Practically a year ago the Covid-19 crisis began. Few could foresee the resulting economic and social consequences. The peculiarity of this crisis is the paralysis or drastic decline, by decree, of economic activity in many sectors. Running a business necessarily carries risks. Things can go right or wrong. Success is determined by the ability to surround yourself with the best resources, organize them, understand consumers, analyze the competition and, in general, the environment to make the most appropriate decisions. Longer-running companies, usually family-owned, know a lot about this.
Current circumstances demand supporting business activity in a way unprecedented in our recent economic history. The European Commission has approved a new amendment to the agreement taken on March 19, 2020, entitled ‘Temporary Framework relating to state aid measures aimed at supporting the economy in the context of the current Covid-19 outbreak’, in order to avoid the destruction of the productive economy, especially the most vulnerable, the self-employed, individual entrepreneurs, micro and small businesses.
Now, initial aid will be allowed in the form of repayable advances, guarantees on loans, rebates on interest rates on loans or other repayable instruments, and recapitalization measures (allowing the temporary participation of the state in the capital of companies) they can be transformed or granted, to a greater extent, into subsidies or direct aid, tax and payment advantages. Promoting, in this way, non-repayable aid against the initial ones that cause indebtedness without repayment capacity and that were becoming a greater burden for companies.
Current circumstances demand to support business activity in a way unprecedented in our recent economic history.
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The European framework also allows member states to temporarily defer to companies the payment of taxes or social security contributions, the granting of periods without accrual of interest, the suspension of the collection of tax debt and accelerated tax refunds. , as well as aid in the form of wage subsidies. In order to protect fairness in competition, the spirit of European regulations states that aid to the entrepreneur or self-employed person can only cover the loss of profit from economic activity, that is, the estimated business profit that would have been generated in the absence of the crisis caused by Covid-19.
The Barometer of the family business in the Region of Murcia, prepared by the Chair in collaboration with the Murcian Association of Family Business (Amefmur), explained last November precisely the need to go further in helping our companies on the line with the new approaches. This study revealed that family businesses focused their response to the crisis primarily by reducing costs, and resorting to external financing (40%) and their own (31%), and only 18% to public aid. As the main measures, companies demand the reduction of the tax burden (79%), the reduction of Social Security contributions (63%) and administrative simplification (52%). Time plays against the closure of companies by a very guaranteeing legal system that causes great slowness due to the numerous administrative procedures.
A fundamental question will be to determine the companies that are the object of this direct aid. The aim is to revive those business projects that ensure the maintenance of employment and generation of wealth. In this context, economists must play an essential role, advising and evaluating the viability of business restructuring processes as a result of the crisis caused by Covid-19 and, especially, taking into account the forthcoming transposition of Directive 2019 / 1023 on restructuring, insolvency and debt relief that seeks to help viable companies, but with financial problems.
In short, it is good news that the public authorities have understood the need to go beyond conventional approaches. In the same way that Corporate Social Responsibility (CSR) is a business tool that incorporates a system of values that guides decisions taking into account its economic and social impact beyond regulations, we propose a Public Social Responsibility (RSP) that exceeds traditional behaviors and empathize with their managers, carrying out the role contemplated in our legal system in the most effective way. For this purpose, the European Commission has taken a step of great importance that must be correctly carried out by those responsible for the different levels of administration: national, regional and local.
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