Small and Medium-Sized Businesses Save on Employees

Small and Medium-Sized Businesses Save on Employees


Since February of this year, some Russian small and medium-sized (SMB) companies have begun to reduce their staff. According to analysts, nearly one in four SMB companies has laid off some of its employees this year.

At the same time, as reported by RBC, 19% of such companies outsourced some types of work, i.e. outsourced it to contractors. This means that there have been significant reductions of employees in this segment.

At the same time, the heads of enterprises not only began to reduce the staff since February this year, but also cut bonuses to their employees, according to the results of a survey conducted by financial services such as the Sravni financial marketplace and Platforma. This survey, in which 1,301 heads of SMB companies took part, as RBC writes, was conducted in mid-July. The head of development of financial services Platforma Boris Vasiliev, as writes, explained the transformation of small business in our country by the influence of external circumstances, calling them the “catalysts.”

Meanwhile, statistics show that 14% of companies offered their employees to go on vacation, which was not always paid, 7% of companies transferred employees to part-time work. 5% of companies, in order to keep the staff, sent employees to take time off, while not always retaining their wages. Only 17% of SMB companies in the first half of the year did not change anything in their activities.

More than a quarter of companies were forced to cut staff in the first half of the year due to the changed conditions. According to RBC, more than 50 employees resigned or were made redundant in 5% of small and medium-sized companies.

At the same time, the reduction affected 20-30 people in every fifth company. However, it should be taken into account that this is only, if I may say so, the first wave of reductions in small business. Unless economic conditions change, it will inevitably be followed by further reductions, because data from a survey of company executives indicate that 13% of business owners plan to downsize by the end of this year. At the same time, the media reports that business executives are planning to cut costs at their companies. According to the survey, 30% of executives in the second half of the year are planning to optimize business processes, while 11% are thinking of eliminating offices, and 8% want to reduce production. As known, a lot of money is also spent on advertising. So, 6% of managers have planned to reduce deductions for advertising of their activities. The survey confirms that 32% of small business owners feel confident and don't think about saving money.

At present, the situation in business is changing quite rapidly, and the introduction of Western sanctions has a significant impact on this. It follows from the survey data that 54% of companies intend to replace software in their offices, with 42% having already partially adopted Russian software, and 12% having completed this process completely. At the same time, a small part of companies (4%) do not use Russian software, but use unlicensed foreign programs in their work.

Meanwhile, 80% of SMB companies who participated in the survey admitted that along with optimization they used state support. Loans with preferential rates were the most popular. Such credits were taken out by every fifth enterprise (21%). Slightly fewer entrepreneurs took credit vacations, and 15% secured a loan guarantee.

It is noteworthy that the amount of credit taken out by SMB companies in 27% of loans amounted to 1 million rubles ($16,293), 21% asked for the loans of 5 million rubles ($81,465), and 20% of 3 million rubles ($48,879). Analysts said that the amount of requested loans this year has increased. Pointedly, the greatest interest in credit was shown by entrepreneurs from major Russian cities, including Moscow, St. Petersburg, Samara, Kazan, Nizhny Novgorod, Ufa, Vladivostok, and Novosibirsk. The survey showed that 51% of individual entrepreneurs and 49% of LLCs use credit products.

There were staff reductions at major enterprises as well. At AvtoVAZ in Izhevsk, as TASS reported, employees were offered voluntary resignations, promising to be paid up to 12 minimum wages depending on their length of service, while stating that they are not talking about mass layoffs. Benefits have also been promised to those employees who will retire early.

Apparently, company reforms are taking place in different sectors of the economy and affect organizations with different numbers of employees.

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