According to the IWH research institute, the number of bankruptcies in Germany rose to a record high in March. There have never been more company bankruptcies since the survey began in January 2016.
The number of bankruptcies climbed to a new high in March. Since the survey began in January 2016, there have never been more company bankruptcies, as the Halle Institute for Economic Research (IWH) announced. However, an end to the increase is in sight.
Around 11,000 jobs affected
According to the IWH insolvency trend, the number of insolvencies of partnerships and corporations was 1,297 in March. This exceeded the most recent record value, which was measured in February, by another nine percent. Compared to the previous year, the current value is a whopping 35 percent higher.
The IWH analysis shows that around 11,000 jobs were affected in the largest ten percent of companies whose insolvency was reported in March. The number of affected employees in the largest ten percent of companies is at the same level as the previous month, but around 42 percent higher than in an average March before the corona pandemic.
The number of company bankruptcies will remain above pre-Corona levels for many more months, explained Steffen Müller, head of the IWH department responsible for insolvency research. According to the information, in 2003 and 2010 there were significantly more company bankruptcies than currently, with 2,000 bankruptcies per month.
Bankruptcies are important for National economy
The leading indicators, which are around two to three months ahead of events, show that bankruptcies could decline slightly again from May onwards. After peaking in January, there was another decline in March. “There is a silver lining on the horizon in the early indicators,” said Müller.
Even if corporate bankruptcies are painful for the affected companies and employees, it is important for a permanently competitive economy that business models that are no longer viable leave the market, the IWH expert continued. In parallel to the high number of insolvencies, there is a labor shortage in many industries.
“This shows that employees in efficient companies are desperately needed.” Therefore, the risk of unemployment after the employer goes bankrupt is currently limited.