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No 1 - November 2009 (last change 22.12.09)  
 

A blind eye turned to fraudulent use of short-time work compensation

Sources (see below):
Zeit Online 16.03.09
Bundestag-Presse
ZDFheute 12.09.09
BR5-Funkstreifzug 21.11.09
amongst others

Next to distributing vast sums of the taxpayers' money to needy banks (in the assumption that these would go back to their role of providing firms with loans), the german government expanded the subventioning of needy firms that desire to make use of short-time work compensation (extension from six to 24 months, unbureaucratic handling of applications). The agency responsible for processing and approving these applications is the Federal Agency for Employment (FAE).

The idea is that firms can temporarily reduce production by paying workers lower wages/salaries for less work. The FAE compensates the wage reduction to a fair degree, and jobs are saved - for some period.

Currently 1.4 mio workers in 63000 firms are being subsidized. The amount spent until 15.06.09 was €954mio (Bundestag Presse).

In a Zeit Online article of March 09, Josef Schlarmann (Christian Democrats) expressed his view that the current regulation for short-time compensation without a control instrument offers a big opportunity for misuse.

At first none, then inadequate controls

No controls were foreseen after the expansion of short-time compensation in the first half of 2009. The rationale of the FAE was the lack of sufficient (qualified) personell. In the meantime, 500 complaints over misuse have been lodged. Misuse could mean that employees continue working after having clocked out because the threat of being laid off. The FAE is forwarded ficticious work times.

In the face of a rising wave of lodged complaints from Summer onwards, the local FAEs in Bavaria, Baden-Württemberg, North Rhine-Westfalia decided in September to install control teams, each consisting of seven controllers (ZDFheute). And even these 21 people worked as controllers only part-time. On being asked what she thought was the reason for this obvious negligence in controlling the use of the taxpayers' money, a speaker of the Greens said: the government wanted nothing to get into the media that could stain the positive image of this instrument for combating unemployment, especially not during the time before the
Bundestag (Federal) elections. In a radio interview (BR5) the speaker of the FAE tried to withhold information on the present number of court cases (turns out to be nine). The names of the firms concerned were also not divulged, on the basis of the data protection laws.

Eulenspargel:

The following issues come to mind:

1. Should the work of public authorities be influencable by election canvassing?

2. Controls would not damage the reputation of short-time work compensation as such, but would damage the reputation of those firms breaking the rules. The effort to protect the reputation of these firms demonstrates dependency of the political establishment on the major actors in the economy.

3. Whatever the explanation for the lack of interest in controls, the whole political establishment - also the Greens - saw the need for controls only after being forced into it after the wave of complaints appeared in the media. This is in marked contrast to the recognition of the need for detailed control of the recipients of Harz IV support (a low-level mixture of social welfare and unemployment benefits).

4. Are the current data protection laws really applicable when it comes to court cases concerning the misuse of the taxpayers' money?
SOURCES (german):
[1] Die Zeit "Kurzarbeit: Gute Zeiten für Trittbrettfahrer", 16.03.2009
[2] Bundestag "Fast eine Milliarde Euro für das konjunkturelle Kurzarbeitergeld gezahlt", 23.07.2009
[3] Frontal 21 "Tricksen mit der Kurzarbeit: Arbeitgeber zocken ab", 25.08.2009
[4] BR5 Funkstreifzug "Kurzarbeit außer Kontrolle", 20.11.2009