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Companies register short-time work for 10.1 million people

2020-04-30T12:23:59.930Z

The situation in the Corona crisis is dramatic: Germany's companies register short-time work for over ten million people - and thus for almost every third employee in Germany. Almost all employees are affected in some sectors such as gastronomy.



The situation in the Corona crisis is dramatic: Germany's companies register short-time work for over ten million people - and thus for almost every third employee in Germany. Almost all employees are affected in some sectors such as gastronomy.

Nuremberg (dpa) - The Federal Employment Agency sits on a gigantic pile of money: the reserve that has accumulated at the authority in Nuremberg in recent years is 26 billion euros.

And even this thick financial cushion may not be enough to combat the consequences of the corona crisis on the German labor market. What the CEO of the Federal Employment Agency, Detlef Scheele, had to announce, makes the extent of the crisis more than clear to the economy. Unemployment is increasing, short-time work benefits are rising exponentially to "undreamed-of heights", and access to jobs is falling - Scheel summarized the negative numbers right at the start.

By the end of April, 751,000 companies had registered short-time work for 10.14 million people. Much more than economists had predicted. "This is a number that took our breath away a bit," said Scheele. But behind these 10.14 million names were people whose jobs would be preserved.

Not only could every third company entitled to this be affected by short-time work, but almost every third employee in Germany who was subject to social security contributions. In the catering trade - one of the sectors most affected, short-time working was even registered for nine out of ten employees.

The Federal Agency assumes that in the end not all people for whom an application has been made will actually claim short-time work benefits. There are no valid estimates because the situation is not comparable to an economic crisis.

It is also unclear how long and to what percentage the short-time work will take place in the end. The federal government has decided to increase short-time work benefits and thus no longer only replace 60 percent of the net loss, but up to 80 percent, for parents up to 87 percent. The increase would cost between 1 and 1.5 billion euros, said Scheele.

Despite the enormously high short-time work announcements, the number of unemployed - atypical for April - rose by 308,000 compared to March to 2.644 million. This is 415,000 higher than in April 2019. Seasonally adjusted, 373,000 more people were out of work in April - an increase of the season like never before. The unemployment rate rose by 0.7 points to 5.8 percent. But there are no mass layoffs, the companies keep employees and bridge the crisis with short-time work.

In the crisis year of 2009, 1.44 million people were on short-time work - the previous record. In 2009 as a whole, the number totaled 3.3 million. This is now far exceeded. In its negative scenario, the Federal Agency assumes that there will be up to eight million short-time workers at peak times and that the annual average will be a gigantic 2.8 million. In addition, the number of unemployed could increase by an annual average of 200,000.

In this scenario, the reserve of 26 billion euros would not be enough. "We would have a financial need of between four and five billion euros from federal funds this year," said Scheele. Steffen Kampeter, chief executive of the Federal Association of German Employers' Associations and co-chair of the board of directors of the Federal Agency, criticized what he considered to be an overly generous labor market policy. "However, due to political decisions, the Federal Employment Agency's reserve is melting faster than snow in the Sahara," emphasized Kampeter. "Politics that want to please today and lose sight of tomorrow completely are of little substance and have an even shorter half-life until the political oath of disclosure."

Detlef Scheele, who has been accustomed to positive reports in his previous term as Chairman of the Executive Board of the Federal Employment Agency, is clearly taken with him when he has to announce the April figures in Nuremberg. Scheele said that he or one of his predecessors had never had to go to the press with such figures before in post-war history.

"The Corona crisis is likely to lead to the worst recession in Germany after the war," he emphasized: "It has never been worse." This will put the job market under great pressure. Not so much because there were layoffs on a large scale. Rather, because there are hardly any vacancies left and because labor market policy measures such as qualifications could not even have started.

"The labor market policy has practically collapsed," said Scheele. In April 2020, only 626,000 vacancies were registered with the employment agencies, 169,000 fewer than a year ago. Seasonally adjusted, the number of vacancies dropped by 66,000.

There is hardly any mediation. The intermediaries would now process requests for short-time work. In total, this job currently does not involve 700, as usual, but 9000 people - in addition to the employees of the employment agencies, volunteers from the Federal Office for Migration and Refugees, the German Pension Insurance and the German Post.

Federal Labor Minister Hubertus Heil - just like IG Metall boss Jörg Hofmann - praised the short-time working instrument available in Germany - in comparison to other nations. "Short-time work secures millions of jobs," said Heil. In the United States, more than 26 million people have lost their jobs in the past five weeks. The development shows: "Although we cannot guarantee every job in our country, we will fight for every job," said Heil.

Finance Minister Olaf Scholz (SPD) said the government would continue to do everything it could to secure companies and jobs. "I deliberately took out the Bazooka. Our goal is that companies and jobs get through this period reasonably well," said Scholz with regard to the provision of tax money.

However, it is not certain whether the struggle with gigantic sums can actually prevent bankruptcies and thus new unemployed. "It depends on how long it takes," said Scheele. Success depends on decisions that virologists and politicians have to make. The crux of the matter is the opening of schools and kindergartens. "The economy can only start up if parents can go to work," he emphasized. And the deputy chairwoman of the German Confederation of Trade Unions, Annelie Buntenbach, warns: "The dam is short-time working and we have to do everything to ensure that it does not break."

Information on short-time work

Labor market in April

Source: merkur

All news articles on 2020-04-30

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