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

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BERLIN - JANUARY 08: A worker uses a remote control to move rotor assemblies for a turbine at the Siemens gas turbine factory on January 8, 2010 in Berlin, Germany. Recent economic data, including better-than-expected unemployment figures and a positive trend in manufacturing orders in the last quarter, are giving economists hope that the German economy is recovering faster than expected from the effects of the global financial crisis. Siemens produces gas turbines for power plants and the majority of its turbines are destined for export. (Photo by Sean Gallup/Getty Images)

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.

Read more: German malaise continues as factory orders tumble

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.