The most vulnerable economies affected during the pandemic.

MSMEs started laying off employees at a relatively early stage in order to survive (68.0% of micro, 59.5% small, and 78.6% of medium enterprises), especially in manufacturing (69.4%) and services ( 67.3%).

The bigger the company size, the more job options available. Among medium-sized enterprises, 41.1% reduced their employees' working hours, followed by 34.8% small enterprises and 26.5% micro enterprises. Working from home is not a preferred option for many MSMEs. Small firms have more difficulty introducing these arrangements: 24.9% medium-sized enterprises, 19.8% small enterprises, and 11.3% micro enterprises.

LPM (employment) estimates indicate that most industrial sectors are less likely than agriculture to drop their employees by March 2020 or retain their employees largely.

Compared to agriculture-based enterprises, the number of MSMEs that have reduced their employees is more than 20 percent lower in real estate, professional services, human health and social work, financial services, information and communication technology, administrative services, construction. , other services, wholesale and retail trade, and accommodation and food services, all at the 1% significance level.

This shows that there was no significant change in employment among MSMEs in the first month after the lockdown.

However, by region in the Philippines, compared to NCR-based companies, MSMEs in CAR, Cagayan Valley, SOCCSKARGEN, East Visayas, Davao and Central Luzon are more likely to reduce their number of employees in March 2020.

The number of MSMEs that reduced their number of employees was 58.3 percentage points higher in CAR (1% significance level), 43.3 percentage points higher in Cagayan Valley (1% significance level), 37.5 percentage points higher in SOCCSKARGEN (5% significance level), 31.4 percentage points higher in Eastern Visayas (10% significance level), 31.3 percentage points higher in Davao (5% significance level), and 15.7 percentage points higher in Central Luzon (10% significance level).

This shows that provincial MSMEs are more likely to reduce the number of employees compared to NCR. The results based on the operating period, sex of MSME owner, involvement in GVC, and company size did not show statistically significant results.

Payment of Wages during the COVID-19 Pandemic

Most MSMEs suspended payment of wages to employees following the COVID-19 outbreak and lockdown, and this was more evident for micro enterprises (59.8%) and manufacturing (61.0%). More than 30% of small and medium enterprises reported a decrease in total salary payments to employees following the outbreak. By sector, more than 20% of MSMEs in manufacturing and agriculture reduced their total wage payments.

LPM results show that education, accommodation and food services, and manufacturing are less likely to provide salary payments to employees after the outbreak compared to agriculture, mainly due to temporary business closures. Compared to agriculture-based enterprises, the number of MSMEs without wage payment was 46.6 percentage points higher in education (1% significance level), 26.2 percentage points higher in accommodation and food services (1% significance level), and 15, 8 percentage points higher in manufacturing (10% significance level).

Similar to the sales and income analysis, the power and energy sectors are less likely to pay employees salaries. The number of MSMEs without wage payments in the electricity and energy sector is 49.5 percentage points lower than that of agriculture-based enterprises at a 10% significance level, which is supported by demand for electricity and gas supplies. , estimates suggest that financial services, education, manufacturing, and accommodation and food services are more likely to reduce total salary payments to employees after the outbreak than agriculture.

The number of MSMEs with decreased wage payments was 34.4 percentage points higher in financial services than in agriculture (1% significance level), 31.3 percentage points higher in education (5% significance level), 22.8 percentage points the percentage was higher in manufacturing (1% level of significance), and 21.8 percentage points higher for accommodation and food services (1% significance level).

Meanwhile, real estate services tend not to experience a decrease in wage payments compared to agriculture. The number of MSMEs that decreased their wage payments was 34.5 percentage points lower in real estate than in agriculture (10% significance level).

The COVID-19 and Lockdown pandemics hit education, accommodation and food services (including tourism), and manufacturing the hardest.

in sales and revenue, and they cut wages at the same time. Financial services are also moving to cut their internal costs.

Meanwhile, staying at home creates new demand for electricity and gas as well as real estate services for households, leaving a better business and employment climate in these sectors than in others. By region, the situation for paying wages varies.

MSMEs in CAR are more likely to promote non-payment of wages during the pandemic, while those in Caraga (Region XIII) are less likely to do so than NCR-based companies.

The number of MSMEs without wage payment was 25.4 percentage points higher in CAR (1% significance level) and 49.7 percentage points lower in Caraga than in NCR (10% significance level). MSMEs in East Visayas (Region VIII) are more likely to lower their wage payments than NCR-based firms (18.0 percentage points higher at 5% significance level).

Regarding the period of company operation, there were no statistically significant results for MSMEs that stopped paying wages after the lockdown, but those operating for 11--15 years were more likely to decrease their wage payments (13.0 percentage points higher than those operating until 5 years at the 5% significance level). it did not see statistically significant results based on gender of MSME owners, involvement in GVC, and company size.

Financial Condition During the COVID-19 Pandemic

Most MSMEs lack the necessary funds to maintain their businesses after closure.

Large shortages of working capital are more serious in smaller firms. There were 43.8% micro enterprises, 23.2% small businesses, and 3.9% medium enterprises that did not have cash or savings at the time of the survey. In addition, 61.4% of medium enterprises, 53.1% of small businesses, and 37.8% of micro enterprises reported that they would run out of funds within one month. Only 14.8% of micro enterprises, 19.0% of small businesses, and 28.7% of medium enterprises have enough cash and savings to run their business for 1 month.

All sectors face serious underfunds to operate. There were 43.7% of service MSMEs without cash or savings at the time of the survey, followed by agricultural MSMEs (42.1%) and manufacturing MSMEs (34.2%). Many manufacturing MSMEs (47.8%) stated that their funds would run out within a month, followed by the service sector (37.4%) and agriculture (35.1%). About 22.5% of agricultural MSMEs also reported that they had enough cash and savings to maintain a business for a month.