The COVID-19 pandemic was an exogenous shock – sudden and without any prior indications. Governments all over the globe have reacted in different ways to contain the health crisis, and its subsequent economic impact. Some governments were quick to react with multi-billion and multi-trillion packages, despite one great unknown. How long can they sustain such economic support measures for?
The performance of the Maltese government and the private sector during past years enables our economy and households to venture into this highly uncertain period from a position of strength. The approach of the government is sound, allowing enough breathing space, as well as space to manoeuvre to continue intervening even further down the line, if need be.
The COVID-19 assistance packages are directed towards the entire private sector: be it large, small and medium enterprises, self-employed, or households. This assistance created a general safety net by immediately applying measures to defer provisional tax, national insurance and VAT, as well as a guarantee on operational loans that might be required.
Then it directly assisted employers and employees through the supplement of wages and salaries of those who are impacted, including parents or those with a disability, as well as financing part of the quarantine leave and providing assistance to enable companies to embrace teleworking.
This package is not one size fits all and takes care of specific strata in society. In previous years, the government implemented policies to boost female participation and also to encourage people with disabilities to play an active role in our labour force. The extraordinary measures announced ensure that these people now are provided with some comfort to deal with this situation.
In essence, the objective of the government is to keep businesses afloat during this period and ensure employment. This will safeguard income levels which ultimately translate into expenditure and additional economic multipliers.
In the unfortunate event of redundancies, the government is also supporting individuals directly. This strategy will be critical to ensure that domestic consumption can kick-in immediately once local restrictions are removed and to move gradually to export goods and services.
We will be among the first countries to start issuing assistance
The energy of all employees at Malta Enterprise is focused to assist companies to remain in business, retain their employees and to convey the right information on the assistance that is available. The outcomes of most of the interactions we are having are encouraging. And they translate to confidence in the future.
Agility is key in these circumstances. Within days, Malta Enterprise set up a website along with online applications for the various schemes. We will be among the first countries to start issuing assistance. In the next few days, Malta Enterprise will have processed thousands of applications for the quarantine leave, and will start issuing payments.
By mid-April, we will be in a position to pay employees’ their March and April wage supplement. This way, we are ensuring that businesses, employees and their families are sustained through this period of uncertainty.
During a time in which businesses are being asked to shut down operations, complacency should not be an option. This is the opportune time for our businesses to revise their business model. Things were going so fast that we hardly ever had time to stop and reflect.
Businesses should take the time to identify ways to address their shortcomings, develop a future strategy and be ready to spring out once this period of turbulence settles.
We believe that an important part of the strategy that companies should be adopting right now is to provide training. Malta Enterprise has a dedicated training scheme with which we actually finance most of the costs through a cash grant. In most cases, this scheme can also be used in conjunction with the other measures that the government announced to safeguard jobs.
One thing we already know is that our lives have changed – overnight.
People have suddenly realised that we cannot keep living like there is no tomorrow, because tomorrow came too quickly for many.
Let us use this time to make sure that life after COVID-19 would have changed for the better for our families, our businesses, and the communities we live in.
Kurt Farrugia, CEO Malta Enterprise