Pandemic predicted to cut a million medium-sized jobs in Germany

Pandemic predicted to cut a million medium-sized jobs in Germany
An employee in Torgelow, Mecklenburg-Western Pomerania in July. Photo: DPA
More than a million jobs could be lost this year in small- and medium-sized enterprises -- the backbone of the German economy -- due to the coronavirus pandemic, a study showed Thursday.

In its annual survey of the “Mittelstand” sector, the public investment bank KfW estimated that SMEs could shed some 3.3 percent of their workforce by the end of the year, equivalent to some 1.1 million jobs.

There are an estimated 3.8 million such companies in Germany — predominantly family-run businesses specialised in sectors such as manufacturing, often for the export market.

They employ around 60 percent of workers — 32.3 million in 2019 —  and its share in Germany's overall economic activity is more than 71 percent.

READ ALSO: Working in Germany: How is the pandemic affecting jobs?

KfW said that the coronavirus pandemic was leaving “deep marks” on the SME sector.

“Worries and uncertainty are always high. Sales are breaking down more than in the financial crisis,” it said.

(article continues below)

See also on The Local:

The historic recession into which the virus lockdowns plunged Europe's biggest economy and the anxiety about the recovery are impacting the outlook this year for SMEs, KfW wrote.

“More than one out of every two SMEs — some two million companies — are expecting a drop in revenue,” with a 12-percent drop expected for the sector as a whole, equivalent to 545 billion euros.

KfW signalled that companies were also holding off investments projects due to “uncertainty and tight funds”.

By the end of August, Germany had already lost 670,000 jobs, with “very pessimistic” macroeconomic forecasts pointing to a difficult final quarter.

Earlier Thursday, data showed consumer confidence had sunk heading into November as fears rise of further restrictions to curb the spread of the pandemic.

As part of a vast support plan from the German government, KfW has paid out 55 billion euros in aid since April to companies in difficulty.

The current climate of “great uncertainty” must be countered by “targeted economic policy measures”, the study concludes.

READ ALSO: Pandemic to 'cut thousands of banking jobs' in Frankfurt

Jobs in Germany

Member comments

The Local is not responsible for content posted by users.

Become a Member to leave a comment.Or login here.