Germany has less than one million in “layoff” but extends support to companies | Coronavirus

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The number of workers in layoff in Germany (short-time work) fell to 3.7 million in September, a reduction of one million compared to the 4.7 million that were in that situation in August, according to estimates released this Tuesday by the Ifo institute in Munich.

The reduction has been consistent since May, when 6.7 million Germans were covered. Even so, the federal government decided, two weeks ago, to allow the extension of this mechanism, usually available for a maximum of 12 months, up to 24 months, thus extending this support to workers and companies until the end of 2021.

“The number of part-time workers has been falling consistently. However, the proportion of employees in this situation in the industry remains particularly high ”, points out Sebastian Link, labor market specialist at Ifo.

In this sector, it is estimated that there are still 1.47 million to receive short-time work allowance, name of the benefit provided by the State, which in the German case increases as the worker stays longer in this part-time situation. These 1.47 million workers represent 21% of the labor force in German industry.

In services, there will still be 1.23 million people in the same regime. They represent 12% of workers in these sectors.

In trade, there will still be 406 thousand people, estimates the Ifo. They are 6% of the workforce. In construction, there are only 5,000, or 1%.

In the remaining sectors, all together, there are over 622 thousand people in layoff, making up another 5% of the workforce in these areas.

The German Minister of Labor and Social Affairs, Hubertus Heil (of the SPD), refutes the criticisms that have arisen because the government has allowed a longer duration of the layoff , including companies that, in the short or medium term, will be unfeasible. The official says that the critics are “theorists who speak from the academic rooms”, challenging them “to enter the world of business”.

Hubertus Heil, German Minister for Labor and Social Affairs
Hannibal Hanschke/Reuters

“We are experiencing the deepest economic crisis in our history,” says Heil. Not all jobs can be kept due to the magnitude of the crisis, he added. “But we are going to fight for all jobs. And the crisis will not end on January 1, 2021. So we need this extension.”

Companies will also be supported with all social contributions due per employee in layoff, which will be reimbursed by the Federal Employment Agency by mid-2021.

The added cost for 2021 is five billion euros, estimates Berlin. This decision is accompanied by an “incentive to innovation”, to motivate companies and workers to reinvent products, services, methods and careers.

This is one of the criticisms of the OECD that, through the voice of chief economist Laurence Boone, had pointed to the risk that this extension of support would inhibit companies from making structural changes.

Boone recommends the Dutch model, which makes it easier for workers to obtain qualifications while working part-time. And he argues that only companies committed to structural changes and a more digital and environmentally sustainable future should be supported in this second phase.

German GDP contracted 9.7% in the second quarter of 2020, the biggest drop in 50 years in the period that corresponded to the most drastic containment measures. However, some estimates point to a rapid recovery in the third quarter, which ends now in September. In an optimistic scenario, there is a growth of 6.6% in the third quarter.

In terms of infections, Germany has registered an increase in new cases, like other European countries. Chancellor Angela Merkel is concerned. He admits that, at the current rate of 2000 new cases per day, the country may reach 19,200 new cases daily around Christmas, as he admitted on Monday, during a meeting in which the evolution of the pandemic was analyzed.

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