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German manufacturers expect increased use of short-hours facility

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BERLIN (Reuters) – German manufacturers expect to make more use of “Kurzarbeit” — a short-hours facility aimed at avoiding mass lay-offs — in the coming three months as an economic slowdown leaves its mark on the jobs market, a survey by economic institute Ifo showed.

The survey of some 2,000 companies showed 8.5% of manufacturers expect to use short-hours working in the coming three months, the highest level since early 2013. Some 3.8 percent are already using the facility, Ifo said on Thursday.

The Kurzarbeit scheme was used by many struggling companies in the 2008-2009 recession, allowing them to preserve jobs by cutting employees’ hours when plant usage was low and having the government compensate workers for part of their lost wages.

“The economic slowdown is gradually leaving its mark on the job market,” Timo Wollmershaeuser, head of economic forecasting at Ifo said in a statement.

“German industry has been in recession since the middle of last year. Short-time work is a tool of choice if companies want to retain their skilled workers despite the difficult economic times. “

Unemployment in Germany fell slightly in June compared to the previous month, data from the Federal Labour Office showed on Monday, but there was an increase in the amount of underemployment, clearly pointing to a weakening in the economy.

Seasonally adjusted unemployment fell by 1,000 to 2.281 million compared to the month before. A drop of 3,000 had been forecast. The unemployment rate remained at 5%.

In its 10th year of growth, the German economy is expected to grow by a modest 0.5% this year, according to government projections.

(Reporting by Paul Carrel; Editing by Jon Boyle)

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