An OECD-World Bank-Facebook report quantifies the impact of Covid on SMEs. Closed especially those led by businesswomen, due to the disproportionate duty of care for the family and as they were more affected by the lockdown measures.

Covid-19 has left its mark on the life of businesses in all the economies of the world. The first report that photographs the social effects of the pandemic on small and medium-sized enterprises in over 50 countries was published by Facebook. The Global state of small business report, compiled by the Organisation for Economic Cooperation and Development (OECD) and the World Bank, argues that the pandemic mainly affected companies with fewer than 500 employees, dispersing inequalities and targeting the most vulnerable groups.

In OECD member countries, small and medium-sized enterprises (SMEs) account for about 99% of the total and employ 65% of the workforce. Between January and May this year, more than a quarter of them closed down, a figure that in some cases exceeded 50%; while a third of the companies that did not have to close down reduced the number of staff. However, not all were affected in the same way. Smaller companies, where often the owner is also the only employee, closed at a faster rate than the others. A situation that mainly affected women. In fact, the report explains that closures have affected women-driven SMEs “disproportionately” and that female entrepreneurs are 7% more likely to close down than their male colleagues.

While stressing that, in general, the development of small and medium-sized enterprises leads to inclusion, the results collected show that, across the board, women may have been more affected than men by lockdown measures. In fact, companies without employees, which are the most common among women, have closed most, while those traditionally led by women are concentrated in the sectors most affected by the pandemic. 

Quarantine has made it more complicated for female workers, who have often borne the burden of household chores. A significant percentage of all entrepreneurs interviewed reported spending six or more hours a day on domestic tasks and care duties. This situation mainly concerns women. In fact, in all countries that participated in the survey, women entrepreneurs are statistically more likely to have to take care of their children or other dependants, as well as registering a low propensity to receive help from their male spouse. In some of the countries with the greatest disparities – Australia, Belgium, Hungary, the Netherlands, Romania and Russia – the greatest likelihood of having to fulfil care obligations reached as much as 50%. Between 20 and 30% of women will not be able to rely on their spouses.

The Covid-19 pandemic may have exacerbated this situation by introducing additional responsibilities, such as assistance in distance learning. About two-thirds (67%) of the entrepreneurs in the sample reported that domestic responsibilities were having an impact on their work. Domestic chores (31%) and childcare (26%) were the actions that most interfered.

However, the harshness and therefore the socio-economic effects of the quarantine did not see the same policy response everywhere: some governments, particularly those in high-income countries, were able to offer assistance, such as wage support and subsidies to compensate for the impact of the pandemic, while in the poorest countries the lockdown was tougher also in economic terms.

According to the OECD and World Bank Report, employment and wage support systems in higher income countries, particularly in the European region, may have helped to offset some of the impact of the pandemic on workers, although the type of public support available to SMEs differed significantly in the various countries analysed by the sample. The impact of the pandemic on employment appears to have been particularly severe in low and middle income countries. In sub-Saharan African countries about half of the companies reported that they had to reduce their workforce in response to the pandemic at the time of the survey (28-31 May).  On average, among all open SMEs during the survey period (excluding Europe), more than 30% said they were forced to reduce their workforce due to the pandemic.

Link to the report.