“The organised tripartite co-operation and universal welfare states of the Nordic countries have encouraged an immediate, united societal response to this major health and economic crisis.”
- Andrew Scott, Convenor, Nordic Policy Centre
This catalogue details the Nordic states’ economic responses to assist workers during the Covid-19 crisis. It builds on the international catalogue of economic responses compiled by the Centre for Future Work. it is non-exhaustive and will be updated with new developments.
Wage compensation scheme
A tripartite agreement between Government, unions, and employer associations was concluded on 15 March in a record time of just 24 hours to provide temporary wage compensation to private sector employees, encouraging companies to preserve their relationship with employees during the crisis.
Under the agreement, the government will cover 75% of the wage of salaried workers, and 90% of the wage of hourly employees, not exceeding 30,000 DKK per month ($6,871 AUD) (increased from 26,000 DKK per month to 30,000 DKK on 30 March), on the condition that companies do not terminate any employees while receiving the salary compensation. The other 25% of wages will be covered by employers. Workers must use 5 days of annual leave during the period they receive compensation.
The budget estimates 2.5% of private sector workers will be covered by this scheme, but there is no ceiling on the number of workers that can be covered.
The scheme applies to any company that would otherwise make at least 30% or more than 50 employees redundant. It will last 3 months, until 9 June 2020. Some casuals and contract workers are covered by the scheme, but self-employed workers are not.
Compensation for loss of revenue for small business
Small business (with less than 10 employees) are not covered by the wage compensation scheme outlined above. Instead, they can receive compensation of up to 75% of lost revenue. The maximum compensation is 23,000 DKK ($5,268 AUD) for every person owning 25% or more of the company, per month per business.
To be eligible, the business must have suffered a revenue decline of more than 30% and generated a revenue of at least 10,000 DKK ($2290 AUD) per month prior to the crisis.
Compensation for fixed expenses
Companies experiencing a revenue decline of more than 40% may receive compensation for fixed expenses such as rent. Companies may be compensated between 25% and 80% of expenses, depending on the amount of revenue decline. This measure has yet to be formally passed, but is expected to pass without issue. It will be in force for three months, until 9 June 2020.
Further information on the Danish economic response:
Fixed sum financing for sole entrepreneurs
Sole entrepreneurs can apply for financing from municipalities consisting of a fixed sum (up to 2000 euros per month) to cover business expenses such as rent. The scheme will run for 6 months from April 1st.
Expanded coverage of existing unemployment benefits
The unemployment benefit has been extended to laid-off employees engaged in business activities or studies. This amendment to the Unemployment Security Act remains in force until 31st July 2020. (if the laid off person derives income from business activities, this is taken into account and the unemployment benefit payment is adjusted accordingly.)
Self-employed persons and freelancers will be able to access to unemployment benefits during the crisis. This proposal has been given by the Government, and should enter into force as soon as possible pending passing by Parliament.
Residence permit holders granted access to essential work
The Government has also proposed a temporary amendment to the Aliens Act and Seasonal Workers Act to allow residence permit holders (third-country nationals) to work in essential roles for security of supply and functioning of the labour market. The provisions would apply until 31 December 2020.
Working group to assess economic impact of covid-19
A working group to assess the impact of covid-19 and measures to limit the damages to the Finnish economy has been established by the Ministry of Economic Affairs and Employment and the Ministry of Finance. The group may consult experts as it sees fit, and is required to complete its report by 1 May 2020.
Further information on the Finnish economic response:
Partial unemployment benefits to complement wages
Full-time and part-time time employees can claim up to 75% of unemployment benefits to avoid job loss. Employees who have had their employment reduced by at least 20%, but no more than 75% are eligible. This is aimed at encouraging businesses to keep employers on their payrolls part-time instead of laying them off.
The legislation applies to self-employed, students and freelance workers, and to those whose employment was reduced before the Act entered into force. The benefit is capped so an individual’s income cannot increase due to working reduced hours. The act remains in effect until 1 June 2020.
Delayed company taxes and abolished hotel taxes
Company taxes can be delayed until 2021 and hotel taxes will be abolished until the end of 2021. Bank taxes and state guarantees on loans will be implemented to encourage banks to lend to companies.
Access to voluntary pension savings
Individuals will be able to withdraw a monthly sum from their voluntary pension savings during the next 15 months. The maximum withdrawal is ISK 800,000 ($8756 AUD).
