Government approves new short-time work subsidy scheme

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The Czech government has approved new rules for its short-time working (kurzarbeit) scheme that seeks to alleviate the impact of the coronavirus crisis on workers. The new rules are set to start in November and should allow shorter working hours with a part of the wage being paid by the state.  Sectors to be supported by the scheme will be selected by the government if these were threatened by economic fallout, natural crises, epidemics, or cyberattacks.

The kurzarbeit scheme, as it is known in the country, enables employees to work shorter hours during an epidemic, or in times of economic difficulty. It revolves around a system wherein the business pays its employees based on the number of hours they worked, while the state covers the amount that is needed to cover for their normal wage.The scheme has been proposed by government, but is yet to be approved by Parliament.

The latest proposal, which was formed on Friday, would give the government the power to set the exact conditions for enacting the scheme based on executive orders. It would be able to set the region, business sector, the extent of working hours and the period during which the measure would be supported financially by the state. The employee could thus spend up to four days a week at home and receive 70 percent of his normal net salary despite not working. However, the maximum rate of subsidies would not exceed the country-wide average salary.

The maximum period for which the short-time working subsidies could be paid out is 12 months. Employees with a limited contract, who have worked in the company for at least three months would also be eligible for kurzarbeit. Those employees who are in debt, or receive benefits would see parts of the subsidies diverted to cover these extraordinary obligations.

The government proposal excludes kurzarbeit coverage for health insurance. This would continue to be paid from the workers company salary, with two thirds paid by the employer and the remaining amount paid by the employees themselves.

The proposal has already come under fire from representatives of both business and the trade unions.

The chairman of the Bohemian‑Moravian Confederation of Trade Unions, Josef Středula, told Czech Radio on Friday that the only group that will end up paying for the scheme are the workers themselves, as they will lose 30 percent of their salaries. He pointed to the fact that in Germany, where the kurzarbeit system already operates, workers receive 100 percent of their normal earnings.

Meanwhile, the head of the Czech Chamber of Commerce, Vladimír Dlouhý, criticised the average salary limit for kurzarbeit state subsidies, arguing that it should be at 1.5 the rate of the average salary, otherwise companies will be forced to fire their highly qualified workers, because they will be unable to pay their salaries.