Wage Subsidies — an economic recipe for the global pandemic?
The outbreak of the Covid19 has shaken up things around the world in such a manner that no one could comprehend. It took the world and effortlessly turned it on its head.
Businesses worldwide are coming to terms with the huge impact of lock-downs /shutdowns as the ripple effects of this permeates to all — the big corporates, SME’s and startups.
Everyone is grappling with a profound sense of uncertainty and insecurity as they struggle to come to terms with the “NEW NORMAL”.
As a recruiting business owner, we can sometimes be called a “barometer” of how the economy is performing, as hiring/laying off is almost a sure sign of things to come.
In this post, I would like to briefly highlight how governments around the world are helping companies fight lay offs by offering a special policy mechanism called “Temporary Wage Subsidy Plans”. Here the government picks up a part of the payroll cost of the employer thus helping them maintain headcount and protecting the employees.
01. Canada — Private businesses experiencing a decline in revenue of 30% or more in March, April or May (relative to 2019) are eligible for temporary wage subsidy for remuneration paid from March 15 to June 6.
Maximum benefit is CAD 847 per week for each employee on its rolls.
Small business entities will be given higher benefits.
02. United Kingdom — Employers can claim a grant covering 80% of the wages for a furloughed worker to a maximum of GBP 2,500 per month. It covers all employees who were on payroll on or before March 19. It is a temporary scheme open to UK employers for atleast 3 months, starting from March 1.
03. Denmark — For 3 months, govt to cover 75% of the monthly salary (upto a maximum of € 3100) on the condition that the employer does not lay off any workers. The balance 25% has to be borne by the employer. Govt. picks us a higher percentage for casual workers.
04. Singapore — Government will pay 75% of April wages for every worker in employment, capped at SGD4600. Wage support levels will be differentiated by sector for remaining qualifying months (75% wage support for aviation, accommodation and tourism, 50% for food services and 25% for all other sectors.)
05. Spain — The government will pay upto 70% of the salaries upto a maximum amount of € 1412 per month. The existing provision for temporary layoffs, known as ERTE, has been expanded to cover businesses affected by the virus . Additionally, the government has also ordered utility companies to maintain services to all “vulnerable” households, even if they are unable to pay their bills.
06. Italy — the govt has adopted a series of “Social shock absorbers” to tide over the crisis. It includes payment of upto 80% of an employees salary for a period of 9 weeks to a maximum of €1,130 net per month.
Self-employed people have also been awarded a one-off payment of €600.
07. Germany — has expanded its short-time allowance, or Kurzarbeitergeld, to include companies that cut working hours as a result of the coronavirus. Tenants who are unable to pay their rent will be protected from eviction until September 30, although back rent will be owed when the economic situation improves.
Sources : OECD / Various
