Energy crisis: Quarter of German companies ‘plan to cut jobs’

Snigdha DaluaOctober 27, 2022

101 2 minutes read

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Energy crisis: Quarter of German companies ‘plan to cut jobs’

The latest analysis of German companies found that 25% of them plan to cut jobs in addition to other cost-cutting measures to combat rising energy prices. A survey of 1,080 German companies conducted by the Munich-based Stiftung Familienunternehmen and released on October 24th, 2022 revealed that about 25% of German companies plan to cut jobs as a cost-cutting tactic.

In their most recent study, the figure carried out in April was 14%. Additionally, 90% of the primary small or medium-sized companies questioned either plan to or have already increased their rates.

How is the energy crisis affecting German companies?

The German labor market is being hammered by the energy crisis more and more severely as a result of decreased output, stagnant investments, and rising costs. According to a study by the Ifo Institute for the Foundation for Family Businesses, 25% of businesses in the federal republic indicated they were preparing to reduce employees, up from just 14% in April.

What are companies’ strategies to overcome the Energy crisis?

90% of companies stated they planned to or had already passed on their increased expenses to customers when asked how else they were addressing the energy crises. 48% of respondents said they were either currently using alternative energy sources or were contemplating doing so, while 82% said they were spending money to make their businesses more energy efficient.

Cutting back on heating, lowering overtime and holiday days, letting employees work more frequently from home, and even hiring temporary workers are further cost-cutting strategies used by companies (Kurzarbeit).

9% of companies are thinking about moving their manufacturing overseas. Concerningly, 13% of companies indicated they were considering completely ceasing production as a result of growing prices, and 9% stated that moving to manufacture overseas was now an option, up from 6% six months earlier.

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The survey’s findings, in especially the rising desire to go abroad, according to Rainer Kirchdrfer, should raise alarms. Focus Online quotes him as stating, “This tragic trend in Germany is speeding up. “Companies are cutting back on manufacturing in Germany or moving it to countries with cheaper energy prices, taxes, and bureaucracy.” He said, “We need to take steps to restore Germany’s competitiveness as a commercial location.

In terms of the company’s ability to develop, the plan to cut jobs within the company has the potential to cause enormous damage. So let’s hope the German administration will come up with bold ideas and effective answers to the escalating energy crisis.