Businesses face cash crunch to retain staff and operations during COVID-19: ILO
Published: Nov 30, 2020
By TIOLCORPLAWS News Service
GENEVA, NOV 30, 2020: The greatest challenge to businesses during the COVID-19 pandemic have been insufficient cash flow to maintain staff and operations, tide over supplier disruptions and access raw materials, said a survey by the International Labour Organisation (ILO).
“With businesses already undergoing significant competitive pressure prior to the crisis, government restrictions, health challenges and the economic fall-out brought by COVID-19 further set back many enterprises,” said the ILO. They surveyed over 4,500 enterprises in 45 nations worldwide between Match and June 2020.
Interrupted cash flow was the greatest problem, the survey conducted by ILO's Employers and Business Membership Organizations (EBMOs) found.
More than 85% respondents said the pandemic had a high or medium financial impact on their operations. Only a third said they had sufficient funding for recovery, with micro and small enterprises worst affected.
Over 65% of surveyed enterprises reported that they did not have enough cash flow to pay staff salaries and maintain business operations. About half of enterprises reported that suppliers were unable to provide inputs and that raw materials were not supplied or had become expensive.
The survey, carried out by Employers and Business Membership Organizations (EBMOs), also found that 78% of the businesses changed their operations to protect them from COVID-19. An overwhelming majority, nearly 80% said they planned to retain their staff but close to a quarter anticipated losing more than 40% of their staff.
Fewer than half the enterprises surveyed had a business continuity plan when the pandemic hit, with micro and small businesses the least likely to have made such preparations, the ILO found. Additionally, only 26% of the businesses said they were fully insured while 54% had no coverage at all.
The ILO also recommended strengthening government support measures for enterprises as a vital measure for economic recovery. The estimated time to fully restore operations varied greatly among enterprises, ranging from one month to over six months.
However, four out of ten enterprises said they had no funding to support business recovery while two-thirds said funding was insufficient.
Of the sectors analysed, the tourism and hospitality sector, followed by retail and sales, were most likely to report funding issues.
The ILO said several factors are likely to influence actual recovery time including when the pandemic reaches its peak, relaxation of government-imposed measures and whether a second or third waves of the virus emerges.
