Government cooks up €123 million support package for restaurant industry

The hospitality industry association says the amount is not enough, and they're demanding a €350 million package instead.

File picture of sign at closed restaurant, April 2020 / Credit: News Now Finland

The government has unveiled a new package of financial aid for restaurants, cafes and bars which were forced to close down when nationwide restrictions were imposed to slow the spread of coronavirus in early April.

Restaurants, cafes and licensed premises must stay closed until the end of May but Parliament had already said that a compensation fund must be set up to cover reasonable costs and recompense owners for lost revenue while their businesses are forcibly shut down.

The new package earmarks €40 million for re-employment aid and another €83 million for financial compensation of lost earnings and running costs like rent.

“There are about 9,600 companies in the sector, and the combined turnover is more than four billion euros” says Minister of Labour Tuula Haatainen (SDP).

Any compensation will be offset against any other funds the business might already have received from other official sources like Business Finland or Ely Keskus.

“Our objective is to reasonably compensate for the restrictive measures and encourage companies to employ workers. With this model we can support not only companies but also enable a return to work for as many people as possible who have been laid off or dismissed as a result of the coronavirus epidemic” says Haatainen.

What can businesses apply for? 

When it comes to support for re-employing staff, businesses can receive up to €1000 per staff member as long as they’re going to be paid at least €2,500 for the three months after the restrictions end. This is supposed to encouraged businesses to hire staff that may have been laid off when the restaurant, bar or licensed premises closed.

Companies can get this support for up to 800 staff.

When it comes to getting compensation to offset the negative impact of closing the business, or restricting it to take-away service only, the amount is calculated using a percentage scale and looking at their earlier takings.

Companies will be paid 15% of the difference between their January and February average, and what they made in April.

Most companies won’t need to apply for the money separately, it will be calculated based on VAT returns.

Reaction to the new funding package 

The Finnish Hospitality Association Mara says the proposed compensation “is not enough to save restaurants and jobs.”

“Thousands of companies in the industry are threatened with bankruptcy through no fault of their own” says the industry association, and demands that the government increase the level of compensation being offered to €350 million.

Celebrity restaurateur Henri Alen who has been very vocal on social media about how badly the industry has been hit by coronavirus asks how the government can base the compensation package on January and February’s average takings, which are traditionally the quietest months in the restaurant industry.