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Longer non-working days may force every fourth small business in Russia to close — survey

Earlier, the Russian President declared non-working days from October 30 to November 7 due to the pandemic

MOSCOW, November 3. /TASS/. Any extension of the non-working days in Russia after November 8 will put one in four small and medium-sized businesses in Russia at risk of closure. This is according to a survey conducted by the institute under Russia’s Presidential Commissioner for Entrepreneurs' Rights Boris Titov. 

The survey focuses on an assessment of the current state of business and the effectiveness of state support measures. Managers and owners of 7,160 companies from 85 regions were interviewed.

Earlier, Russian President Vladimir Putin declared non-working days from October 30 to November 7 due to the pandemic. The decision was taken to curb the surge of the new epidemic wave.

"If the restrictions are extended after November 7 of this year, 56% of entrepreneurs will work at a loss and balance on the brink of survival, waiting for the restrictions to be lifted. Another 28.6% of respondents will not be able to continue doing business in such conditions. Only 8.5 % will be able to maintain their activities without changes," according to the files of the survey obtained by TASS.

However, 67.7% of respondents said "they will be able to survive the week of day-offs."

According to the survey, 56.4% of entrepreneurs will be able to retain their staff in one way or another: 19.7% - through support measures, 26.5% - through personal savings. For another 10.2%, the lockdown will have no effect on employment, while 33.4% of businessmen said they would dismiss some of their employees and 10.1% will dismiss all of their employees.

Support measures

The entrepreneurs consider new support measures such as the resumption of lending at 3% per annum and subsidies to the tune of the minimum wage per employee to be insufficient.

"Only 27.9% of the respondents will use the loans the state offers at 3% on condition that they retain at least 90% of the personnel. The remaining 72.1% of entrepreneurs either will not be able to fulfill this condition or do not fit the program parameters.

At the same time, 47% of respondents consider the support measure in the form of new subsidies for SMEs in the amount of the minimum wage to be effective, but insufficient, and another 47.1% consider this measure to be insufficient and ineffective," the survey shows.

The following support measures are regarded as necessary and effective by entrepreneurs: "not to close their businesses for quarantine" (67.1%), "to relieve from taxes, to reduce the tax burden or carry out a new tax restructuring" (66.1%), as well as "new direct subsidies amounting to one minimum wage per worker for all months of restrictions"(31.6%).

"As we can see, tax restructuring or a tax amnesty is one of the main measures of support people are waiting for and counting on. This will become a tangible expense item, but the state of the federal budget allows us to cope with it," business ombudsman Boris Titov said as quoted in the survey.

Current condition of SMEs

By the beginning of the non-working days, small and medium-sized businesses did not have time to fully restore their pre-crisis turnover. In particular, 62.7% of respondents reported that in the nine months of 2021, the company's turnover was lower than in the same period in 2019. Another 24% managed to recover their revenue, and 5.5% even surpassed the pre-crisis level. Also, 4.5% of respondents changed their field of activity, and 3.3% closed their business, according to the survey.

"Business problems over the year have changed qualitatively. Most of the respondents (68.0%) named the increase in purchase prices for goods and services as their main difficulty. Insufficient demand, which has been constantly called problem number 1 since March 2020, has now moved down to third place (55.5%). The second main problem is the instability of restrictions (58.3%)," the study shows.

In 2021, more than a third of respondents (35%) are forced to save on the wage fund, and 64.9% of respondents said that the wage fund in their company has not changed or has grown slightly.