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Unemployment: Can Germany weather the coronavirus crisis without mass layoffs?

Unemployment in Germany only inched up in June, official data showed Wednesday, as Europe's top economy has weathered the coronavirus storm so far without an extreme amount of job losses.

Unemployment: Can Germany weather the coronavirus crisis without mass layoffs?
Archive photo shows the Agentur für Arbeit (job centre) in Schmalkalden, Thuringia. Photo: DPA

The unemployment rate added just 0.1 percentage point compared with May, reaching 6.4 percent, seasonally-adjusted figures from the BA federal labour agency showed.

Before the pandemic reached Germany in March, the rate had hovered around 5.0 percent since late 2018 as the country basked in the end of a post-financial crisis boom.

In absolute terms, less representative of underlying trends but more closely followed in public debate, the number of people out of work rose by 40,000 month-on-month, to over 2.8 million.

That was almost 640,000 more than a year ago.

“The labour market remains under pressure due to the coronavirus pandemic” although “massive use of shorter hours schemes have stabilised” employment, BA chief Detlef Scheele said in a statement.

READ ALSO: German firms apply for Kurzarbeit for nearly 12 million workers during coronavirus pandemic

Germany's shorter hours scheme known as Kurzarbeit, in which the government tops up workers' wages when their shifts are pruned back, was credited with saving many jobs in 2008-09 and has been widely copied since.

After a surge to 10.6 million in March and April combined, the number of new workers covered by shorter hours applications fell to 1.1 million in May and just 340,000 in June, BA said.

New data showed that payments actually flowed to 2.5 million workers in March and 6.8 million in April, the authority added.

“The numbers resorting to shorter hours were far higher than those at the time of the Great Recession” of 2008-09, the BA said.

The IMK think tank has forecast three million unemployed by the end of the year compared with 2.3 million on average in 2019.

If that prediction comes true, “one cannot speak of mass unemployment” resulting from the pandemic, weekly Die Zeit commented ahead of Wednesday's data release.

“It shouldn't be ruled out that in the end, Germany will – yet again – escape with only a black eye,” Zeit added.

READ ALSO: How to apply for Kurzarbeit in Germany when working hours are reduced

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COVID-19 RULES

Germany should prepare for Covid wave in autumn, ministers warn

German health ministers say that tougher Covid restrictions should come back into force if a serious wave emerges in autumn.

Germany should prepare for Covid wave in autumn, ministers warn

Following a video meeting on Monday, the health ministers of Germany’s 16 states said tougher restrictions should be imposed again if they are needed. 

“The corona pandemic is not over yet – we must not be deceived by the current declining incidences,” said Saxony-Anhalt’s health minister Petra Grimm-Benne, of the Social Democrats, who currently chairs the Conference of Health Ministers (GMK).

According to the GMK, new virus variants are expected to appear in autumn and winter. Over the weekend, federal Health Minister Karl Lauterbach (SPD) also warned that the more dangerous Delta variant could return to Germany. “That is why the federal Ministry of Health should draw up a master plan to combat the corona pandemic as soon as possible and coordinate it with the states,” Grimm-Benne said.

Preparations should also include an amendment of the Infection Protection Act, ministers urged. They want to see the states given powers to react to the infection situation in autumn and winter. They called on the government to initiate the legislative process in a timely manner, and get the states actively involved.

The current Infection Protection Act expires on September 23rd this year. Germany has loosened much of its Covid restrictions in the last months, however, face masks are still compulsory on public transport as well as on planes. 

READ ALSO: Do people in Germany still have to wear Covid masks on planes?

The health ministers said that from autumn onwards, it should be possible for states to make masks compulsory indoors if the regional infection situation calls for it. Previously, wearing a Covid mask was obligatory in Germany when shopping and in restaurants and bars when not sitting at a table. 

Furthermore, the so-called 3G rule for accessing some venues and facilities – where people have to present proof of vaccination, recovery, or a negative test – should be implemented again if needed, as well as other infection protection rules, the ministers said. 

Bavaria’s health minister Klaus Holetschek, of the CSU, welcomed the ministers’ unanimous call for a revision of the Infection Protection Act. “The states must be able to take all necessary infection protection measures quickly, effectively, and with legal certainty,” he said.

North Rhine-Westphalia’s health minister Karl-Josef Laumann (CDU) warned that no one should “lull themselves into a false sense of security”.

“We must now prepare for the colder season and use the time to be able to answer important questions about the immunity of the population or the mechanisms of infection chains,” he said.

On Tuesday, Germany reported 86,253 Covid infections within the latest 24 hour period, as well as 215 Covid-related deaths. The 7-day incidence stood at 437.6 infections per 100,000 people. However, experts believe there could be twice as many infections because lots of cases go unreported. 

READ ALSO: Five things to know about the Covid pandemic in Germany right now

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