World News

Half of German firms using shortened working hours due to coronavirus: Ifo

BERLIN (Reuters) – Half of German companies are using the government’s short-time work facility as most see a decline in revenues due to the coronavirus outbreak, a survey published by the Ifo economic institute on Thursday showed.

Short-time work is a form of state aid that allows employers to switch employees to shorter working hours during an economic downturn to keep them on the payroll. It has been widely used by industry, including Germany’s car sector.

Ifo said about 18% of companies surveyed said they wanted to lay off workers or not extend temporary contracts. Surveyed businesses said they expect restrictions on public life designed to slow the spread of the virus to last about four months.

Chancellor Angela Merkel’s government has launched an unprecedented rescue package for the economy. On Thursday, her conservatives and their Social Democrat coalition partners approved an additional stimulus of some 10 billion euros that includes more money for short-time workers.

Ifo said some 15% of companies have had to stop production.

Germany had been in its 11th straight year of growth before the pandemic, which is set to plunge Europe’s biggest economy into a recession. The Ifo institute has said that output could shrink by as much as 20%.

(Writing by Joseph Nasr; Editing by Michelle Martin)