More than one in three businesses surveyed by an employers' lobby say government financial aid has been extremely ineffective and almost a third will consider redundancies if the situation remains the same in June.

A total 38% of the 346 respondents to a survey by the Malta Employers Association said the aid measures rolled out by the authorities were extremely ineffective.

A further 15% said they were moderately effective, 5% said they were extremely effective, 13% that they were effective, and 30% said they were neither effective nor ineffective. The study did not cite figures for businesses which felt measures were ineffective. 

The study highlighted that while only 9% were forced to reduce staff, 31% may have to make redundancies if the status quo continued beyond May and 45% were not sure what would happen.

Many businesses were using internal mechanisms such as leave so as to retain employees but this was not sustainable, MEA director-general Joe Farrugia said.

“A lot are doing what they can to hold on to their workforce, which is both in the interest of the organisation and the employees, but this isn’t a situation that can continue long term as businesses can’t keep on drawing from within to keep themselves afloat,” he said.

Cuts to the working week and forced leave were some of the internal mechanisms businesses were using to ride out the storm, he said.

A total 36% of respondents said they had reduced all their employees’ hours, while 24% had done this for a portion of their workforce. The rest were operational full time.

Regarding leave, 38% had required their employees to take pro-rata leave for 2020, and 20% their total leave entitlement for the year.

And when it came to unpaid leave, 22% of companies had enforced unpaid leave on some employees. Six per cent said all employees were on unpaid leave.

Based on the findings, the MEA listed a number of recommendations for the government to take on board in the event of another financial package being rolled out.

Farrugia said it was important that more companies qualified for aid, such as those co-dependent on sectors that have been closed.

In addition, the government should also make the employment of third-country nationals more flexible as many employers were running into difficulties due to the rigidity of regulations surrounding work permits, he continued.

VAT rates needed to be reduced to kick start the economy, and rates on utility bills cut to help employers, he pointed out.

Businesses would also benefit largely from schemes on commercial rent and a subsidy on bank interest rates on loans and overdraft facilities, he said.