Work shows a temporary increase for the initial time since February
In December 2021, Germany experienced an increase in the number of short-time workers, a trend primarily attributed to the ongoing economic challenges posed by the COVID-19 pandemic.
The sectors most affected were manufacturing, services (including hospitality and tourism), and retail. These industries, which tend to reduce working hours first during downturns while avoiding layoffs, saw a significant rise in short-time workers.
The manufacturing sector, for instance, witnessed an increase from 33,000 to 44,000 short-time workers. Similarly, the number of short-time workers in the metal production and processing industries rose from 14,000 to 22,000, and in the chemicals sector, the number increased from 15,000 to 21,000. The hospitality industry also saw a substantial rise, with the number of short-time workers increasing from 35,000 to 47,000.
The need for renewed short-time work arose from restrictive measures that caused reduced production and service demand in late 2021. Supply chain disruptions and lower consumer activity were particularly impactful.
Germany's labor market institutions rely heavily on the short-time work scheme, known as Kurzarbeit, during economic downturns as an alternative to unemployment. This policy was consistent with previous downturns in the Euro area.
The service and manufacturing PMI employment indexes, which typically correlate with short-time work levels, showed stress in late 2021.
While specific December 2021 data on short-time workers is not available in the provided results, economic context and the known policy use of Kurzarbeit during 2021 indicate that the December rise was due to renewed pandemic restrictions impacting manufacturing and service sectors. This policy helped moderate layoffs amid fluctuating demand.
Looking ahead, the number of short-time workers in Germany is expected to rise again for the first time since February, reaching 608,000. Currently, 1.8% of employees in Germany are estimated to be short-time workers. It's worth noting that the number of short-time workers reached a record high of 6 million in April 2020.
Interestingly, the number of short-time workers in the automotive industry and its suppliers changed only slightly, rising from 110,000 to 111,000. Before the corona pandemic, the number of short-time workers was 134,000 in February 2020.
This trend underscores the ongoing impact of the COVID-19 pandemic on Germany's labor market and the continued reliance on short-time work policies to mitigate job losses.
In light of the renewed pandemic restrictions and the impact on production and service demand, it's likely that the increase in short-time workers in December 2021 extended to other industries, such as finance, given the trend observed in manufacturing and service sectors. As Germany continues to navigate the economic effects of COVID-19, the reliance on short-time work policies may expand to include more sectors beyond manufacturing and services.
