17% of companies reported redundancies over the past month, 6% increase from previous month – MEA survey

The second COVID-19 focused survey hosted by the Malta Employer’s Association (MEA) revealed that 17% of companies reported redundancies over the past month, which is a 6% increase from the results of the previous survey.

In a video conference on Thursday, the MEA shared the results it received from its COVID-19 Business and Employment survey. “This is the second of the surveys that we have done during COVID-19 and we have gone more indepth with our questions while maintaining others that are still relevant,” MEA President Doris Sammut Bonnici said.

MEA Director General Joseph Farrugia pointed out that the survey took place before the mini-budget that the government announced on Monday.

The survey received 253 responses over the period between 27 May to 3 June that represent over 300 companies that employ around 3,000 people. The sectors that respondents relate to vary but the highest percentage include Hospitality and Tourism, Manufacturing, Professional Services and Wholesale and Retail.

Notably, 56% of the businesses that responded are solely geared for domestic economy while 14% are mainly equipped for exportation. The remaining 30% are geared for both.

One of the first question that participants were asked was if they experienced a loss of businesses over the course of this survey. Most of the businesses, 87%, reported a loss of business, while only 3% said that they increased their business and 10% remained the same.

The survey asked by how much these people lost business, and 33% said that they lost 75% or more of their business; most of which is attributed to the hospitality sector.

Asked about expected loss in the next 6 months, the majority (42%) said that the situation will remain the same. 21% said that things will get worse in the coming 6 months.

However, 34% are expecting a decrease in losses, meaning that they believe things will get better even if they will not reach pre- COVID levels. This was said mostly by the manufacturing and whole sale industries.

The MEA also asked how they are managing losses and gave them four options; cost reduction measures (not employment related), cost reduction on Employment related costs ( including redundancies), income from government schemes and use of internal reserves.

Most respondents (71%) commented that they were highly affected with cost reduction measures (not related to employment) and with the use of internal reserves (73%). Another point to note is that a few companies recurred cost reductions on employment related costs (including redundancies).’

Companies were also asked on whether they had to resort to redundancies and the results are quite striking when compared to the previous survey.

In April, the MEA reported that only 9% of the respondents for its first survey had resorted to redundancies, however, the figure has increased to 17% this time round; a 6% difference over the course of two months.

Nonetheless, it should be noted that 88% of the businesses who issued redundancies, did so for 0%-25% of their employees while only a select few reported redundancies of over 75% of their employees.

When asked if companies foresee an increase in redundancies in the next three months ( June – August 2020), 34% answered no, 20% answered yes while 46% said they are undecided.

Farrugia said that this is why the MEA has made it clear to the government that the coming three to four months are crucial for businesses and employment and believe that it will takes around a year or so to reach pre-COVID employment levels at this stage.