COVID-19: Information on industrial policy issues

Update July 7

Almega's restart program - How we kickstart the service sector

On Monday, July 6, Almega presented its proposal for a restart program in response to the ongoing corona crisis: "How to kickstart the service sector".
The program consists of three parts. The first part focuses on measures that strengthen employers' opportunities to rehire and recruit, and on measures that stimulate the consumption of services. The second part consists of proposals aimed at boosting Sweden's growth and the productivity and competitiveness of the business sector, and part three highlights key investments crucial for a successful sustainable transition. The total cost of the measures amounts to more than SEK 150 billion, but the investment is crucial if the country's most important sector is to get back on its feet.

IT&Telecom companies, together with Almega's other unions, have been involved in the development and our previously presented package of measures is reflected in many of the proposals. Christina Ramm-Ericson, Head of Industrial Policy at IT&Telekomföretagen, highlights three areas of particular importance:
- Accelerating digital transformation such as investing in fast broadband and 5G.
"The coronavirus crisis has highlighted the need for people and businesses across the country to have access to fast and secure connectivity. Investing in fast broadband and 5G creates good conditions for society at large and is a necessity for rural areas
- Ensuring the supply of skills to businesses.
Among other things, it is proposed that workers have access to special tech checks for skills development in IT and new technologies.
- Accelerate the digital transformation of health and social care.
In light of the many challenges currently facing health and social care (linked to the coronavirus and demographic trends), we need to accelerate the digital transformation of the entire system, and it is urgent.

Take the full program on almega.se

Update June 24, 2020

Restarting Sweden - Reforms for a more competitive and sustainable Sweden

On Tuesday, June 23, the Confederation of Swedish Enterprise presented the first package of measures in its project "Restarting Sweden" to ensure that the Swedish business community emerges from the crisis with strengthened competitiveness.

IT&Telecom companies, together with Almega and other member organizations, have been involved in the project "Restart Sweden" and our previously presented package of measures is reflected in many of the proposals. IT&Telekomföretagen has emphasized the importance of supporting digital and creative entrepreneurship in the IT and telecom industry and thus solutions to today's challenges and future jobs.

IT&Telecom companies are positive about the package of measures and welcome the fact that skills supply and expanded digital infrastructure are two of the five main proposals presented. IT&Telecom companies' head of industrial policy Christina Ramm-Ericson points out some valuable proposals:

- Sweden needs to take action to stimulate fixed broadband deployment across the country and enable 5G technology to get the most out of digitalization. The coronavirus crisis has highlighted the need for people and businesses across the country to have access to fast and secure connectivity and to stimulate the use of 5G applications to competitively restart the Swedish economy.

-The supply of skills to sectors in need of labor needs to be facilitated. The increased use of digital tools, and the need for skills that arises in its wake, has become even more evident through the Corona crisis.

-We need to accelerate the digital transformation and create a national IT infrastructure for the welfare sector, especially in light of the many challenges that health and social care now face.

For more information: Visit the Confederation of Swedish Enterprise website.

Update 25 May 2020

Current policy measures in response to COVID-19

The Government has presented a number of crisis packages to deal with the effects of the outbreak of the novel coronavirus in society. Here are some current measures that have taken place in recent weeks. IT&Telecom companies are actively following developments and will continue to update regularly.

Tillväxtverket makes a U-turn - support will no longer be paid for short-term work during vacation

The Swedish Agency for Economic and Regional Growth has previously announced that support for short-term work can be provided for paid and earned vacation. On May 14, the agency changed its mind and stated that support will no longer be paid for vacation but should instead be seen as absence.
It is a tense situation today for many authorities with new regulations to apply and high pressure from companies and individuals. However, it is of great importance that companies can trust the rules and that information that goes out is correct. Many companies are under pressure today and this adds to the uncertainty and makes it more difficult for them to plan their business. This is not primarily an issue of substance, but many businesses have adapted their holidays in line with the previous rules. They need to be able to rely on the communicated messages. The announcement was also made very late in the summer, which does not help the situation, but is an economic setback for companies and counteracts its purpose of saving jobs and employment.

We are in a very serious situation and it is a worrying situation for the economy. To avoid redundancies and bankruptcies, the possibility of support for short-time work is important and then the system must work and companies must be able to rely on the rules being firm. Read also what applies to short-time work and vacation at almega.se.

