(Bloomberg) --
Almost half a million Germans applied for financial aid under a government support program in March, when factories and other businesses were forced to shut because of the coronavirus outbreak, the Labor Ministry said on Tuesday.
The pandemic sparked thousands of furloughs in Europe’s largest economy, a development echoed across the continent. Figures published Tuesday showed 470,000 sought kurzarbeit, a form of state wage support, this month.
The measure allows businesses to reduce workers’ hours or halt production while still paying them with the help of government salary subsidies.
Carmakers Volkswagen AG and Daimler AG and sports-apparel maker Puma SE are among those planning to idle tens of thousands of staff. Even financial institutions like Deutsche Bank AG are considering such moves.
Figures published earlier on Tuesday showed little change in the number of people officially out of work in March. However, that report was only based on data available through March 12 and fails to capture the impact of the lockdown.
Germany’s strong labor market was a bright spot for the economy throughout last year, propping up domestic spending when trade tensions weighed down manufacturing.
Economists warn that a recession in Germany is unavoidable. Even if most measures aimed at containing the virus are lifted in mid-May, allowing the economy to recover through the summer, output is expected to shrink by 2.8% this year, according to a report published by government advisers on Monday.
©2020 Bloomberg L.P.
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