Paying workers is top concern of business: ADB

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    The most significant financial problem for enterprises during the coronavirus disease 2019 (COVID-19) pandemic is paying staff wages and social security charges, a study conducted by the Asian Development Bank (ADB) showed.

    The COVID-19 impact on Philippine business: key findings from the enterprise survey report released by the multilateral agency yesterday showed the results of the survey conducted from April 28 to May 15, 2020, to gauge the COVID-19’s effect on the business community.

    ADB said responses were received from 2,481 enterprises, which included micro, small and medium-sized enterprises as well as large firms.

    “Survey responses show that quarantine restrictions, which began on March 16 to contain the spread of the virus, had a significant impact on business activity,” the report said.

    “Two-thirds of businesses closed temporarily, with most others (29 percent) reducing operations. Of those remaining open, most (78 percent) operated at half capacity or less.

    Only four percent of the enterprises maintained full operations,” it added.

    The report said liquidity was a serious concern for most enterprises as working capital became scarce.

    “One-third of respondents had run out of cash and savings by the time of the survey, while another one-third expected to run out over the next one to three months. Constraints on additional credit were also binding: just over half (53 percent) could not arrange to borrow P50,000 within a week, if needed,” the report said.

    The situation and needs assessment questions in the survey revealed that the most pressing payment concern was wages and related social security contributions (37 percent), ADB noted.

    Half of the firms surveyed suspended wage payments after the COVID-19 outbreak, with the suspension more pronounced in microenterprises, it said.

    “In line with this, a wage subsidy was the most frequently requested government support measure (57 percent). Micro and small enterprises were about 10 percentage points more likely to request a wage subsidy than large enterprises,” the report said.

    “Some 33 percent of those surveyed availed of the Department of Labor and Employment’s grant program for workers unable to receive wages. Use of the program was higher among small and medium-sized enterprises (38 percent) than for microenterprises (28 percent) or large firms (35 percent),” it added.

    According to the report, deferment of tax payments was the second most common policy support desired, cited by more than half of respondents.

    The third most common request was for low-interest or subsidized loans (36 percent) followed by tax reductions or credits (35 percent), ADB said. Those surveyed were allowed multiple responses.

    “As just a few (14 percent) of the enterprises in our survey sell products or services via the internet, it was generally difficult for businesses to service customers and generate revenue during quarantine,” ADB said.

    “Better connection to internet-based business platforms would not only help continue businesses operations currently, but also help prevent adverse impacts from a second wave of infections in the near future,” it added.

    While the enterprises are prepared to comply with required health and safety measures for reopening in general, ADB said the survey also identified different challenges to reopening businesses.

    “The most frequently cited challenge after reopening is providing face masks to workers (63 percent). However, only 17 percent of enterprises would practice social distancing and create smaller working groups,” ADB said.

    “Regular body temperature checks were planned by 13 percent of enterprises. Measures least likely to be used were contact tracing (six percent) and canteen rationing (less than one percent),” it added.