New companies claim unequal treatment

Owner of restaurant Tramm nr 4 Andrus Rebane. Photo: Sander Ilvest

Payouts of the next round of the Unemployment Insurance Fund’s salary support measure will start in April, while a lot of companies will not qualify this time around. Their hopes lie with Estonia’s supplementary state budget instead.

Just like in spring, the fund’s recent round of salary support will leave a lot of companies rather unhappy. Newcomers are especially disgruntled.

The government has announced a salary support measure in light of new coronavirus restrictions from Thursday that companies hit hardest in the crisis can apply for starting on April 1. The applications will be processed by the Unemployment Insurance Fund. Companies the March turnover of which has fallen by 50 percent comparted to the period between December 2019 and February 2020 qualify.

This means that any company that wants to qualify for support must not have been created later than February 2020.

Owner of restaurant Tramm nr 4 Andrus Rebane describes the problem: “There are several things wrong with this salary support scheme. Those who only started their business recently have been left in the cold.” Rebane said he opened in June of last year. He still qualified for the recent salary support round that ended in March. “But I no longer qualify for this supposed continued support. Am I suddenly no longer sustainable?” the businessman asked. Rebane said he tried to find out the reason for the new conditions but was only told from the fund that the rules were made in cooperation with the government. “An employee of the fund said on Delfi [news portal] that older companies could not foresee or take precautions for the crisis! But this is unequal treatment and I’m far from being the only one. The state is ultimately at fault – everything should have been locked down in November or December instead of waiting this long and having entrepreneurs run around,” Rebane said.

Communication specialist for the fund Lauri Kool confirmed Rebane’s diagnosis. “It was found that companies that have been in business for longer could not take the coronavirus into consideration when making investments, while newer businesses could,” he said in terms of the logic behind the instrument, adding that the same problem cropped up last spring. It has been suggested in the media that the real reason for the constraint is that the fund only has €39 million for the scheme. Figuratively speaking, drawing up the supplementary state budget was postponed until every last cent was spent.

Kool said that other benefits for both unemployed and employed persons will be retained and that there are sufficient funds for them. People who lose their jobs or are laid off do not have to be concerned. People can also work odd jobs [during the benefit period]. “These are major and rapid changes,” Kool said.

No solution yet exists to match the needs of Andrus Rebane. “Are they looking to make sure their initial benefit was for naught? Want my employees to turn to the fund? Ours is not some kiosk but a company that runs a restaurant on 400 square meters and has ten employees!” Rebane said.

The date of the company’s creation is not the only problem with the recent round of support. Entrepreneurs criticized support distribution being based on [Classification of Economic Activities] EMTAK codes where it is possible two companies working in the same sector can be treated very differently.

Head of the Estonian Employers Confederation Arto Aas said that salary conditions will become clearer this week. “Everything else would be speculation at this point,” he said after attending a meeting at the Ministry of Finance.

Entrepreneurs’ hopes lie with the March supplementary state budget as the Unemployment Insurance Fund has made it clear it has run out of options, whereas government reserves are also all but spent. Estonia can apply for aid from the European Union – a request was sent out on Wednesday – or take out a loan.