New government support for ailing businesses secures jobs till December

New government support for ailing businesses is to kick in next week as the ‘simplified lay-off scheme’ draws to a close.

The plan – finalised in Monday’s extraordinary meeting of the Council of Ministers – aims to secure businesses (and their workforces) till December.

It’s particularly focused on companies that can show losses the fall in income caused by the pandemic is 75% or more.

Dubbed “support for progressive return”, the plan is integrated within the government’s PEES programme (Programme for social and economic stabilisation).

Explain reports, there are different supports for different levels of ‘falls in business’. In other words, companies that have suffered revenue losses only 40% can still take part. But the core focus is on those that have been worst affected by the pandemic – ie businesses within the tourism industry – and which nonetheless do not want to suspend contracts.

How it works?
Businesses with falls in income of at least 40% can reduce staffing timetables by up to 50% in August and by 40% from October.

For businesses that are making 60% losses or more, work schedules can be reduced by up to 70% in August and September and up to 60% from October onwards.

Employers will have to pay staff for the hours effectively worked, with Social Security paying 70% of the hours that are ‘not worked’.

For companies ringing in less than 75% of ‘normal business’, there is an extra support, explains Expresso: Social Security will also support the hours that are worked by 35%.

As Labour minister Ana Mendes Godinho has stressed, these special ‘support lines’ can be used by companies at different times within the August-December period.

In other words, if business is ‘good’ (or improving) they can opt out of the programme. If it suffers again, they can opt in. Evaluations will be made on a ‘month by month basis’ – and all companies taking part will have the right to either a reduction (in the case of large companies) or complete exemption (in the case of small and medium size companies) of Social Security contributions.

The only provisos for businesses taking up this support is that they must not fire staff while benefiting from it, nor can they let go of people in the subsequent two months.

As to the kind of pay workers will receive, this should pass to 77% of their habitual salary from August, and 88% from October. (Under the simplified lay-off scheme, workers were receiving only 66% of their usual pay packet).

For the time being, there has been little reported on the reactions to what newspapers are calling “an oxygen balloon to stop job losses”. But it has always been clear that businesses would continue to need government support if they are to survive the effects of the pandemic. What is not so clear is whether the time period will be enough. Business leaders have warned that companies should be able to get support right up till the start of the next tourist season, ie until next March at least.

natasha.donn@algarveresident.com