A survey conducted by The Malta Employers’ Association (MEA) showed that 38% of companies feel that the schemes the government implemented to help businesses affected by the Coronavirus pandemic were extremely ineffective.
On Tuesday, the MEA hosted a press conference in which it presented the findings of a survey which it has carried out among companies to determine the impact of the Covid-19 on employment together with the extent of effectiveness of the various schemes the government introduced to help alleviate problems encountered by employers.
The aim of the survey was to discover how businesses are affected by Covid-19, review which measures are deemed to be the most effective for companies, identify the needs of MEA members in order to lobby and improve the association’s services and to assist companies and social partners in forecasting what needs to be done in the coming months.
The survey’s timeline spread from 20 March to 24 April. MEA received 346 replies from companies in different sectors and having varying numbers of employees. Most respondents are companies within the wholesale and retail industry, followed by manufacturing, professional services, hospitality and tourism and also the gaming sector.
One of the questions that were asked in the survey was for the companies’ opinion on the effectiveness of the financial schemes that the government implemented in the past month.
The highest percentage of respondents (38%) said that they were extremely ineffective while 15% think that they were only moderately effective. Only 5% thought they were extremely effective while 13% said that they were effective. The remaining 30% were undecided on the effectiveness of these measures.
MEA Director General of The Malta Employers’ Association Joseph Farrugia explained that a reason for these results is that a number of respondents did not fall under either Annex A or Annex B of the government’s financial schemes.
Respondents were asked if they are making use the Covid-19 wage supplement for their business and 52% said that they are – 65% of which fall under Annex A while 35% are under Annex B. However, the other 48% are not making use of it at all since they fall under neither of the annexes mentioned.
Covid-19 effect on companies and their employees
The survey asked respondents if their company reduced its business operational hours since the outbreak of Covid-19.
24% said that only some employees are working at reduced hours while 36% said that all their employees are working at reduced hours.
The remaining 40% said that it is still continuing with business as usual, yet, Farrugia pointed out that this does not mean they have faced any problems since the MEA has received a number of concerned calls from such cases which are continuing as usual in order to safeguard employment.
Asked if they have had to put employees on unpaid leave due to insufficient business, 72% of respondents said that they have not placed any employees on unpaid leave, and 6% replied that all their employees are on unpaid leave.
The survey also covered the number of redundancies companies had due to the Covid-19 outbreak. The majority (91%) of the respondents have not made any redundancies as of yet. Only 9% of respondents declared that they have made redundancies, with 80% of those who have stating that the rate of redundancies has been, so far, less than 25%.
However, in spite of this somewhat positive scenario, only 24% of respondents said that they will not increase redundancies if the crisis persists beyond the end of May 2020. 31% replied that redundancies will increase beyond 31 May and 45% said that they are undecided.
“This is indicative of a high level of uncertainty that prevails in the business environment and this is why I believe that the coming weeks are crucial for employment,” Farrugia said.
Of those who envisage an increase in redundancies, 36% are in Annex A, 21% in Annex B and 43% are in neither Annex A nor in Annex B of scheme eligibility.
Respondents were also asked what measures they have taken in order to compensate for people who have to stay at home due to being or living with vulnerable individuals. 5% are compensating by employing temporary staff, 29% are distributing work with the rest of employees, 8% have increased overtime, 12% have had to suspend some of their work while 57% were unaffected.
The survey also showed that 72.5% of respondents have opted to telework from home while 58.3% are using video-conferencing both internally and with clients. 18.4% are using E-Commerce which includes websites and online payments.
Farrugia believes that some of these measures will probably rub off and more companies will use teleworking and e-commerce.
MEA’s recommendations to the government
Primarily, MEA called for the government to include more companies in Annexes A and B of their financial schemes, especially those that are co-dependent on sectors that have been closed.
This should be done in order to safeguard as much employment as possible in light of the fact that 31% have reported increased redundancies if the situation remains unchanged, and a further 45% are uncertain about the immediate future.
“When the situation improves and fewer businesses will be in need of funding to retain employees and/or to remain operating, more intensive incentives should be focused on those companies and sectors who will take longer to recover.”
MEA also called for more flexibility for the employment of Third Country Nationals (TCNs) as many face the unpleasant prospect of ending up in the streets without any income and without the possibility of returning to their country of origin.
The association believe that the government should also consider a temporary reduction in the VAT rate to kickstart the economy, depending on the extent and duration of the damage.
The government should also temporarily waive or revise commercial rents for companies who have been hit by the crisis and reduce energy bills to reflect international prices
Finally, MEA said that the schemes for reduced interest rates and liquidity incentives should be implemented immediately.
President of MEA Dolores Sammut Bonnici, SME Helpdesk Executive Anton Vella and Research Executive Sharon Farrugia were also present during the conference.
Full presentation in pdf