German companies sign up record 10.1 million for state salary scheme

By Rachel More, dpa
Berlin (dpa) – German companies have applied for state aid to cover the salaries of a record 10.1 million people in the coronavirus crisis, the Federal Employment Agency reported on Thursday, citing data up to April 26.

That soars past the levels seen during the financial crisis of over a decade ago, when the German government last turned to its work scheme – which enables employers to change workers to shorter hours – in a bid to prevent mass lay-offs.

By comparison, over the course of 2009, in the midst of that crisis, 3.3 million applications for the aid programme were filed.

The figures this time around were far higher than expert predictions of 3-7 million short-time workers.

But the safety net was not able to prevent all job losses, as the agency reported 308,000 more unemployed people in April than the previous month, bringing the total to 2.644 million, in the first such data to reflect the sweeping closures and restrictions introduced to combat the pandemic.

With that, Germany’s unemployment rate stood at 5.8 per cent, up from 5.1 per cent in March.

It increased by 0.9 percentage points compared to April 2019.

“The coronavirus pandemic is to lead to the worst recession in post-war history. As a result, the labour market is also coming under immense pressure,” said Detlef Scheele, chairman of the Federal Employment Agency.

He noted that this was the first time the agency had noted a rise in unemployment and underemployment for the month of April, with the spring usually handing a boost to industries.

Meanwhile, demand for new employees has also plummeted.

In April 2020, there were only 626,000 registered vacancies in Germany, 169,000 fewer than the same period last year.

In seasonally adjusted terms, the number was down by 66,000 year on year.

On Wednesday, cabinet ministers signed off on plans to expand the short-time work scheme, with the state now covering 80 per cent of salaries under the scheme. Parents with children at home will get 87 per cent.

The state aid had previously covered 60 per cent of pay or 67 per cent for parents.

While lamenting the astronomical strain that the pandemic has had on employment in Germany, the German Trade Union Confederation (DGB) pointed to the fact that the short-time work scheme was doing its job in preventing what could be a far worse situation.

“The dam that is short-time work is holding, and we must do all we can to ensure that it doesn’t break,” DGB executive board member Annelie Buntenbach said.