Rapid assessments of the EBMOs in Western Balkans and Ukraine reveal the challenges and needs faced by enterprises in navigating and recovering from COVID-19
The outbreak of the COVID-19 pandemic and related containment measures have caused significant losses and disruptions to enterprises in Western Balkans and Ukraine. To collect evidence on how the pandemic is impacting enterprises’ operations and viability, EBMOs in the region conducted countrywide surveys, which importantly identified relevant support measures for business continuity and recovery. Carried out online between mid-April and May 2020, the surveys reached 2,149 enterprises in six countries. The survey was based on the ILO ACT/EMP “Enterprise survey tool: Assessing the needs of enterprises resulting from COVID-19” and was conducted in partnership with the European Bank for Reconstruction and Development (EBRD).
In Albania, the crisis has created unprecedented operational challenges for 76 per cent of surveyed enterprises, of which near one-third reported a complete shutdown of their operations, whereas almost 40 per cent remained partially operational at the time of the survey. Another 7 per cent had to adjust to a fully remote working mode to be able to keep their operations up and running. Falling consumer demand and disruptions to supplies halved the revenues of more than 50 percent of enterprises. At the same time, more than a quarter of enterprises surveyed did not have access to any funding, whereas 27 per cent relied on loans and grants to overcome the financial pressures mounting from the crisis. Alarmingly, more than 40 per cent of enterprises surveyed dismissed employees due to COVID-19 and if the restrictions are maintained or re-introduced, the prospects of job cuts are worrying with a staggering 52 per cent of enterprises signaling that they will be forced to resort to layoffs. Policy recommendations stemming from the survey include financial/tax relief measures for enterprises, access to liquidity (cheap or interest free loans), wage subsides and deferral of VAT payments.
The full report produced by BiznesAlbania (BA) can be accessed here.
In Bosnia and Herzegovina (Republika Srpska entity), the COVID-19 pandemic has caused significant operational disruptions for two-thirds of surveyed enterprises. More than one quarter of enterprises were not in operation, and almost 40 per cent operated only partially. Enterprise revenue fell dramatically with more than half of enterprises reporting a decline in revenue of more than 50 per cent, while some 30 per cent reported a decline of 20–50 per cent. Only one in ten enterprises reported having its own cash reserves while access to alternative funds was perceived as profoundly limited. Despite these unparalleled challenges, only 6 per cent of enterprises surveyed dismissed employees due to timely measures taken to preserve the workforce. The most widespread measure was the reduction of working hours implemented by some 30 per cent of enterprises. The assessment highlighted that enterprises require government support schemes aligned to their specific needs to enable them to cope with the crisis, stabilize and accelerate recovery, such as access to favourable credit lines, support programmes to retain employment, measures to increase consumption, establishment of a crisis fund to support enterprise recovery and others.
The full report produced by the Union of Employers’ Associations of Republika Srpska (UEARS) can be accessed here.
In Montenegro, an unprecedented figure of over 40 per cent of enterprises were not in operation during the survey period and 35 per cent were operating partially. Only less than one quarter of enterprises were fully operational, of which more than half operated remotely. As operations slowed to a halt and enterprises anticipated deep cuts in revenue, their ability to access alternative funds was profoundly limited. Only a very small share of enterprises (16 per cent) had their own cash reserves. More than half of enterprises surveyed did not have access to any funding whereas nearly 30 per cent were relying on loans and grants. Overall, 90 per cent of enterprises surveyed were able to retain their workforce due to timely tactical measures. The most widespread adjustment measures applied were switching to teleworking (32 per cent), reducing working hours (26 per cent) and providing paid annual leave to employees (21 per cent). The most severe constraints reported by the enterprises were working capital deficit (50 per cent), incapacity of business partners to operate normally (47 per cent) and low demand for products/services or restrictions on operations (both at 40 per cent). Policy recommendations based on enterprises’ needs include access to liquidity (cheap or free-interest loans); wage subsidies for companies affected by state-imposed restrictions; reducing the amount of and postponing the deadlines for payroll tax payments; and suspension of debt enforcement proceedings to name a few.
The full report produced by the Montenegrin Employers Federation (MEF) can be accessed here.
