More and more people are working in the technology sector. While the average employment rate was 52.8 percent in early April, it has since risen sharply to 75 percent. One in five people are temporarily unemployed, reported sectoral federation Agoria on Tuesday. According to Marc Lambotte, CEO of Agoria, this is a major step forward: “Work is the basis of our prosperity. Going back to work in safe conditions is good for all of us.”
The survey was conducted by telephone between 5 and 8 May among a representative sample of 335 technology companies employing some 92,000 people. Together, these companies represent 30 percent of employment and turnover in the technology sector in Belgium. Agoria will resume the survey at the beginning of June.
75% of technology companies have gone back to work
The resumption of business on 4 May for companies belonging to the non-crucial business sectors and non-essential services resulted in a sharp increase in employment compared to figures just a month earlier.
- The employment rate in the technology industry as a whole is now 75%, compared with 56% at the beginning of April and 50% in the second half of March.
- The employment rate in the ICT sector is approaching 90% after falling to 75% in the previous month. Teleworking accounts for a very large proportion of this figure.
- In industry, the resumption is most pronounced in the automotive sector, where the employment rate is now around 67 % compared with barely 7 % at the beginning of April. Volvo Cars is back up to 100%. DAF, Audi, Van Hool, Volvo Group and other are resuming production more gradually.
- Construction technology companies have also significantly increased their employment rate to 72%.
- The resumption of business has been more gradual in companies active in products, techniques and services for the installation, maintenance and operation of buildings, infrastructure and industry. This is due to restrictions on access to sites and construction sites, the availability of employees and the postponement of maintenance operations for non-essential customers.
- In the aerospace sector, the resumption of business is less pronounced and the employment rate remains at 40 %. This is also due to structural issues.
In the course of this week, the employment rate will undoubtedly increase by a few percentage points. Many companies already started making preparations last week. However, it does not look as if we will reach a rate of more than 90% in the short term (see below).
The main factors limiting the employment rate:
- 72% reported insufficient demand, compared to 67% in April.
- Compliance with the rules of social distancing is still affecting employment, although a little less: 35% instead of 39%.
- The supply of raw materials and components has improved from 40% to 33% but remains an issue. A more European coordinated recovery could remedy this.
- Availability of workers has greatly improved, with the reduction in availability falling from 38% to 23%.
- Availability of protective equipment affects 20% of businesses.
More business, but no full recovery in 2020
The current employment rate has risen sharply in May but still remains well below normal and below the level necessary for a sustainable situation. The survey also asked about the outlook for the second half of the year. Overall, businesses in the technology industry expect to see a progressive increase in activity, reaching 86% in the third quarter (July - September) and 90% in the fourth quarter (October - December). A full recovery in all subsectors will not be achieved by the end of 2020:
- Telecoms and ICT are expecting an almost complete recovery of business in the second half of the year. However, e-health companies continue to struggle as the financing of normal health activities is under severe pressure as a result of the coronavirus crisis.
- Construction technology companies are also expecting a rapid recovery and a further breakthrough in innovative technology. The EU Commission also expects a full recovery in 2021 after a sharp fall of investment in construction in 2020.
- Industrial activities in the technology industry that were already facing challenges before the coronavirus crisis, such as the automotive and aviation sectors, will experience a slower recovery and a lower level of activity.
Employers attribute the fact that business will not fully recover as early as the second half of the year primarily to an unfavourable trend in demand on the markets (66%). In addition, the coronavirus is also expected to lead to difficult access to customers and disrupted commercial relations both at home and abroad in the second half of the year. Employee availability and flexibility also remain difficult according to 30% of employers.
7.3% of workers are absent
Absenteeism has fallen from 9.6% to 7.3%. This is partly due to a reduction in absences due to illness from 7% to 6%.
Temporary unemployment falls to 19%, but remains an important support measure
The increase in economic activity is causing a sharp drop in the number of people in temporary unemployment, falling to 19%. However, as we are far from 100 %, temporary unemployment remains an important support measure for absorbing the financial and social consequences of the Coronavirus crisis.
Only 1 in 10 companies want to terminate fixed contracts
Should the Coronavirus crisis continue for too long, companies risk being forced to reduce their workforce. So far, only a small minority (9%) is considering terminating permanent employees. In addition to the prospect of a continued resumption, the possibility of temporary unemployment also plays a role in keeping this number down. Companies in the technology industry therefore feel well supported in this respect. 97 % feel that the flexibility measures taken to deal with the crisis are sufficient.
Social distancing: only 13% of companies cannot find a solution
Business can only resume provided that the safety rules are observed. The lack of clarity that still existed in April has almost completely disappeared. 94% of companies claim to be sufficiently aware of the obligations. The applicability has also improved. Whereas in the previous survey, 42% replied that no solution could be found in the short term, this percentage has now dropped to 13%. The companies still experiencing issues with the measures are often service companies that make extensive use of teleworking and have not yet completed their return to the traditional office environment.
The work on drawing up a generic guide and a sector-specific adaptation of said guide has therefore already borne fruit.
4 out of 10 companies fear financial problems
The Coronavirus crisis is putting pressure on the financial resources of technology companies. The fact that many technology companies have been able to continue to operate in part and that the rules on social distancing have been improved means that the liquidity position is less dramatic than in some sectors that have been forced to close. However, 14 % of technology companies say they are already experiencing acute financial difficulties. This percentage has not risen since the April survey because business is starting up again and cash is coming in again. The government's financial and tax measures are also contributing to this, as is, of course, the temporary unemployment due to force majeure.
However, 37% of tech companies foresee financial problems in the future. This is linked to the prospect of a period of reduced business. In general, business is not expected to return to cruising speed by the end of the year but only to 90% of normal. Larger companies in particular expect financial difficulties in the second half of this year. They employ about 50,000 employees.
Reliance on financial and tax support measures is clearly increasing. However, it is striking that the Banking Plan, the bridging loan component in particular, is slow to get off the ground. Only 7.5% of the respondents are currently using these loans, compared to 3.6% in April.
Half of the companies are seeing a negative impact on investments, while only 5% foresee new investments
The economic and financial uncertainty created by the coronavirus crisis is having an impact on investments. For example, the European Commission expects investments in Belgium to fall by 15% in 2020. 46% of technology companies claim that the coronavirus crisis has a negative impact on their investment projects. For large companies, this figure rises to 51%. The telecoms sector is a major exception in this regard, as it does not foresee a negative impact and some companies are even assuming an increase in investments.
So far, the negative impact has mainly translated into the postponement of investment projects. Additional investments are planned only in 5% of cases.
Low impact on research and innovation activities
Unlike what is being seen in the area of investments, the coronavirus crisis has so far had little impact on innovation and research activities. Two thirds of tech companies estimate the impact as being neutral, while 20% of them estimate it as being negative. On the other hand, 13% report a positive impact. 1 in 5 smaller companies and digital companies expect additional innovation projects.
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