Capital injection to Almi

Almi Invest receives an additional SEK 400 million in an extra amending budget presented on May 20. The money will be used to invest in growth companies. The supplement aims to bridge the crisis in small innovative companies. This supplement is a complement to the previous crisis package where Almi received SEK 3 billion for lending activities.

We welcome the capital injection to Almi. In the IT&Telecom companies' package of measures, we emphasize the importance of direct business support for startups and SMEs. They play an important role for the Swedish tech sector and for the innovation power in society, but at the same time these companies are particularly vulnerable in the current crisis.

Read more about the capital injection to Almi at regeringen.se.

Sick pay liability - extension of measures

The government has temporarily taken over the cost of the first two weeks of sick leave from companies. Initially, this only applied during April and May. On May 7, the government and the cooperation parties announced that the state will also cover the cost of sick pay during June and July. The state will also reimburse employers for higher sick pay costs in August and September as a result of COVID-19.

The compensation for the first day of sickness, which would have originally applied until May 31, is also proposed to be extended for four months until September 30.
It is good that the government is extending state responsibility for sick pay. Given that the waiting day is abolished until the end of September, it would be reasonable for the sick pay liability to be removed during the same period to support an already weak economy for many companies.

We also want more measures to be extended or retained for as long as the crisis requires, such as employers being able to reduce working hours for short-term layoffs by up to 80 percent (instead of 60 percent) even after July 31 and a continued reduction in employer contributions after June 30.

Business support based on loss of turnover

On May 15, the Ministry of Finance sent out a memorandum in reply to public consultation with proposals for legislation regarding the so-called transition support.

To be eligible, the company must have had a turnover of at least SEK 250,000 in the last financial year and a drop in turnover of at least 30%. The loss of turnover is calculated on March and April 2020 compared to the same months last year. Conversion support is given with 75 percent of the percentage loss of turnover. The proposal is proposed to enter into force on July 1, 2020.

The proposal is welcome and is a general support to all industries. In order to bridge the acute crisis and make it easier for companies to adapt, we see a need for the measure to be extended and not just cover the two months announced in the memorandum. Developments in large parts of the business sector and the labor market remain very negative.

Read the proposal on transition support at regjeringen.se.

Investing in digital infrastructure - back to square one

Last week, we had some good news! The government announced that it plans to invest an additional SEK 200 million in support for broadband. The money is particularly welcome since the Swedish Board of Agriculture, as IT&Telekomföretagen has previously commented, decided at the end of April to stop broadband support. The Swedish Board of Agriculture's decision meant that SEK 200 million that would have gone to the expansion of broadband in Sweden's rural areas was instead transferred to pastures and hay meadows - something that has met with strong criticism from several quarters. It is therefore gratifying that the government and the supporting parties have acted so quickly and have now made a decision that restores order. We are thus back at the same level of support funds as we were at the beginning of the year. This is of course positive, but more is needed to ensure that everyone throughout Sweden has the same opportunity for fast connection. The IT&Telecom companies' report Snabbt bredband för sysselsättning och tillväxt i hela Sverige (Fast broadband for employment and growth throughout Sweden ) shows that investments of the equivalent of SEK 42 billion are needed for the whole country to have access to fast broadband.

The state of the Swedish economy - a brief overview

On May 14, Minister of Finance Magdalena Andersson presented an update on the macroeconomic situation. The overall picture is that we are somewhere in between the two scenarios presented in the spring bill on April 15. The base scenario assumes that GDP will fall by 4% in 2020 and the alternative scenario in the event of a more prolonged crisis with a decline in GDP of 10%.

Regarding the situation on the labor market, the number of registered unemployed at the Swedish Public Employment Service is increasing and unemployment is now 8.4% according to data from the Swedish Public Employment Service on May 18. Among young people, the unemployment rate is 11%, which is explained by the fact that many sectors with entry-level jobs are hard hit. The number of people given notice of redundancy is also increasing again, and the Swedish Public Employment Service unfortunately expects the negative trend to continue in the future.

