Danish government takes action to address COVID-19

The Covid-19 pandemic has already reached a large part of the population and this is reflected in the impact it has on both citizens and businesses, as well as in the measures taken globally to deal with this virus. That is why the danish government, among other measures, will cover 75% of the wages of workers in private companies who could lose their jobs due to the Covid-19 crisis, under the commitment that there will be no layoffs. This is how the Danish government announced after an agreement with employers and trade unions. 

This action is mainly aimed at companies that plan to cut 30% of their workforce or more than 50 employees due to losses caused by the outbreak of the coronavirus global pandemic. In addition, this measure will be applied retroactively from 9th March to 9th June

The state will cover 75% of the wages of workers threatened by the possible implementation of cut plans, which will be up to a maximum of DKK 23,000 (3,074) gross per month and 25% will be paid by the company, while workers will have to take five days of unpaid leave. The agreement details that employees working on an hourly basis will receive greater coverage, with the state covering 90% of the salary in such cases and may reach a ceiling of DKK 26,000 (€3,480), because such workers face a greater risk of dismissal. The aim of this coverage measure for companies is to facilitate a rapid resumption of economic activity as soon as the restrictions are removed. 

Furthermore, in order to avoid, as far as possible, the negative effects of this pandemic, the Danish Government has introduced a number of rescue packages as aid for businesses. The strongest points of these packages are that larger companies can defer VAT payment, as well as extended deadlines for paying PAYE tax and labour market contributions. The government also wants to include SMEs in this package, which is expected to improve the liquidity of small and medium-sized enterprises. In addition, it proposes an extension of the deadline for payment of tax B, which will in particular benefit the self-employed. 

In the other hand, in order to help trade and industry, the Government has launched also some iniciatives that provide, among other things, suspending the so-called employer’s period of the sickness benefit system, so that companies can get reimbursement from the first day the employees are sent home due to the Covid-19. Furthermore, the labour division squeme will be more flexible so that companies can reduce employees working hours, thus making it easier for the companies to adapt quickly to the situation, as well as to avoid dismissing their employees. 

In addition, the Minister of Industry, Business and Finance affairs decided to give banks wider options for granting loans. This is done by freeing up the so-called counter-cyclical capital buffer (generally speaking, money that banks must set aside for hard times), which gives banks more room to bear losses without having to impose restrictions on their lending. 

Sources: Expansión, Gorrissen Federspiel, Copenhagen Capacity, El Confidencial 

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