German officials expect unemployment in Europe’s largest economy to rise sharply as a consequence of the coronavirus crisis, even though hundreds of thousands of companies have applied for their staff to join a government-subsidised short-term work programme designed to avoid lay-offs.

Germany has sought to avert a big spike in unemployment through an expansion of the “Kurzarbeit” or short-time work scheme, under which companies hit by a downturn can send their workers home, or reduce their hours, and the state will replace a large part of the lost income.

Figures published on Tuesday showed that 470,000 companies had applied for funds under the scheme in the past two and a half weeks — a record monthly increase. Last year, there were only 1,300 applications a month on average.