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Small companies make up 99% of all firms and two-thirds of the workforce.

Coronavirus impact on Small businesses

In Switzerland, small companies constitute to 99% of all firms and two-thirds of the workforce. These companies make up the bulk of the economy. Switzerland went into lockdown last month until April 19 which means all non-essential businesses like Restaurants, bars and non-essential shops should be closed. Border restrictions have been introduced and there are restrictions on public gatherings too. The restrictions set the retail, tourism, hospitality and event management sectors in immediate danger. Small manufacturing firms that supply larger companies would be facing challenges, as the economy is bend to fall off in coming months.

Kurzarbeit – A hope for employees
Small businesses are counting on “Kurzarbeit,” which is a government program covering 80% of employee salaries for companies that are closed down due to health emergency. The Federal Council announced on March 13, a CHF 10 billion aid package to keep companies afloat. This includes CHF 8 billion for “Kurzarbeit,” or short-time work, and CHF 580 million in guaranteed bank loans. The CHF 8 billion will reimburse employees who have been told to stay at home and not work.

Companies which intend to get benefitted from “Kurzarbeit,” have to give a notice – three days instead of ten days and this now covers employees on temporary contracts also. Nearly CHF 1.6 billion has been laid down for state-guaranteed bridging loans to companies that are on the verge of collapse or those which do not have funds to provide for immediate bills. The remainder will target specific sectors, such as events management.

Many cantons have received strong response for the aid. The Office for Economy and Labor stated that Zurich has received about 8,000 requests related to work stoppages in recent days. Geneva said it has received 600 queries about short-time work from companies and about 33,000 from worried employees. Geneva and Basel are offering tens of millions of francs in measures to assist local businesses, mainly in the form of guarantees for bank loans.

Earlier last week, the government has increased its emergency funding from CHF 10 billion to CHF 42 billion ($42.6 billion). Around CHF 14 billion will pay the wages of employees on “Kurzarbeit,” with CHF 20 billion being offered as guaranteed loans and more funds targeted at specific industries.

But the downfall of this “Kurzarbeit” program is that the small business owners and the self-employed will have to cover for themselves.

Different position for small business owners and the self-employed
The issue of small business owners and the self-employed taking all the risk in running a business and ending up with nothing, need to be addressed. The Swiss Small and Medium-sized Business Association is pressing that financial aid should be extended to the self-employed and owners of micro-companies. “It won’t help employees if a micro-company goes bankrupt because the owners have to get over their heads in debt. In this case, even employees who are entitled to short-time work benefits will lose their jobs,” it states

More considerable funds required
Thousands of enquiries about the short-time working hours fund and other measures, like the bridging loans has been received by The State Secretariat for Economic Affairs (Seco). It is also looking to improve the financial aid system to close loopholes but thus far doesn’t have all the answers.

The KOF Swiss Economic Institute at Zurich’s Federal Institute for Technology (ETH Zurich) states that the financial support system will fall short of protecting businesses in the current climate. It has called for the creation of a CHF 100 million emergency loan fund and a temporary easing of obligations for companies to declare insolvency.

The HotellerieSuisse which represents the hotel industry, expresses that the support from state is more needed than ever before. Member companies expect revenues to drop by at least 45% for March and April. The Swiss Retail Federation which represents firms that employ 310,000 workers informs that non-food sales falling between 30% and 60% with two-thirds of firms expecting to announce shortened hours for staff in the coming weeks.

But Seco points out that it is constrained by fiscal laws, known as the Debt Brake, that puts limits on the amount of debt the country can rack up.

Corona crisis till end of year?
Business leaders and economists suggest that a CHF 42 billion coronavirus financial aid package may not be adequate to save firms from extinction. The state could be loaded with a bill three times higher if the crisis lasts until end of the year. Further billions may be needed to save Swiss companies. The KOF Swiss Economic Institute has already called for a CHF100 billion fund. It states that this fund will not violate Switzerland’s Debt Brake rules on keeping public debt in check.

Source : https://www.cnnmoney.ch/shows/big-picture/videos/small-businesses-switch-survival-mode-amid-coronavirus
 https://www.swissinfo.ch/eng/fight-to-survive_coronavirus-fallout-threatens-existence-of-small-companies/45625050
 https://www.swissinfo.ch/eng/business/coronavirus-economy_further-billions-may-be-needed-to-save-swiss-companies/45634956

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Publiziert am

02.04.2020

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#diewirtschaftsfrau #coronavirus #impact #smallbusiness

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