Czech government parties agree new short-time work initiative

PRAGUE (Reuters) - The Czech government coalition agreed the framework of a new permanent scheme that would partially subsidise salaries of employees on reduced hours, a version of a German short-time work programme, the Finance Ministry said on Wednesday.

Under the plan, state support would reach 70% of net wages for up to four days a week. The maximum amount would be capped at the national average wage, the ministry said.

It added the support would be activated in times of need when the state saw a real threat to the economy.

The cabinet is due to debate the plan on Friday.

The country of 10.7 million quickly adopted a job furlough programme early on in the coronavirus pandemic as it sought to soften the economic impact from the virus and early lockdowns on businesses.

The jobless rate - the lowest in the European Union going into the crisis - reached 3.8% in August, up from 3.0% in February, as the rise has been eased by the current furlough scheme.

Economists have warned that many jobs would be lost when it expires at the end of October. The government is aiming to transition into a new scheme.

The Czech plan is modelled after Germany’s short-time work scheme, also known as Kurzarbeit, allowing employers to switch employees to working fewer hours or even none during a downturn.

Reporting by Jason Hovet, Editing by William Maclean