Half a Million German Companies Ask for Wage Support for Workers
German Companies Ask for Wage Support for Half a Million Workers
(Bloomberg) --
German companies filed almost half a million applications for financial aid under a government support program in March, when factories and other businesses were forced to shut because of the coronavirus outbreak.
The pandemic sparked thousands of furloughs in Europe’s largest economy, as restrictions on movements in the country and across the continent to contain the outbreak hammer business activity. Figures published Tuesday showed 470,000 requests for kurzarbeit compensation, a form of state wage support.
The measure, which allows businesses to reduce workers’ hours or halt production while still paying them with the help of government subsidies, is hailed as one of Europe’s most successful safety nets during economic crises. Carmakers Volkswagen AG and Daimler AG and sports-apparel maker Puma SE are among those planning to idle tens of thousands of staff. Even financial institutions like Deutsche Bank AG are considering such moves.
The data include applications filed up to March 27, which came from nearly all sectors of the economy, the labor agency said.
Labor minister Hubertus Heil said labor-market support measures will save “millions” of jobs in Germany through the crisis, but “we can’t save every single job.”
“We’re doing everything we can to bring the country safely through this crisis,” Heil said. Detlef Scheele, the head of the labor agency, said “money is no limiting factor” when it comes to financing the subsidies.
Figures published earlier on Tuesday showed little change in the number of people officially out of work in March. However, that report was only based on data available through March 12 and fails to capture the impact of the lockdown. Scheele said in a press conference that joblessness “is climbing, and climbing very strongly in the restaurant and tourism sector.”
Germany’s strong labor market was a bright spot for the economy throughout last year, propping up domestic spending when trade tensions weighed down manufacturing.
Economists warn that a recession in Germany is unavoidable. Even if most measures aimed at containing the virus are lifted in mid-May, allowing the economy to recover through the summer, output is expected to shrink by 2.8% this year, according to a report published by government advisers on Monday.
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