Projections for the “Day After” Optimistic – Companies Advised to Keep Their Employees

The initial impact of the coronavirus pandemic was suffered by small and medium enterprises. While private companies are waiting for the Government to adopt measures, the conclusion reached at the webinar organized on March 26 by the Serbian Association of Managers (SAM) and ICT Hub is that the most important thing is for companies to prepare the plans and to shoulder the burden of the crisis on par with all the members of a collective, as well as to maintain the stability of the business operations and prepare several scenarios for exiting the crisis with minimal consequences – primarily for the people, but also for the business.

The measures that are expected from the state are only to add to what the companies are already doing, so it's not paramount for them to be implemented at the moment, but it's important for them to reduce the panic and pessimistic projections, said Dragoljub Damljanovic, the president of the SAM.

– The most important measures Serbia could take is to provide access to money, to support a a part of the earnings of those employees that are to lose their jobs, especially in the industries that are the most affected at the moment, and to secure the refinancing of the debts and the capital investments, whether with a state guarantee or through a new model.

According to Damljanovic, negotiations with commercial banks are ongoing and a state fund that banks will use to refinance companies' debts is being prepared.

– We don't know the details yet, but I expect the agreement with the Ministry of Finance to be made as soon as possible – Damljanovic said.

Dejan Randjic, the director of DNA Communications and ICT Hub, says that the most important thing for all companies, while they are waiting for the government measures to be adopted, is to prepare their company and their business by preparing their own measures.

– Each company's individual plan should go in three directions: negotiations with the creditors, the stopping of capital investments and considering a reduction of operating costs. What everyone fears the most is reducing the operating costs at the time when business is in drastic decline. In some industries, such as retail and logistics, the activities have even increased due to the current situation, but on the other hand, there's no business that's not affected by the current situation, so the maintenance of operating costs is brought into question – Randjic explains.

As numerous industries have lost their income completely, while, on the other hand, there's a public pressure on companies not to fire people and not to lower the salaries, companies are still not sure how to act.

– If we don't protect the business, there will be no jobs. Everyone should do their best to handle the burden of the crisis equally as much as possible, but difficult decisions also need to be made in order to protect the business, which should create new jobs – Damljanovic emphasized.

However, he says that the projections for the “day after” are still optimistic.

– Our analyses show that never in the past 150 years has there been so much capital for the period after the crisis as there is now. That means that all companies which expect their business to go back up should try to protect their employees. A huge inflow of capital and huge incentives are expected afterwards – he said.

When asked whether the money will reach Serbia, Damljanovic said that it certainly would, directly and indirectly.

– I believe that, as a country in the process of pre-accession negotiations, we will get a part of these funds. Also, if the European market starts recovering, so will ours, as we are tied to Europe – Damljanovic says.

Advice of successful entrepreneurs

Stanka Pejanovic, the executive vice president of Hisense Gorenje Europe, emphasized that, under the current circumstances, the most important thing was to reorganize the operations as soon as the crisis appeared and to maintain them for its duration.

– It is known that the social dialogue is on a much higher level in Europe. The number of vacation days is much larger and it was important to make the harmonization of collective annual leaves with the situation as the first measure. Another option is to work from home, but people who have to work in factories should also be enabled to do so. We all need to be very patient, as this is a question of survival.

She also said that, if the government has a decree banning certain activities, those activities are the first to be subsidized, such as the hospitality industry.

– If the employees are on hold, the companies should pay out 80% of the salaries, and half of the amount will be subsidized by the state – Pejanovic said.

Care for the employees and making sure that no one is exposed to risk is the main focus at the moment, according to Biljana Bogovac, a partner at the auditing and consulting company PwC.

– It's important to protect people as much as possible. Crisis planning, global, regional and local, is required, so as to prepare the best case and the worst case scenarios. The infodemic is a serious attack on us all, that is, how to choose which piece of information to base one's decisions on. The focus is also on not breaking the suppliers chain, but also on the quality of information available to people, which can lead to wrong measures and decisions – Bogovac said.

The hotel industry was the first to be brought down, as the income which measured tens of thousands of euros a day is now earning several hundred euros, noted Zivorad Vasic, the senior vice president and regional director of IHG, Delta Holding.

He also reminded that, in America, six to eight billion people had lost their jobs in the hotel industry the previous day, and the industry generates EUR 700 billion annually.

– The state has to adopt a set of measures that would help everyone. We need to find a way for companies to survive. One of the solutions is to pay attention to what is going on in the world. Delta has invested EUR 400 million and plans to invest as much, as we want to build. We need to keep the employees, but the employees must also suffer some consequences, as there is no liquidity. We have offered jobs to people in some other business systems of ours. We will continue working on preserving the capacities. Employers and employees need to talk openly and the morale needs to be raised. Once this is over, there will be work for everyone – Vasic said.

Aleksandar Hangimana, the director of Manpower Group Balkans, reminded of the experience from 10 years before, during the economic crisis.

– The companies which kept the employees and split the cost came out of the crisis stronger and better. It's very important to remain optimistic. The three options we propose is to stop working for up to 45 days, while the employer pays 65% of the average salary in the past 12 months, to reduce the working hours and to pay minimum wages in order to overcome the crisis – Hangimana advises.

Let us remind that the Serbian Association of Managers will continue organizing online discussions each Thursday to the end of informing and helping companies.

S. Petrovic

Srpska asocijacija menadžera Beograd

ICT hub d.o.o. Beograd

DNA communications Beograd

Ministarstvo finansija Republike Srbije

Delta Holding d.o.o. Beograd

Manpower d.o.o. Beograd

PricewaterhouseCoopers d.o.o. Beograd

Hisense Gorenje Europe, d.o.o.

coronavirus

pandemic

Covid 19

coronavirus and business

advice for companies

how to overcome coronavirus crisis

Dragoljub Damljanović

Dejan Ranđić

Stanka Pejanović

Biljana Bogovac

infodemic

Živorad Vasić

Aleksandar Hangimana