It was the most cost-intensive corona measure – and undoubtedly an important one: the Covid 19 short-time work is likely to have saved hundreds of thousands of people from unemployment. However, the incentive to abuse was great from the start. Now it turns out that the extent to which abuse took place at all was almost never checked. As the Court of Auditors found out, there were simply no instruments to determine whether there was any abuse at all.
From March 2020 to March 2021 – the period that the Court of Auditors examined – 1.25 million employees at 113,771 companies were on short-time work. A total of 7.8 billion euros in tax money was paid out for this. By the end of 2021, the payouts increased to 9.2 billion euros.
The model was very generous: the companies were compensated in full for the costs of lost hours. Workers received high replacement rates of their net wages and a significantly higher income than if they were unemployed. This was an attractive model for both employers and employees.
The problem: “There was no control concept for uncovering unlawful receipt of funding and abuse of funding,” criticizes the Court of Auditors. “In particular, the question of a targeted control of unjustly billed lost hours was unresolved.” The competent labor market service (AMS) never carried out on-site inspections. A central element was therefore missing in order to check the amount of the payout at all. Working time records were only requested in exceptional cases.
It was clear: controls are extremely important here. The most common cases of suspected fraud reported to the AMS related to unjustly charged lost hours. The Court of Auditors recommends the development of a control concept to record the illegally received funding.
That wasn’t the only drawback.
In order to benefit from short-time work assistance, companies had to be in temporary economic difficulties that were not seasonal. Companies that were already experiencing economic difficulties before Covid-19 were not eligible. The Court of Auditors raises another point of criticism here: The AMS has never checked whether this funding requirement is fundamentally met or not. No criteria were developed jointly with the Ministry of Labor to determine how plausible the information provided is to know whether the eligibility requirement exists at all.
The fact is: It is doubtful whether an important but expensive corona measure really only benefited those who needed it. There may have been a few too many sums spent. In this case, it was the taxpayer who suffered.