Counting the losses: what is Russian business getting out of a pandemic with
In the regions, they are preparing to adjust budgets in connection with the loss of income against the backdrop of the coronavirus pandemic and the additional costs of combating the spread of infection and supporting business. Most of them received 40–50% of their payments in March, April, and May.
The business itself does not yet know whether it will be able to survive at all.
In turn, according to the BCS Broker campaign, 70% of Russians employed in small and medium-sized businesses were left without savings and state support, 20-40% of enterprises would shut down their activities, and about 5% of large enterprises could also close. It is worth considering that after the removal of quarantine measures, the restoration of consumer demand will occur for a long time. This will also affect budget revenues and, accordingly, will negatively affect the standard of living of Russians.
The mighty Moscow is not afraid of blows and demonstrates confident optimism. Not even three days have passed after the rapid lifting of restrictive measures in the capital, the deputy spoke to the deputies of MHD online. Economic Policy Mayor Vladimir Efimov. According to him, business activity during quarantine in Moscow “was not generally violated,” by the end of July, the sectors affected by the pandemic will restore revenue and turnover. This will be possible thanks to the effectiveness of the measures taken, in particular, the volume of support for the capital’s business amounted to 85 billion rubles.
- Cool, huh? - the deputy commented on the performance. the mayor in his chat, Moscow City Duma deputy Mikhail Timonov. - Of the 85 billion, 43 billion is not help, but a delay, that is, you still have to pay. 35 billion - loan subsidies (who, interestingly, became the beneficiary and for what merits?). 7 billion - exemption from rental payments. This is really real support for small and medium-sized businesses. But this is only 8.2% of the announced amount. Who needs the mayor's office a bunch of numbers?
The Chamber of Commerce has already calculated: real unemployment in Moscow is approaching 3 million people, about a million Moscow entrepreneurs have gone bankrupt. Lists entire industries and sectors that are waiting for a global reboot. The tourism industry - in fact, has risen, the restaurant business has fallen strongly (by 90%), everything that is connected with the organization of mass events is shocked. Closed fitness centers, swimming pools, sports clubs will pose huge problems for the entire beauty and health industry. Decline awaits in general all retail, except, perhaps, grocery and pharmacy. People will go shopping less for shopping, not only for fear of infection, but simply because of falling incomes.
And so it’s not at all in the major that the city hall demonstrates. However, the bossy word was spoken and most of the controlled media rushed to show and tell how Muscovites rushed to stores to restore consumer demand on the very first day after the abolition of self-isolation. It was as if Okhotny Ryad was popping from the influx of people; there are much more buyers in the Gorod shopping center on Ryazanka than a week ago, when only a hypermarket was working. They dragged everything with trunks - from galoshes to the dacha to furniture sets, without which they especially missed self-isolation. The cashier from the "City" Galina Cherenkova in a conversation with "NI" denied the hype:
“Nothing of that kind was close, visitors were expected, but there were very few of them, the ticket offices were empty. People came in just to see. I broke three checks all day and didn’t even justify a shift - 700 rubles, 150 and 420. Someone had better, but there were no major purchases. We have a cafe on the second floor, about ten to twelve. There is always a lot of people. This time, the girls were prepared for a holiday and all in vain, more than half of the food was not eaten, for release. And this with the losses that they incurred for three months".
However, the crush at Moscow shopping centers echoed in the provinces and shocked local merchants. “People, do you live on Mars? Or only in Moscow ?, - are torn from indignation of a social network. “We’re eating the last horseradish without salt, there’s nothing to pay for utilities, but you don’t know where to spend the money”. Hundreds of stories: a family cafe in Oryol Livny was closed - debt for renting premises can only be paid by selling equipment, a private kindergarten in the regional center of the Tula region was self-liquidating - parents have nothing to pay for the maintenance of children, a dog shelter in Kursk that existed on donations from an individual entrepreneur did not survived quarantine - the bank refused a loan...