In North Macedonia, the COVID-19 crisis has severely affected an overwhelming 82 per cent of surveyed enterprises, which reported significant financial losses and temporary suspension of business operations. About 43 per cent of surveyed enterprises experienced a sharp decline in revenues by more than 50 per cent and 11 percent reported a complete shutdown of their operations. To alleviate the consequences of the pandemic and maintain the workforce, all surveyed enterprises adjusted their business operations. The most widely applied adjustments included the reduction of working hours (69 per cent), providing paid annual leave to employees (43 per cent), changes in work organisation (28 per cent) and access arrangements for customers and/or suppliers (28 per cent), and implementation of innovative solutions (for instance, e-commerce). In spite of all measures taken to preserve the workforce, some 9 per cent of surveyed enterprises had to lay off employees. The survey pointed out that while government support schemes were timely, the eligibility criteria for applying for such support need to be more transparent and inclusive. Enterprises need further government support schemes aligned with their specific needs, including access to liquidity and wage subsidies.
The joint report produced by the Organisation of Employers of Macedonia (OEM) and Business Confederation of Macedonia (BCM) can be accessed here.
In Serbia, despite the overall negative impact of the pandemic, more than 80 per cent of enterprises managed to maintain their operations, mostly due to the Government support measures provided to businesses. Half of surveyed enterprises continued functioning to the full extent, either on site or remotely, while the other half operated partially. The crisis has had a disruptive blow on the financial health of surveyed enterprises with more than half reporting a revenue fall of 50 per cent or more. For another 40 per cent of enterprises, revenue dropped between 20 and 50 per cent. More than half of enterprises surveyed reported they did not have access to any funding that would provide financial relief. To be eligible for the Government’s wage subsidy support, the vast majority of enterprises (91 per cent) did not dismiss any employees. The survey highlights that enterprises need further support from the Government to be able to cope with challenges resulting from COVID-19 and to accelerate the recovery such as liquidity loans, deferral of VAT payments, targeted state aid for sectors of strategic importance and others.
The full report produced by the Serbian Association of Employers (SAE) can be accessed here.
In Ukraine, public policy measures put in place to contain the spread of the virus resulted in significant operational disruptions for 84 per cent of surveyed enterprises. Almost one quarter of enterprises reported a complete shutdown of their business, while 40 per cent operated partially at the time of the survey. Another one fifth operated at full capacity, but remotely. Collapsing demand and supply have put a strain on enterprise finances. More than half reported that their revenues had halved, while a further 40 percent reported a decline ranging from 20 to 50 per cent. Furthermore, roughly a half of enterprises did not have access to any financial resources to overcome the challenges resulting from COVID-19. Despite challenges posed by the crisis, 89 per cent of surveyed enterprise were able to retain their workforce. Policy recommendations stemming from the survey include, among other things, granting access to liquidity (cheap or interest free loans), wage subsidies, reduction of tax rates, exemption from payment of taxes/social contributions, deferral of tax and loan payments, temporary bans on some imports.
The full report produced by the Federation of Employers of Ukraine (FEU) can be accessed here.
Given that the crisis is a protracted one the majority of EBMOs in Western Balkans are currently conducting another round of surveys to track enterprise challenges and needs and shape the policy direction and response of government.
The full report produced by BiznesAlbania (BA) can be accessed here.
In Bosnia and Herzegovina (Republika Srpska entity), the COVID-19 pandemic has caused significant operational disruptions for two-thirds of surveyed enterprises. More than one quarter of enterprises were not in operation, and almost 40 per cent operated only partially. Enterprise revenue fell dramatically with more than half of enterprises reporting a decline in revenue of more than 50 per cent, while some 30 per cent reported a decline of 20–50 per cent. Only one in ten enterprises reported having its own cash reserves while access to alternative funds was perceived as profoundly limited. Despite these unparalleled challenges, only 6 per cent of enterprises surveyed dismissed employees due to timely measures taken to preserve the workforce. The most widespread measure was the reduction of working hours implemented by some 30 per cent of enterprises. The assessment highlighted that enterprises require government support schemes aligned to their specific needs to enable them to cope with the crisis, stabilize and accelerate recovery, such as access to favourable credit lines, support programmes to retain employment, measures to increase consumption, establishment of a crisis fund to support enterprise recovery and others.
The full report produced by the Union of Employers’ Associations of Republika Srpska (UEARS) can be accessed here.
