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Gov't pledges €120m to shore up restaurants hit by crisis

The government has promised 1,000 euros per employee to help restaurateurs re-hire laid-off staff.

Tampereen Kauppahallin Neljä Vuodenaikaa-ravintola oli suljettuna 25. maaliskuuta 2020.
Government ordered restaurants to stop serving dining customers in April, but many saw business drop off even before that. Image: Miikka Varila / Yle

Restaurateurs have been promised 120 million euros in direct compensation to re-hire furloughed employees and to compensate for lost sales resulting from the novel coronavirus crisis.

On Wednesday evening Labour Minister Tuula Haatainen unveiled a two-tiered funding model for restaurants ravaged by forced closures to stem the spread of the virus.

According to Haatainen, the first plank of the rescue programme is an employment promotion measure that offers businesses 1,000-euro per employee to encourage them to re-hire workers who had been laid off.

Haatainen noted in a statement released on Wednesday that coffee shops, restaurants and bars had been closed for business since 4 April and that they would remain shuttered until 31 May. She said that altogether 40 million euros had been allocated for this purpose.

Some strings attached

In order to qualify for the grants, restaurateurs need to pay employees at least 2,500 euros over a three-month period after restrictions are lifted at the end of May.

Additionally, businesses can only receive the funding for a maximum of 800 employees and any special coronavirus aid that they previously received, whether from local economic development centres or their municipalities, would affect the amount they receive under the new scheme.

Restaurants will have to apply to local economic development centres or local employment offices for the funding.

Relief for lost sales

The second aspect of the programme provides support for restaurant business that had to contimue paying fixed costs after the government declared a state of emergency. According to Haatainen, businesses would be entitled to a maximum of 500,000 for lost sales. The total amount allocated for this measure was about 83 million euros, Haatainen said.

In this case as well, possible compensation would be affected by other special coronavirus funding previously reseived by local economic development centres or from Business Finland.

This form of support would not require restaurants to apply, but would be automatically paid out based on estimates of earnings from Value Added Tax returns filed with the Finnish Tax Administration.

MaRa: Funding doesn't go far enough

Meanwhile the Finnish Hospitality Association Mara, said that the government's funding pledges don't go fare enough. Instead, the organisation said that the budget for the support scheme should have been 350 million euros.

The organisation pointed out that businesses in the sector found themselves in financial difficulty through no fault of their own, because of government's decision to shut down dine-in operations to curb the spread of the virus. On top of that, they have to wait until summer to re-open their doors to customers.

"The compensation proposed by government is not enough to save restaurants and jobs. Thousands of businesses in the field are faced with bankruptcy through no fault of their own," MaRa said in a statement.

Commendation and criticism from union

The service sector union PAM, noted that two-thirds of the 90,000 people working in the restaurant trade have been temporarily laid off.

"The government has tried to work conscientiously and we are grateful that support is finally available because it is essential. We hope that the funding will be dispensed quickly and without problems," PAM chair Annika Rönni-Sällinen said.

However she criticised the government's slow action in coming to the sector's rescue and said that she hoped that the delay had not caused firms to go under.

"The government also has to prepare for [the fact that] this support will not necessarily be enough if the number of applicants and the costs are greater than estimated. In that case additional support will be needed," she added.

According to the government's estimates, there are about 9,600 firms whose primary business is in the restaurant sector. Revenues in the sector are estimated to be around 5.2 billion euros annually, if part-time players are included.

Edit: Updated at 7.10pm to include reaction from hospitality association MaRa and service sector union PAM.

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