced hours, with the replacement rate typically depending on family status (for example, it is higher for employees with children). Standard rates are around 60% of the lost net wages, rising to about 67% for workers with children (rates can vary in crisis periods or special schemes). The duration generally matches the period of reduced hours, commonly up to 12 months, with extensions possible in prolonged or crisis situations, potentially reaching 24 months under certain conditions.

History and context: Kurzarbeitergeld has been a central tool of German labor market policy since its inception and has been expanded during major economic crises, notably the 2008-2009 financial crisis and the 2020 COVID-19 pandemic, to provide broader access and higher replacement rates during those periods.

Legal basis: The program is governed by German social law, including provisions in the Social Code (SGB) and related regulations.