Companies fear for their future as coronavirus consequences stretch on
Companies in the Netherlands are worried about their continued existence. While the government is offering businesses support, the consequences of the coronavirus are stretching further and further into the future and many businesses worry about whether they will survive.
According to economist Esther van Rijswijk, the government's focus is currently on preserving jobs and keeping businesses afloat. That is all well and good, but the government should also look beyond that, further into the future, she said. "You also want support where the government encourages companies to invest in the new future," she said to WNL.
According to Van Rijswijk, a crisis like the one the whole world is currently in has three phases. "The first phase is only the factory has to close because something is going on, but we will open again soon. We have passed that phase," she explained. "We are now in the phase that some factories or in this case catering companies may no longer be able to open or have no future, that people become unemployed. They are going to spend less, also people who are not unemployed sit on their money, and that makes it much more complicated and can make it last longer."
While this second phase is already a bad place to be in, the third phase is the one that must be avoided. "We have to make sure that we don't get into the third phase, where the banks are in trouble and cannot provide credit to companies who do have a future," Van Riswijk said. Then you are in so deep that very few will be able to dig their way out.
Businesses need more options, according to Jacco Vonhof of the association for small and medium sized businesses MKB Nederland. "You will soon get the consequences of international developments, so the drop in demand, nothing will be bought anymore," he said to WNL. "The impact of such a blow is that you have to give support for a while, that is for half a year now, but after that half a year we also do not know what will happen. So we have to think of things that offer a little more perspective and invest."
He thinks the government should give businesses more room to put their business 'on hold' for a while. "In general, if an entrepreneur quits now and he has debts, he has to repay them and maybe sell his house or dig up their entire pension pot and that is impossible. So if the government ensures that the transition to quitting is slightly different during this period than normal, it would help many companies to quit now and then start again later when things start to get better. I think the cabinet will think about that."
The government is trying to help companies adjust to a new future, by scrapping the dismissal fine from the conditions for the extended emergency package for businesses, CDA parliamentarian Madeleine van Toorenburg argued while defending this decision in parliament. Unions and opposition parties fear for layoffs, and that may happen. But if a company can survive by dismissing a few employees now, many more jobs are saved.
"With this support package, you need to look a little more closely at which companies will make it in the future. What does it mean for those companies if they employ a few less people, can that company then survive? Otherwise you are paying for a company that is no longer viable. Then it is apparently cheaper to go bankrupt, and then everyone loses their jobs," Van Toorenburg said.
Van Rijswijk understands this argument. She compared the Netherlands with the situation in the United States. "People are fired very easily there, which means that companies can continue working faster. A new future, a new world, go further," she said to WNL. In the Netherlands, it is much harder to fire someone, partly because the Netherlands protects employees. 'But with that you also lock the into those companies a bit, and with that you also lock up the entrepreneurs. That's just a dilemma."