The economic situation in Germany is tense. Many companies had to temporarily close or significantly reduce their production during the pandemic, which led to financial burdens that are still having an impact today. Subsequent geopolitical tensions, in particular the conflict in Ukraine, triggered the energy crisis. High operating costs have since put pressure on profit margins and forced corresponding countermeasures, which often take the form of layoffs.
Raw material shortages and rising transport costs have further affected production and mean that many companies can no longer operate profitably. Increasing inflation reduces the purchasing power of consumers and consequently reduces demand for products or services. More and more companies are finding it difficult to remain competitive. The increased number of bankruptcies is endangering the country’s economic stability.
Industries affected by the crisis
The automotive industry is currently facing numerous challenges, including supply bottlenecks for semiconductors, the switch to electromobility and rising production costs. Some well-known companies such as Volkswagen and BMW have already announced savings in production. Those retailers who were unable to switch to digital sales channels quickly enough are particularly struggling with changing purchasing habits and online competition. Karstadt and Galeria Kaufhof had to close branches or lay off employees.
On the other hand, the healthcare sector is experiencing stable demand due to demographic developments and a continuous need for medical services. The IT and technology industry is also proving resilient to the economic crisis thanks to digital transformation. Companies such as SAP and Siemens are benefiting most from other companies that are currently having to optimize their internal processes and business procedures. The big challenge will be to adapt to the changed market conditions and develop new strategies.
Calculating with reduced income
If you are affected by short-time work, this can have some financial consequences because working hours are reduced. The employer must officially report this to the Federal Employment Agency and fill out the relevant forms. A future resumption of regular working hours must be promised and employees should agree, as this usually means a change to the employment contract. Short-time work benefits can normally be applied for for up to 12 months (the pandemic was an exceptional case).
In Germany, you receive 60 percent of the lost net income (67 percent with children in the household) as short-time work benefits. The reduced income can put a strain on the family budget. You may have to adjust expenses to close the financial gap. It is also important to take a look at existing obligations (rent, loan payments) so that these can continue to be met without any problems. Ultimately, the hope is that you will soon return to full-time work when the economic situation improves.
Indications of financial difficulties of companies
Short-time work can be a sign that a company is not receiving enough orders. If the situation does not improve, layoffs are inevitable. In economically difficult times, bonuses, promotions and salary increases are not possible. High levels of uncertainty about the future can also have a negative impact on the working atmosphere. The general mood in the company will suffer from the additional stress, leading to a less motivated work environment.
If layoffs occur, the remaining employees may have to take on more responsibility with the same tasks, which creates additional pressure. If the company is in the negative headlines or many employees are laid off, this may cause difficulties for the individual in finding alternative jobs. Important contacts or references for networking are lost. You should carefully monitor developments in the company and act proactively to adapt to changes.
