Amman - While the economy is opening up, only half of surveyed enterprises were confident that they would weather the crisis and resume profitability according to a recent assessment by the International Labour Organization (ILO), the United Nations Development Programme (UNDP) and Fafo Institute for Labour and Social Research.
Many faced difficulties even prior to the crisis with a quarter of enterprises indicating that they were losing money and almost half reporting that they were only breaking even. Few were prepared for the crisis with only 25 per cent reporting to have had a business continuity plan in place at the time of the survey.
The assessment, based on interviews of 1,190 enterprises across the Kingdom in late April, sheds light on the significant impact of COVID-19 and the lockdown measures on enterprises and employees. All surveyed enterprises faced challenges in terms of cash flow, reduced demand and supply and the disruption of supply chains as a result of measures responding to COVID-19.
UNDP Resident Representative Sara Ferrer Olivella said this assessment is timely and crucial to help decision-makers respond effectively to the huge impact the crisis is having. While the economy has opened up, many sectors continue to see reduced demand and challenges for the foreseeable future. She stressed that “the economic concern is high, and we believe that understanding the situation on the ground is essential to design our post-crisis response accordingly”.
Patrick Daru, ILO's Country Coordinator for Jordan said: “The assessment shows the difficulties companies we talked to are facing, but it also shows a general lack of awareness of government measures and their general unpreparedness in front of the evolving COVID-19 crisis. Beyond subsidies, much needs to be done to strengthen their capacities and resilience. This current fragility of the private sector can have potentially a disastrous impact on workers and their livelihoods."
According to the survey only 42 per cent of businesses indicated that they could continue paying salaries to all workers for less than one month, another 42 per cent for less than three months under conditions prevailing at the time of the survey.
A majority of businesses said direct financial support was the most essential support needed to cope with the situation at this stage, with 60 per cent of micro-businesses and 43 per cent of enterprises with more than 100 workers indicating the need for direct financial support. Many also indicated the need for wage subsidies.
The impact of the crisis on micro and home-based businesses has been particularly difficult. Many lack cash reserves, financial resources and assets as well as access to finance to respond to the crisis. Government measures currently largely focus on formal SMEs, the report therefore recommends targeted measures for informal, micro and small businesses, to ensure that the most vulnerable are protected.
The report highlights that government measures should focus on helping and incentivizing businesses to ‘build back better’. This should include supporting business preparedness, aligning business models towards more inclusive and sustainable practices, accelerating digital transformation so companies can evolve with the market, remain competitive and resilient to future crises.