In Montenegro, an unprecedented figure of over 40 per cent of enterprises were not in operation during the survey period and 35 per cent were operating partially. Only less than one quarter of enterprises were fully operational, of which more than half operated remotely. As operations slowed to a halt and enterprises anticipated deep cuts in revenue, their ability to access alternative funds was profoundly limited. Only a very small share of enterprises (16 per cent) had their own cash reserves. More than half of enterprises surveyed did not have access to any funding whereas nearly 30 per cent were relying on loans and grants. Overall, 90 per cent of enterprises surveyed were able to retain their workforce due to timely tactical measures. The most widespread adjustment measures applied were switching to teleworking (32 per cent), reducing working hours (26 per cent) and providing paid annual leave to employees (21 per cent). The most severe constraints reported by the enterprises were working capital deficit (50 per cent), incapacity of business partners to operate normally (47 per cent) and low demand for products/services or restrictions on operations (both at 40 per cent). Policy recommendations based on enterprises’ needs include access to liquidity (cheap or free-interest loans); wage subsidies for companies affected by state-imposed restrictions; reducing the amount of and postponing the deadlines for payroll tax payments; and suspension of debt enforcement proceedings to name a few.
The full report produced by the Montenegrin Employers Federation (MEF) can be accessed here.
In North Macedonia, the COVID-19 crisis has severely affected an overwhelming 82 per cent of surveyed enterprises, which reported significant financial losses and temporary suspension of business operations. About 43 per cent of surveyed enterprises experienced a sharp decline in revenues by more than 50 per cent and 11 percent reported a complete shutdown of their operations. To alleviate the consequences of the pandemic and maintain the workforce, all surveyed enterprises adjusted their business operations. The most widely applied adjustments included the reduction of working hours (69 per cent), providing paid annual leave to employees (43 per cent), changes in work organisation (28 per cent) and access arrangements for customers and/or suppliers (28 per cent), and implementation of innovative solutions (for instance, e-commerce). In spite of all measures taken to preserve the workforce, some 9 per cent of surveyed enterprises had to lay off employees. The survey pointed out that while government support schemes were timely, the eligibility criteria for applying for such support need to be more transparent and inclusive. Enterprises need further government support schemes aligned with their specific needs, including access to liquidity and wage subsidies.
The joint report produced by the Organisation of Employers of Macedonia (OEM) and Business Confederation of Macedonia (BCM) can be accessed here.
In Serbia, despite the overall negative impact of the pandemic, more than 80 per cent of enterprises managed to maintain their operations, mostly due to the Government support measures provided to businesses. Half of surveyed enterprises continued functioning to the full extent, either on site or remotely, while the other half operated partially. The crisis has had a disruptive blow on the financial health of surveyed enterprises with more than half reporting a revenue fall of 50 per cent or more. For another 40 per cent of enterprises, revenue dropped between 20 and 50 per cent. More than half of enterprises surveyed reported they did not have access to any funding that would provide financial relief. To be eligible for the Government’s wage subsidy support, the vast majority of enterprises (91 per cent) did not dismiss any employees. The survey highlights that enterprises need further support from the Government to be able to cope with challenges resulting from COVID-19 and to accelerate the recovery such as liquidity loans, deferral of VAT payments, targeted state aid for sectors of strategic importance and others.
The full report produced by the Serbian Association of Employers (SAE) can be accessed here.
In Ukraine, public policy measures put in place to contain the spread of the virus resulted in significant operational disruptions for 84 per cent of surveyed enterprises. Almost one quarter of enterprises reported a complete shutdown of their business, while 40 per cent operated partially at the time of the survey. Another one fifth operated at full capacity, but remotely. Collapsing demand and supply have put a strain on enterprise finances. More than half reported that their revenues had halved, while a further 40 percent reported a decline ranging from 20 to 50 per cent. Furthermore, roughly a half of enterprises did not have access to any financial resources to overcome the challenges resulting from COVID-19. Despite challenges posed by the crisis, 89 per cent of surveyed enterprise were able to retain their workforce. Policy recommendations stemming from the survey include, among other things, granting access to liquidity (cheap or interest free loans), wage subsidies, reduction of tax rates, exemption from payment of taxes/social contributions, deferral of tax and loan payments, temporary bans on some imports.
The full report produced by the Federation of Employers of Ukraine (FEU) can be accessed here.
Given that the crisis is a protracted one the majority of EBMOs in Western Balkans are currently conducting another round of surveys to track enterprise challenges and needs and shape the policy direction and response of government.