Service Providers of the Information Society Mainly React to Fluctuations in Demand with Overtime and Short-Time Working

Nearly 40 per cent of the companies in the economic sector service providers of the information society, which is characterised by a high ICT intensity and makes up around 8 per cent of the overall German gross value added, are affected severely to extremely severely by fluctuations in demand. As a reaction to these fluctuations, the majority of companies (41 per cent) frequently resort to overtime and/or short-time working, while dismissals represent a less important form of adjustment measure.

This is the result of a survey among service providers of the information society conducted by the Centre for European Economic Research (ZEW), Mannheim, in cooperation with the credit reference agency Creditreform, Neuss, in November and December 2007 (details regarding the survey are provided below).

The second most common measure to react flexibly to fluctuations in demand is hiring contract workers, adopted by 36 per cent of companies. Informal networks are also used frequently to react to fluctuations in demand. By contrast, companies regard dismissals, the use of working time models or working time accounts, and pricing adaptations as less suitable to react to fluctuations in demand. Only 10 per cent of the companies surveyed indicated that they make use of one of these measures.

Fluctuations in demand, which affect the service providers of the information society, can be both cyclical as well as seasonal in nature. Cyclical influences on demand are more important (48 per cent of companies) than seasonal influences (25 per cent of companies). Information and communication technology (ICT) service providers, including software companies, IT-services, ICT specialised trade, and telecommunication services, experience stronger cyclical fluctuations in demand than knowledge intensive service providers, including companies from the sub-sectors tax consultancy and accounting, business consultancy, architectural offices, technical consultancy and planning, research and development, and advertising. While around 58 per cent of ICT service providers indicate that they are severely to extremely severely affected by cyclical fluctuations in demand, this share is only 46 per cent for knowledge intensive service providers. The sub sectors most severely affected by cyclical fluctuations in demand are architecture (77 per cent), advertising (62 per cent), and ICT specialised trading (60 per cent). Only about one fourth of the ICT service providers indicated that they are severely to extremely severely affected by fluctuations in demand. The influence of seasonal factors on demand is especially strong amongst advertising, and technical consultancy and planning businesses. Around 43 and 35 per cent respectively stated that seasonal fluctuations in demand are strong or very strong. 

The economic survey conducted by ZEW/Creditreform

About 800 businesses participate in the quarterly survey. The economic sector service providers of the information society consists of information and communication technology (ICT) service providers (businesses of the sub-sectors software and IT-services, ICT specialized trade and telecommunication services) and knowledge intensive service providers (businesses of the sub-sectors tax consultancy and accounting, business consultancy, architectural offices, technical consultancy and planning, research and development and advertising). An overview of the ZEW/Creditreform economy survey is available online at www.zew.de/dienstleister (German only).

Comment on the projection

To ensure the analyses’ representativity, the ZEW projects the answers of the survey participants with the turnover value of the businesses with regard to the entire economic sector service providers of the information society. The phrasing "share of the businesses" therewith reflects the share of turnovers of the businesses.

Contact

Dr. Jenny Meyer, E-mail: meyer@zew.de