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Germany’s economy may have narrowly avoided a recession, but the pressure on the country’s industry shows no sign of abating.
Daimler AG said this week it will shed 10% of management positions at its Mercedes unit, lifting the tally of job cuts announced this year across Germany’s manufacturing sector to more than 80,000, according to Bloomberg calculations.
Ola Kallenius by Alex Kraus/Bloomberg
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Companies from Volkswagen AG to Siemens AG are letting workers go as Germany’s powerful automotive industry struggles with a shift toward electrification and self-driving cars, and makers of machinery and robots are hit by slower exports and trade disputes. Makers of well-known German products such as Meissen porcelain and WMF kitchenware are also trimming their workforce.
While the country’s unemployment rate, at 5%, remains close to its historic low, the number of freelancers is rising and short-term work has been creeping up since last year. Automotive companies in particular have also started to shed thousands of jobs. Daimler alone pledged to cut a total of at least 1.4 billion euros ($1.5 billion) in personnel expenses, potentially putting many more jobs at risk.
The full effect of the cuts may not be felt immediately. German labor laws and powerful unions make it difficult to fire workers, and many large companies have agreements banning forced dismissals, meaning job-cut programs have voluntary elements and sometimes run for years.
Still, the deteriorating prospects for employment could turn into a headache for the German government, which has been considering following countries from China to the U.K. in beefing up investments to stimulate its economy. Ironically, from the perspective of the European Central Bank — and others trying to persuade Germany to loosen the purse strings in exchange for an economic boost — an increase in the number of people out of work may even seem helpful.
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