THE TIME TO REACT IS NOW

New Support Measures for Businesses in Cyprus

In addition to the support package that has been announced on the 27th of May by the President of the Republic of Cyprus, new measures to support businesses, workers and the unemployed hit by the Coronavirus crisis in Cyprus were announced within a press conference on the 3rd of September by the Cyprus Government.

The new schemes are directly addressed to businesses which either registered lower revenues, or suspended their activities indefinitely, due to the effects of Coronavirus. Special support plans will also address affected employees alongside the special allowance for the unemployed.

The newly approved support measures are the following:

1. The implementation of Special Plans being applied by the Ministry of Labour, Welfare and Social Insurance are extended until 31st of October 2020, provided there will be no layoffs until December 2020 (i.e. Special Plan for Hotel and Tourist Accommodation, Special Plan for Economic Activities related to the Tourism Industry or Economic Activities directly affected by Tourism or Economic Activities linked to Businesses under Mandatory Full Suspension, Special Plan for Businesses of Certain Economic Activities, Special Plan for Complete Suspension of Business Activity, Special Unemployment Support Plan, Special Plan for Certain Categories of self-employed, concerning persons who are not employers and which are registered in the Register of the Social Security Services for specific professional categories)
2. Special Schemes for the Training of Employees to the amount of €14m for the period starting at the end of October 2020, aiming to enable 1.000 SMEs, that have registered substantial reduction in their turnover due to the pandemic, to train approx. once a month their employees with the training costs being covered by the Scheme
3. A special Programme to be introduced for the Professional Training of Unemployed (with focus on Unemployed in the Hotel Sector) amounting to €7m
4. Schemes concerning the Subsidization of the Payroll Cost for the Recruitment of Unemployed Personnel for the period after the end of October 2020, by making use of the European Social Fund
5. Special Plans for Full & Part-time Suspension of Business Activities implemented by the Ministry of Labour, Welfare and Social Insurance for Hotels and Tourism related Enterprises are to be modified and implemented for the period starting with November 2020 until March 2021, following social consultation
6. Specific businesses are going to be supported after the end of October 2020, depending on the pandemic situation,
7. The employees’ rights are protected against any unilateral decisions not in line with the statutory procedures of the Trade Relations Code and the Protection of Wages Law through continuous checks and measures regarding counterincentives for companies.

The highlight is still on the tourism sector, as it continues to be one of the most affected industries by the restrictions imposed internationally.

As it has been stressed by the Finance Minister, Mr. Constantinos Petrides, during the press conference, the course of the Cypriot economy, which relies highly on tourism, will depend on the course of the World economy and how other countries will deal with Coronavirus pandemic.

Reality Check

Following the same line of thought, it looks like 2020 is a lost year for hoteliers and nobody expects any substantial income in the tourism sector before 2021, provided that the global pandemic is controlled in the near future.

Moreover, based on the current situation and considering some short-medium term projections, it seems that we shouldn’t expect significant recoveries before 2023, which means that the years to come will be difficult for this business sector.

When the Consumer Trends Change so Should the Business Model

Under these circumstances, one obvious question arises: How is a business to plan ahead when it is still impossible to foresee the future?

Taking advantage of the existing support measures is definitely recommended, and all companies should consider them if they have been directly affected by the pandemic.

Nevertheless, additional actions should be taken as well in order to safeguard the companies’ future. In spite of everything, directors need to think ahead and adjust to the market conditions.

All across Europe a rescue culture is now developing, which is focused on prevention rather than cure. Within this new context, Insolvency Practitioners who are also Restructuring Experts are an important resource as they can use their significant experience and specialized skills in order to help companies in distress to identify the best options going forward.

Finding proper ways of diversifying the product, improving the services, restructuring the activity, or making the step towards digitalization are just some of the actions that should be considered by any business looking to survive these uncertain times.

Reactive policies can no longer be considered a suitable approach when the new reality demands a proactive mindset.