People are furious: “In three months everything has been destroyed, which then it sought with blood for years. Again poverty, again from the beginning ... There was no war ... But why are we all like after an enemy captivity? ” On May 27, the head of the Ministry of Economic Development of the Russian Federation Maxim Reshetnikov said that the total cost of anti-crisis measures to support the Russian economy aimed at combating the consequences of the coronavirus pandemic reached 3.3 trillion rubles. On June 2, Mishustin presented Putin with a nationwide plan to restore the Russian economy in 2020–2021, saying, in particular, that the cost of the national plan would be about 5 trillion rubles. “That is, another 1.7 trillion was added to the fight against coronavirus”, the province estimates.
- And where did 3.3 trillion go? Show on fingers who got them? Who specifically, which city, which region received federal support? Again poured into Moscow? “I would intercede for Muscovites,” says Natalya Vetlitskaya, an Alpari expert. - For the most part, they suffered financially from forced isolation no less than the province. Even more, because they were closed more severely, and they were fined monstrously with fines. Therefore, it is natural that the first request that arises among the Muscovites who have broken free will is to regain the city to which they are accustomed. I’m not sure that it’s necessary to execute for this ...But otherwise they are like everyone else. I have in my hands several independent sociological studies of the consequences of the pandemic in Moscow and the regions. Whatever you may say, the research company Magram Market Research, Banks.ru and the research center of Sberbank see the same trend: a third of the population has been left without any income during these months, 11% of respondents say that there is no money whatsoever, 18% of residents of the capital and regions on leaving self-isolation will immediately go to look for work. That is, it is obvious that many Russians, regardless of registration, did not have enough savings even for a minimum quarantine period. Now for the government support measures.
They were the same everywhere, no matter how much the Moscow authorities declared the opposite, and no matter how many regions were burned with envy. But it is precisely the measures proposed by the government, and their inconsistency with the scale of the disaster, that are now doubting and irritating everywhere. The solutions listed in the economic package (expanding concessional lending programs for small and medium-sized enterprises, deferring rental payments, introducing a moratorium on business verification) would be relevant before a pandemic - when the economy gradually slipped into crisis and when growth drivers had to be launched, supporting a private initiative.
But now other questions are already coming to the fore: what alternatives are the authorities ready to offer to those millions of citizens who will partially or even completely lose their livelihood in conditions when the services and goods provided by the business are in principle not in demand, when systemically significant changes and the market occur overwhelmed by bankruptcy. No answers yet. “The bosses are biting their elbows,” the owner of the Nastyusha store in Novosibirsk shared her unflattering opinion about her authorities. - When we were all closed on the same March day, several active entrepreneurs came to the city hall: guys, what are you doing? Let's start from the situation - there are few diseased, you better close the border, prepare hospitals and observers as a last resort, but give the city the opportunity to live and work normally.
After all, economic devastation will hit not only small businesses, all residents will suffer, and the city budget in the first place. What are you saying! Who is listening to "these sacks"! One or two, everyone was closed for self-isolation, they reported, we are sitting-afraid. It’s not clear where every day there are more coronaviruses, it has already exceeded four thousand and there is no end. But the end is near for business - every second store in the city announced its liquidation, the courts will open - there are a lot of bankruptcy cases. And what did the budget have? Minus 40% of taxes. All social in the city will sit... Anastasia says that the authorities have now come to their senses. Novosibirsk City Hall conducts a survey of how citizens survive in a pandemic and economic crisis.
Well, what good did you learn? 66% of respondents did not have any savings in case of job loss. Less than a third of the respondents were able to get at least some support from the state: 28% had additional payments for children, about 3% - unemployment benefits, 1.53% were able to defer payments, 0.92% took advantage of tax benefits, 0.53% - special credit programs. Almost 70% of respondents said that they did not receive any help from the state.
