In Germany, they call it “Kurzarbeit.” In France, it’s “Chômage partiel.” The Brits refer to the acronym, “CJRS”—short for “coronavirus job retention scheme.”
Together, these policy names form the backbone of Europe’s plan to keep unemployment here from spiking à l’américaine.
U.S. employers have already shed roughly 22 million jobs in the past month, with the pending Thursday jobless claims numbers suggesting it’s even worse than that. In Europe it’s a bit better—18 million workers across the continent have been furloughed, the Wall Street Journal reports, citing government statistics.
But there’s a big difference: In Europe, most of them are kept on the payroll, collecting a wage. The government—in essence, the taxpayer—is footing the bill.
Europe is betting the crisis will be of the short, sharp variety and that the wage subsidy will be a lifeline for employees and employers, one that keeps unemployment and levels of social unrest from spiking.
“Because of this subsidy, businesses can more easily hold on to their workers,” Florian Hense, an economist at the German bank Berenberg, wrote in an investor note yesterday. “Workers benefit because they do not get sacked and continue to receive a compensation which, while usually below their regular pay and capped at a maximum, exceeds the standard unemployment benefits.”
Europeans aren’t inventing these measures from scratch. Germany’s Kurzarbeit, for example, is widely credited with keeping German unemployment from skyrocketing during the 2008–09 global financial crisis.
According to Hense, German employment levels fell by just 1% during that crisis a dozen years ago even as real German GDP plunged 7%. In the U.S., the opposite effect was observed—U.S. GDP fell by 4%, but unemployment climbed 5.4%.
By Hense’s calculation, the wage-subsidy scheme saved about 1.5 million German jobs back then.
Hense anticipates something similar happening this time, as Europe uses the payouts to minimize the “risk of a protracted downturn caused by a more persistent shock to demand from high unemployment.”
The schemes vary by generosity and duration, country by country. But they are mostly based on Kurzarbeit. That is, Hense notes, they are “designed to cushion a sharp but temporary drop in demand. The schemes are comparatively generous in the Netherlands and less so in Italy and Spain.”
This is what the plans look like, ranked from most generous to least.
The Dutch will pay up to 90% or 9,538 euros ($10,371) of an employee’s gross monthly wages for a period of three months. Germany’s plan lasts a full 12 months, and pays two-thirds of net wages. That’s pretty generous.
In Italy, where wages are generally lower, the Italian government will cover up to 1,129 euros’ worth of gross wages.
The aid cannot come soon enough. The front page of La Repubblica ran a headline blaring: 10 million Italians are at risk of falling into poverty.
More must-read finance coverage from Fortune:
—5 veteran investors on how to approach the coronavirus stock market
—These countries’ stock markets have been hit the hardest by the coronavirus
—China’s next coronavirus crisis: What happens after a country closes its economy
—This time, the banks were ready: How the Big Four prepared to survive the coronavirus
—How the American economy can recover from the coronavirus pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—VIDEO: 401(k) withdrawal penalties waived for anyone hurt by COVID-19
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.
