Solutions for Romanian companies in the age of COVID-19

Newsroom 31/03/2020 | 15:10

To understand what measures can be taken to support the Romanian business environment, we must first of all understand the main needs of the entrepreneurs and managers. It is not enough to compare ourselves with other countries and take over the practices of other states in terms of public policy and government support programs.

By Claudiu Vrinceanu

 

Where are we now as a result of the increased effects of COVID-19 in Europe and the measures taken to limit the spread? To what extent are Romanian companies affected? How necessary is the intervention of the authorities to take measures in support of companies?

 

The Current State of Romanian Startups During COVID-19

Firstly, let’s analyse a study of the ScaleOut program, “The Romanian Startup and Scaleup Tech Ecosystem Impact Report and COVID-19”, which identifies the effects generated by the spread of COVID-19 virus on the Romanian tech ecosystem. Based on responses of more than 100 founders of tech companies, the influence of COVID-19 on the activity of startup and scaleup companies is clear: 36.7% of the founders interviewed have already seen negative developments and changes in the business, and 40.4% estimate that they will have effects on the short and medium term development. The study shows that only 38.5% of the Romanian founders of startup tech companies will reduce the labor costs due to Covid-19.

As solutions for the future, the government has the levers needed to be with tech companies, but the founders of tech companies will be able to recover and grow faster on their own and, of course, with investor support (venture capital funds, business angels , crowdfunding platforms), plus the support of business communities.

Business communities, business accelerators and education will become even more important for managers and entrepreneurs in the next, post-Covid-19 period. In the context of an imminent economic crisis, the health of Romanian companies will worsen, but the internationalisation, the “Born Global” mentality and the exports will become more relevant than ever. What will happen when the current situation ends? We will continue to have the weaker national currency than ever before, with a huge gap in our economy and many business opportunities. Those who will plant the seeds of internationalisation in the coming year will protect their companies for future uncertain periods!

Also, according to a CNIPMMR study, the main measures that entrepreneurs consider necessary in order to overcome this crisis situation, there is a state aid program on subsidizing up to 75% for the payment of salaries in the areas affected by crisis (69.1%) and the payment in full and directly from the health budget, of the medical leave allowance for coronavirus patients or quarantined employees.

 

Checklist for the government

As concrete proposals, the Romanian state should come with an upgrade to the package of measures taken to mitigate the economic crisis caused by the epidemic with Covid-19 virus.

A good idea would be to establish a mechanism of approval and financing in emergency regime (maximum 1 month) for projects funded from European funds that address the effects of Covid-19 pandemic.

Also, an effective idea may be to reallocate some of the European funds not yet used in the current financial framework to financing programs for start-ups and SMEs for research, development, innovation and production in medicine and pharmacy for development. of medical and sanitary products / equipment / materials.

The government can also take into account the reallocation of part of the European funds still unused in the current financial framework to financing programs for start-ups and SMEs for private investments.

Let’s not forget about social entrepreneurship. It is necessary to relaunch the calls within the POCU for the establishment of social enterprises / structures of social economy, in order to mitigate the effects of the redundancies in some fields of activity.

Regarding the proposals regarding fiscal, social aspects, related to labor law, it is necessary to apply the support measures for SMEs of all categories of employers / employees: NGOs, protected units, social enterprises.

In terms of modern public policies, the business community recommends the elaboration of the necessary clarifications regarding  work at home, work with flexible / offset / temporary program. An example to follow would be the “Kurzarbeit” system in Germany where, in crisis situations, the employer agrees with the employees on the reduction of the work program and, in proportion, the salary, and the Government takes the difference: so instead of talking about it only by technical unemployment, in which the Government takes over the full cost of the allowance (within the limit of the average gross wage in the economy), we could have flexible situations, in which the employees would work a small number of hours or with a delayed schedule, and the Government would take a higher cost. small, and economic activity could be maintained.

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