One in Five German Firms Cut Jobs Despite Efforts to Save Them
A business owner uses a remote control to open the shutters on the Pigalle Musique musical instrument retail outlet ahead of reopening in Paris, France. (Photographer: Adrienne Surprenant/Bloomberg)

One in Five German Firms Cut Jobs Despite Efforts to Save Them

(Bloomberg) --

Almost one in every five company in Germany decided to let go of staff in April -- an early warning sign that state subsidies might not be enough to prevent widespread damage to the labor market.

Some 18% of the roughly 6,500 businesses surveyed by the Ifo institute said they laid off workers or didn’t renew contracts. At least half of all restaurants and hotels in the poll indicated they slashed jobs, according to the report.

The numbers underscore the difficulty governments face in preventing major employment losses amid the coronavirus pandemic, even in a country with special labor-market policies to help companies.

Germany’s frequently praised support program in which the state compensates large parts of wages lost when businesses cut workers’ hours has received applications for more than 10 million workers, the Federal Labor Agency said last month. Even so, unemployment shot up by more than 370,000 in April, with further increases likely.

“From now on, the crisis will have an impact on the German labor market,” says Klaus Wohlrabe, head of surveys at the Ifo Institute.

The report showed that some 39% in Germany’s powerful automotive industry decided to cut headcount. The pharmaceutical sector, chemicals, construction and real estate were among the least affected by intentions to reduce employment.

Germany High Frequency Data Dashboard

One in Five German Firms Cut Jobs Despite Efforts to Save Them

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