PwC survey on the impact of COVID-19 on businesses: 37% have fully or partially interrupted activity, 27% will definitely apply for technical unemployment

Around 37% of companies surveyed have fully or partially interrupted their operations after declaring the state of emergency due to COVID-19 pandemic and 20% have reduced their activity, according to a barometer conducted by PwC Romania at the end of March. In this context, 27% say they will definitely apply for technical unemployment.

“The vast majority of companies want to keep their employees and reduce the negative effects on them. Unfortunately, the solutions are limited and difficult to anticipate in an unpredictable climate that results in an unexpected drop in incomes in a very short time. The effect of the crisis is a domino one, affecting more and more industries. The government has made a first set of decisions, but it must continue to monitor the problems very closely in order to react in time with other support measures and thus save as many companies and their employees as possible”, said Daniel Anghel, Partner, TLS Leader of PwC Romania.

The survey included a series of questions regarding the total or partial interruption of the activity, its reduction, the decrease of the turnover and the ability to pay wages. According to the answers:

• 19% have stopped the activity altogether
• 18% partially interrupted the activity
• 19% haven’t interrupted their activity, estimate a decrease by 25% of the turnover and have the ability to pay salaries
• 10% haven’t interrupted the activity, anticipate the reduction of the turnover by 25% and don’t have the ability to pay salaries
• 20% reduced their activity, and business will be reduced by more than 25%
• 14% don’t expect a decrease in turnover.

In this context, work from home is an opportunity for companies that can implement it due to the specific nature of the activity. According to the study, 19% of companies implemented mandatory work from home for all employees.

“The work from home has become possible for many companies due to the fact that they have technology and digitally skilled employees. At the same time, Romania’s digital infrastructure, which is among the best performing in Europe, contributes to run the activity without constraints. Equally important is the organizational culture in the new working conditions and we can conclude that organizations that have invested in digital training have an advantage now that will become even more valuable in the long run”, said Ionuț Sas, Partner, Leader People & Organization PwC Romania.

Companies whose activity specificity doesn’t allow them to work from home and whose businesses are affected take into account technical unemployment provisions, as follows:

• 27% say they will definitely apply for technical unemployment
• 18% still don’t know if they will apply because the technical unemployment provisions are unclear
• 18% still don’t know if they will apply because they haven’t analyzed them
• 5% indicate that they won’t apply them because the current provisions don’t correspond to their activity specificity.

“Employers are looking for different ways to reduce costs to maintain the market. However, at this time only 11% are considering dismissals and most are looking for other options to keep their employees, such as encouraging rest or part-time leave, stopping or reducing training programs, suspending hirings, eliminating or reducing non-compulsory benefits or reducing working hours”, said Oana Munteanu, Senior Manager People & Organization PwC Romania.

According to the survey, almost 30% of those surveyed anticipate that they will have the ability to pay wages in the next three months, while 42% didn’t estimate yet.