Short-term and unemployment benefits should be reduced, according to a recommendation by the Ifo Institute.
In a bid to support Germany's fragile economic recovery and alleviate labor market pressures, the Ifo Institute - a renowned Munich-based economic research institute - has put forth a series of proposals aimed at reforming the country's short-time work allowance and unemployment benefits systems.
The Ifo Institute's recommendations focus on shortening the duration of the short-time work allowance (Kurzarbeit) and reducing unemployment benefits. These proposals are part of a broader call for market-oriented structural reforms in the labor market to ensure economic sustainability and growth.
The Ifo Institute's assessments are based on current studies that suggest higher or longer benefits can extend the duration of short-time work and unemployment. By shortening the duration of Kurzarbeit, the institute aims to encourage quicker workforce reallocation rather than prolonged reliance on subsidized reduced working hours. Similarly, reducing unemployment benefits would be intended to incentivize faster re-employment and reduce the fiscal burden.
One of the key proposals is to reduce the maximum duration of short-time work allowance from 24 months to either 12 or 6 months. This move is expected to push employees in industries undergoing structural change to find new employment faster.
The Ifo Institute also emphasizes the need for affected individuals to have the opportunity for retraining or further training to reduce unemployment. Accelerated qualification programs could help prevent unemployment or at least reduce its duration.
It's important to note that the Ifo Institute's proposals do not specify any changes to unemployment benefit II, but rather focus on providing opportunities for retraining or further training. The switch from unemployment benefit II to unemployment has led to a significant expansion of benefits, according to the Ifo Institute.
The Ifo Institute's proposals are part of an assessment for the Munich and Upper Bavaria Chamber of Industry and Commerce. However, the detailed policy specifications from the Ifo Institute are not explicitly outlined in the available data.
Critics have been quick to point out the German government's slow progress on such structural reforms, including pension and labor market policies, which are seen as necessary to revive medium- and long-term growth prospects.
In conclusion, the Ifo Institute's proposals align with incentivizing labor market flexibility by limiting the length and scope of social supports like Kurzarbeit and unemployment benefits. The institute's stance is aimed at preventing the duration of short-time work and unemployment from being extended, while encouraging a quicker re-entry into the job market.
The Ifo Institute's proposals involve reducing the duration of short-time work allowance (Kurzarbeit) and decreasing unemployment benefits, which form part of a broader call for market-oriented structural reforms in the labor market.
By advocating for the reduction of the maximum duration of short-time work allowance and suggesting accelerated qualification programs, the Ifo Institute aims to encourage quicker workforce reallocation and reduce the duration of unemployment.
