German carmakers among thousands of companies halting production, employing 'short-time' work

Germany's largest carmaker, VW, has extended the suspension of car production at its German plants in a bid to cushion the impact of the coronavirus outbreak. Thousands of companies in the country have introduced 'short-time' work for their employees in order limit the damage to their businesses. The system allows companies to recieve government support to keep employees on the payroll, but at lower pay. Over 76,000 companies in the country had applied for short-time work by the end of last week, up from an average of 600 per week in 2019, the Federal Employment Agency said. Among the companies applying for the employment protection measures is carmaker Daimler, which also said it has suspended the majority of production activities in Germany and plans to continue the short-time measures until at least 17 April. VW said it has completely halted production until at least 9 April, with some 80,000 employees placed in short-time work. The decision was triggered by "the continued fall in demand for vehicles and the challenges faced by the supply chain." VW production manager Andreas Tostmann said the company would draw on experiences at its sites in China, where production has largely resumed over the past few days. "To date, there has not been a single case of corona among our employees in China," Tostmann added.

Energy industry magazine Erneuerbare Energien reported that the virus's impact is also clearly being felt in the energy sector. Workers from Eastern Europe are staying away, components cannot be delivered and commuters are being held up at Germany's internal state borders "without a legal basis." With grid employees working remotely from home and local administrations going into emergency mode, installations can no longer be licensed. "We're seeing an exceptional state," the magazine said, adding that the energy sector's functionality and power supply security remain essential.

The virus's outbreak is likely to cause a massive reduction in Germany's industrial output and is set to largely paralyse economic activity for at least several weeks. While this is expected to reduce carbon emissions, the trend is likely to be short-lived and may be followed by a rebound that will offset any CO2 savings. This has led observers to call for a "green stimulus package" that ensures business resumes without compromising environmental objectives. Climate researcher Hans Joachim Schellnhuber said an economic shutdown due to the crisis is the "most expensive" and painful way to achieve emissions reduction.