Russia’s small businesses reeling under curbs

MOSCOW: When President Vladimir Putin announced a paid holiday for the month of April to keep Russians home and prevent the coronavirus from spreading, many small business owners braced themselves. How would they keep to the president’s promise of paying employees while they were shut down?

The small furniture manufacturing company where Natalia Garnova works has told her she will receive only half her monthly salary of 40,000 rubles ($544). “I do not know how I will feed my children tomorrow!” the 41-year-old told AFP. “This month, we have no orders... We already know that several people will be laid off.”

Lawmakers are due Tuesday to table legislation to help small and medium-sized businesses, but for many it could already be too late. According to the Center for Strategic Research, a think tank close to the government, about a third of companies it surveyed forced employees to take leave without pay from the first week of the nonworking period. Nearly half of the thousand companies surveyed reduced wages, 16 percent announced redundancies and nine percent anticipated bankruptcy this year.

The non-working period was initially introduced by Putin on March 28 and extended on April 2 to the end of the month as part of tightening measures to slow

COVID-19. Russia on Monday reported 2,558 new infections-its biggest daily increase to date-bringing its total tally to 18,328 cases and 148 deaths. The fallout could see the number of unemployed rise from 2.5 to 8 million this year, according to Russia’s Audit Chamber.

Difficult to survive

Some self-employed Russians, like 29year-old personal trainer Olga Novikova, have already seen their incomes vanish. “The longer it lasts, the more difficult it becomes to survive,” she told AFP.

She cannot give lessons in gyms since they were closed earlier this month. Coaching online is not an attractive option, Novikova says, because of competition from any number of free alternatives.

For Russians whose purchasing power has already been hit over recent years, the economic situation looks set to become even more precarious. The outlook is especially bleak for the nearly two-thirds of Russians who-according to a survey last year by the Levada polling agency-have no savings.

In an effort to support entrepreneurs, the government has rolled out tax cuts and offered deferred payments. The central bank has released funds for banks so they can offer cheap loans to small businesses. But Igor Nikolayev, director of the Institute for Strategic Analysis of FBK Grant Thornton Russia, said the “government measures should be on a bigger scale and better targeted. “There should be direct support for the citizens, those who suffer most from the situation,” he added. — AFP