Labor market: More companies want to cut jobs

The effects of the ongoing economic crisis on the labor market are becoming stronger. The monthly employment barometer from the Munich Ifo Institute has fallen again. This month the index value is 92.4 points, after 93.3 points in November. “Fewer and fewer companies are adding staff,” said Ifo survey director Klaus Wohlrabe. “The proportion of companies that want to cut jobs is increasing.” Industry and commerce in particular want to cut jobs.

The employment barometer is currently as low as it was last in the first Corona year in 2020. Unlike at the beginning of the pandemic, this year is not a sudden crash, but rather an almost continuous decline.

Query of 9,500 companies, no economic sector positive

The economic researchers ask around 9,500 companies from the four major economic sectors every month about their employment plans, including industry and trade as well as the construction and services sectors. The institute also calculates the respective balance of the employment plans for each sector of the economy: If more companies want to reduce staff than increase them, the balance is negative, and the larger the proportion of companies that want to reduce their workforce, the greater the minus. The balance is currently negative in all four sectors of the economy.

In December, industry slipped from minus 19.8 in the previous month to minus 22.8 points, and trade slipped from minus 16.4 to minus 16.6 points. For service providers and construction companies, on the other hand, the proportion of companies planning to cut staff is still significantly smaller, at minus 2.4 and minus 1.6 points respectively. According to the Ifo Institute, no major wave of layoffs is expected in construction despite the poor order situation.

At the beginning of the week, the Ifo Institute published the business climate for December, according to which pessimism in the German economy continued to increase.