Many SL SMEs on the verge of collapse, survey shows
As government unlocks the near 2-month lockdown, thousands of small and medium businesses are on the verge of winding up without seeing any grounds for recovery, according to a Labour Department survey concluded recently.
Lifting of the island-wide curfew came this week just in time to resurrect most of these ailing business enterprises ensuring the job security of employees, a senior official of the department said.
Relevant authorities will review the report presented to the Labour Relations Minister Dinesh Gunawardena and implement its recommendations to rescue collapsing institutions, he disclosed.
The Labour Department has conducted the e-survey on private sector establishments affected due to COVID-19 and over 2000 companies completed and submitted the relevant questionnaire through the department website before May 15.
A total of 2764 private sector establishments had responded to the survey, with 58.59 per cent of establishments belonging to the Colombo District.
All 21 types of industries included in the International Standard Industrial Classification (ISIC) of All Economic Activities have been captured, with the manufacturing sector taking the lead with a group of 28.65 per cent of the total responded establishments.
53 per cent of the establishments had their businesses ‘closed’ during the survey period (months of April, May), with only 3 per cent of the establishments capable of functioning ‘fully’ the survey revealed.
The total employment in these establishments in the month of February was 596,022, with a staggering 64.26 per cent of the employees not finding work during the survey period.
1084 establishments had indicated that they would be unable to pay salaries to their employees.
According to findings of the survey, only 2 per cent of the responded establishments have been successful in securing the working capital loans offered by financial institutions, with 48.11 per cent of establishments awaiting the outcome of their applications.
These findings indicate the need for arriving at industry specific interventions to revive businesses for the protection of both employment and business sustainability.
Data collected from the survey will be used to provide effective, targeted and well-designed responses by the government including necessary financial and other relief to affected private sector establishments in the short run, the senior department official said.
Recommendation has been made to retain employees, with deducted salaries for those who have been made to stay at home due to non-availability of work for short-term.
Establishments are to be allowed to make prorate payments according to the number of hours worked by each employee, if losses of business/ social distancing requirements have resulted in lower hours of work per employee.
It has been recommended to continue the granting of loans to provide working capital to the businesses at lower interest rates.
Employers will be allowed to recover a portion of ‘lost paid hours without work’ in future having consent with trade unions or relevant parties.
A suggestion has been made to strengthen the social dialogue mechanism at enterprise and sectoral level to mitigate the negative impact of the labour market leading to industrial peace.
Another recommendation was to explore and adopt strategies to modernise and diversify agriculture (including fisheries), apparel and textile industries, and tourism sectors.