Private economy’s intubation

Private economy’s intubation

Eight out of 10 enterprises and one in every three workers in the private sector are surviving on state support.

A 32.6% share of private sector salary workers employed by companies harmed by the pandemic are in furlough and getting the special-purpose compensation as well as other support measures such as the rent reduction and the suspension of tranche payments toward arranged dues.

The consequences of the crisis on the market are huge and are set to continue into the first quarter of 2021. Finance Ministry figures show that 800,000 enterprises have seen their turnover crumble since the start of the pandemic. Some 210,000 of them have shuttered by state order and up to 600,000 belong to the list of companies in the affected sectors.

The sum of workers at the above corporations comes to 1.5 million, of whom 647,871 have had their contracts suspended. The total figure of private sector workers is around 1.9 million.

In total, the crisis has hurt 1,447,871 enterprises and workers, while the sum of companies and salary workers in the private sector comes to almost 3 million, meaning that almost 50% of the private economy has taken a serious hit from the pandemic.

For all those taxpayers the future appears particularly bleak, as in 2021 they will face a huge volume of obligations, concerning taxes, social security contributions and loan installments dating from 2020.

The government will fork out €2.5 billion euros to support workers and enterprises next month. About €1.5 billion of that will concern the “Deposit To Be Returned” loans program, which some 450,000 corporations and freelancers are expected to join. The other €1 billion will concern the special-purpose compensation for December (payable in January), credit to property owners of 50% of their rental losses in November and December, and unemployment benefits.

A ministry official said that after the fifth and sixth phase of the cheap state loans program, there may well be a seventh if the pandemic continues to squeeze businesses.

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