By B Izzak
KUWAIT: Private businesses have been hit hard by a sharp decline in the number of customers that made almost 80 percent of companies unable to cover expenses, the financial and economic affairs committee said in a report to the National Assembly. The committee prepared the report to justify a draft law that would allow private businesses to cut salaries of their staff or ask them to go on leave during the coronavirus crisis.
The report said that the number of customers dropped by 75 percent in May, which hit revenues badly and made as many as 80 percent of companies unable to cover their expenses for six months. The committee said 26 percent of companies are on the verge of collapse after their revenues dropped by as much as 80 percent on average.
It also admitted that due to the delay in issuing the necessary legislation, 21 percent of companies violated the laws and forced their employees to take unpaid leaves, while 15 percent laid off their employees. The draft law, which has been under debate for months in the Assembly, allows companies to reduce the salary of their employees by 50 percent provided that the new salary is not below minimum wage. The reduction must be made after mutual agreement and working hours should be reconsidered.
The bill also allows companies to ask their staff to go on a special leave with 30 percent pay or the minimum wage, whichever is higher. The action applies during the lockdown months or during restrictions imposed by the government. The draft law insists however that end of service indemnity must be calculated on the basis of the original pay. The bill however obliges the government to pay the amounts deducted to Kuwaitis employed in the private sector and in some cases the social security agency will pay unemployment benefits to affected Kuwaitis for six months.
MP Ali Al-Deqbasi in the meantime called on the health minister to reconsider his decision of continuing the lockdown on Farwaniya, the last residential area under isolation. The lawmaker, who represents the area, said markets and malls have reopened everywhere except in Farwaniya, which impedes commercial activity and hurts the interests of the people. He said what is surprising is that the number of cases has been rising in other areas but only Farwaniya remains under lockdown, which means the decision is “unfair”.
The government is meanwhile contemplating the possibility of placing certain areas under total lockdown during Eid Al-Adha, which starts at the end of the month. The aim is to prevent mixing of people, which has become the main source of spreading the disease.