Number of people on German short-time work scheme has dropped to 3.7 million: Ifo

FILE PHOTO: A worker wears a protective mask at the Volkswagen assembly line after VW re-starts Europe's largest car factory after coronavirus shutdown in Wolfsburg, Germany, April 27, 2020. Swen Pfoertner/Pool via REUTERS

BERLIN (Reuters) - The number of people on the German government’s short-time work scheme dropped to 3.7 million in September from 4.7 million in August, the Ifo institute said on Tuesday, in a sign that the economy is recovering somewhat.

Short-time work is a form of state aid that allows employers to switch employees to shorter working hours during an economic downturn to keep them on the payroll. Its use is intended to stop immediate shocks such as the coronavirus crisis from turning into mass unemployment.

Ifo said 21% of the workforce in the manufacturing sector remained on the programme compared with 12% in the service sector. Only 1% of construction workers were working on the reduced hours scheme.

Ifo said the numbers were based on its own calculations and estimates.

Reporting by Michelle Adair; editing by Thomas Seythal