News Belarusian (Belarus): the Belarusian business on the background of the pandemic radically changed the plans

From business development to staff reductions

Economic activity in Belarus has turned 180 degrees. In the first quarter small and medium businesses looking to the future with some optimism. In the survey of the IPM Research center, which in January-February was attended by representatives from 400 small and medium enterprises, almost 47% of the respondents talked about plans to expand the business and only 2.8% were planning reductions.

In March, apparently, the situation in the real sector of the economy began to deteriorate. In the first month of spring, according to the survey of the National Bank, which is based on a survey of businesses assessing business climate, economic sentiment index fell to minus 5.6%. However, it turned out, was just the beginning, and in April the economic sentiment went into deep negative territory, reaching minus 17.3 per cent. Thus, in one month economic sentiment in the Belarusian business have deteriorated three times.

And here is another survey of small and medium business, the results of which say that the private sector now does not think about its development, and survival.

The company MIA Research (custom outreach) interviewed in April 100 small and medium enterprises employing up to 250 people, and found that almost two thirds of respondents saw a reduction in revenue, and 40% cash flow decreased by more than 20%. And some companies that are engaged in rental real estate and entertainment, revenue fell by 90%.

The sharp decline in revenue the risk that the company will reduce its workforce or close the business. Although in April the company tried to cut different kind of expenses and dismissals were in the most extreme cases. Even in those activities in which the revenue was reduced by 90%, reducing the number of employees in April, said only a third of respondents.

According to experts of the Belarusian economic research and education center (outreach), in the segment of micro and small enterprises and among individual entrepreneurs without work can remain about 114 thousand people already in the short term. This assessment is made taking into account the impact of the crisis on the most affected areas of activities (primarily services), which occupied a small business.

With regard to medium-sized enterprises (with number of workers from 101 to 250 persons) and large enterprises, the rate of unemployment that economists still difficult due to the closure of statistical data on these companies. According to the expectations of the Belarusian economists, in the case of a continuing crisis of unemployment can be calculated in hundreds of thousands of people. What can the government do in order to minimize the extent of possible unemployment?

What kind of business and how to save?

Most affected small business asks the government for help. More than 60% of respondents from small and medium business, said during the April survey on the need for tax breaks. By the way, some representatives of private business not only participate in the survey, but also make public statements.

Renowned restaurateur Vadim Prokopyev recently posted an emotional video message in which he said that restaurants are going to work together to achieve at least indirect support measures in the dialogue with the government.

“We are not able to defend their interests before the state. Colleagues, we need an organization lobbyist, the organization counsel, an organization that protects our common interests,” — said Prokop’ev in his video message informing about the creation of the Association of restaurateurs of Belarus. He said that restaurants are asking the state to reduce rents, and taxes.

In turn, Belarusian economists believe that we need to face the truth and understand what to help all the needy entrepreneurs in the state can’t. “We are not Russia, which has large reserves and mineral resources, we do not belong to the countries that can print a freely convertible currency. So you need to stop demand from the state is impossible,” — said in comments to the BelaPAN candidate of economic Sciences Igor Pelipas.

In his opinion, Minsk is full of companies that focus on customers with above-average incomes, as well as commercial companies, without whose services in times of crisis you can do. “There are countries who have accumulated a large nest egg, but it’s not about us, we are unable to provide widespread support to the business. And whom to support? Restaurants, cafes, gyms? These businesses show up when people are good. Will grow out again in people income, these businesses will appear again” — says Pelipas.

Similar opinion is shared by other economists. “A small business that is focused on the service sector, often able to quickly reincarnated when market conditions improve”, — says senior researcher outreach Rodion frost.

Independent experts note that to minimize the size of unemployment in the country support as a priority need to provide to industrial enterprises.

“The industry ratio interindustry interactions can reach five to seven, that is, one employee five to seven workers in related industries. Accordingly, if the company that have a great impact on the economy can not work, then the effect on employment will be very visible,” — said Director of investment company UNITER Roman Osipov in an interview with BelaPAN.

For strategic companies in the economy, he says, are complex, and large industrial enterprises (e.g., petrochemical, oil, metals).

“Consequently, such enterprises need to support the economy and employment is very desirable that these companies worked. What kind of support? Businesses now need to delay the rent, tax payments, credit vacation. Therefore Belarusian banks must have the resources, and it is logical that the government now refers to external creditors for money to support banks and the economy”, — said Osipov.

He is convinced that we need to support those enterprises which in the past have proven effective.

“We have to support both public and private companies. But we must remember that the credit resources is a recurrent resources, so as to maintain to be the most effective businesses that after the crisis is taken now will be able to return the money,” — said Osipov.

The same opinion is shared by other experts.

“In industrial enterprises invested a lot of resources and it is very desirable to keep them. Another thing, if the enterprise is inefficient and in the past was not able to pay the bills, it is better to support directly the employees of such enterprises, to improve their skills and thereby solve the problem of unemployment,” — said in a comment to BelaPAN Rodion frost.