20% of businesses foreseeing redundancies, MEA survey suggests

Tista' taqra bil- Malti.

A fifth of Maltese businesses are projecting that they will need to resort to redundancies over the next three months, and most of the rest are undecided on the matter, a survey by the Malta Employers Association shows.

The MEA carried out its survey among 253 respondents, who represent 300 companies which employ around 30,000 people in total, chosen to represent all economic sectors in Malta and all sizes of companies. The survey was carried out between 27 May and 3 June, before the government announced its stimulus package last Monday.

As one might expect, the vast majority suffered as a result of the Covid-19 pandemic, with 87% reporting a drop of business. Only 3% reported increased business, and while 10% said that the pandemic had no effect, more than a third said that they registered a loss of business in response to another question in the survey. A slight majority – 52% – of those who reported a loss in business saw their revenues slashed by more than half. 33% registered a drop in business of more than 75%, with many hailing from the hospitality industry.

Additionally, businesses were on the whole somewhat pessimistic about the next six months, with 34% predicting a decrease in business and just 21% foreseeing an upswing.

17% resorted to redundancies

The vast majority of the respondents surveyed did not make any redundancies in their companies, but 17% reduced their staff count. The vast majority of them reduced their headcount by up to a quarter.

But more are expected to make employees redundant over the summer, with 20% foreseeing the need to make redundancies in the next three months. 34% said that they had no plans to make anyone redundant, while the remaining 46% were still undecided.

29% of the companies expecting to reduce their workforce were involved in the hospitality and tourism sector, with a further 22% operating in wholesale and retail and 16% coming from the manufacturing industry.

In its reaction to the stimulus package announced by the government, the MEA had itself warned that the planned reduction in wage supplements may bring about an increase in unemployment.

Businesses unconvinced by government schemes

Asked to rate the effectiveness of government schemes to date, most companies did not provide particularly high scores. Only 20% felt that the schemes seeking to prevent redundancies until business recovered were effective, while 44% believed that they were not.

Respondents were also asked on how their companies were using the downtime resulting from the pandemic, with 36% stating that their company was operating on full hours.

Among the others, 36% said that they worked on maintaining their premises, 34% planned future projects, 25% awaited further developments, 24% focused on training their employees and 19% sought to diversify their businesses.

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