Gloomy business forecast

With some 14,000 people having already claimed unemployment benefits since the outbreak of COVID-19 in Barbados on March 17, the head of the island’s main business organisation is forecasting more layoffs in the coming four months.

President of the Barbados Chamber of Commerce and Industry (BCCI) Trisha Tannis warned this afternoon of more job cuts in the offing, suggesting that only the stronger businesses might be able to keep some of their employees while the current 24-hour curfew and physical distancing restrictions bite into bottom lines.

“Yes, we do anticipate that there will be some retrenchments. Businesses have tried to hold on as much as their capital base could allow them to. We do know of course there are some businesses that could not hold on…the small business sector in particular, the hospitality sector and so on. But generally speaking, we do know some constraints apply to retaining as many numbers for as long a period as possible,” Tannis told Barbados TODAY.

However, the BCCI president said the economic impact of what corporate Barbados was now experiencing is yet to be formally assessed.

“What we do know, clearly when you have businesses that are recording zero revenue or certainly a much compromised level of revenue, it is going to force them to look at their structure; and those more resilient would be able to continue to hold strain for much longer. But any other sectors that are vulnerable, I think you will see some layoffs over the next few months,” she declared.

While Tannis could not at this stage anticipate the severity of the retrenchments, she told Barbados TODAY businesses would be forced to make some very serious decisions about their survival, even after the COVID-19 all-clear is given to re-open the country.

“I don’t want to be the prophetess of gloom and doom, and I cannot speak to the relative strength of all the balance sheets in the country, but you could appreciate that [layoffs] would be a decision that companies would have to make based on the impact on their bottom line. And certainly if the existing layoffs will cause some degree of contraction, even businesses that open or re-open, may find themselves re-opening in a far different landscape,” she added.

Tannis suggested that once businesses are faced with a climate that is out of the ordinary, owners would then be forced to make decisions for the sake of their survival.

“It is very difficult to predict in terms of the quantification of, or severity of the layoffs, but I do think that it is something that is likely to happen over the next three to four months,” the Chamber president stated. She however is urging the business community to start preparing to hit the ground running when the situation returns to normal.

“What they need to be doing…they need to be forecasting and running their various scenarios and sensitivity models and then taking appropriate action. You need to look at your cost structure, you need to see essentially what your capacity is in terms of your revenue base…and that typically would drive a lot of the actions,” she told Barbados TODAY.

Meantime, Chairman of the Barbados Private Sector Association (BPA) Edward Clarke said while some companies have retrenched workers most have not done so as yet.

He said those who have kept their employees and put some on vacation, cannot continue these arrangements indefinitely and he expects more layoffs if the restrictions remained much longer.

“What you would find though, is when all of the vacation time is finished, the companies, due to the cash flow constraints they are under at this time, may have little choice but to put people on the layoff notice period according to the labour laws. I don’t think people have a lot of choices if there is no cash flow coming into many of the businesses in Barbados,” Clarke said this afternoon.

He was quick to point out that significant reductions in cash flow could bring down big and small businesses.

“There are many, many businesses in Barbados that are undergoing significant cash flow problems. We know the closure is something that is necessary due to the COVID situation, but economically it is a disaster for many businesses,” Clarke warned.

Asked how long he thinks businesses can hold strain, the BPSA head said that would depend on each enterprise and the length of the current crisis.

“It depends business by business. But as a country…I have seen the IMF projection of 7.6 per cent negative growth, that is quite a large drop from where we were headed. As a country, a lot depends on how long we take and what part of the economy can pick back up…,” he added.

The private spokesman also told Barbados TODAY he did not even want to imagine what would happen to Barbados, should the existing business restrictions continue until the end of this year.

“One would hope that is not the case. If that is the case, we would have a much bigger problem than we can even imagine at this stage. We cannot continue to operate like this until year-end. I don’t even want to think about that because the Government’s unemployment programmes would not be able to keep people in a condition that they would live to any decent level; and certainly many, many businesses in Barbados would collapse,” Clarke predicted.

While saying that small businesses would be the first to go, the business leader however was optimistic the lockdown would not continue to year-end.

Minister of Labour Colin Jordan agreed that any further layoffs would depend on the longevity of the present shutdown.

He believes that once Barbadians complied with all of the protocols and regulations designed to halt the spread of the COVID-19 virus, the situation could be shortened rather than prolonged.

“This all depends on how quickly we can get pass the worse of the pandemic and get people back to work. If an organisation, whether it is a business organisation, a private sector organisation or a third sector organisation is not producing anything and is not engaged in trade activity, then that means there is no revenue coming in,” he said, adding that this makes it difficult for employees to be paid.

That is why, he said, the Government has asked employers to keep their workers as long as possible even if they put them on short week or paid vacation before being forced to lay them off.

“Those are things that employers can do. The reality that all of us have to face is that no revenue means there is no money to do a lot of other things with, and that impacts the number of payments on the unemployment portion of the National Insurance Fund,” said the minister.

He said the bottom line is that Barbados needs to get over this crisis, which he noted means that all residents must adhere to the directives of the health professionals.

“Keep the distance, stay home as much as possible…leave home only if you absolutely have to, practice hygiene, wear face masks so that we can get pass this hurdle as quickly as possible and start the engine of the economy working again,” Minister Jordan said.
emmanueljoseph@barbadostoday.bb