ifo Institute: Number of Short-Time Workers Rose in November

According to estimates by the ifo Institute, the number of employees on short-time work in Germany rose in November for the first time since May. The estimates suggest that around 2.0 million people are likely to have been on short-time work, up from around 1.8 million in October. Originally, the ifo Institute had estimated the figure for October at 3.3 million. “ifo has revised its figures for October and previous months downward. This is because the German Federal Employment Agency has now published its final figures for May for the first time, which meant we could compare them with our original ifo estimates,” says ifo labor market expert Sebastian Link.

In November, the share of all employees subject to social insurance contributions who are on short-time work rose to 5.9 percent, up from 5.4 percent in October. “This can be traced primarily to those sectors of the economy affected by the ‘lockdown light’ that has been in force since the beginning of November,” Link continues. The number of short-time workers in the hospitality sector is likely to have more than doubled month over month. There was also a slight increase in the number of short-time workers in trade. In manufacturing, however, the share of employees on short-time work fell again and is now likely to be below the 10 percent mark for the first time since the start of the coronavirus crisis. The estimates are based on the ifo Institute’s monthly Business Survey of around 7,000 companies.< /p>

The estimation method applied in previous months has been revised. While ifo’s original estimate for May, dated June 2, was 7.3 million employees on short-time work, the first projection from the German Federal Employment Agency (BA) for May, published on July 30, was initially of a similar order of magnitude at 6.7 million. However, the BA has since corrected these figures considerably downward. The final figure for May is now 5.7 million people.

For manufacturing, the ifo estimates are only slightly higher than the final BA figures. However, ifo’s other original figures were too high, particularly in building completion and in trade. Building completion, which includes plumbing, window construction, painting, heating, and ventilation, is not covered by the ifo Business Survey. ifo therefore estimated the number of short-time workers here based on the figures for reported short-time work published by the BA. However, these companies implemented short-time work to a much lesser extent than the average for companies in the rest of the economy.< /p>

In the retail sector, large companies accounting for a major share of all employees subject to social insurance contributions, especially supermarkets and discounters, are somewhat underrepresented in the ifo survey. These companies in particular had little need to implement short-time work, which is why the ifo extrapolation led to values that were clearly too high.

In the “wholesale and retail trade and repair of motor vehicles and motorcycles” category, a significant share of the workforce is employed directly in workshops, which were less affected by the lockdown in the spring than were dealerships, which had to close down across the board. However, the ifo Business Survey mainly includes car dealerships, which probably explains much of the estimation error in this sector. Overestimates also occurred for the remaining service providers as well as in agriculture, forestry, and mining, since the ifo Institute assumed the same ratio of reported short-time work to implemented short-time work here as in the sectors covered by the survey.