In the UK, the government has been paying the wages since March of almost 10 million workers unable to do their jobs because of the covid-19 outbreak. The Coronavirus Job Retention Scheme, as it’s called, is set to end on 30 October.

What will follow, many economy-watchers predict, will be a flood of layoffs. The National Institute for Economic and Social Research has warned UK unemployment is likely to rise to around 10 percent by the end of the year.

Private equity-backed businesses are not exempt from this pain. When we surveyed 40 GPs around the world in May, 60 percent said they had made layoffs at portfolio companies since the pandemic started, with almost half expecting to make further layoffs. (It’s important to note these are firms from across the globe, not just the UK.)

While a certain amount of layoffs are inevitable for businesses in particular sectors, some of the industry’s biggest investors have suggested private equity-backed companies may be in a position to avoid drastic cuts.

Speaking to PEI in May, Blackstone’s global head of private equity Joe Baratta stressed the need for private equity firms to focus on business building rather than cost cutting, even during a recession. As well as investing for growth, this means being slower than others to pull the trigger on employment reductions.

“We’re seeking to make sure that we’re on the generous side and not leading sectors in employment reductions compared to public company peers,” he told us. “We want to preserve the ability of these businesses to rebound and to operate when the economy reopens.”

Similarly, on a panel this week, CPPIB head of Asia-Pacific Suyi Kim stressed to business owners that employees are their “key asset”, and that protecting them can “help a business ramp back up more quickly when the situation allows”.

Meanwhile, Singapore-headquartered Everstone, which invests across India and South Asia, told us last month how the firm had been taking “strong measures to keep staff”, including pushing senior management to forego bonuses and take pay cuts.

“The CEO, of a company like Burger King India, can take a 25 percent cut to compensation and we could keep all staff employed. Getting this balance is the responsibility of private capital.”

While there’s discussion of further government intervention to keep businesses afloat, there’s no guarantee it will be open to PE-backed companies – and even if it is, some have pointed out the challenging optics of private equity firms accepting such aid.

There will certainly be challenges ahead; Hony Capital-owned PizzaExpress announced closures this week, following in the footsteps of Mayfair Equity Partners-backed restaurant chain YO! Sushi.

But combatting them should play into private equity’s strengths, namely its patient capital mentality: if heavily cutting staff (an albeit effective, but one-time, cost saving) can be avoided, the potential for long-term value creation could be enhanced.