Additional economic measures to deal with the effects of Covid-19
Following the first economic measures, approved on 23rd March, Andorra has just approved a second package of aid and benefits to complement and reinforce the initial measures.
The aim of these changes is to protect jobs as far as possible, to preserve the productive fabric and guarantee the continuance of the welfare state. These measures are taken in accordance with the principles of joint responsibility and proportionality.
The main innovations are listed below:
Measures affecting employment
Approval has been given for the temporary suspension of temporary contracts (STCT) and for the shortening of the working day (RJL) of salaried people. Those who can benefit from these measures are companies whose activities have been suspended by a governmental decree, and those that have to operate an on-call system. Also eligible are companies which, although authorised to remain open, can show a 50% reduction in turnover for the period 1st to 30th April, 2020, compared with the same period last year.
For the self-employed whose activity has been suspended, approval has been given for a gross monthly benefit of 1,083.33 euros.
Paid leave will continue for those who look after children who are younger than 14, or who are disabled and have no relatives of up to the second degree of blood or family relationship to look after them (other than grandparents). In order to qualify, both parents will need to be in this situation, or the family will be a single-parent family.
Measures connected with Social Security
With regard to the contributions of salaried people, the Government and the company will each pay a part of the normal amount of the employer’s contribution.
For medical personnel, 100% of their salary will be paid from the first day of an absence due to isolation or a diagnosis of COVID-19, and 66% of the salary will be paid for other workers.
Self-employed people will benefit from a 50% reduction in their social security contributions, or even from their complete suspension (in which case the Government will pay 10% of the general contribution so that sickness benefits are assured).
Measures relating to rents and bank credits
There will be a 20% reduction in the rent for homes, and the period of reduction of the rent for business premises will be increased as follows:
- If the business has remained open, a reduction of 80% (previously 50%)
- If the business has operated under an on-call system or permanency, or if the activity has been suspended, a reduction of 100% (instead of the previous 80%).
When normal activities are resumed, commercial rents will be regularised as follows:
- In the first month following resumption, for businesses which remained open: a reduction of 50%
- For businesses operating an on-call system or permanency: a reduction of 80% in the first month following the resumption of activity, and of 40% in the second month.
- For companies whose activity was suspended: a reduction of 100% in the first month following the resumption of activity, of 50% in the second month, and of 25% in the third mont
There will be periods of grace for mortgage payments for homes when their amount plus the cost of essential household supplies exceeds 35% of the income of the family unit. A monthly bail-out of private pension plans will also be allowed up to a maximum of the amount of the minimum salary.
Measures relating to taxation
Finally, a new law will be prepared before 15th May, proposing a reduction in the salaries of public officials and in the country’s institutions, and the containment of public expenditure in the Government’s budget.
All measures are paltry when trying to mitigate the effects of a worldwide pandemic such as Covid-19. But Andorra has risen to the occasion by implementing new measures to try to protect the country’s business fabric (which consists mainly of SMEs and self-employed business people) and the workers in sectors such as tourism and catering, who will without doubt be the ones who suffer the most. But let’s persevere!