- I don’t know for what purpose this survey, but where the numbers are from 0.5 to 1%, is about us, about small business, - Anastasia says. - Personally, I was able to defer payment of the loan for only a month. For a longer period, the bank did not agree. They said directly to your eyes: you’ll make a loan from your boutique in a week. What kind of reality do they live in? With us, 40% of the population did not plan any large purchases even before quarantine, now at all - everyday clothes and shoes will be the most expensive purchase. I opened a store, one customer came in two days. She bought sandals and a dress that she had looked after already last year. I gave it at half price. In my store the electricity burned more money than I've earned. But I will not close the shop. More truly, I’ll turn off my obligations to the state, because they don’t fulfill their obligations to me, a person who has been paying taxes for five years and giving five more jobs, and is not going to meet them. And I can’t give up my girls, with whom lights and waters, Turkey, Poland and China, have passed since the beginning of the 90s. We have nowhere to go, all pre-pensioners, ballast for the state. Nothing, start digging the earth again. We have two cars and a large area. We thoroughly studied it while we were sitting under lock and key, we know who needs what - from washing powder to work clothes. What should I do? We were a fashion boutique, we will become a household store on wheels. A kind request to the authorities: do not meddle with us for at least a year, go about your business while we do our own.
A similar signal was sent to regional authorities by the head of the Ministry of Economic Development Maxim Reshetnikov: “In any case, all the epidemics, all these shocks are temporary, then the economy will certainly return to the growth path. But what this trajectory will be, very much depends on how adequately and quickly we will take measures now. Therefore, it is very important now to give the business a respite, to wait, to wait until they have certainty, ”he said on the air of Echo of Moscow. The main criterion for salvation, he said, should be a social function - the preservation of jobs.
According to various estimates, enterprises that are closing due to the epidemic will have to cut at least 50–75% of the staff, and maybe even shut down if the state does not come to the rescue and does not provide assistance in finding a job.
We note in brackets that the head of the Ministry of Economic Development primarily means state enterprises. But what about small business? Apparently, he remained outside the scope of state aid, no matter how much he himself declared his importance and no matter how many leading analysts predicted the government’s economic decline after the death of small enterprises. In the middle of last year, the Sberbank analytical center reported that small and medium-sized enterprises, along with individual entrepreneurs, provided about 18.3 million jobs in the Russian market.
But, firstly, there is no clear analysis yet which particular small and medium-sized enterprises are critically important for the country both in terms of employment and in terms of providing citizens with necessary goods and services. Experts agree on only one thing: small businesses have an independent and painful period of adaptation to new realities. They can count, for example, on tax holidays or direct financial injections, but the effect of these expectations will be the same as from prayers for health and for peace. Although, as a significant part of Russian economists and businessmen believes, the state should not be engaged in supporting small enterprises. With a new collapse in demand due to the pandemic, quarantines, prohibitions, restrictions, it is already obvious - many will not survive. More precisely, the fittest will survive, who had less debt, who had an accumulated supply of fat, who had the most effective model. Everything is as always, as in the regular market. Just a pandemic has accelerated the process of identifying weak players, their bankruptcy and withdrawal from the market many times.
-Yes, many enterprises could not stand the quarantine for several months. But why should the state spend money on restaurants, design and entertainment? Experience shows that after crises, the niches formed will be instantly filled with new players, and most likely the very model of consumption and provision of services will change significantly, - said Vadim Farizov, Associate Professor of the Russian Social University. - For decades, service industries have been growing, tied to artificial or momentary needs, lifestyle and constant customer visits. Didn’t the entrepreneurs realize that catering, tourism, beauty salons, massage, the organization of paid education for children and entertainment events for adults are an area of increased risk? Now we are dealing with a force majeure market, in which both the quantity and solvency, and the immediate needs of customers are reduced. The only thing the state can do is to start pouring money into state employees and the public sector in the hope that the flow of funds, rushing vertically downward, will be sufficient to support the economy.
It’s extremely unpleasant to hear such a small business, for the most part left to the trough, and seems unfair. For example, the famous businessman Sergei Vasiliev, chairman of the board of directors of the Russian Funds Investment Group, who at the beginning of the pandemic declared that only “the public sector will help the Russian economy to withstand, and this is the rare case when more statehood of the economy is good in this case” , the business case has undergone severe obstruction. But if we now look at the entire list of potentially “problematic” sectors, we will see that there have long been problems.
