Many initiatives to mitigate the financial impact of the pandemic have been taken since the lockdown of most of the Danish society on 11 March 2020.
Due to a positive development with a steady decrease in the spreading of the virus, the government has decided to a step-by-step reopening of the society and therefore to phase out the temporary wage compensation scheme and other support packages.
In this document, we share information about some of the steps to reopen the society and to recover after the COVID-19.
Agreement on the recovery of the Danish economy and phasing out of the compensation packages
On 15 June, the government reached an agreement with most political parties in the Parliament about a recovery package and the phasing out of the various compensation packages.
Tripartite agreement on temporary wage compensation
On 5 June, the government and the social partners made an agreement on the phasing out of the tripartite agreement on temporary wage compensation.
The arrangement was prolonged until 29 August after which it terminates. As part of the agreement, employees on wage compensation will take up to 3 weeks of holiday during the summer. Companies cannot receive wage compensation in this period.
History
The tripartite agreement concluded 14 March covers employees working in private companies that are particularly economically affected due to COVID-19 and therefore facing having to give notice of redundancies of a minimum of 30 percent of their employees or more than 50 employees.
The companies can use the new wage compensation scheme if they opt out of the existing possibilities for temporary laying off employees without pay.
The companies in the private sector continue to provide full pay for their employees during the compensation period, even though they may be severely economically affected due to COVID-19. The employees who are at risk of redundancy cannot work, but are laid off temporarily with full pay during the compensation period.
At the same time, it is a precondition for wage compensation that, for the duration of the wage compensation period, the company refrains from dismissing employee for economic reasons.
The individual worker for whom the company seeks wage compensation must take holiday or time off in lieu amounting to a total of five days in connection with the compensation period. If the employee has no holidays, time off in lieu etc. of a duration of five days, he or she must take leave without pay or holidays from the next holiday year. The companies cannot receive wage compensation for these days.
The state wage compensation for employees who are at risk of redundancy will constitute 75 percent of the wage bill for the monthly salaries of the employees covered by the scheme, however not exceeding DKK 30,000 per month for a full-time employee covered by the scheme. For non-salaried employees, the state wage compensation may amount to 90 percent.
The duration of the wage compensation package was initially 3 months but later extended to 4 months.
Many companies have applied for wage compensation
Since the application system came into function, more than 30,000 companies have applied for wage compensation. More than 250,000 workers have benefitted from the wage compensation scheme.
Stimulation of the private consumption
Early payment of bound holiday benefits
Due to a significant change in the Danish holiday Act in 2020, 5 weeks of holiday benefits were bound to personal accounts until retirement. However, in order to stimulate the recovery 3 weeks of holiday benefits can be paid out already this year.
Tax-free amount for people on social benefits
As a targeted effort to support low-income groups, they will receive a tax-free amount of 1,000 DKK.
Summer package to stimulate domestic tourism
In June a 700 million DKK package to support domestic tourism was agreed.
Phasing out financial assistance to companies
The various compensation packages will gradually phase out and replaced by more targeted assistance to sectors still facing COVID-19 restrictions.
Compensation for fixed costs terminated on 8 July but will continue for companies still covered by COVID-19 restrictions. The new scheme will continue until 31 August 2020.
Stimulation of the investments etc.
Tax deduction for investments in research and development
A temporary increase of tax deduction (130 percent) for investments in research and development in the years 2020-21 has been agreed.
Support for the exporting sectors
In support of the exporting sectors, several initiatives have been taken to assist companies.
Fund for recapitalizing Danish companies
As a contribution to the recapitalization of Danish companies, the government will establish a fund of 10 billion DKK. It targets major important companies that have exhausted normal options for financing. One example is Scandinavian Airlines.
The airline industry
The government has established a support package for the airline industry. The primary objective is to support the domestic flights. As part of the package there are recommendations regarding the mitigation of the impact on the climate by the air traffic.
Upgrading instead of dismissal
In June, new agreements about up-skilling and re-skilling were concluded.
According to the agreement, low skilled unemployed can receive 110 percent of the unemployment benefit, if they choose to start on a vocational training in sectors with good employment opportunities.
Similarly, people with an outdated vocational training can start a new “adult” apprenticeship.
The hope is that these initiatives will increase the number of employed with a vocational training filling the gap foreseen for the coming years.
Tripartite agreement on extraordinary assistance to apprentices and companies
Since the COVID-19 could refrain many companies from establishing apprenticeships, the three parties agreed in May 2020 to establish a temporary wage support schema that will provide companies with apprentices with a 75 percent wage support until 31 December 2020.
In case of the establishment of new apprenticeships signed after 1 May, the support will be 90 percent for the rest of 2020.
Figures for unemployment
Despite all efforts taken to handle the negative consequences of the COVID-19 crisis, Denmark has experienced a high rise in the number of newly registered unemployed. Since Monday 9 March, 185,000 have registered themselves unemployed. Per 12 July, the total number of unemployed have reached 180,500.