BERLIN (Reuters) - The number of German manufacturers switching workers to short-time employment rose in September, the Ifo economic institute said on Thursday, signaling that a recession in the sector was having a rising toll on the labor market.
Some 5.5% of manufacturers surveyed by Ifo said they had used the “Kurzarbeit” short-hours facility, a way to avoid mass layoffs, in September, up from 3.8% in June.
This figure was last recorded in 2012-13 after the financial crisis, when 100,000 workers in manufacturing had been on short hours, Ifo said.
Some 12.4% said they expect to use the facility in the next three months, up from 8.5% in June.
The German economy risks sliding into a recession in the third quarter after contracting by 0.1% in the April-June period.
The slowdown has been mostly felt by export-dependent manufacturers. Uncertainties linked to Britain’s planned departure from the European Union and the trade conflict between the United States and China are affecting exports.
Kurzarbeit allows manufacturers to retain workers by cutting their hours when plant usage is low. The government compensates workers for part of their lost wages.
German unemployment rose in August, compounding fears that the services that had been compensating for weakness in manufacturing would also spiral into a protracted contraction.
Chancellor Angela Merkel’s right-left government has resisted calls for a fiscal stimulus.
Ifo did not say in a statement how many companies it had surveyed. Some 2,000 companies took part in its previous survey on short hours released in July.
(The story corrects percentage of manufacturers surveyed in second paragraph to 5.5% from 5.8% after Ifo corrected)
Reporting by Joseph Nasr, editing by Larry King