Coronavirus: Layoffs inevitable unless government extends aid package, business leaders warn

For some workers, the March pay could be their last as business leaders warn of layoffs unless the government aid package is extended to more companies.

The situation has been likened to the Great Depression by Paul Abela, head of the Chamber of SMEs, who said the government’s two-tiered financial aid package was not enough.

“We are on the brink of a Great Depression worse than that after the First World War… Annex B of the aid package is not enough and I’m 99% sure it will lead to layoffs,” Abela told MaltaToday.

The government last week unveiled a two-tier aid package. The more generous includes a government wage subsidy of €800 per month per employee for companies listed in Annex A – these mostly cover outlets and activities that have been forced to shut as part of restrictive measures, hotels, restaurants and other tourism-related establishments.

The second aid package, known as Annex B, provides a wage subsidy of €160 per employee per month.

Annex A aid covers some 60,000 employees, self-employed and part-timers, while the second-tier aid in Annex B covers more than 100,000 people.

Companies in Annex B are supposed to represent those that sustained less of an impact from the coronavirus pandemic but many have experienced drastic losses in income.

For many workers employed by companies that fall in Annex B, the March pay may very well be their last.

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Paul Abela has urged the government to put its cards on the table and tell the business community its plans.

“Government is giving indications of another package as it is seeing that the current one isn’t going to work. We are saying that many sectors were left out of Annex A and we want them in,” he said, adding the Chamber of SMEs has forwarded a list of sectors for inclusion.

Abela said that by widening the eligibility for aid, the government will save money because these workers will end up unemployed and still receive €800 a month in benefits.

“The cost will be higher because it will also create mental health issues of having to go home saying ‘I’m unemployed.’ People will end up three months worrying about this and afterwards will still not necessarily find work,” he said.

Abela appealed to the Prime Minister to either “massively extend Annex A aid”, or come up with a new package that must be divulged now.

“You have to give yourself medicine, otherwise you won’t heal,” Abela said.

All businesses in Malta are struck by the Covid-19 pandemic, but still some companies do not qualify for government aid making it inevitable that redundancies will happen, said Malta Employers Association Director General Joe Farrugia.

Redundancies are the last resort but many businesses will have to contend with such a situation, eventually. “Businesses generally opt for less drastic measures such as reducing the working week or teleworking but this is not always possible,” Farrugia stressed.

He acknowledged government had a dilemma because it could not pay the private sector wage bill in its entirety.

“There is the element of how long this crisis will last, that’s the depth, but then there is also the width: how many sectors can the government support… in the end all sectors are tied together,” Farrugia said.

Government must keep contact with the constituted bodies to revise the package on a daily basis if possible since the situation evolves from day to day, he added.

“It is important not to introduce measures, which will damage business, such as the draconian proposal to lockdown all 65-year-olds and vulnerable people, including people who live with them. Thankfully, this was reversed within 24 hours,” Farrugia said.

The lockdown was relaxed to allow relatives who live with vulnerable people the possibility to still go to work.

Meanwhile, as Malta approaches its first month of tackling the virus, the health authorities have so far recorded 156 cases of Covid-19.

Four of these are in Mater Dei Hospital’s intensive care unit with one person on a ventilator.

Malta has not recorded any deaths.

Restrictive measures have been put in place to curb the spread and people have been urged to remain inside their home.

The rate of infections appears under control but the health authorities keep warning people not to relax social distancing because it may lead to a sudden rise in contagion.