More severe job cuts in the corona crisis expected by medium-sized companies

Empty shopping arcade in Dresden

Many companies see the extension of the short-time work allowance as helpful, but expect more severe job cuts.


(Photo: dpa)

Berlin The corona crisis is likely to have a worsening effect on employment in medium-sized companies. In a survey by the Federation of German Industries among companies from various industries, 40 percent said that they expect the number of employees to decrease by up to ten percent by the end of the year compared to the end of 2019.

One in five even suspects further job cuts in their own company. The companies are trying to cushion the sometimes drastic slump in sales as a result of the pandemic. Almost half of the 92 companies surveyed expect declines of up to 25 percent.

27 percent are even preparing for even greater losses on the income side. The results of the survey were available to the Handelsblatt in advance.

Many of the companies not only save on personnel costs, but also cut investments: a good 40 percent of those surveyed stated that they want to cut their corresponding expenditure in Germany. The decline is much milder abroad.

As a result, the chairman of the BDI SME Committee, Hans-Toni Junius, warns that the entrepreneurial framework of the economy is in danger of further eroding. “Politicians must use all the screws to turn this disastrous trend,” he demanded.

Six percent growth expected

Weak investment is also holding back the recent economic recovery. According to the recently presented economic forecast by the German Institute for Economic Research (DIW), investments in 2020 will collapse by 19 percent compared to the previous year – more sharply than ever before.

The researchers are now anticipating a six percent decline in economic growth. The federal government had recently raised its forecast: It expects a minus of 5.8 percent for 2020 as a whole instead of the 6.3 percent previously published. In the following weeks, several research institutes will also publish their autumn forecasts.

Despite the deep recession, almost two-thirds of the companies surveyed want to forego state financial aid. Even in dire straits, medium-sized companies rely on entrepreneurial solutions and their own resources, says Junius.

Of the federal government’s crisis measures, the companies consider the extended payment of short-time allowance to be particularly helpful. On the other hand, 70 percent of those surveyed reject a longer suspension of the obligation to file for insolvency.

The grand coalition recently decided to suspend the obligation for heavily indebted companies until the end of the year if they are not insolvent

More: Conference of Economic Ministers: “Not every company will make it”

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