Businesses expect to return to normality in nine months
KATHMANDU, Aug 9: Businesses and industries have cut one fourth of jobs during the lockdown imposed by the government to combat the spread of coronavirus, a survey by the Nepal Rastra Bank (NRB) has found.
The survey covering 674 businesses and industries from 52 districts carried out between June 8 and June 24 found 22.5 percent of their employees were laid off during the lockdown. According to the survey results, two-thirds of those who have lost their jobs were either temporary or contract-based workers. Job losses in the hotel and restaurant sector remained the highest at 40 percent , according to the survey report.
The survey attempts to identify the sectors that have been hit hardest by the lockdown after collecting data of drop in transactions and productions of businesses and industries, job cuts and plans after the lockdown. The survey is possibly the first assessment by a state agency to evaluate the impact of COVID-19 and the lockdown imposed by the government to contain the spread of coronavirus and gauge the sentiment of the private sector.
Businesses and industries have not only eliminated jobs during the lockdown but also slashed the salary of their employees by 18.2 percent on an average. The pay cut was highest at 36.4 percent in the hotel and restaurant sector. Large-scale businesses/industries reduced the salary of their staff by 22.5 percent while small and medium-sized businesses and industries lowered their pays by 13.6 percent.
Apart from the assessment of the impact of COVID-19 on various sectors of the economy, the survey has also tried to give an operational outlook of business and industries after the lockdown.
Those businesses and industries participating in the survey believe that it could take nine months on an average to return to normality after the lockdown. The hotel and restaurant sector could take 13 months to get back to business in a normal position, according to the survey report. The duration that businesses expect to take for them to return to normalcy indicates a long time for the revival.
However, 29.5 percent of respondents believe that they are in position to give continuity to their businesses or operations only for a month if the lockdown is continued compared to 7.4 percent of the respondents who are confident of their business operation for more than one year.
So, what are the post-lockdown plans or strategies that businesses and industries are now considering?
The NRB survey results show that 82.3 percent of businesses and industries want to continue their current businesses whereas 4.5 percent are considering scaling down their businesses. Similarly, 5.4 percent of the respondents said that they want to sell while 2.8 percent want to shut down their businesses. Similarly, 80 percent businesses and industries will borrow money from banks and financial institutions to mobilize funds while 26.41 percent indicated the cost reduction by cutting salary and jobs, according to the survey report.
To understand the expectations of the private sector, the central bank had also asked what the businesses and industries want from the government. Over two-thirds respondents said that they want subsidy on interest on loans. Likewise, 57.9 percent businesses and industries said that they want to have flexible installment payments for loans. Waiver on income tax (54.7 percent of respondents), additional working capital loans (49.7 percent) and extension of maturity for loan repayment (47 percent) are other expectations of the private sector that the survey found.