Firms lack orders but won't cut workforce - poll

A lack of orders is the main obstacle preventing firms from returning to pre-coronavirus production volumes, however, most of them are not planning lay-offs even though their economic performance will get worse this year, a survey carried out by the Confederation of Industry showed.

Some 85 percent of businesses said they will be short of labour in autumn and winter because of coronavirus and the preventive measures taken to curb the spread of the virus, according to the survey conducted among 121 businesses in September. Compared to the Jan-June period, the share of firms predicting a drop of over 40 percent in orders in the next two months has declined.

The percentage of those reporting an annual decline in orders amounting to 1 to 20 percent has risen. The coronavirus crisis that started in the spring continues and the autumn will bring new problems, the poll showed. Over 80 percent of businesses envisage a lower than planned profit or will be in the red this year, and 75 percent said they will see an annual slump in orders in October and November.

More than 30 percent of those polled expect their orders to go down by over 20 percent. "Orders keep falling, which shows the crisis has spilled over to the entire Czech and global economy ...," Jaroslav Hanak, president of the Confederation, said. Businesses were doing relatively well in summer, completing orders and finalising production to make up for the time lost in the spring.

Firms managed to cope with the first wave of the pandemic thanks to their reserves and performance over the past six years. However, a new wave of restrictive measures to lock down the economy would be fatal for a number of businesses, Hanak said.

As much as 32 percent of firms are predicting an over 20 percent decline in their orders in the next two months, against 52 percent in June. The share of firms not considering workforce cuts rose to 66 percent in September from 55 percent in June. However, 75 percent of respondents have taken a measure under which employees showing symptoms of a respiratory disease must stay at home, Hanak said.

According to him, up to a third of firms - mostly smaller ones and firms in the chemical industry and foundries - said this may jeopardise their operations. A half of respondents said that, if possible, their employees work from home again. Twenty-nine percent of employers pay for Covid-19 tests, while 69 percent do not, according to the survey.

The share of firms whose customers meet payment deadlines increased to 58 percent in September from June's 54 percent. About 3 percent of respondents said they may be facing secondary insolvency, while in June it was 12 percent of businesses.

The whole survey you can read here.

Source: ČTK