70% of businesses can't survive more than a year in current post-COVID situation – survey

Chamber of SMEs survey finds wage subsidies prevented redundancies, but sales and insufficient rent assistance remain challenges for businesses’ survival

The majority of businesses surveyed by the Malta Chamber of SMEs said they don't think they can survive more than 12 months in the current situation
The majority of businesses surveyed by the Malta Chamber of SMEs said they don't think they can survive more than 12 months in the current situation

Wage subsidies have helped prevent redundancies, but low post-coronavirus sales and insufficient aid for rent payments are major issues for businesses, a survey has found.

The survey, carried out by the Chamber of SMEs involved 362 respondents, 70% of which indicated that they felt they cannot survive for more than 12 months in the current situation,

Twenty-two percent said they could survive another three months, 33% up to six months, 15% up to 12 months, and 30% said they could keep going for more than a year.

Calling the situation "precarious," SMEs Chamber president Paul Abela said the government had to carefully consider not stopping the wage supplement in September, since doing so could lead to serious problems.

"The short length of time businesses can survive depicts a somewhat precarious state – 70% say they won't last more than a year. This is worrying," Abela said, as he acknowledged that the expectations were based on the status quo, and that things could improve in the next months."

"If the wage assistance is stopped before the end of the year, this will exacerbate things," he added, however.

The survey was carried out between 29 June to 4 July, and involved respondents from across Malta's businesses in various sectors, including retail, restaurants, hotels and other business-to-business and business-to-consumer services.

Sales biggest concern

Sales levels were cited by 79% of businesses as being their biggest current concern, followed by uncertainty, at 69%.

For the biggest percentage of businesses – 32% - sales figures compared to the same period last year stood at 50%, while 31% said they were only selling 10% of what they did in the corresponding period in 2019.

The positive impact of the government's wage subsidy can be seen in the fact that, while salaries where the biggest concern in the previous survey, businesses were now more worried about sales since they were receiving assistance with paying their employees.

"But even if the government's helps with wages, if a business doesn't make enough sales, it has a problem. Businesses need to reach a certain sales threshold if they are to make money," Chamber of SMEs president Paul Abela said on Wednesday.

The wage subsidy has also prevented businesses from laying off workers, with only 13% having made any redundancies. Of those who did make redundancies, the majority (58%) laid off ten or less workers.

€2,500 rent subsidy not enough

The majority of businesses said that the government's one-time €2,500 rent grant was not sufficient to help with their burden. On a scale of 1 (lowest) and 5 (highest), 39% of businesses rated the level of rent assistance from the government a 1, while 19% gave it a 2 and 25% a 3. Only 10% and 7% respectively gave it a 4 or 5.

Thirty-two percent of businesses said they paid more than €2,000 a month in rent, 30% more than €5,000 and 12% over €10,000.

Abela said the rent situation was a complex one, which the government had to consider carefully, because, together with sales levels, it would be one of the determinants of whether a company would keep going. "And I a company closes shop and stops renting their premises, then even the rental market will lose out. A landlord is not going to be able to rent the premises to someone else in this current climate," he highlighted.

"The €2,500 rent grant is clearly not enough, as the statistics show... The survey shows that the wage supplement and rent are the biggest pillars on what everything is based," Abela added.

Situation is fluid

SMEs Chamber CEO Abigail Mamo underscored that thing were changing from week to week, and that frequent surveys were being carried out in this regard in light of the fluidity of the situation.

The Chamber, she said, had started the process of working on proposals for the current budget, which would be based on later surveys. "We'll be presenting more measure proposals, including fiscal ones," she said.

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