Germany’s chems employment resilient on union protection but short-time work impacting downstream

LONDON (ICIS)–Employment in the German chemicals sector remains resilient and, given its importance in the supply chain and connection to the health sector, provisions are being made for workers in the industry, according to corporates and the main chemical union.

The German chemicals trade group VCI released a statement at the end of last week along with the country’s mining, chemistry, and energy trade union (IG BCE), which includes chemicals workers, saying what measures would be put in place during the coronavirus pandemic.

These currently include allowing employees to get to and from work despite any imposed curfews, preserving the supply of raw materials, and ensuring transport for products to provide protection for the 465,000 jobs in the nation’s chemical and pharmaceutical industry.

Germany’s Federal Council has made amendments to the Infection Protection Act which enables the Ministry of Health “extensive authorisation to take measures for basic care with medicines, medical devices, narcotics, aids, laboratory diagnostics, protective equipment and disinfection,” the joint statement read.

The economic aid package being prepared by the government will provide relief for small- and medium-sized enterprises (SMEs) and larger companies by preserving liquidity.

The chemicals sector also benefits from further boons of a 90% increase in collective agreements, tax deferrals and postponements, guarantees and interest-free loans.

Extended short-time working rules have also been rolled out across all sectors, but the chemicals industry – along with the food sector – has not recorded a significant impact from this yet.

Short-time work is a scheme in which employees are forced to accept reduced hours and pay, called in German Kurzarbeit.

A QUARTER ON SHORT-TIME WORK
Economic analysts at the German Ifo Institute have said while short-time work in Germany is set to jump by 25.6% in the next three months, the chemicals sector anticipates only a 14% increase, second to the food industry for which it expects a 6% rise.

The overall increase would be the highest since 2010, and is up from 15.3% three months ago.

While the chemicals industry may record stable employment levels, Ifo estimates that downstream markets would have much higher levels of short-time work, with 41% in the automotive industry, 33% in mechanical engineering and 32% in electrical engineering.

Smaller sectors that are also likely to be heavily affected by short-time work in the same period are metal production and processing (49%), other vehicle construction (43%), textile manufacturing (41%) production of leather goods and shoes (35%) and manufacturing of metal products (27%).

As the effects of the coronavirus pandemic continue deteriorating at a significant rate, then the results of this survey taken in mid-March may become more pronounced.

Already 9.3% of industrial companies have introduced short-time work, with wide variation from region to region, said Ifo.

15% of electrical equipment manufacturers, 14% of mechanical engineering firms and 11% automotive industry companies have already implemented short-time work.

As downstream production continues to suffer with fewer workers and mounting financial pressures, this could impact the chemicals industry in the long term if customers cannot afford materials.

Please visit the ICIS coronavirus topic page for analysis of the impact on chemical markets and links to latest news.