We need changes to the strict cost support policy and better predictability for the summer tourism season

The Finnish Commerce Federation finds the 30% turnover limit proposed in the draft law for cost support to be excessive. The turnover of many businesses in the commerce sector has been reduced by 20–30% due to the COVID-19 measures of the authorities and the resulting changes in consumer behaviour. In some cases, the intensive drop in turnover has been prolonged by more than a year as the pandemic continues. The criteria for support proposed in the draft law will likely prevent a large share of businesses in the commerce sector from receiving cost support.

“In the commerce sector, a 20–30% drop in turnover is so significant that the costs of the operations cannot be adjusted in a corresponding proportion. We believe that the turnover limit to cost support should be reduced to 20%,” says Mari Kiviniemi, Managing Director of the Finnish Commerce Federation.

According to the Finnish Commerce Federation, this could be achieved with a national decision in terms of the general cost support. This would also ensure that the support would be a better response to businesses suffering from the prolonged drop in turnover. Moreover, reducing the turnover rate would support the realisation of objectives previously set for the Act on Cost Support. The Federation notes that the Constitutional Law Committee stated the importance of reasonable compensation for businesses in connection with all restrictive measures in line with the Communicable Diseases Act.

“Even though businesses in the commerce sector have not been closed on the basis of the Communicable Diseases Act, the indirect impact of the restrictions and recommendations has been considerable in the commerce sector and has factually restricted the freedom of trade. This is why it would be reasonable to compensate businesses for the negative financial effects caused by the restrictions,” says Kiviniemi.

The restrictions on movement, proposed by the Government and later withdrawn from Parliament, and the related public discussion, were also heavily reflected in the customer and sales volumes of brick-and-mortar shops.

The strict support policy weakens the international competitive strength of Finland

Compared to other EU countries, Finland has offered very limited support to businesses during the pandemic. According to the European Commission, the crisis support paid to businesses in Finland last year was the third lowest in the EU in proportion to the GDP. Ireland and Croatia were the only countries that provided support lower than Finland.

The strict support policy has also been reflected in the commerce sector. In the second round of applications for cost support, only 33.5% of businesses in the retail sector got their support application approved, and a total of about EUR 6.5 million was granted to said sector.

“The scarcity of cost support weakens the international competitive strength of Finnish businesses as well as their abilities to offer employment and investments,” says Kiviniemi.

Future outlook of businesses exceptionally vague

The festive season in the summer is approaching, but it is still unclear whether Finns will be allowed to organise parties and whether companies will be able to invest in the high season. The opening of tourism services also seems uncertain at the moment, and any decision-making processes are slow and rigid.

Foreign tourism is crucial for businesses in specialty goods trade and daily consumer goods trade near the Russian border, in Helsinki and in the tourist destinations of Lapland, for example. The requirement of a negative COVID-19 test result for people arriving in the country has been attempted to be included in the act, and a new proposal on a test certificate is being prepared by the Ministry of Social Affairs and Health. The Finnish Commerce Federation believes that progress should be made quickly.

“The slow opening of the economy has a considerable impact on the turnover of businesses in the tourism and commerce sector. The future outlook of businesses is exceptionally vague. We need quick and unambiguous decisions as well as proactive communications on relaxing the restrictions,” says Kiviniemi.

For more information, please contact:

Mari Kiviniemi, Managing Director, Finnish Commerce Federation, tel. +358 (0)50 511 3189, mari.kiviniemi(at)kauppa.fi