The COVID-19 pandemic has shaken the global market. Probably the most affected sector is the Micro, Small, and Medium Enterprises. Small businesses are shut and are bearing losses. In response to the same, all countries come out to provide COVID relief for businesses.
They have no other option but to terminate the employees and cut down the salaries. This becomes a big problem for any country and led to increasing in the unemployment rate.
ILO Prediction on Job losses
Across the globe, many countries are providing financial aid to small businesses so that the situation could be controlled.
The warning comes nearly three weeks following the International Labour Organization (ILO) predicted that 25 million jobs have been threatened by the new coronavirus pandemic.
According to the agency, the recent evaluation reflects the partial or full lockdown measures impacting nearly 2.7 billion employees i.e. four of the world’s workforce.
The COVID-19 emergency is predicted to wipe out 6.7 % of working hours worldwide in the next quarter of 2020 i.e. equal to 195 million full-time employees.
Massive cuts are predicted from:
- Arab States (8.1 percent, equal to 5 million fulltime employees ),
- Europe (7.8 percent, or 12 million fulltime employees ) and
- Asia & the Pacific (7.2 percent, 125 million full-time employees ).
Enormous losses are anticipated across different income classes but particularly in upper-middle-income nations (7.0 percent, 100 million fulltime employees ). This far surpasses the crisis’ ramifications.
The businesses most at risk include lodging and food services, manufacturing, retail, and administrative and business actions.
The ultimate growth in global unemployment throughout 2020 will depend considerably on future improvements and policy steps. There’s a high risk the end-of-year figure will be significantly more significant than the first ILO projection of 25 million.
Employees in four industries will undergo the most extreme ramifications due to the illness are
- Hospitality (144 million employees ),
- Wholesale and retail (482 million),
- Services and management (157 million), and
- Production (463 million).
Collectively, they add up to 37.5 percent of global employment, and these numbers are enormous.
Governments helping with COVID relief for the small businesses
India was one of the 1st countries to come forward for the help of smaller firms to provide COVID relief. Concerning short-term relief, steps have been taken. Public sector banks have introduced crisis credit lines. Borrowers can avail a loan amount of around Rs 200 crore roughly 10 percent of their present working capital limitations.
The Small Industries Development Bank India has declared a concessional Rate of Interest of 5% for loans to Facilitate Emergency Response against COVID-19.
The government has introduced COVID relief measures allowing GST payments without levy of penalties, late fees, or interest. Despite all these steps, however, there are reports which MSMEs are not confident of paying lenders and wages given that the freeze on manufacturing coupled with demands.
A strategy towards financing was noticed in public sector banks before the market was hit on by the health crisis; it’s thought that this strategy may worsen in times like these.
While in the USA, Senate Democrats objected to including $250 billion into some small business loan application called the Paycheck Protection Program funded at $350 billion from the stimulus bill.
Republicans rejected a counterproposal backed by the lawmakers of Connecticut which could include tens of thousands of dollars to improve COVID relief for small businesses.
While Democrats enjoy, Blumenthal agrees with Republicans that the app ought to be increased by $250 billion as COVID relief to businesses. Still, they’re also looking for new regulations which would require half that cash, $125 billion, to be made accessible to small, community based-lenders, minority depository institutions and tiny banks and credit unions with less than $10 billion in consolidated assets.
The last national stimulus package, called the CARES Act, also supplied Connecticut’s state government with approximately $1.5 billion to allow it to cover the costs of this emergency.
In the UK, the government will not charge business rates, a property tax, on Businesses in the retail, hospitality, and leisure in 2020-21. This includes coffee shops, hotels, and restaurants also.
These measures mean that 45 % of all business premises in the UK, or approximately 900,000 properties, will not pay prices.
Local authorities, which collect prices, will be provided with £2.2bn from the government to compensate for the shortfall. But many companies are still unable to get any major financial help from the government.
As organizations start to run and struggle to get access to aid from the authorities, more businesses in the UK are laying off employees.
The employers’ organization said just 1% of firms responding to its survey had procured a loan under the government’s Coronavirus Business Interruption Loan Scheme (CBILS).
A recent poll found little change in the dire cashflow issues facing companies, with 57 percent of companies having three months’ cash in reserve, and 6 percent reporting they had run out of money.
The 700,000 smallest companies that are exempt from paying prices will be qualified for £3,000 grants to three months’ lease bill for a store that is typical, according to the federal government. It is not yet clear how companies will access the grants.
How business owners can act in this tie of global emergency
It is the time to remain calm and think practically for any business owner. The world is suffering from huge losses. They are not the only ones. Panicking in these times will only create problems for themselves and will not help their organizations.
The government is trying to help to provide COVID relief as far as they can. And in times like these, the employees need the most support. Terminating employees can create a big problem for everyone.
So, employers must realize this and initiate work from home is their business allows this. Many service-based organizations have opted for work from home approaches and running their companies seamlessly.
Until the lockdown is over, entrepreneurs need to analyze the fact that termination will lead to more and more problems for the employees and the company as well. Laying off must not be the solution.
The government is providing financial aid, and thus, they need to take advantage of it to the fullest and pay their employees as well.
Also, small businesses can cut down the work, instead of firing employees and maybe cut down the salaries if it needs to be.