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Our View: As government support schemes wind down, what happens next?

Sea
Other tourism sector businesses - car rentals, tourist coaches, restaurants and sea sports have been excluded from the extended support scheme

Everyone is asking what will happen to businesses next month considering all the government support schemes for businesses will end at the end of August. Only the scheme for hotels will continue until the end of October. This has sparked complaints of unfair treatment by a host of other tourism sector businesses – car rentals, tourist coaches, restaurants, sea sports – that have been excluded, especially as the hoteliers persuaded the government to raise the employer support from 50 to 70 per cent.

As for businesses in other sectors, they remain in the dark about new support schemes. The labour ministry confirmed there would be new support schemes as there was still a “need for targeted support”. A ministry source said: “some of the measures for businesses will be in force after August.” There will be consultations between the labour minister and the social partners before the former does the costing for new schemes that will require the approval of the finance ministry.

Everyone agrees there is a need for support, but caution is urged by both employers’ organisations and unions. The former wants careful assessment by the government to determine the businesses most affected by the pandemic and unions seem to agree. “It will be extremely difficult to avoid lay-offs unless support continues for an additional two months for those businesses that still need it,” said OEV general manager Michalis Antoniou.

The question is, what will change after two months? Will these businesses, receiving state support now stop needing it? For how much longer is the state prepared to support businesses in order to protect jobs? Can it afford to carry on protecting jobs when there is no visible improvement of economic conditions on the horizon? Does anyone actually believe the economy will pick up in November, by which time any new schemes will end, and businesses will not be forced to cut jobs?

The tourism recovery the government was hoping for to stimulate the economy in the latter half of the year has not materialised, so even if jobs are protected they will still not survive the end of the next state-support scheme. The government needs to have a rethink based on state finances which have also taken a big hit – tax revenue and foreign earnings have plummeted while state spending is steadily rising thanks to the support schemes.

This situation is not sustainable for much longer. The finance ministry is full aware of this of course, but it needs to take difficult decisions about how to proceed, sooner rather than later.

 

 

 

 

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