BERLIN, March 22 | Thu Mar 22, 2012 9:50am EDT
BERLIN, March 22 (Reuters) - Germany's 16 states are discussing ways to help the staff of insolvent drugstore chain Schlecker who face redundancy as the retailer is due to close more than 2,000 stores.
Unlisted Schlecker, which competes with privately-held peers Rossmann and dm, filed for insolvency in January after struggling to secure funds against a gloomy economic backdrop.
Representatives from the German states met on Thursday to discuss providing guarantees for a loan of 71 million euros ($93.7 million) that would finance a temporary employment company for the more than 10,000 Schlecker employees threatened with redundancy.
Under the model being discussed, employees would receive a large part of their income for a year plus training for new jobs.
Measures such as temporary employment companies, 'mini' jobs and shortened working hours have helped Germany bring the unemployment rate to a two-decade low, although critics say it has broadened the low-paid and temporary work sector.
A research institute on Thursday predicted German unemployment would fall for the third consecutive year in 2012.
Even though the federal government has declined to provide support to Schlecker, the German states' efforts to help employees facing redundancy contrast with Britain, where many well-known retail chains have collapsed in recent months, putting thousands out of work.
In Britain, a pre-pack deal has emerged as a common solution for struggling retail chains.
Under such deals, companies are declared insolvent and go into administration before immediately re-emerging under different ownership, such as when JD Sports acquired rival Blacks Leisure. Employees then have to hope a maximum number of stores will be retained.
Schlecker, which owes several hundred million euros to suppliers including Unilever and Procter & Gamble, plans to cut about 12,000 jobs and to shut more than 2,000 of its 5,400 stores.
Insolvency administrator Arndt Geiwitz said last week that about two dozen potential investors had expressed interest in Schlecker, and that negotiations would begin once he makes a shortlist in the coming days.
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