Over 65% of firms laid off workers – study

Community quarantines imposed by the government to curb the spread of the coronavirus disease 2019 (Covid-19) resulted in at least 65 percent of local businesses laying off employees.

This is according to a study by researchers from the University of Asia and the Pacific (UA&P), the results of which were presented in a recent Management Association of the Philippines (MAP) forum.

The study showed that of the 33 economic-sector representatives that researchers polled online and the over 10 companies they interviewed, 67 percent of businesses reduced their workforce, 27 percent kept it intact, and six percent added more employees.

Firms that retrenched workers are those in the construction, food and nonfood manufacturing, hotel and accommodation, recreation, and travel and recreation industries. Those that hired more are into food retail and manpower procurement.

The coronavirus pandemic also forced firms to adopt measures to safeguard livelihoods, the study found.

“To avoid further retrenchment, about 33 percent of [the] respondents that faced exceptional challenges resorted to cuts in the salary [or] benefits of its workforce,” researchers said.

“Some firms had enforced cuts in benefits by as much as 50 to 100 percent, especially those [in the] recreation, travel, and restaurant industries,” they added.

The rest — 66 percent — left salaries untouched despite a downturn in sales.

Businesses into hotel and accommodation, restaurant and food activities, arts and
entertainment, and recreation reported sales declining by more than 50 percent; those into manufacturing and construction, 10 to 50 percent.

The lockdowns also posed challenges to logistics, according to the study.

Majority of the respondents blamed the limited mobility in manpower as the primary reason for the difficulties.

Peter Lee, vice dean of the UA&P School of Economics, said during the MAP forum that local firms resorted to loans and use them as additional working capital, and to service existing mortgages and fund health and safety protocols.

Most of them “are looking at tax incentives and relief to support business operations moving forward,” he added.

The academic also said firms also mentioned facilitating access to new financing models, like crowdfunding and peer-to-peer lending, to operate in the new normal.

Subsidy for utility expenses and added costs were also needed, he added.

Nonfinancial stimulus policies needed include clear and consistent health and safety protocols; the Trade department’s help in facilitating the mobility of goods; easing restrictions and allowing more access to raw materials; relief from the tedious process of securing permits and licenses; financial advice in reporting due to supply-chain disruptions; training on business digitalization and transformation; government intervention to improve information and communications technology infrastructure; and streamlining labor regulations.