Mentions of it appear especially in times when the economy is facing tough obstacles – debates revolved around it during the crisis in 2009 and during the covid pandemic. And negotiations about it have returned even today, when companies are facing an unprecedented cocktail of expensive energy in combination with the increase in the price of a number of other inputs.
Minister of Labor and Social Affairs Marian Jurečka (KDU-ČSL) said on CNN Prima News last week that if the government does not find an instrument within three weeks that would fight energy prices and support companies, the Ministry of Labor is ready to start kurzarbeit.
What is kursarbeit?
Kurzarbeit means short-time work.
The company pays people for hours worked and the state reimburses them for part of their earnings for time not worked.
This is a short-term measure to bridge the crisis period.
The Czech Republic has new short-term work rules in the Employment Act since last July.
Kurzarbeit details in the Czech Republic:
- Workers should receive 80 percent of their earnings for the time not worked during part-time work.
- The state would provide four-fifths of this compensation, including levies up to 1.5 times the national average wage.
- Employees could be at home one to four days a week.
- Support should be used, for example, after natural disasters, during epidemics or in various crises.
According to the information given to SZ Byznys by the head of the media communication department of the Ministry of Labor and Social Affairs, Jakub Augusta, it can be expected that if further negotiations proceed according to plan, the measure could be activated from January 1, 2023.
“Among other things, it is necessary to take into account the limited possibilities of the state budget, because it is a relatively expensive tool. Therefore, we assume that if the measure were to be launched, it would not be widespread, but could only concern employers in the most affected fields. However, the specific outlines are still subject to negotiation,” Augusta said in a statement on behalf of the department.
I would be much calmer if we knew by now that the European Commission has no reservations about the government’s proposal to start short-term work, but unfortunately we are not in that state yet.
Although kursarbeit could be introduced to the Czech market in less than four months, state officials and the measure itself still have a long way to go. Although the Czechia already adopted the framework rules for short-time work in the Employment Act last July, in order to activate it, it is necessary to issue a relevant government regulation and submit it for approval to the European Commission.
“In this activation regulation, the reasons why the measure is activated and other parameters for the provision of the contribution must be defined. Among other things, the definition of the range of employers or industries that are eligible to receive the allowance. Such parameters must correspond to the specific situation,” explains Augusta from the Ministry of Labour.
Due to the growing uncertainty in the European energy market, the concerns of entrepreneurs are growing. The situation does not leave Jan Rafaj, vice president of the Union of Industry and Transport, calm either.
“The situation is not optimal. The heating season is approaching every day, Nord Stream 1 is currently standing still and we don’t know exactly what could happen. I would be much calmer if we knew by now that the European Commission has no reservations about the government’s proposal to start short-time work, but unfortunately we are not in this state yet,” says Rafaj for SZ Byznys.
In connection with the current problematic situation in the field of energy, nine associations of energy-intensive industries turned to the current government with a call for concrete steps in the fight against high prices. They propose six measures to help solve the energy crisis and unbearable energy prices, one of which is Kurzarbeit.
“The Škoda Auto company would welcome the possibility of part-time work, which would help employers overcome possible economic difficulties and ensure the flexibility of the labor market in similar situations,” said Martina Špittová, Škoda Auto press spokesperson.
Six proposals to manage the energy crisis
1) Capping energy prices as quickly as possible. The ceiling can be applied in different ways and the cost of it can be spread over time if necessary.
2) Introducing an incentive element for large consumers to save natural gas by offering them financial compensation for a voluntary reduction in consumption.
3) Initiation of the European debate on the suspension or modification of the emission allowance trading system.
4) Approval of the program to help companies according to the temporary EU state aid framework. Help should also be available to companies that are not yet in an operating loss, but this situation essentially threatens them.
5) Preliminary activation of kursarbeit in the event that production stops, for example due to a sudden interruption of natural gas supplies.
6) Intensification of support for the technological and climate transformation of Czech industry, including the transition to alternative fuels.
Source: Open letter from representatives of Czech industry (edited abridged)
Radek Špicar, vice president of the Union of Industry and Transport, is also asking for a comprehensive solution.
“At the national level, it is necessary to prepare a set of measures that will help each other, will be linked to each other and will support Czech companies. Among the main ones, I include the activation of a temporary crisis framework, through which it is possible to help companies with gas prices, the use of bank loans with a state guarantee, as well as the activation of short-term work,” he said.
From the point of view of plans to maintain employment in companies, according to him, it is also necessary to think about the fact that, just like the last one, this crisis will pass one day. After mass redundancies, it would be very difficult and expensive, in some fields almost impossible, to get employees back.
Labor market analyst from LMC Tomáš Ervín Dombrovský also considers Kurzarbeit to be an effective tool in times of short-term uncertainty and exceptional external shocks. However, he also points out the pitfalls of this tool.
According to him, a possible risk can arise if it is not just a short-term shock, but rather a long-term burden that exceeds, for example, a year – and the solution is completely out of sight. In such a case, kursarbeit may cease to be effective and perhaps even useful.
“When it comes to a structural problem that is not solvable in the foreseeable future, it is perhaps better that people get into industries that are viable through job changes and move to activities that have a better long-term perspective of application. And the same applies to a non-negligible part of companies or employers, i.e. the content of their activities,” comments Dombrovský.
Well-intentioned government aid can, if it lasts for a long time, cause “zombification of the economy”, when the state practically subsidizes the operation of non-functioning companies with taxpayers’ money, or the activities of the national bank.