The state is seriously considering a plan to curb unemployment by shortening the working week. For 12 to 18 months, companies that owe no debts to the state could receive subsidies to pay employees to stay home one extra day each week.
A working group of representatives of the Labour and Finance ministries, trade unions and employers is proposing that workers on furlough would receive 60% of their wages from their employer and 20% from the state.
The shorter working week is intended to curb abuse of unemployment benefits and slow growth in unemployment.
Unemployment in the Czech Republic reached 8.4% in July, with nearly half a million people out of work. Analysts forecast that unemployment will reach 10% by the end of the year.
Businesses agree
A shorter working week could also help companies retain key employees and, when the crisis is over, save large sums in hiring and training new staff.
The companies polled said they would welcome the system, which is called “kurzarbeit” in Germany. This year, hundreds of firms have resorted to shorter working hours, owing to a shortage of orders, and are paying their employees 60% of their wages. Now they could be entitled to a government subsidy. “Kurzarbeit is definitely a tool to keep higher employment,” said Radek Špicar from Škoda Auto.
ArcelorMittal Ostrava, the largest Czech steelworks, would be interested in the wage subsidy as well, spokeswoman Věra Breiová said. The company sent a similar request to the prime minister in late May.
Isn’t it too late?
The system of state-subsidised wages will not be settled in the next few weeks. Even if the government which forms after the October elections supports the plan, the soonest possible launch date would be January 2010. The plan would more likely take effect in the middle of next year.
But some forecasts predict the economy will be growing again by that time, and that companies will no longer need to send employees on furlough.
The state must first ensure that subsidising wages does not violate European law. The working group will address this issue with the anti-monopoly office, said Josef Středula, head of the Kovo trade union association.
Preventing benefits abuse
The subsidised wages could help prevent abuse of short-term labour contracts, the Labour Ministry says.
Dismissed employees are entitled to state unemployment benefits. However, the law enables these workers to return to their jobs as independent contractors, doing the same work, but without social and health insurance paid by their old boss.
The law limits such contracts to 150 hours a year — a limit business have found a way around. Trade unions say more than 10,000 people are already working this way in the Czech Republic. “The state is paying hundreds of millions of crowns in benefits for no reason,” says Kovo chairman Josef Středula.
The Labour and Social Affairs Ministry estimates that the hundreds of millions of crowns it would each month in unemployment benefits could finance the wage subsidies.
