August 8, 2020

German Companies Reduce Coronavirus Vacancies, Avoid Mass Layoffs

German companies responded in the first two weeks after the closure of public life as a result of the coronavirus with a reduction of vacant positions, but managed to avoid large waves of mass layoffs for the time being.

However, the weakening of the economy before the coronavirus crisis had already led to a drop in demand for personnel, according to a study published Tuesday by the Agency’s Labor Market and Employment Research Institute (IAB) Federal Employment (BA).

The deadlines for notification of dismissal, the “Kurzarbeit” modality – in which the State temporarily assumes between 60% and 87% of the salary that the worker no longer receives due to the reduction in working hours – and the announcement of various measures of Support “have initially stopped the threat of layoffs,” say IAB experts.

“But naturally they cannot stop it completely, nor in the long term,” they warn.

The so-called vacancy rate, that is, the percentage of open positions in relation to all the occupied and unoccupied positions in a company fell in the first quarter to 2.6% compared to 3.2% in the last three months of the year past.

The decline is even more remarkable if one takes into account the last two weeks of March, when the economic halt took effect as a result of the coronavirus.

In those two weeks, the vacancy rate stood at 2%, while in the first eleven weeks of the first quarter it was still 2.7%.

On the other hand, the employers consulted in the last two weeks of March forecast a 2.4% drop in employment for the next twelve months.

Given that the companies surveyed in January and February started from 2.2% job growth, their occupancy expectations actually fell by 4.6 points.

“Today it is in the air if these negative forecasts are reinforced over time or to what extent political measures can dampen them,” added the experts.

In addition, the survey carried out at the beginning of the economic slowdown shows that a high percentage of employers have a company closure.

“But the real dimension of these closures here also depends ultimately on the effectiveness of the political measures adopted,” they emphasize.


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