Government group calls for jobs saving framework for crisis hit companies

The government working group tasked with cushioning the impact of the Ukraine crisis and escalating sanctions on Czech companies has proposed state help for firms putting employees on short-time work as its main recommendation. The group argues such help could avoid massive lay-offs if the worst happens with the framework in place for future emergencies as well as the current one.

The government working group (from right to left): Josef Středula, Tomáš Prouza, Jaroslav Hanák and Vladimír Dlouhý, photo: ČTK

Kurzarbeit was the German word being heavily bandied about on Monday as the government working group on the Ukraine crisis came up with its main recommendations on how to help Czech companies that could be hit by sanctions and disappearing contracts.

The concept basically covers a three way agreement between the state, companies and employees under which the government agrees to aid hard hit firms which choose to put workers on short-time rather than reverting to major lay-offs.

Unlike many other European countries, the Czech Republic has so far lacked a framework for how this aid could be given. Tomáš Pouza is the Secretary of State for European Affairs and has been in charge of putting together the plans for the emergency help. I asked him first of all what jobs losses are already threatened.

Tomáš Prouza, photo: ČTK

“There are no job losses so far. I think we will see a small impact in the agricultural sector because some of the production is now being exported to Russia. But there will also be money from European funds to cover these losses, so in agriculture the job losses could total a couple of dozen.”

The framework of help for companies forced to introduce short-time working, how quick and how wide will that framework be?

“What the government wants to do is to help companies deal with any kind of crisis, be it the current sanctions or be it natural disasters, when they lose part of their production or they lose part of their export opportunities. The goal is they will keep on the employees, not have to let them go. So the government would subsidise part of their wages so the employees could work part time but still receive full-time pay on two conditions. These are that there is a major impact outside the company’s control, be it sanctions or major disaster, and the second condition is that the employees go to a training or education course so that they improve their capacities and that when they get back to work they will be a bigger asset to their employers.”

And will all the help come from the Czech state or will there be European funds used as well?

The government working group (from left to right): Vladimír Dlouhý, Jaroslav Hanák, Tomáš Prouza and Josef Středula, photo: ČTK

“We want the help to come from the Czech government budget. This makes it a lot more flexible than using European funds. We tested using European funds a couple of years ago and the feedback from the employers at that time was that it was too costly for them in terms of the administrative burden for them to use these opportunities. So the money will come from the Czech budget and I think this makes sense because if the people are laid off the government budget will still have to cover the cost of unemployment payments. And it is much more expensive to pay the unemployment benefits and have the people on the street than help the companies to keep them. ”

How confident are you that this will be in place as some employers want by the start of next year?

“Currently there are other changes to the employment law being discussed in parliament, so if we act quickly we can add these changes to the discussion currently under way. If we manage to do that within roughly the next three weeks then all the changes could be in force by January next year. So, I think we are pretty confident. We know how to carry out the changes technically so we will now spend about three weeks with the political discussion just to confirm that this is the way to go. ”