Germany's cabinet today approved a 12-month extension of a popular scheme allowing firms to cut working hours which has helped keep a lid on unemployment in Europe's biggest economy.
The scheme, known as 'Kurzarbeit' - 'short-time working' - allows firms hit by the recession to cut costs by keeping employees at home or shortening their working hours but without making them redundant. The state then pays up to 67% of a worker's salary for a period of up to two years.
The latest data from September showed around one million workers were covered by the scheme.
The programme had been due to expire on December 31, 2009 and is now set to be extended by a year, although for firms applying next year the state will only pay out for a period of 18 months instead of 24 months.
Although Germany has suffered this year its worst postwar recession, the downturn has not been mirrored by a sharp rise in the number of people out of work.
Germany's raw unemployment rate fell to 7.7% from 8% in September, official data showed, as the country, which accounts for one-third of euro zone output, showed signs of recovery.
