Sole traders hit by coronavirus crisis to get Kc25,000-government

The government will provide a one-off payment of Kc25,000 to sole traders hit by the coronavirus crisis, with the cabinet approving the relevant programme Petadvacitka at its meeting, the Finance Ministry said.

Originally, the ministry proposed to pay sole traders Kc15,000 a month. Sole traders applying for the aid will have to meet certain conditions which include at least a 10 percent sales drop in Q1, and a gross annual income of at least Kc180,000 last year or a gross monthly income of at least Kc15,000 in case they operated for less than a year.

Chamber of Commerce president Vladimir Dlouhy said he appreciated the Finance Ministry's measure and added that now it was key for the state administration to make the measures official so that sole traders receive the money as soon as possible. The programme will be managed by the Financial Administration, the ministry said. The goal is for applicants to receive the money within April.

Applications will be accepted and money paid after the proposal goes through the approval process, which the ministry expects by April 12. The proposal was submitted in the form of a law and the Chamber of Deputies will discuss it on April 7. Sole traders will get the funding for the period from March 12, when the state of emergency started, until the end of April.

The government also approved rules of the kurzarbeit (part- and short-term working) system, and the state will pay two kinds of contributions for the period from March 12 until the end of April, Labour and Social Affairs Minister Jana Malacova said after the cabinet meeting. The state will provide 80 percent compensation for wages of employees that are in quarantine or those that work for companies that stopped operating (maximum of Kc39,000). Employers provide 60 percent of pay to people in quarantine and employees of shut down companies are entitled to 100 percent.

The second kind of contribution concerns companies whose production has decreased because of a drop in employees, material or demand. To this group the state will provide 60 percent wage compensation (maximum of Kc29,000). Employees of companies reporting a drop in input material are entitled to at least 80 percent of their pay, and those working for companies with lower demand should get at least 60 percent. The aid will be based on the super-gross wage (employee's gross wage plus social and health insurance).

The Antivirus programme, which involves kurzarbeit, is supposed to last until the end of April but it may be prolonged, Malacova said. Expenditures for the first two March weeks amounted to Kc10.9bn, according to the Labour and Social Affairs Ministry. They could exceed Kc30bn by the end of April.

The government approved the kurzarbeit system on March 23. It originally had five points, while now it has two. The state's wage contributions are supposed to prevent lay-offs, Malacova said.

Companies which still operate and pay their employees 100 percent of wages but their revenues or production have dropped because of the coronavirus will be entitled to wage compensation via kurzarbeit, and specific conditions for the aid will be worked out by April 6 by Industry and Trade Minister Karel Havlicek, Finance Minister Schillerova and Labour Minister Malacova, Havlicek said at a press conference after the government meeting.

The Antivirus programme could concern 280,000 companies, Malacova said. If unemployment grew by 1 percent, the state budget would lose Kc1.7bn in mandatory payments and taxes, she added.

The Confederation of Industry appreciates that after three weeks of negotiations the government approved a kurzarbeit system which corresponds with employers' requests, but it would like the aid to be prolonged to six months. It is important that the aid is based on the super-gross wage, Confederation of Industry vice-president Jan Rafaj said.

The kurzarbeit is crucial for the preservation of thousands of jobs in companies not only in the car industry, the Automotive Industry Association said. The Confederation of Commerce and Tourism and the Association of Hotels and Restaurants welcome that the approved kurzarbeit reflects employers' comments and appreciate the promise of fast payment, but they believe the government took quite long to introduce the measure, they said in press releases.