Germany: Federal Employment Agency prepares for a wave of bankruptcies and layoffs

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In September, the number of unemployed in Germany fell slightly, but in October Germany is facing a wave of massive bankruptcies and layoffs.

The head of the Federal Employment Agency (BA) Detlef Scheele accordingly prepares the department for the situation of a sharp increase in the unemployed. BA is doing whatever is necessary for a possible “emergency,” Scheele told the Bild newspaper. “Taking action, we are currently training an additional 250 employees in the event of a serious wave of bankruptcies.” In addition, 1.6 billion euros are planned to support bankruptcy victims in 2021, this year the department had an amount of 950 million euros.

In the current year, the number of people receiving benefits in the event of insolvency of companies was higher compared to the same period last year. “At the current moment this year, we have paid out due to bankruptcies 350 million euros more than in 2019. By the beginning of September, the payments amounted to about 600 million euros. However, it is difficult to predict what will happen when the obligation to report insolvency comes into effect again, ”Scheele said.

From the beginning of the month (October 1), the temporarily canceled obligation to file a bankruptcy petition in case of insolvency came into effect again. For enterprises, the mitigation of the law on the need to report over-indebtedness, introduced during the coronavirus crisis, will remain in effect until the end of the year.

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