SUP survey: half of entrepreneurs are able to hold out during quarantine for no more than a month
Coronavirus VS Business: Assessing the Business Consequences of Government Measures to Protect the Population from Coronavirus Infection COVID-19
The Union of Ukrainian Entrepreneurs (SUP) conducted a survey of domestic businesses to find out how those who create thousands of jobs evaluate the impact of the pandemic on their businesses and the Ukrainian economy. Nowadays micro, small and medium enterprises make up a larger part of the SUP structure. These enterprises will survive the crisis especially painful under any scenario so first of all the results of the survey represent the opinion of the most vulnerable business representatives. We have also interviewed businesses in different regions of the country with the support of associations joined the Union-initiated COVID-19 Business Headquarters.
The main area of activity of the respondents is retail and wholesale trade, among enterprises there are also consulting, marketing and advertising services, non-bank financial services, production of equipment, furniture and mechanical engineering, sphere of services, HoReCa, construction and architecture, IT companies, providers of educational services and others. These are representatives of all regions except the occupied territories. 17% of the respondents have representative offices all over Ukraine.
Possible quarantine termination scenarios
“The results of our poll show the need to introduce radical measures by the authorities to support the economy such as the temporary tax exemption for businesses which continue paying salaries to employees during quarantine. Half of the owners have the strength reserve for no more than a month of quarantine, these figures make it possible to imagine the magnitude of the economic crisis”, – said Kateryna Glazkova, the executive director of the Union of Ukrainian Entrepreneurs.
The entrepreneurs’ attitude to continuing the quarantine in Ukraine until April 24 is mostly negative (42% of business owners), while 30% of them have not decided yet. Only every fourth considers the continuation of restrictive measures necessary during the spread of a pandemic.
In entrepreneurs’ opinion, what should the business scenario be like after April 24? 48% of entrepreneurs consider it necessary to loosen restrictive measures (quarantine only for the elderly people or those with weak immunity), 33% believe that it is better to consider an individual approach to a specific territory. Only 1% of respondents expect the quarantine to end completely.
Almost 60% of business owners continue to operate during restrictions (mostly large and medium businesses) while another 29% stopped working (typical for micro business). At the same time 51% of enterprises are able to hold out for only 1 month and every fourth business can withstand 2-3 months of work in quarantine and not go bankrupt. 6% of entrepreneurs have completely closed the business, mostly micro and small businesses are in this category. Only 3% of respondents point out that their business will be able to work for a long time under the necessary conditions (lease vacations, remote access for employees, viewing the business model).
Forced steps during quarantine
One third of business owners (mainly micro-) claim a 90-100% drop in revenue since the beginning of quarantine. The same entrepreneurs have already fired up to 50% of staff. Small and medium business owners talk about decreasing revenue by 25-50% compared to the pre-quarantine period and have already fired from 10 to 25% of employees. The loss of profits of large enterprises is 10-25% where it is predicted to reduce the staff by 25% by the end of restrictive measures.
Necessary decisions / actions by the authorities to help the business
First of all entrepreneurs expect financial support from the state authorities. 29% of business owners believe that it should be in the form of temporary tax exemption or at least a significant tax reduction (tax breaks, temporary abolition of the single social contribution (SSC) and income tax (PIT). At the same time the recently adopted “anti-crisis” laws to support the economy No. 3275 and signed No. 533-IX did not take into account the relevant business’ proposals. Today the SUP is calling on the authorities to release all business, that does not reduce staff in downtime, from paying single social contribution and income tax till the end of the year. The purpose of this initiative is not to save money on the payroll fund but to allow employers to retain jobs during the current crisis.
According to our calculations in case of elimination of the SSC and the PIT for certain activities the Government will be able to financially support almost two million of its citizens (1408.2 thousand employed in legal entities and 546.5 thousand as individual entrepreneurs).
Another 9% of entrepreneurs (mostly small ones) expect a reduction in rents. Other expected steps and proposals to the government include: loss compensation to employers and employees, government loans and government orders (5-6% each respectively).
According to the survey results Ukrainian entrepreneurs are in difficult conditions for existence – the multiplier effect of the spread of the virus in the country under different scenarios will result in a 4-9% drop in GDP this year due to business closure and significant staff cuts. 42% of interviewed entrepreneurs have partially or completely reduced their staff, 63% – predict a reduction by the end of quarantine. Millions of people will find themselves out of work if the business does not receive the proper support from the state.
In this regard in addition to the temporary abolition of the SSC and PIT the Union continues to emphasize the need for more serious business support measures such as:
1. to exempt from income tax the most affected areas: cultural institutions (cinemas etc.), enterprises of tourist sphere.
2. to give all employers the opportunity to receive partial assistance for their workers if they are reduced in time and workload in order to prevent the spread of a pandemic.
3. to impose a moratorium on all business audits by the end of the year so that entrepreneurs are able to economically recover from the crisis and not engage in administration.
Microbusiness – up to 10 employees in the company and turnover up to UAH 5 million
Small business – 10-100 employees and turnover UAH 5-50 million
Medium business – 100-250 employees and the turnover UAH 50-100 million
Large business – more than 250 employees and turnover more than UAH 100 million.
The poll was conducted by the Union of Ukrainian Entrepreneurs
The results of the survey were analyzed by the Ukrainian Marketing Group
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