Over 40% of Operational Businesses Lose Half of Turnover due to COVID-19, according to Chamber of Commerce Survey

Following the publication of its business leader survey results, Luxembourg's Chamber of Commerce has called for increased support for businesses and a readjustment of direct aid in the context of the ongoing COVID-19 (coronavirus) crisis.

In order to understand how Luxembourg businesses are experiencing the current crisis and how they see their future, and thus better help them overcome the crisis, the Chamber of Commerce conducted a major field survey from 8 to 15 April 2020 with the support of five federations (ACA, ABBL, CLC, Fedil and Horesca). The survey collected nearly 2,600 responses in one week and consisted of 25 concrete questions, the answers to which give an idea of the scale of the challenges that businesses are currently facing. Of all the the businesses that responded, nearly three-quarters were small (fewer than 10 employees), and the hospitality and non-food retail sectors were well represented.

The survey revealed that businesses have been very hard hit, that they are rapidly running out of cash and that the current direct aid is not sufficient for the individual situations of a large number of businesses, especially those affected by partial or complete closure. In light of these results, the Chamber of Commerce has advocated for continued support for businesses and especially an adjustment of direct aid.

Among the respondents, 58.5% said that their activity had completely stopped, either in direct connection with the government imposed ban on certain activities (41.3%) or due to personal initiative (17.2%) after the demand for the activity had diminished or it was impossible to carry out the activity remotely. For those businesses that could continue their work (41.5% of respondents), one of the major problems, encountered by 60% of them, was operating with a small or very small workforce. Absence for family reasons (related to school closures) was the top reason for this unusual absenteeism. More than half of these companies found themselves operating, partially or totally, with a workforce reduced by more than 40%.

Just under a quarter of the responding businesses that have remained operational managed to have 100% of their workforce work remotely. It was mainly companies in the finance, insurance and information and communication sectors that were best able to organise telework for their employees. More than 60% of respondents from these sectors reported that more than 80% of their employees work remotely. In just over a quarter of the cases, the share of teleworkers was very low (0 to 10%), particularly in the non-food retail sector: 46% of respondents in this sector reported that less than 10% of their employees can work remotely.

While 27.3% of at least partially operational respondents reported a loss of turnover of between 0 and 20%, more than 40% of them reported a loss of at least half of their turnover. This has had a significant impact on liquidity, with 27% of respondents reporting that they have been short of reserves since 15 April. 72% of the respondents from the hospitality and catering sector said that they will run out of reserves as of 1 May. 

Recourse to partial unemployment was the measure most used by businesses surveyed regarding their staff. At the time of the survey, redundancies for economic reasons were still the exception. More than 50% of the respondents said they intend to apply for partial unemployment, grants, cancellation of advances or deferment of tax payments and measures in respect of social security contribution payments.

In this context, businesses feel moderately well informed about the aid to which they are entitled. Their main sources of information are the Chamber of Commerce, the press and government communications. However, for most of the businesses surveyed, the measures taken by the government so far will not be sufficient to help them overcome the crisis. 

Concerning the ability to restart their business quickly when containment ends, just over 30% of respondents said that it would take them more than 10 days. Nevertheless, nearly two-thirds of respondents said they have prepared a business recovery plan.

It should be noted that this survey was carried out prior to the Prime Minister's announcement of the government's crisis exit strategy on 15 April 2020.