This article is written by Yuu Shibata and contributed to our publication on Medium.com.
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In Italy, the issue of the new coronavirus has dramatically worsened since late February 2020. Initially, the spread of this infectious disease has been revealed in Lodi (a region situated from central-southern Lombardy). Since then, the Italian government has started taking measures in order to stop its spread, yet it seems that such measures are not working well or are not implemented in the right manner, as we can see on this days that the number of infected cases exceeded the 74,000 and the number of deaths are more than 10.000 (according to the data of the Italian Ministry of Health and Welfare on 30th March 2020).
There are two important measures that the government has taken so far. The main measure that the Italian government has taken in order to face this problem has been a “lockdown”. The first lockdown was implemented at Codogno, the place where Patient One was identified, (local lockdown); the second lockdown was announced on March 8th which concerned basically Northern Italy (regional lockdown) , and finally the third lockdown, which concerned the whole Italian territory (national lockdown), was activated since March 10th . The general rule of this lockdown is that people are allowed to be outside their home only in cases of: work, health issues or necessities.
The second important measure, which is also related to the above, has been the closure of non-essential business activities. So, what busienss activitites are allowed? On March 25th, a list of business activities has been published by the Ministry of Economic Development. The activities listed in this document are classified as essential activities that are allowed to stay opened. Such activities are: agricultural crops and production of animal products, fishing and aquaculture, coal mining, extraction of crude oil and natural gas, food industry, manufacture of technical and industrial textile articles, manufacture of non-woven fabrics and articles made of it (excluding clothing), production of overalls, uniforms and other work clothes, manufacture of wooden packaging, and so on. (for an exhaustive list, please visit the website of the Ministry of Economic Development.). A key point of this list is that the government hasn’t only identified the type of businesses that can stay opened, but it also has identified the specific industry code (called Codice Ateco) so that any misunderstandings are avoided. Every Italian company has at least one industry code registered in each company’s certificate of incorporation, so when considering whether one’s company can be opened or not, the answer will depend on what industry code (or codes) applies to each company.
These measures can be considered very drastic ones from every point of view, because by limiting so much people’s freedom of movement and even binding the closure of non-essential business activities, it was very clear that this would cause serious economic damage to the country. However, seeing the increasing numbers of infection and deaths, it is also understandable that Italy hasn’t had other options.
The above-mentioned measures caused a huge anxiety to all Italian companies, yet specially to SMEs mainly for three reasons: great decrease of sales, no enough working capital and no enough supply. It is very difficult for SMEs to survive for long time (for few months) in such circumstances.
In fact, in order to understand the current scenario, “Confindustria” (General Confederation of Italian Industry) has carried out a survey with 4000 Italian companies and analysed/evaluated the impact of the Covid-19 in the business.
Generally speaking, 67% of respondents indicated that the spread of the Covid-19 had affected their business, yet, the regions of Lombardy and Veneto had higher average, as the 71% indicated their concern on how it affected their business.
If we have a closer look by industries, 99% of industries related to tourism, food and transportation reported negative effects; and about 62% of manufactures (yet, approximately 76% for clothing and 71% for furniture) reported the same.
The answer is “yes” (however, this does not mean that it’s enough). There have been announced some measures either at national or regional level.
The first and most important one so far (at national level) is the State aid that consists on 350 billion euros to boost the economy and support business and workers, employees, self-employed professionals as well as the productive sectors of the country affected by the Covid-19 emergency.
Part of this aid includes the Italian State guarantee supporting a debt moratorium from banks to SMEs affected by the coronavirus outbreak (this State aid was approved by the Commission on 19 March 2020, under the State aid Temporary Framework to support the economy in the context of the Covid-19 outbreak) . Basically, it includes “the postponement of repayments of overdraft facilities, bank advances, bullet loans mortgages and leasing operations” and it has “the objective to ensure that SMEs have liquidity to help safeguard jobs and continue their activities faced with the difficult situation caused by the coronavirus outbreak”.
Another important measure is the 5 billion euros of social safety nets for SMEs to be used for temporally layoffs (cassa integrazione). Also, for some industries (such as tourism) there is a suspension of payments of withholdings, social security and welfare contributions and bonuses for compulsory national social security.
There are many other measures that the Italian government has taken so far in order to protect SMEs and workers. Some of them are constantly updated in order to adjust to the changing reality.
Unfortunately, since the coronavirus emergency has spread all around the world, we can start noticing that SMEs are the first ones suffering the crisis, forcing them to go under bankruptcy procedures. Now that it is evident that this emergency will continue for a while, the objective of future economic policy is to avoid corporate bankruptcy, by protecting, helping and boosting them, especially because SMEs are the backbone of Italy’s economy and also EU’s economy.
As already mentioned, one of the biggest problems that SMEs are facing is the lack of working capital. The Italian government has in fact started acting on the issue by adopting urgent economic measures. Despite of the fact that this issue is big and important, this is also a shallow (superficial) issue. The government needs not only to act on the current problems (such as offering liquidity to companies) but also needs to understand and to foresee the actual economic consequences that the new coronavirus will cause to the national economy, more specifically, it needs to know whether such impact will be temporally, meaning that the national economy will be reactivated once the emergency will pass, or whether the damage may persist. These two scenarios will depend on many aspects, yet most importantly on the numbers of SMEs that will have to go under bankruptcy procedures due to Covid-19.
She is a Legal Counsel and she holds a Ph.D in Law (University of Bologna). She is specialized in European Union Law and she is the Head of the Japanese Desk and Spanish Desk. She is mother tongue Japanese and Spanish and speaks fluently Italian and English.
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