More flexibility required for sector limitations and grounds for application

The sector limitations for cost support are very problematic as there are major company-specific differences within sectors.

“In the commerce sector, there are many companies whose field of activity is not among those eligible for support under the definitions in the government decree, even though they have suffered considerably due to a decline in turnover as a result of the coronavirus pandemic,” says Simo Hiilamo, Director, Public Policy and Advocacy, Finnish Commerce Federation.

Examples include many companies operating in the daily consumer goods trade, companies located at transit points, in office areas, tourist resorts and near territorial borders. In addition, there has been a significant decline in the turnover of companies operating in the wholesale trade of alcohol and other beverages as there has been a major decrease in sales to restaurants due to restrictions imposed on restaurants. Cost support is not available to this field of activity.

The particularly weighty grounds for support must be made more flexible

Based on the information available to the Finnish Commerce Federation, the possibility to apply for support on the basis of particularly weighty grounds, the so-called special paragraph related to the sector definition for the cost support, has so far been subject to very strict interpretation and, despite applications, no support has been granted to companies in the commerce sector who do not operate in the fields eligible for support under the government decree.

“It is very important that the special paragraph, that is, the particularly weighty grounds for applying for support, are made more flexible,” Hiilamo says.

Currently, the statement of reasons for the government proposal states that only limitations governed by public law and written regulations are considered as particularly weighty grounds. According to the Finnish Commerce Federation, recommendations given by authorities, such as the recommendation concerning remote work, that have a direct effect on the operations of numerous companies regardless of the sector should also be deemed particularly weighty grounds.

“The recommendation concerning remote work has had a major effect particularly on the commerce sector, such as in the fashion industry and the retail business for stationery and office supplies, which is a sector that was not within the scope of the cost support,” Hiilamo says.

The maximum amount of cost support is not sufficient for major employers

The maximum cost support is determined to be EUR 500,000, as was the case with the previous cost support. In practice, companies that received the maximum amount of support in the first phase of cost support can be granted further support for a five-month period, with the maximum total amount being EUR 300,000 due to the EU’s temporary maximum limit for government support being EUR 800,000.

As a result, some of the companies eligible for support will not receive sufficient help through the cost support in their difficult financial situation.

“The problem concerning the maximum amount of cost support applies especially to companies who are major employers and who use a lot of subcontracted services,” Hiilamo states.

In order to ensure that sufficient support is available to companies who need it and who are eligible for it, the Finnish Commerce Federation is of the opinion that the maximum limit of the EU’s temporary government support regulations valid at the given time should be applied to the coordination of various support forms. If the coronavirus pandemic continues and further cost support is available to companies, the other support forms enabled by the EU’s temporary government support regulations should be utilised, such as support for uncovered fixed costs.

For further information, please contact: Simo Hiilamo, Director, Public Policy and Advocacy, Finnish Commerce Federation, +358 (0)50 350 7564, firstname.lastname@kauppa.fi