Post-covid recovery

Half of SMEs will not recover pre-covid sales for over a year

Four out of ten small and medium-sized companies already suffer supply problems

3 min
Catalonia is the first region in the EU in attracting aid to SMEs

BarcelonaHalf of the small and medium-sized companies (48%) that have suffered a drop in sales during the pandemic estimate that it will take more than a year to reach pre-covid turnover figures. During the harshest lockdown, in the second quarter of 2020, nine out of ten SMEs (87%) saw revenues plummet. Now, according to Q3 data, this percentage has fallen, but still more than half (55%) have not achieved pre-pandemic figures

According to the VII Report on the economic and employment situation of Catalan SMEs by business association Fepime, which is part of Foment del Treball, presented on Monday, a smaller part of the affected companies (28%) believe it will take between 6 and 12 months to recover the figures before covid, while 16% doubt they ever will.

Due to the losses, these companies have begun to suffer other difficulties, such as liquidity problems or solvency. According to the president of Fepime, Helena de Felipe, solving these adversities "is more expensive for SMEs" than for large companies, since credits for small companies are "more limited and difficult to obtain". Fepime director general César Sánchez has specified that SMEs usually ask for loans of under €250,000, where interest rates have been rising this year, while credits for over €1m have fallen. "That also hinders the growth and recovery of SMEs," he reiterated.

The other problem small and medium enterprises are finding in their recovery is supply problems caused by the logistics crisis. And it is getting worse: almost four out of ten of these companies have already suffered during the third quarter of the year, a figure that offers no respite considering it has grown 5.9 points over the second quarter. "In many companies the problems due to restrictions on opening times or capacity and the drop in turnover have been replaced by the increase in price of raw materials and energy, supply difficulties or solvency or liquidity problems," said De Felipe.

By sector, it is SMEs in the hospitality industry which continue to be most affected by the crisis, after being the most affected by restrictions too. Six out of ten continue to struggle in the third quarter of this year, despite an almost 30-point drop compared to the second quarter. By contrast, those who have least noticed the effects of the pandemic have been the construction (18%), followed by industry (26%).

Low survival

And all this context occurs when in Spain only half of companies with employees survive three years after their creation and only 38% survive for five years. These are among the lowest percentages in Europe, only surpassed by Romania and Denmark. During the height of the pandemic, the furlough scheme prevented these figures from getting even worse and the unemployment rate from soaring even higher. Since the beginning of the state of alarm almost half of SMEs (46%) have filed for furlough. The largest SMEs, which exceed fifty workers, are those who have most often put workers on furlough (54%), while the very small companies did it the least (35%). According to the study, by the third quarter of this year 88% of furloughed workers had gone back to work, while 5% are still on furlough and 1.4% have lost their jobs. "In September there were still 15,290 companies and 49,288 workers on furlough in Catalonia. And hiring has still not reached pre-pandemic levels, since many of the new contracts are in the public sector and not so much in the private," said Sánchez.

Given the state of the labor market, coupled with the decline in employment and supply chain problems, the spokeswoman for Fepime stated that the short-term outlook "is not encouraging, although SMEs are very resilient". In this sense, he has appealed to the authorities: "It would be good if when distributing European funds and also the general funds of the European Community, those in government took SMEs into account and applied measures to boost productivity and competitiveness of SMEs. It is the right time," he concluded.