Germany style furlough: What is the German style furlough?

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Rishi Sunak was due to unveil his autumn budget this week but the announcement has been scrapped in favour of a Winter Economy Plan being launched today. Mr Sunak is reportedly spending his time putting together a new package to support Brits unable to work following a second spike. One option is a German-style furlough or wage subsidy scheme. But what is the Germany-style furlough?

Mr Sunak is said to be considering a new furlough scheme that combines elements of the German scheme with Britain’s existing one.

This comes as Boris Johnson employs stricter rules to combat a second-wave of the virus.

The UK has reported its highest amount of daily cases, with 6,208 people testing positive in just 24 hours on September 23.

Nicola Sturgeon has decided to ban the mixing of households indoors, and rumours that a second national lockdown are spreading.

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The furlough scheme that has supported the UK’s workers through the pandemic so far has cost the Government more than £39 billion.

In the last eight months, British companies have borrowed over £57 billion from the Government.

The Treasury is looking for ways to make the furlough system less costly.

The loan programmes were due to stop accepting applicants at the end of September, and the Bounce Back scheme is due to expire at the start of November.

Boris Johnson told MPs on Tuesday: “I know that my right honourable friend the Chancellor will be applying, as I say, his imagination and his creativity to helping those sectors in the months ahead.

“But the best thing for them is to get back to life as close to normal as possible by getting this virus down and that is the point of the package of measures that we are announcing today.”

The Government wants workers to work at least 50 to 60 percent of their normal hours, according to the Financial Times.

It has also been suggested that the Treasury would announce a new scheme early next week.

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What is the German style furlough?

Germany’s furlough scheme is called Kurzabeit, which translates to ‘short work’.

It is believed that the Kurzarbeit system could be taken on in the UK.

At the start of lockdown, more than 10.1 million workers were on Kurzarbeit in Germany, but this nearly halved by late July.

Like the UK’s furlough scheme, Kurzarbeit aims to save jobs with employers reducing employees working hours instead of laying them off.

The Government pays those on the scheme about 60 percent of their regular income, and more for workers with children.

This is 60 percent of their pay or pay for the hours not worked while getting paid by the employer for the hours they have worked.

This rate rises to 70 percent after three months and 80 percent after six months.

Germany has been able to announce that it will extend its scheme until the end of 2021.

The scheme has cost the German Federal Employment Agency €12billion so far and is predicted to cost them €36billion with this extension.

This is due to cost £27 billion and will help the country’s economy to recover.

The UK Chancellor is expected to announce a similar scheme for Britain in his announcement today.

The plan is likely to be similar to proposals made earlier this month by the TUC, the union umbrella group which helped Sunak draft the original furlough scheme.

The scheme would see companies pay staff for the time they are at work, while the Government would cover the remainder of their wages.

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