Tuesday 9 July 2019 6:13 pm

German factories set to cut workers' hours to cope with downturn

The number of German factories shortening their employees’ working hours to cope with the country’s economic slowdown is expected to rise significantly over the next three months, the Ifo Institute think tank has said.

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Almost four per cent of Germany’s manufacturing sector has in recent months introduced “short-time work” – cutting employees’ hours to avoid laying them off – which was credited with maintaining employment levels during the financial crisis.

With the German economy slowing amid a tough global backdrop, weaker demand from China, and new car emissions tests, the proportion of companies on short-time work is expected to increase to 8.5 percent over the next three months, Ifo said.

Over a third of textile manufacturers are expected to introduce short-time work, for example. A fifth of metal production and processing factories are predicted to cut workers’ hours.

“Industries that are important for Germany, such as automotive, mechanical engineering, and chemicals, will be hit harder,” said Timo Wollmershaeuser, head of forecasts at Ifo.

The German government expects GDP to grow by just 0.5 per cent this year. It had previously predicted almost two per cent growth for 2019.