Germany extends short work hour plan

GERMANY yesterday extended until the end of 2010 a government program that allows companies to put workers on shorter work hours in an effort to avoid layoffs - an arrangement credited with keeping down unemployment over recent months.

Chancellor Angela Merkel's Cabinet approved a one-year extension of the plan. However, it reduced to 18 months from two years the maximum period over which benefits can be paid.

The benefits cover as much as 67 percent of the income that workers lose out on by being partially idled.

Many companies have cut hours to avoid axing workers as they scale down production to cope with reduced demand.

Although the German economy - Europe's biggest - has grown in the last two quarters as exports begin to recover, Merkel has warned that the country isn't yet over the crisis. Unemployment is expected to grow next year.

"Securing jobs will remain a challenge in 2010," Labor Minister Franz Josef Jung said in announcing the extension of the short-work program.

Germany's unemployment rate stood at 7.7 percent in October, with some 3.23 million people registered as jobless.

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