IHK survey: One in four companies expects job cuts

Saxon companies continue to be predominantly pessimistic about the economy. This is the result of a joint survey by the Saxon chambers of industry and commerce at the beginning of the year, which was presented in Dresden. According to the survey, almost one in four of the companies surveyed expect to cut jobs (24 percent). Twelve percent of companies intend to create additional jobs.

"Apart from the coronavirus-related slump in spring 2020, this is the worst figure since the economic and financial crisis in 2009," said Fabian Magerl, Managing Director of the Leipzig Chamber of Industry and Commerce. "The Saxon economy remains in weak mode. Stimulus is urgently needed." According to the figures, the IHK business climate index remains at a low level and has risen by 2 points compared to the previous year to 99 points.

According to the IHK leaders, the automotive sector, mechanical engineering and the chemical industry in Saxony are particularly affected by the current crisis mood. The hope for the "autumn of reforms" announced by the federal government has now largely given way to disappointment for most companies. The CCIs are calling for lower labor costs, less bureaucracy and simpler application and award procedures as well as more investment incentives for the economy.

Labor costs are the most frequently cited risk factor

The survey involved 1,760 companies from industry, construction, trade, the service and transport sector as well as the hospitality and tourism industry with a total of almost 82,000 employees. Only 14 percent of companies expect business to improve in the future, 26 percent expect it to deteriorate.

Weak demand and high costs put pressure on turnover and earnings: 38% of companies reported a decline in turnover and 45% a deterioration in earnings. Andreas Sperl, President of the Dresden Chamber of Industry and Commerce (IHK), explained that this also had a corresponding impact on planning: "What concerns me in particular is that the willingness to invest is not very pronounced and we are expecting a decline in personnel planning." Only 17 percent of survey participants are planning higher investment budgets, while 28 percent want to cut back.

The development of labor costs is the most frequently cited risk factor in the survey - particularly in sectors such as hospitality, tourism and transport. This is followed by domestic demand, unfavorable economic conditions such as bureaucracy and regulation, and high energy prices.