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ECONOMY

Siemens unveils huge layoff plan

German engineering giant Siemens said Tuesday it planned to cut 16,750 jobs worldwide in a major restructuring drive to push down costs and boost competitiveness.

Siemens unveils huge layoff plan
Photo:dpa

Siemens, which employs 400,000 people around the globe, said it would cut 12,600 mostly white-collar jobs. It also plans to eliminate 4,150 jobs as part of an ongoing restructuring process.

“The speed at which business is changing worldwide has increased considerably, and we’re orienting Siemens accordingly,” Siemens chief executive Peter Löscher said in a statement. “Against the backdrop of a slowing economy, we have to become more efficient.”

Of the total number of jobs lost, 5,250 would come in Germany, the company said. Plants in Erlangen, Munich, Nuremberg and Berlin will take the biggest hits.

“We want to begin negotiations with the employee representatives quickly in order to make the cuts in a way that will be as socially responsible as possible,” Siemens Personnel Director Siegfried Russwurm said, AFP reported.

Löscher said the sprawling conglomerate which makes products ranging from light bulbs to power stations and trains, had to catch up with its main rivals, such as the US group General Electric.

Siemens’s cost base remains double the size of its competitors’ in several areas and the company says it expects the work force reductions to save it €1.2 billion ($1.9 billion) by 2010.

afp

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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