“We just tried not to think about it”, - Vadim Prudnikov, a spokesman of All-Russian Public Organization of Small and Medium-Sized Entrepreneurship the Backbone of Rossii, told to NI. - All these sectors: tourism, fitness, restaurants, beauty salons, clothing and other retail - have long been in a great crisis, and terrible mutual competition. There has long been a general dumping. This is especially true for regions. There, the business comes to life and can earn at least something within four to five days a month - when state employees get paid and pensioners get pension.
All the rest of the time, entrepreneurs are aground, inventing ways to save on taxes, and cut down the already meager salaries of employees. In a pandemic, many folded their arms altogether, as the manna of heaven waited from the government for financial warming and stimulation. Well, yes, the government is sleeping and sees how to help Russian small businessman Oleg, who sells auto parts, and his girlfriend Kristina, the owner of a beauty salon. They do not want to lose income! They need the rest! Here are just some interesting bookkeeping: if before the crisis and quarantine you had everything ok with customers and sales, then where is your gold reserve? Most of you were aching, how small was the revenue, few customers, you need to change something, optimize it. Optimize! Three months of forced karate is the most suitable time for this. Develop a customer base, come up with a new collection, concept, recipe. If you haven’t done this, then yes guys, your prospects are dull. The one who moves will remain. But such reasoning does not remove the question of the fate of citizens who have lost both their earnings and their jobs. At the expense of small business, at the very least, there were 15 million people.
“It's not about the owners of the companies, but about the employees”, - writes Tatyana Boroda, FB. “All are woven into one lump. I agree with Opora Rossii and the writer Maria Arbatova: businessmen are citizens, but far from being the most vulnerable to stand in line for budget support. But people, ordinary people... ...They are something in what wrong? Once the state has already abandoned them, pushing them into the private sector, they are abandoning them now. It’s scary”.
Stanislav Kukayev: “Nonsense. Some businesses will go bankrupt, others will appear. If there is a demand, there will be a supply. And the demand - this is people. And the country must support its citizens in a critical situation. The help should be social and without division, where you served your native economy - in its small sector or in its large. Just give people money for groceries, basic necessities. Investments are not critical for the country, but they will prevent a humanitarian catastrophe. Does anyone really need 15-18 million people to face a reduction or complete disappearance of their sources of income?”.
According to Ilya Zharsky, managing partner of the Veta expert group, the risks of losing all or part of the income are now present plus or minus for 90% of Russians. “Business, regardless of its size, will suffer from a decrease in business activity and a drop in turnover, company employees - from staff cuts and the lack of funds for the employer to increase wages, self-employed - from reduced demand for their services, state employees - from reduced opportunities the state involved in the “fire extinguishing” in the economy”, - the expert expects. - So the problem of state support for citizens remains relevant. It is impossible to solve it by distributing certificates for voting on amendments to the Constitution. In my opinion, these are just 10 billion rubles thrown into the wind. It would be better if they were directed to a point where it was completely hopeless - to create new jobs. ” Let us recall: as one of the main problems of self-isolation, one in three Russians (35%) singled out fear of losing their jobs and anxiety about tomorrow.
Almost every fifth person after lifting restrictions will look for a new job. An interesting point in connection with these plans is noted by experts of the Institute of Economic Forecasting of the Russian Academy of Sciences. The employees of small enterprises, the most affected by the crisis, do not associate further labor activity with the public sector, would like to return to their old place or to find a job that matches their qualifications in a newly opened private enterprise in the service sector, if it is not related to sales and entertainment, but "with more useful and stable activities." Vadim Storozhenko, the author of a closed expert survey, commented “NI” on the emerging trend: “Despite everything, our respondents believe that private enterprises are more viable than state-owned. There is more creativity, initiative is valued, there are jumps for growth. The ability of the MP to be reborn from the ashes like a phoenix bird is emphasized. For example, we were completely unexpected for ourselves, we learned a lot of examples of how “kids”, even in isolation, rebuilt, found new niches and ways to earn money.
Probably not all of them will be preserved in their new quality. Moreover, knowing the background of the relations of officials to the entrepreneurial initiative, it can be assumed that not every new project will be able to be developed to the point where it can provide well-paid stable jobs.
But I would say this: small business is more likely to be alive than... It will heal its wings and will go forward! So, somehow so far... We will be monitoring the forecast.