Ukrainian lockdowns logic: how strict quarantine is killing business

Author

Natalia Myronova

We at have been figuring out how much business in Ukraine suffered during two strict quarantines: the spring one in 2020 and the two-week one in 2021. And we have analyzed how many diseases occurred during and outside the strict quarantines.

Coronavirus in Ukraine: how the rates of susceptibility to infection are changing

During the spring lockdown in Ukraine, the government took timely measures to protect citizens from coronavirus that was unfamiliar at that time. On March 13, the first death from COVID-19 was recorded. On the same day, the NSDC made a decision, according to which Ukraine closed its borders for 14 days from March 16. On March 17, the Kyiv and Kharkiv subways were closed. All this time, the spread of coronavirus infection was growing very smooth, but still was growing. From late July to early October, the daily number of new COVID-19 cases was in the order of thousands.

In early October, the first wave of coronavirus bed occupancy exceeded 60%. Earlier, the Ministry of Health announced that it would propose to introduce increased quarantine restrictions across the country if the occupancy rate of beds for patients with coronavirus in hospitals exceeds this figure.

Coronavirus exceeded 10 thousand infections per day in November 2020. By the end of the month, 16 thousand cases of infectioning were recorded.

Due to the rapidly growing incidence trend, many talked about the introduction of a lockdown in the fall of 2020. However, then local elections were held in Ukraine, and the quarantine was not tightened.

After a two-week lockdown in January 2021, according to the Prime Minister Denys Shmyhal, the situation with the incidence was stabilized, and the medical system was somewhat relieved.

"If at the beginning of December there were almost 29,000 patients with COVID-19 in hospitals, now this figure is less than 19,000 people," he wrote on his Facebook on January 25, 2021.

Earlier, the Verkhovna Rada adopted President Volodymyr Zelensky's draft law No. 4429, that deals with a one-time financial aid for Ukrainians who have lost part of their income due to quarantine, and for businesses that should cut costs of workers. In his draft law, Zelensky proposed to give financial aid in the amount of 8,000 UAH. It should "have a positive effect" on the insured persons and business entities.

Aid was received by employees of enterprises whose work was suspended. Also, financial aid was received by individual entrepreneurs who lost part of their income due to quarantine.

According to the European Business Association, only 36% of the surveyed entrepreneurs appealed to the state to receive 8,000 UAH. Including 33% received funds a week after successful application submission, another 19%—after two weeks or more, 13%—after 1-3 days. As of January 19, 2021, 35% of entrepreneurs are still awaiting funds. At the same time, 84% consider such funds to be insufficient to compensate for their losses from the lockdown introduction.

Business is losing money

In the spring of 2020, during a strict quarantine due to the coronavirus COVID-19 spread, part of the business closed or lost the opportunity to earn money. At the same time, many enterprises had to cut the number of employees or cut salaries. According to the State Statistics Service, during 10 months of 2020, Ukrainian business became poorer by 250 billion UAH.

According to a study by the Union of Ukrainian Entrepreneurs (SUP) and the Ukrainian Marketing Group, 29% of Ukrainian companies temporarily suspended their activities during the spring quarantine, and 6% even closed their businesses. A third of micro-business owners have reported a 90-100% drop in income since the start of quarantine. They had to lay off 50% of the staff.

During the entire period of the quarantine restrictions (since March), restaurant turnover fell by 81%. The restaurant business recovered over the summer, but revenues began to fall again in October, according to a study by Poster.

There are no good results for business after a two-week lockdown in January 2021. For example, in Kharkiv, small and medium-sized businesses lost about 25% of their profits due to a lockdown, said Oleksandr Chumak, president of the Association of Private Employers in the Kharkiv region. According to a survey by the European Business Association (EBA) among small entrepreneurs, 62% saw no sense in the January lockdown. 22% of respondents were forced to send their employees on unpaid leave, another 13% cut their wages, 10% cut their staff, and 9% decided to close the business.

The so-called "sock quarantine" also raised questions: entrepreneurs did not understand how to work the day before the lockdown was introduced due to the ban on the certain goods sale.

"Thus, the day before the lockdown, the business does not understand by what rules it will have to work. Moreover, the business must take a product inventory in one day in order to understand what to take away and what to leave on the shelves. If there is a product on the shelf that cannot be sold, the fine will be 17,000 UAH," the EBA noted.

Business was also blown back by the "weekend" quarantine. For example, the club Bingo was closed in Kyiv. The reason for this was the quarantine: the club practically did not work. According to the Executive Director of the SUP, Kateryna Glazkova, restaurants, bars, and cinemas lose almost half of their revenue because of the weekend quarantine. And this revenue they cannot compensate at other times.

"Business understands that it is necessary to fight the epidemic, but sees that statistics are growing, and the "weekend" quarantine does not help in any way. People will not abandon the services and goods they need, just everyone will be shopping at the malls from Monday to Friday, not on weekends. Yesterday it was impossible to order food with delivery, because on Friday nights everyone is trying to enjoy their time in advance in restaurants, cafes, and bars. Nevertheless, we have to talk about losses, since the "weekend" quarantine is a measure that has appeared today, and before that we had three months of a full lockdown, and then we had certain restrictions," she said on the air of the TV channel Ukraine 24.

According to Opendatabot, in November 14-15, 2020 alone, under the conditions of a "weekend" quarantine, Ukrainian catering establishments lost 27% of their turnover.

And the pandemic does not even think to end: Europe and the world are tightening quarantine due to new coronavirus strains. The Organization for Economic Cooperation and Development (OECD) Economic Outlook also downgraded its forecasts for 2021. GDP will fall especially significantly in European countries. Bleak forecasts will remain at least until the mass vaccination against coronavirus begins in the world.