The impact of the pandemic on Catalan companies
The Covid-19 pandemic has done great harm to Catalan companies. To top it off, the ones that have suffered the most have been the smaller companies. Those that have not had to close have suffered a significant drop in sales and, in many cases, have been forced to include workers in an ERTO or even sack them. This first quarter of 2021, however, shows a certain recovery in economic activity.
According to Idescat, on January 1, 2020 a total of 637,772 companies were established in Catalonia (excluding agricultural production, fishing, and domestic services).
If we consider only the criterion of number of employees, the sum of self-employed (companies without employees), microenterprises (less than 10 workers), and small businesses (less than 50 workers) is 629,332, more than 98% of the entire Catalan business sector. In fact, the sum of self-employed and microenterprises only exceeds 94% of the total in Catalonia.
The smaller the company, the more it has suffered
The size of companies has turned out to be strongly related to their degree of vulnerability to the economic and social crisis resulting from the pandemic.
At the end of February this year, the Bank of Spain Survey on Business Activity (EBAE) read that small businesses were the ones that suffered most from the effects of the crisis during 2020, as they lost, on average, 19% of their turnover, whereas big businesses only lost 12.4%.
The drop in sales softened as the size of the company grew. This same trend has been observed in effective employment – once the ERTO (layoffs) have been deducted.
All sectors have been more or less affected
In Catalonia, 74% of GDP corresponds to the services sector, an economic activity strongly dependent on tourism. Thus, the president of the Guild of Restorers of Barcelona, Roger Pallarols -without precise data yet-, believes that in Catalonia the proportion of businesses that have closed to never reopen can reach 25%.
Other sectors, such as trade and industry, have also suffered a significant impact. According to the survey by PIMEC, Evolution of the Catalan industrial SME in 2020 and prospects for 2021, 54% of Catalan industrial SMEs have closed the year of COVID-19 with results below those achieved in 2019. Up to 29% have destroyed employment, whereas only 22% have increased their workforce.
This strong relationship between the “health” of companies and employment levels ends up having a direct impact on the well-being of people.
Prospects: a glimmer of hope
These first months of 2021, however, are beginning to send us a message of hope.
According to data from the Department of Business and Labour of the Generalitat de Catalunya in its Bulletin of the labour situation and productive sectors. 1st term 2021, in the 1st quarter of 2021 there is a remarkable recovery of economic activity and this is reflected in the evolution of the labour market. The month of May 2021 shows a -3.1% drop in unemployment. The number of people affiliated to Social Security has risen in +1.1% compared to the previous month, and recruitment has grown by 11%.
Another reason for hope can be found in the first Scanner Startups Ecosystem, organised by Barcelona Tech City and Closa Investment Bankers, based on operations closed in 2020. It states that last year the Spanish technological companies almost got to €2,100 million in financing, an increase of 4.3% -despite the fact that Spain’s GDP fell by 11% due to the impact of Covid-19- and that in the first four months of 2021 the sector has already raised nearly €1,800 million, almost as much as in the whole of last year. 41% of respondents say they have increased their workforce in the last year, compared to 31% which has reduced it. The survey reaffirms that Barcelona is the focus of investment in emerging companies in Spain.
Another positive fact is that the digitisation of companies – which until the pandemic could be more or less optional – has become almost mandatory. M. Rosa Agustí, president of the Girona Association of Businesswomen (AGE), explains: “The pandemic has caused 90% of Girona’s companies run by women to be digitised and sold via the Internet.”