Last updated 11am with GRTU Chamber of SMEs reaction below.

The government's aid package for companies suffering the economic consequences of coronavirus will not stop job losses, the Chamber of Commerce has warned.

Prime Minister Robert Abela unveiled the €1.8 billion package at a press conference on Wednesday evening. 

The package includes €700 million in tax deferrals, €900 million in loan guarantees, a €210 million injection to assist the economy, which includes €35 million to health authorities to fight COVID-19.

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Employers are also to be given €350 for every employee on quarantine leave and there will be special measures to cover leave for families and the wage bill of businesses who have had to close because of the outbreak.

The Chamber of Commerce said it found the measures he had announced "very disappointing" and well short of what it had called for.

"The Prime Minister declared that these measures were intended to protect jobs and ensure that employees suffer no reductions to their salaries. In reality, the Chamber can responsibly declare that the employees will be the biggest loser from the support package," it said.

It said the subsidies on salaries was the priority measure it had sought on behalf of members. "There are valid socio-economic justifications for Government to extend temporary support to ensure that affected companies maintain employees on their books whilst business is at a standstill. Such support would serve to avoid large-scale redundancies which would inflict social
hardship on affected families and increased recurrent expenditure for Government by way of unemployment benefits. At the same time, such assistance would ensure Maltese companies’ strong competitiveness position upon resumption of business."

It said it had suggested that in cases of companies suffering in excess of 25% loss in turnover, Government should pay 50% of the employees' salary up to a maximum of the average salary, with the employer covering a further 25%.
But the announcement made by the government was equivalent to a mere subsidy of 20% of the employee’s salary at the level of the minimum wage.

The announced measures will make it impossible for employers to avoid significant redundancies.

Consequently, the announced measures would make it impossible for
employers to avoid significant redundancies.

"In a scenario of looming mass layoffs, even the deferment of payment of payroll taxes and VAT, which accounts for the bulk of the package, becomes a redundant measure. This amount will not be paid after recovery but lost forever if there are significant job losses and declines in local sales," it added.

The Chamber noted that almost one-half of the government’s €1.8billion stimulus package was composed of loan guarantees for business which may be leveraged to €4.5billion via the banking system. Government-guaranteed loans were an integral part of its proposals for business. But it feared that their potential effectiveness has been placed into serious doubt by the insufficiency of the wage subsidy measure.

Welcome measure on quarantine leave pay

On a more positive note, the Chamber said it had noted the government’s long-awaited announcement to partially offset the employers’ costs for quarantine leave at a rate almost equivalent to the minimum wage (€350 per employee).

"Even this, however, will not fully compensate employers for abuse by those
employees who intentionally self-inflict quarantine," it said.

The Chamber noted a comment made during the press conference by the Minister for the Economy that the government may announce further incentives in the coming days. It feared, however, that they now may be too late to avoid any undesirable consequences on the economy.

The contents are different from the label – MEA

The Malta Employers' Association was also critical of the government's aid package, saying the 'contents are different from the label.'

"While the figure of €1.8 billion sounds impressive from a public relations perspective, the contents of the package are different from the label, and will cost government significantly less than the amount stated," it observed.

"Although the package does contain measures that do address the hardship that many companies are and will face during this crisis, it falls short of what is necessary to keep the ship afloat, and the incentives will, in many cases, be insufficient to curb the onset of layoffs in many firms."

It said the bulk of the package is a deferment – not cancellation - of VAT and Social Security payments, and loan guarantees.

The impetus should have been more on wage subsidisation, rather than liquidity, the association argued.

This would have been more effective to protect jobs in the private sector.

Other measures that could be introduced related to training, with a full refund of wages and training costs, including online training for a specified period.

The package, the association said, did have positive aspects, such as the assistance to the self-employed, and the incentives for parents who cannot telework.

But the €350 grant per employee on quarantine leave was insufficient, and in any case employers were, in principle, against the imposition that they have to pay for such leave.

"Quarantine leave is a social service, and social services are financed by taxes, not by employers," it insisted.

"All in all, the measures announced are a step in the right direction but fall short of covering the full scale of potential problems that are being envisaged by many businesses. It is hoped that this package will be enhanced by other measures that the government may introduce in the near future," the association said.

Hoteliers: Government measures far from what is needed

The MHRA hoteliers' association said the government measurers are far from what is needed. 

"Hotels, restaurants and other hospitality stakeholders are at a standstill. The airport is closed, restaurants are closed, all hospitality events cancelled and hotels are ghost hotels with near-zero occupancy," the association said.

"There is zero income and only massive expenditure, a situation that cannot be sustained for more than a few weeks. This is a reality even for the most frugal of companies let alone those that in the last years have re-invested tremendous sums of money in upgrading their products. These capital intensive investments have resulted in increased employment in the sector contributing further to the economy." 

"Operators in the tourism sector are now faced with having to carry the payroll cost every single day without any income being generated for an indefinite period of time. Clearly this can only be sustained for a small number of weeks but this period can be extended substantially with better government assistance and some help from employees. Without both of these the ability to stay operational is very limited," the association said. 

The measures announced on Wednesday, therefore, were surprising and disappointing.

"Simply put, they are not going to be enough for most stakeholders to retain full-time employees and remain open."

"MHRA is indeed disappointed that the measures announced fell short from addressing the business needs at present and cannot view the outlook as positive. Without support of payroll costs, by a minimum of €800 per month per employee, the situation will effectively turn very difficult, very quickly."

GRTU: Malta to brace itself for mass layoffs 

The GRTU Chamber of Small Businesses also expressed disappointment and warned of layoffs.

"The flashy figures announced yesterday evening, accompanied by the usual rhetoric, mean nothing and will not change one thing in the difficult decisions employers are taking and the sacrifices they and their employees are having to make," it said.

"Government is looking in its breast pocket for funds when it should be digging deep in its pockets until it finds the necessary funds. The government has shown ample capability along the years to come up with millions and billions to finance different operations and projects that it thought fit. Not having the finance is not a credible answer. Now is the time to finance SMEs and their employees who have diligently paid their taxes and sustained the economy throughout," it said. 

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