Insider Economy Relief over decision to extend economic support post-June

Relief over decision to extend economic support post-June

The government’s decision to extend measures to companies and self-employed persons in Cyprus hit by the coronavirus outbreak until June 12 is a big relief to many. Along with the intention to extend these measures for a period of four months beyond June 12, Phileleftheros reports.

The government’s June 12 to October 12 additional support will be granted based on a plan that takes into account the turnover of a business in the corresponding month of 2019 and the reduction in revenue and number of staff in that specific month.

Government to spend €850m in direct support by June amid coronavirus crisis

The state support will depend on the speed of recovery of each business with the basic philosophy being that the resumption of operations should record absolutely no redundancies.

Specifically, the plan provides that if a business has a 50% reduction in turnover (YtY) in July and therefore employs 50% of the staff, then the state will provide support to the 50% of employees who are not working.

If the annual turnover decreases by 60% in August and another 10% of the staff returns to work, then the state will support the remaining 40% who are not working.

Substantially, the state’s additional support will provide benefits to business staff who are still on the payroll but do not work because of the reduced turnover.

This ensures that their jobs are secured even after the operating costs of the business employing them are  reduced, allowing them to cover salaries of only those employees still at work.

Insiders told Phileleftheros that the overall amount of government support to be granted has not been determined yet and will all depend on the financial capabilities of the state.

These funds will go towards covering part of an employee’s salary, with the Ministry of Labour ensuring that safety measures have been put in place before a business receives post-June additional support.

One of these measures provides that a business participating for three months in the government plan cannot proceed with staff redundancies for seven months, that is from mid-March to mid-October.

A reliable source also said that if a company either participates in the plan for a shorter period of time or proceeds with redundancies, then it will not be able to receive state support up until October.

By Eleftheria Paizanou

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Global economic policy response to the coronavirus pandemic

 

 

 

 

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