In a matter of days, Joe Borg’s* small business was decimated.
A few weeks ago, he was busy preparing for the upcoming tourism season, but now his clients have begun to cancel in droves after the outbreak of COVID-19 closed down his business. His services are no longer needed, and government measures, so far, are doing little to address his growing list of expenses.
Christina Cachia* is not doing much better. She’s currently on a two-day workweek and is worried about failing to meet her rent in a week’s time and the months that follow.
The outbreak of the COVID-19 coronavirus in Malta has seen the government roll out necessary but drastic measures to combat its spread. Flights are closed, as are non-essential shops, non-essential services, bars, restaurants, gyms, among others. Most businesses are closed for the time being, with the tourism industry facing the most significant shock.
“We’re usually doing well. I have my staff, and we do a good job and yield positive results. I never thought I would have to worry about paying my rent, but now I do,” Borg told Lovin Malta.
Right now, he’s managed to save up enough and will be able to pay his employees for the next few months at the detriment of his own personal income. But, he explains he cannot do that forever.
“It’s either that or the business will just close forever,” he continued.
Cachia, a freelancer who works in the beauty and hospitality sectors, has seen a major drop-off in business even before the government closed down her sector.
“For the last two weeks, all I’ve had were cancellations. Now my income is practically going to go down to zero. I’ve got a lot of bills to pay and to be honest, I don’t know how I’m going to cope beyond April,” she said.
The government has introduced measures to combat any adverse economic impact. A €1.8 billion package to help businesses was announced, but this was largely focused on tax deferrals and bank guarantees.
Meanwhile, businesses who have been forced to shut down temporarily will only benefit from a two days per week government payment based on a salary cap of €800 per month, or three days per week if they employ people.
Essentially this means that self-employed businesses will benefit from €320 a month or €480 a month if they employ people, plus an additional €320 per employee.
With single rooms renting out for €400 a month and commercial premises at a much higher rate, Maltese residents are growing more and more uncertain over their future. Rent, Borg explains, is the major issue.
Legal sources explained that while many landlords have come out in support of their tenants, both residential and commercial, there is no legal obligation for them to do so.
The government is yet to announce measures to address the issue. However, unless there is a specific redress at law, the obligation to pay that rent will remain. Some cases may be able to do so or potentially terminate their lease on the basis of force majeure. However, this would need to be covered explicitly in the lease agreement.
With businesses closed for the time being and many people facing redundancy, questions have to be asked how the government is going to help them make ends meet. What is clear is that people cannot rely on the kindness of strangers forever.
*Joe Borg and Christina Cachia spoke to Lovin Malta on the condition on anonymity, and their names were changed for the article.