Frames research: 1 mln Romanians could lose their jobs amid Covid-19 driven recession
The jobs of more than one million Romanians (of some 5 mln employees in the country) are at risk amid the economic crisis prompted by the Covid-19 virus, according to an analysis carried out by local consultancy firm Frames, quoted by Mediafax.
Romania will enter recession “unless urgent measures are taken,” according to Frames.
Furthermore, tens of thousands of companies and freelancers will shut down operations as a result of the Covid-19 crisis that already significantly affects Romania.
“The authorities must intervene to save the Romanian business, especially micro-enterprises and freelancers in areas such as services, tourism, transport, trade, events, HORECA, which go through difficult moments. They need urgent aid, especially in the area of taxation,” the report reads.
According to Frames, small firms are at risk particularly because of their high indebtedness. “95% of the Romanian companies are micro-enterprises with 1-3 employees and do not have the financial resources to overcome this period. If the state does not help them with tax credits, most of them will have their activity blocked and over 1 million employees will be affected. Some have already been sent on unpaid leave. Technical unemployment and layoffs will follow,” says Adrian Negrescu, Frames manager.
As of January 31, 2020, over 1.3 million companies and freelancers (accounting for 72% of all the companies in the country) were active in the Romanian economy. Of these, micro-enterprises have the highest degree of indebtedness, respectively 99% (the share of total debt in the total assets), being the only sector that has a negative capitalization and has the highest negative profit margin namely -4.5%.