In Zeit Online, Anke Hassel and Christian Odendahl propose measures to aid families and workers.
The coronavirus crisis has reached Germany in full force, and fortunately people have understood that everyone has to contribute to slowing its spread. But the consequences outside the health sector will also be drastic – for public life, for companies and workers, for parents and children. Politicians are right to stand behind companies with generous liquidity and – via short-time working allowances – behind employees. But it should not lose sight of the fact that there are other people who will need urgent help in this crisis.
The first concern of parents is the closure of daycare centres and schools. Without childcare, at least one parent – in Germany, often the mother – will not be able to work. But so far there is no help for this: if the child is not sick, there is no special leave for the closure of daycare centres. What remains for parents is unpaid leave, since short-time work compensation can only help if the business itself closes down.
The need for temporary daycare arises all the time, forcing parents to turn to the country's largest unpaid reserve: grandparents, who, according to the German Centre for Research on Ageing (Deutsche Zentrum für Altersforschung), provide almost four billion hours of care every year. Often it is also the grandmothers who do this. Since older people are particularly at risk from the coronavirus, however, this reserve is not an option.
Parents therefore need the right to special leave from work to take care of their children, or to child health benefits – implemented without red tape and with immediate effect – which also relieves companies. Family financial allowances would also be an option, but this is far more bureaucratic than the child health allowance already tailored to such absences. The existing ceilings of 25 days per year should be adapted to the severity of the corona crisis. In this way, parents can care for their children themselves without running the risk of losing their jobs or facing financial difficulties. This also protects grandparents, who would often jump in and help in times of need. And it helps daycare centres to maintain emergency operations for children of workers who are urgently needed, such as doctors and nurses.
The short-time work allowance the federal government has extended does not affect all workers who need it. People in precarious employment, mini-jobbers or others often fall through the cracks. Temporary workers and the self-employed are to be included in the short-time work allowance, but an equivalent solution is needed for the self-employed and mini-jobbers.
Currently, the question of whether and under what conditions services can be terminated at short notice is solely up to contracts with service providers. Some large media organisations make working from home and generous childcare facilities possible, even for those “permanent” freelancers who have contract or are on retainers.
The stand-alone self-employed often have no safety net apart from their own savings. Their net hourly income is on average lower than that of employees. About half of them have a precarious income or are barely able to manage. The other half is financially secure.
Not everyone can switch to a home office
Here there should be the chance for compensation for contracts cancelled at short notice and for a medium-term loss of earnings, so that people do not immediately fall into Germany’s long-term unemployment and welfare benefit system, Hartz IV. One possibility would be to open up benefits of voluntary unemployment insurance for the self-employed to people who are not yet insured, and to improve the conditions. The crisis would also be a good opportunity to generally extend and reform the insufficient insurance benefits for stand-alone self-employed persons. At the very least, a bridging loan should be made available by the government.
Undocumented workers are not covered at all because they do not appear in the system. However, they often perform household tasks that could potentially transmit the virus from home to home. Since almost 90 per cent of domestic helpers continue to work undeclared, this would be an opportunity to finally get them out of undeclared work. To help these workers like other precariously employed people, households would have to register these workers and at the same time confirm that they will employ them for at least six months after the end of the epidemic. In this way, financial help would directly lead to less undocumented work in the future.
People in cramped living conditions suffer particularly from quarantine, because the option of at least sitting in one's own garden is not a possibility – let alone not – self-isolation in a holiday home. For these people, the state must create controlled and safe public spaces where people can go and where access is designed to minimise infection. This includes the public library, playgrounds and the like.
Containing economic consequences with courageous policies
People on low incomes are also more at ,risk as they have no cushion or simply lack the money to provide alternative employment or income. So instead of squandering the money from the planned elimination of Germany’s solidarity tax next year (implemented in the 1990s to assist East Germans with reunification) – which will only benefit the upper third of earners – the government should use this revenue to pay each German citizen 500 euros as a coronavirus supplement to cover the bare necessities for the next few weeks. This would also have the advantage of supporting consumption and thus the economy in areas not affected by the virus, such as online offers, mail order or delivery services.
Not everyone can switch to a home office. Telecommuting is often a privilege of higher earners. Being present at work is particularly essential for service work in areas such as retail, transport, health and caregiving. It is therefore important that these people can get to their workplace via safe and clean public transport. Public transport should therefore not be closed down completely, but should be reserved for the few but necessary commuters.
The necessary measures to contain the virus will be drastic, but the economic consequences can be contained with courageous policies. Beyond the undoubtedly vital provision of liquidity to companies and the obligation for those who can to work from home, it is important not to forget those who need help most urgently.
Anke Hassel is Professor of Public Policy at the Hertie School, Christian Odendahl is Chief Economist at the Centre for European Reform.
Originally published in Zeit Online (in German).