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In November and December, the federal government pays for much of the sales lost as a result of the partial shutdown. Members of the government have already made it clear: it cannot continue like this and it won’t continue like this in January.
The federal government is preparing a turnaround for help from the crown. Both Federal Economy Minister Peter Altmaier and Chancellor Helge Braun made it clear that the reimbursement of 75 percent of sales losses granted in November and December during the partial lockdown could not be financed in the long term. “We certainly cannot continue to offer very comprehensive packages, such as the sales discount, for an unlimited period of time,” Altmaier told Deutschlandfunk. Braun told the “Handelsblatt” that the state “could not act indefinitely.” “In the long run, rotation cannot be the central criterion,” added the Minister of Foreign Affairs.
“We have to work on more specific aid for January,” Braun said, emphasizing: “There will continue to be aid for the economy.” In the future, the aid will be geared more towards fixed costs, as will the bridging aid that will be applied from January. Altmaier referred to the extension of the bridging aid until the end of June, with which companies with large declines in sales could obtain reimbursement of a substantial part of their fixed costs.
Yesterday, Federal Finance Minister Olaf Scholz defended the “particularly generous” aid in November and December to ZDF, but at the same time made it clear that the “normal regime with bridging aid” would apply from next year.
Short-term work increases due to partial blockage
In November and December, the federal government supports the companies, associations and institutions that had to close as a result of the partial closure with particularly broad assistance. 75 percent of sales will be refunded starting in November 2019, for companies with up to 50 employees. Larger companies should receive less. A total of around € 30 billion is earmarked for this income-based aid. Applications can be submitted from last week.
As a result of the forced closures, the Ifo Institute recorded an increase in reduced working hours in Germany for the first time in months. The proportion of companies with short hours rose to 28.0 percent in November. In October, the turnout was 24.8 percent. The researchers determine the figures based on their own surveys of 7,000 companies. The Federal Employment Agency (BA) can only provide reliable figures with a delay of several months due to the accounting process for the reduced-time allowance.
According to IFO figures, the proportion of short-time workers in hotels (from 62.9 to 91 percent) and in the catering industry (from 53.4 to 71.7 percent) increased particularly sharply in November. In travel agencies and tour operators, 91.1 percent of companies had registered part-time work for employees. “Especially in these industries, which have been greatly affected by the partial closure, a large amount of short-term work is being re-implemented,” said Ifo labor market expert Sebastian Link. The increase occurred in almost all major branches of the economy. Only in industry was there a slight decline.
Despite the aid, the pandemic has important consequences for the economy
Extended and expanded regulation on short-time work allowance is an essential component of the federal government’s help to businesses in the crown crisis. Chancellor Braun hopes, despite billions in aid, that the pandemic “will leave a significant mark on the economy.” “The State can help most companies to get out of the crisis. But it will not be without consequences,” said the CDU politician. “As a society we have to stick to December and the months through March by observing AHA rules and reducing our contacts. Where that is not enough, cuts are inevitable. Then spring will come and hopefully the vaccine will as well.”
The issue of financing state aid in the Crown crisis, which Finance Minister Scholz estimates at a total of more than 300,000 million euros for the current year and next, is gaining more and more prominence. “We have to assess what Corona has cost us in the context of a cash crash,” Braun said. He did not rule out tax increases, but emphasized: “I do not believe at all in a new solidarity surcharge.” Scholz had previously been open to possible tax increases and referred to a possible increase in the top tax rate.
