The Corona crisis has hit the middle class hard. According to experts, the number of people employed in small and medium-sized businesses could fall by around 3.3 percent. This would mean a loss of almost 1.1 million jobs.
More than one million jobs are at risk among SMEs as a result of the corona crisis. This is the result of a study by the state-owned development bank KfW. According to the study, 16 percent of small and medium-sized companies plan to reduce the number of employees this year in order to cut costs. Overall, the number of employees in the SME sector could fall by around 3.3 percent, according to the KfW SME panel published on Thursday. “This corresponds to a loss of almost 1.1 million jobs”.
Just last year, the approximately 3.8 million small and medium-sized companies, which are considered the backbone of the German economy, had increased their turnover and number of employees. According to KfW, the number of employees reached a peak of 32.3 million. Sales increased by 3.5 percent compared to the previous year. KfW counts companies with a maximum annual turnover of 500 million euros among SMEs.
“After a largely brilliant decade for German SMEs (…) the shock followed in spring 2020,” the analysis says. Although the mood has brightened since then, more than every second company expects a decline in sales this year. In total, revenues could fall by 545 billion euros.
According to the KfW, the loss of sales is burdening the liquidity of the companies. Overall, however, SMEs have a high level of financial resilience, said KfW Chief Economist Fritzi Köhler-Geib. “In recent years, the companies have built up a high level of equity capital, from which they are now benefiting”.
Despite the comfortable starting position of most medium-sized companies, the Corona crisis will leave its mark, said Köhler-Geib. “Caution and restraint could determine the actions of many in the coming time. This should be counteracted by targeted economic policy measures.
According to the survey, most companies do not expect a rapid and strong recovery. For example, 46 percent of the SMEs surveyed assume that sales will remain the same in the years 2020 to 2022. Every fourth SME (26 percent) expects revenues to be below the level of 2019. Only 27 percent expect an increase.