Employers denounce that companies are suffering from a sharp drop in margins and that their profitability is much lower after the pandemic, despite the fact that there is a lot of activity
The Spanish company is showing signs of a slowing recovery. That is the great conclusion drawn from the ‘Indicator of the situation of SMEs’ published today by Cepyme, which aims to measure the strengths and weaknesses of the Spanish business fabric, which is largely made up of SMEs, and stating that, despite the employment recovery and the recovery from pre-pandemic numbers, Spanish SMEs are still going through the toughest situation the business fabric has experienced since 2014.
This report argues that SMEs are being swept away by the high costs faced by employers, significant productivity losses and, in general, lower profitability.
The biggest problem facing the company is that it is shrinking its margins sharply: revenue is growing, yes, but less than costs, resulting in a deterioration in liquidity and competitiveness. For SMEs as a whole, total costs increased 23% in the first quarter of 2022, mainly due to supplies and energy, while revenue grew 19.8%.
In addition, wage costs rose by 5.7% in the first quarter of 2022, the largest increase in years. In addition, it was the small companies that showed the largest increase with an increase of 6.3% compared to 4.1% for medium-sized companies. It should be noted that social contributions have also increased exponentially in recent years.
Therefore, SMEs are facing the next rise in interest rates and the tightening of highly indebted credit, which have increased by ten percentage points after the pandemic, while their profitability fell to 3% in 2021, the lowest level since 2016.
From the CEOE, they point out that the Spanish company has made great efforts in recent months to continue its activities and create jobs, despite the fact that its conditions have deteriorated drastically in recent years due to the highest cost increase in decades and the slowdown in real sales growth and also credit growth, and despite their increasingly weaker productivity, as shown by the indicator.
In turn, they warn from Cepyme that the viability of small and medium-sized businesses is at stake as the pandemic forced them to borrow, to which is now added the collapse of their profitability, for which they fear the scenario of an imminent rate hike by the European Central Bank, a tightening of credit conditions that are already beginning to be appreciated and the exhaustion of the insolvency moratorium.
“Spanish productive fabric is under-capitalized and in worse conditions than companies from other European countries to cope with the economic slowdown,” denounced the employers, who blame this poorer health than its EU competitors on the lack of effective aid. the smaller amount and the bureaucracy.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
