The downside of short-time work

The corona crisis is already hitting the labor market in Germany harder than the financial crisis. What will happen to the six million jobs at risk from the pandemic?

An employee of the Meyer shipyard works on a cruise ship (photo from January).

Dhe Corona crisis is already hitting the labor market in Germany much harder than the great economic and financial crisis in 2009. The number of unemployed rose sharply in April and May, while the number of vacancies fell sharply at the same time. Those looking for work now have a hard time because the companies hardly hire. And a trend reversal is not in sight.

In view of the enormous extent of this crisis, however, things could have been much worse, as can be seen in the United States, but also in other European countries such as Great Britain or Austria. Short-time working in particular has so far prevented larger waves of layoffs in this country.

The numbers have reached an unprecedented level: six million people could have been on short-time work in April, estimates the Federal Employment Agency. Your CEO Detlef Scheele and Federal Labor Minister Hubertus Heil rightly emphasize that six million people are not unemployed.

The only question is: will it stay that way in the long run? Because the other side of the coin are six million jobs that are at risk from the pandemic.

Whereas eleven years ago mainly larger industrial companies were affected by the economic downturn and picked up again after a few months, today almost the entire economy is suffering. Restaurants and cafes, hotels and retailers are cautiously restarting their operations – how many of them will survive the crisis, and with them the corresponding jobs, has not yet been determined.

The auto industry, on the other hand, faced a difficult structural change even before the Corona, for which it still has no solution. The automotive supplier ZF Friedrichshafen has just announced that it will cut 15,000 jobs over the next five years, with more to come.

Everything now depends on the question of how much the coronavirus can spread further and whether there will even be a second wave of infections, which would have serious consequences for the economy. Either way, however, it is clear: Even if the federal government and the Federal Employment Agency spend a lot of money, not every job can be saved.