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Business

Job Cuts Likely in 2009 Despite Promises, Employer Head Says

German companies could be forced to lay off workers next year, despite job guarantees offered by the nation's top corporations, the head of the country's industry federation said in an interview on Thursday, Dec. 25.

car assembly line

Blue-chip firms have said no lay-offs in 2009, but many are skeptical

With Germany bracing itself for what is expected to be a deep economic downturn next year, leading companies indicated at a meeting this month with German Chancellor Angela Merkel they would attempt to avoid large-scale lay-offs.

"This creates confidence" said Juergen Thumann, the president of the Federation of German Industry (BDI).

But he conceded that all companies would not be able to follow this course, telling the DPA news agency that the forecast contraction in economic growth meant that part of industry would be unable to escape job cuts.

"A drastic fall in the number of orders means several companies will be forced to cut their workforce," said Thumann.

Some of Germany's biggest companies offered earlier this month to abstain from mass job cuts in 2009 as a contribution to a government stimulus and recovery package expected to be agreed early next year.

However, small and medium-sized companies reacted coolly to the proposals, saying they were skeptical about such pledges in such a volatile economic environment.

Präsident des Bundesverbandes der Deutschen Industrie BDI, Jürgen Thumann

Juergen Thumann

Thumann's comments came as Merkel's government begins to piece together a possible new stimulus package, which could worth from 25 to 30 billion euros ($35 to $42 billion), to help the nation's economy weather the global economic slump.

Many economists and think tanks are pessimistic about Germany's economic outlook for 2009. Germany is already in recession and some experts say next year's economic performance could be the worst in the country's post-war history.

Economic stimulus

Berlin has already set a raft of measures totalling about 31 billion euros to help ward off the global recession.

However, Berlin has made it clear that it does not plan to finalize the new package until after US president-elect Barack Obama unveiled his proposals to underpin growth in the world's biggest economy following his inauguration later next month.

Merkel is also planning to hold another meeting with top German industry leaders in January to discuss their offer of job guarantees.

In his interview, Thumann said that it was still too early to say how badly the global economic crisis would hit Germany.

However, he said what was important was that the international community gave fresh impetus to the currently stalled world trade talks and hammered out a new world trade agreement.

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