Blueprint to stem anticipated layoff wave

Blueprint to stem anticipated layoff wave

The government is preparing for the day after the pandemic, amid fears that the first few months after the lifting of lockdown measures and the restoration of normalcy will come with more businesses closures and more layoffs than seen during the pandemic.

The period after Easter, in May, will be particularly important, as horizontal support measures that have propped up the labor market will start being withdrawn, leaving only targeted assistance in place. This support includes the program for subsidizing the fixed expenditure of corporations that compensates professionals for losses and the so-called “Gefyra 2” program, which will subsidize corporate loan repayments from May up to December.

The challenge now is to design a targeted support package that will facilitate the adjustment of employees to new conditions, including subsidized training programs and incentives for hiring staff.

It is estimated that as of May there will be no more contract suspensions (except for some specific cases), nor any cheap state loans or rental reductions. From July onward, meanwhile, more than 600,000 businesses committed to keeping their staff in exchange for funds from the “Deposit To Be Returned” program will be able to start making layoffs, adjusting their costs to the post-pandemic era.

The high-risk category is believed to comprise over 350,000 businesses that have suffered losses of more than 20% in turnover. They are estimated to employ at least 650,000 workers.

For the period from June onward, the government will seek to prevent difficult conditions in the labor market by setting the following targets:

– Training thousands of workers so as to stop the increase in unemployment by the abolition of posts: For instance, in the post-pandemic period expectations point to an increase in demand for transportation of products, online sales etc., and to a reduction in jobs for sales assistants at brick-and-mortar stores, a sector currently employing more than 400,000 people.

– The introduction of incentives for the restructuring of corporations even through mergers, as many sectors will require their companies to grow stronger so as to adjust to the new conditions.

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