One-off child allowance
Families with children (under 18 years old) will receive a child benefit payment on 1 June 2020 of 20,000 ISK ($2189 AUD) or ISK 40,000 ($4378 AUD) depending on income (if the income tax base of a single parent or the higher paid parent is less than 11.1m ISK, then the higher amount applies). This is a one off payment.
Further information on the Icelandic economic response:
Changes to the temporary layoff subsidy scheme
Norway’s existing scheme to compensate temporarily laid off workers has been modified. Prior to the covid-19 crisis, an employee was entitled to minimum two-weeks’ notice before being temporarily laid off. The employer paid the employee their full salary for the first 15 days after which the State took over payments, paying the employee 62.4% of their salary (up to 600,000 NOK for 26 weeks) ($91,276 AUD).
Under the modified scheme, the notice period has been shortened and the number of days paid at full salary has increased. Companies can now temporarily lay off workers after two days notice. They then must pay the laid-off worker full pay for two days. Following the first two days of the lay-off period, the State now pays 100% of the employee’s former wage up to and including day 20 (up to 600,000 NOK). After the 20 day period, laid-off employees can apply for the unemployment benefit.
Extension of the unemployment benefit
The unemployment benefit scheme has been extended so that benefits are granted from the first day of unemployment and the daily allowance is increased.
The three day waiting period for unemployment benefits has been removed, allowing employees who have been laid-off to receive unemployment benefits immediately after the wages paid by their employer cease.
Those with income up to 300,000 NOK ($45,638 AUD) will receive 80% of their wage, and those with income above will receive 62.4% of their wage up to 600,000 NOK ($91,276 AUD).
VAT and employer tax deferred
VAT and employer tax payments have been deferred, and the lowest VAT rate reduced from 12% to 8%.
Sick leave extended to self-employed and freelancers
Self-employed and freelancers will receive government funded sick-leave benefits after three days of sick leave.
Subsidy scheme for laid off foreign workers in Longyearbyen/Svalbard area
Foreign workers in the Longyearbyen area (part of Norway, but covered by the Svalbard Treaty), not covered by the Government’s lay-off measures may receive wage subsidies. The scheme applies to those laid off from work in the Longyearbyen plan area, with a residential address in the area, who are not Norwegian nationals nor hold residence permits in EU/EEA countries.
Further information on the Norwegian economic response: https://www.regjeringen.no/en/aktuelt/new-measures-to-curb-the-financial-impacts-of-the-coronavirus-outbreak/id2695404/
Subsidised sick leave pay
The central government will cover the cost of sick leave for April and May. This is usually covered by employers. Self-employed persons and contractors will be eligible for 14 days of government paid sick pay, and the 1-day waiting period for qualifying for sick pay has been eliminated.
Short-term layoff wage subsidy
The government has strengthened its existing short-term layoff support scheme in response to the covid-19 crisis. Employees who have temporarily had their working hours reduced will receive government support for a limited period of time. The central government will cover 75% of wage costs when hours are reduced, in order to maintain workers total income at 90% of their former income. The rest of the wage is paid by the employer.
Deferral of company payroll tax and VAT
Companies may defer social security payments, deducted tax (from workers), and collected GST to the government for up to three months to supplement cash flow. These measures take effect from 7 April 2020 but apply retroactively from 1 January 2020.
Central bank loans to companies
The central bank is directly lending another 500 billion Kroner (more than 10% of GDP) ($78 billion AUD) to companies to maintain operation and viability.
Cultural sector and sports sector economic support
The cultural sector and sport movement will receive SEK 1billion (SEK 500 million each) ($78 million AUD each) government support through the allocation of grants. The funds will be granted to activities that lose revenue due to the restrictions on public gatherings, not including State institutions.
Temporary reinforcement of unemployment insurance
The rules around unemployment insurance eligibility have been relaxed. Under an existing scheme, Swedish workers pay into unemployment funds which offer unemployment insurance to those who lose their job. To be eligible for the unemployment insurance payment, workers needed to have been a member of the fund for 12 months and worked at least 80 hours per month for at least 6 months.
These rules have been relaxed. Workers now need only have worked 60 hours per month and been a member for three months to be eligible for the payments. The salary cap and minimum amount have also been raised.
Further information on the Swedish economic response:
Note: Sweden’s approach to curbing the spread of covid-19 is beyond the scope of this catalogue. However, it should be noted that the Swedish government’s strategy has been criticised for failing to enforce mandatory physical distancing measures. That decision may be because of greater levels of social trust in other people to act responsibly, although other Nordic nations have not hesitated to apply mandatory rules.