COVID and Germany

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Part
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COVID and Germany

Introduction

The labor market in Germany experienced a variety of changes as a result of the COVID-19 pandemic, some of which are expected to become permanent in the country's future. Based on statistics compiled via research studies conducted in 2020 and onward since the start of COVID-19, we have identified three notable changes in how the German workforce is operating today. These impacts are specific to how citizens are working, how employers are hiring and reducing layoffs, and future expectations to the German labor market in a post-COVID world.

Following the insights on the German labor market, we were also able to locate how many businesses are legally operating in Germany based on the number of persons employed. This information was pulled directly from the Organization for Economic Co-operation and Development (OECD). The values depicted are from 2018, which are the most recently-published numbers available via this source.


COVID-19 Impact on Germany Workforce

Short-time work became the new standard for many positions.
  • To avoid layoffs and keep the unemployment rates in Germany as minimal as possible during COVID-19, Germany implemented new legislation to allow employers to offer short-time work for their existing employees. Short-time work allows businesses to keep their employees on payroll and working, but for fewer hours in a day.
  • In Germany, short-time work is a strategy implemented by the government to reduce the impact of an economic downturn. When the COVID-19 pandemic hit, German government implemented short-time work to help reduce the spread of COVID-19 and keep people afloat.
  • By April 2020, more than 20% of the German workforce was employed with short-time work. These employees are typically paid 60% of their full-time salary if they do not have children, or 67% if they do.
  • Because short-time work was implemented as the result of a pandemic, the threshold of employees a business could provide short-time work to was reduced from one-third to 10%.
  • The Federal Employment Agency in Germany helped cover 80% of the loss in gross pay that employers were originally responsible for.

Hiring freezes were implemented to reduce job vacancies and keep as many citizens employed in Germany as possible.
  • Many businesses in Germany implemented a hiring freeze early on in the COVID-19 pandemic as a means to stay afloat financially, while also minimizing layoffs.
  • Hiring freezes in Germany allowed employers to reduce working times by implementing short-time work, but at little to no cost to the employer. While this process typically requires German employers to continue to pay 70% of an employee's salary, the German government covered this obligation entirely because of COVID-19.
  • For employees that had just obtained a job prior to the start of the COVID-19 pandemic, hiring freezes created uncertainty and struggle as these individuals were unable to start work or receive short-time work benefits as a result.
  • Despite not being able to start work, many German businesses continued to advertise job openings for post-COVID employment.

Remote work became the norm, and may even become a legal right for citizens in Germany.
  • As of August 2020, nearly 50% of the German population was working remotely at least one day per week. Of these people, 7% were doing so once per week, 10% twice per week, 9% three times per week, 6% four times per week, and 19% five or more days per week.
  • After 73% of German employees reported in a study conducted by Kapsch Group in September 2020 that they were happy with how their families managed the COVID-19 pandemic, nearly 70% of businesses in Germany had reported that they were planning to implement more long-term plans for sustained remote work. This same study also found that 59% of employees claimed that their employers created new opportunities to work remotely during the pandemic.
  • Because of how successfully remote work was implemented in Germany and how positively it was perceived by employees, the German government is in the process of drafting a law that would make working from home a legal right for workers. This law would be a game changer for the 40% of Germans that continue to want to work from home at least occasionally.

Businesses in Germany by Number of Employees

According to the Organization for Economic Co-operation and Development (OECD), there were the following number of businesses legally operating in Germany in 2018, based on the number of persons employed:
  • 1-9 employees: 131,840 businesses
  • 10-19 employees: 38,844 businesses
  • 20-49 employees: 19,439 businesses
  • 50-249 employees: 15,509 businesses
  • 250+ employees: 4,410 businesses

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