The number of employees in small and medium-sized enterprises (SMEs) in Germany could decline by 3.3 percent until the end of the year, resulting in a loss of almost 1.1 million jobs, according to a study published by the German development bank KfW on Thursday.
German SMEs had still expanded their workforce considerably up to the outbreak of the COVID-19 crisis. At the end of 2019, employment in SMEs reached a new high of 32.3 million, accounting for 71.3 percent of the country's total employment, according to KfW.
After a "largely brilliant decade" for German SMEs, during which companies were able to significantly increase employment and turnover, "the shock followed in spring 2020" when the COVID-19 crisis first hit Germany, the KfW study noted.
Over half of the German SMEs, or around 2 million companies, expected declining sales this year, according to the study which was based on a company survey among German SMEs with turnover of up to 500 million euros (592 million U.S. dollars) per year.
By the end of the year, total revenues of German SMEs were expected to decline by around 12 percent year-on-year, or approximately 545 billion euros, according to the study.
"Overall, however, SMEs in Germany have a high level of financial resilience," said KfW chief economist Fritzi Koehler-Geib in a statement. "In recent years, companies have built up a high level of equity capital, from which they are now benefiting."
The average equity ratio of German SMEs even reached a new record level of around 32 percent in 2019. The continued positive sales development in the last year and an increase in profitability helped to achieve this, according to the KfW study.
The COVID-19 crisis also had an impact on investment decisions by German SMEs. Until September, investment projects on plan were significantly fewer than previous years, the study found.
The COVID-19 crisis would "leave its mark" on most SMEs in Germany. "Caution and restraint" could dominate the actions of many SMEs in the near future, stressed Koehler-Geib.
