BERLIN (Reuters) — More German companies may introduce shorter working hours in the country as the euro zone's problems escalate and Chinese demand takes a knock, the head of a major employers' association told Reuters.
Industrial group Bosch, steelmaker ThyssenKrupp and United States automaker General Motors' German unit Opel have all announced plans to introduce "Kurzarbeit" or government-subsidised short-time work schemes at German plants in recent weeks.
Martin Kannegiesser, president of Gesamtmetall which represents the metals and electronics industries, said the shorter working hours introduced at Opel and Bosch presaged what other companies in their sectors were likely to suffer.
"They are the writing on the wall — they're warning signs," he said in an interview. "There is reason to fear that this will become more widespread. Industrial orders have declined in large parts of the industry and that's inevitable given that most of Europe is in difficulty. That has an effect on investment decisions."
The German economy put in a strong performance in the first three months of this year but economic growth slowed to 0.3 per cent in the second quarter as companies concerned about the global economic environment cut back on investment.
Many firms in the automobile and mechanical engineering sectors have so far been able to compensate for weak demand in Europe with the help of strong appetite from China but even there growth in the second-quarter of 2012 decelerated to its slowest pace since the first quarter of 2009.
Kannegiesser called on the government to keep Kurzarbeit, which was widely used by German industry during the global financial crisis of 2009, readily available.
"Politicians would be well advised to do their utmost to ensure that this tool can be reactivated quickly," he said.
Kannegiesser, who runs a laundry technology business and will step down as head of Gesamtmetall next week, said the metal and electronics sectors were not yet experiencing a crisis.
"At the moment it is still hard to tell whether this will become a crisis or just a noticeable slowdown," he said.
Kannegiesser echoed growing German scepticism about Greece's prospects in the euro zone as Athens struggles to implement tough austerity measures in return for international loans.
"Everything that fans uncertainty or suspicions that the euro zone will break up is damaging for us. For this reason it is desirable that the currency union stays together but not at any cost," he said.
"At some stage we will reach the point with Greece where we have to say we can't go on like this," he added.
"If the troika report shows that hardly anything has changed, we will have reached that point."
Inspectors from the so-called "troika" of the European Commission, International Monetary Fund and European Central Bank are due in Athens this week and are expected to publish a report on Greece's progress next month.