Frankfurt am Main – The economic situation of companies within IG Metall’s membership base has continued to deteriorate. 77 percent of companies are in crisis mode or have even shut down completely. That is 10 percentage points more than in the survey IG Metall published before Easter. It is clear that the ongoing crisis in the automotive industry and the near-total standstill there are having massive repercussions on other industrial sectors. Conversely, the duration and severity of the recession in German industry will depend on the recovery of the automotive sector.
As a result, short-time work is shaping the employment situation across large parts of these sectors. 70.4 percent of companies have registered for short-time work for at least some of their employees. A good 2 million workers are employed at these companies. With the reopening of distribution channels, there is hope for a decline in short-time work, for example, in the automotive repair trade or in the textile and furniture industries.
The majority of companies (1,668 companies) plan to implement short-time work for more than three months, affecting approximately 717,000 employees. For just over one million employees, the planned duration of short-time work is up to three months. Whether this period will be sufficient, however, also depends on future economic developments. Fifty-seven percent of companies are reducing working hours by more than 50 percent, affecting around one million employees. Twenty-seven percent of companies have implemented “short-time work 0,” affecting around 500,000 employees.
Only a portion of companies (61.6 percent) have collective bargaining agreements or company-level agreements providing for top-ups to the short-time work allowance. Some of these are time-limited, and in 25 percent of companies, they extend only through June of this year. The increase in the short-time work allowance that has now been approved is therefore urgently needed and should have taken effect earlier for many employees.
The clear focus on short-time work is helping to prevent unemployment even during this crisis. Layoffs of permanent staff have so far been an issue for only a small proportion of companies; however, there has been a large-scale reduction in the number of temporary agency workers (37.5 percent), termination of service contracts (14.8 percent), and non-renewal of fixed-term employment contracts (31.8 percent). The fact that only a very small number of companies (4.0 percent) intend to reduce the number of apprenticeship positions as a result of the COVID-19 crisis sends a signal of confidence. This confirms IG Metall’s position: The current situation must not lead to a reduction in apprenticeship positions or, even worse, the termination of existing contracts.
The survey results on liquidity show that nearly 10 percent of companies are already experiencing acute cash flow problems. This affects approximately 130,000 employees. That represents an increase of nearly two percentage points compared to the survey conducted at the beginning of the month. Another 15.1 percent of companies expect such shortages in the coming four to six weeks. This would affect 220,000 employees. For Jörg Hofmann, President of IG Metall, this is a warning sign: “The federal government’s decision to provide large-scale liquidity assistance was the right move. These funds must now reach companies quickly and without red tape. In addition to liquidity bottlenecks, however, the equity shortfall at some companies is worsening week by week. Here, the Economic Stabilization Fund must also provide support through direct investments in companies. IG Metall is also continuing to pursue the goal of protecting companies and employees through supplementary fund models. Insolvencies and the sell-off of German industrial companies must be prevented as far as possible.”
The survey shows just how much the COVID-19 crisis has the economy in its grip. In addition to liquidity assistance, there is therefore no way around an economic stimulus package in the medium term. Jörg Hofmann: “An economic stimulus package must be tailored in such a way that, once the crisis is over, it provides impetus for growth and advances the ecological transition. There is much to be done: The mobility and energy transitions require enormous investments, ranging from infrastructure expansion to synthetic fuels and the shift to climate-friendly propulsion systems.”
Slides on Short-Time Work
Slides: Industries
Further information and press photos of Jörg Hofmann
