No unemployment ‘apocalypse’ expected, MEA survey indicates

The number of companies which expect to lay off workers in the coming months has decreased compared to the situation during the height of the coronavirus pandemic, an employers’ association survey shows.

A study conducted by the Malta Employers Association on COVID-19 business and employment projections, published on Wednesday, shows that 20% of the over 250 businesses surveyed expected an increase in redundancies in the next three months.

A similar survey conducted by the MEA in April, in the middle of the COVID-19 crisis, indicated that 31% of businesses believed they might have needed to lay-off workers.

This latest MEA survey was conducted between 27 May to 3 June, before the government’s unveiling this week of its €900 million economic recovery plan. It surveyed 253 respondents, representing 300 companies, and employing 30,000 persons.

The survey shows that 34% of respondents did not expect any increased redundancies in the next three months, while 46% were still undecided.

MEA director general Joseph Farrugia, who was addressing a press conference about the survey’s results, said the measures announced by the government this week could serve to lower the percentage of employers which were still unsure whether they would let go of workers.

In terms of redundancies which have already taken place, the results show that while only 9% of businesses had laid off workers according to the April study, the most recent survey indicates that 17% of enterprises had let go of some workers.

Amongst those companies which did make some redundancies, the vast majority - 88% - let go of only up to 25% of their workers, while only 2% laid off up to 75%.

The relatively small portion of companies which expected redundancies in the next months, however, showed that mass unemployment did not appear to be on the horizon, Farrugia said.

“This shows there will be no apocalypse on the Maltese economy. It is possible that unemployment will rise [in the short-term], but over the period of a year the levels could more or less return to how they were pre-COVID," he said.

The fact that, when surveyed - before the announcement of the economic package - almost half of respondents were still uncertain if they would dismiss any employees over the next three months highlighted how timely the government’s positive economic intervention this week was, Farrugia underscored.

“While jobs will be lost, better weather will come. For some businesses it may come quickly, for others it will take more time. In the next couple of months, unemployment might not drop, since it will take months - or even years - for all companies to recover. But if businesses start seeing a ray of light, this will make them more confident that they won’t sink,” he said.

Despite this, Farrugia reiterated the MEA's position that wage supplements - which have been reduced under the new economic package - should have been kept in place at their full force until September.

Most companies which responded to the survey, however, did not give high scores in terms of the effectiveness of the government schemes when it came to avoiding lay-offs.

Loss of business experienced by most enterprises

Although the negative effects of the pandemic on redundancies was relatively contained, 87% of survey respondents reported a loss of business due to COVID-19. Only 3% said their business increased, while 10% reported no effect.

Of the respondents that reported a loss of business, 33% reported a loss of over 75%. Fifty-two percent of such businesses operate in the hospitality industry.

Recovery time of over 18 months expected by significant portion

Most respondents - 54% - said they expected their business activity to eventually recover, while 32% said they didn’t know if it would, and 13% said it would not.

Amongst those expecting a recovery, the largest portion - 27% - said they thought it would take over 18 months, while 26% said things could take between a year to a year and a half to get back to normal.

“This could indicate that the government might need to extend some of its aid measures, to a certain degree,” Farrugia noted.