The latest forecast from the analysis company Radar shows that the IT market and IT development will decrease by SEK 23-24 billion in 2020 in Sweden. Parts of the digital services and telecom industry are doing well and have increased their turnover in the first quarter, but the IT consulting industry is doing worse, with more than 13,000 employees on short-time work, according to the Swedish Agency for Economic and Regional Growth.

To see the impact of COVID-19 on the members of IT&Telecom companies, a survey was sent out in the last week of April. The majority of respondents believe that the coronavirus crisis will have a negative impact on revenues in 2020. Only 11% responded that they expect revenues to remain unchanged. A majority of the participating companies say they have already laid off staff or believe they will have to do so in the future. In the survey, 66% reported that some existing assignments have been canceled or postponed and 61% that few new assignments and business have been added during the period.

A more detailed account of the statistics and forecasts was presented under "Update 16 April" (see below).

Update April 16, 2020

State of the Swedish economy - high uncertainty

We are heading for a sharp economic downturn and a clear deterioration in the labour market. The statistics and forecasts presented in recent weeks are summarized below.

The Government's Spring Fiscal Policy Bill
The Government's Spring Fiscal Policy Bill was submitted to Parliament on April 15. However, most of its content was known in advance. The Spring Budget brings together the crisis measures presented by the Government in March and April.

As far as Sweden's economy is concerned, we have a fall in growth that is about the same size as during the financial crisis. In 2020, gross domestic product is expected to fall by 4% and then recover by 2021, with unemployment rising to 9%.

The spring budget also presents an alternative scenario of what could happen if the crisis becomes more protracted and the recovery slower than previously estimated. According to this scenario, unemployment risks rising to 13.5% this year and remaining at 13% next year. In the event of a more protracted crisis, GDP is also expected to fall by 10%, recovering to 4% in 2021.

The government is also proposing changes to the expenditure ceiling to take proper account of the fact that the initiatives presented may be more expensive than expected.

The government presents a gloomy picture and it is difficult to know how deep or how long the crisis will last. The government's assessment is that the consequences of the coronavirus crisis will last for several years to come.

However, the government's main economic forecast is more optimistic than, for example, the Confederation of Swedish Enterprise's forecast, which does not consider it likely that the recovery can be so rapid and powerful.

National Institute of Economic Research
According to the NIER's forecast from April 1, the COVID-19 pandemic will hit the Swedish economy hard. How hard is currently very difficult to say, but a particularly deep recession is now at hand.

The economy is expected to shrink by more than 3% this year and then grow by 3.5% next year. In the second quarter, the contraction is expected to be more than 6%, a larger decline than that seen during the financial crisis and the 1990s crisis. However, a double-digit fall in GDP in the second quarter is not impossible, as the forecast has already been overtaken by reality. They expect the start of a recovery in late 2020 and next year, but even if growth turns positive again from the third quarter onwards, the level of GDP will still be severely depressed for a few more quarters. Unemployment will be higher than during the financial crisis and is forecast to reach around 9% in 2020-2021.

The scenario presented by the National Institute of Economic Research assumes that the epidemic will not subside until the latter part of the year and that Swedes will be able to return to a more normal everyday life in the third quarter. The base scenario is also based on the government presenting new measures to support households and businesses.

Swedish Public Employment Service
The ongoing pandemic is having a clear impact on the Swedish labor market. According to the Swedish Public Employment Service, we have never seen such a high number of redundancy notices in one month. In March, a total of 42,000 people were given notice of redundancy. This should be put in proportion to March 2019, when the number of people given notice was 3,292 and the corresponding month during the financial crisis in 2008, we had 20,000 notices.

The government's measures are expected to have a dampening effect on the number of redundancies. But the main factor determining how much unemployment increases is how long the crisis will last. We must try to curb unemployment because if it gets too high, there is a risk that it will become entrenched and we will have long-term problems.

Confederation of Swedish Enterprise
The Confederation of Swedish Enterprise has produced various scenario calculations for economic development, which were presented at their webinar on April 8.

• In their optimistic scenario, Sweden keeps the spread of infection at a low level from June onwards. In that case, the Confederation of Swedish Enterprise expects the economy to get going in the second half of 2020 with unemployment up to 10%. At the beginning of 2021, we return to more normal growth. They expect a GDP contraction of -5% in 2020 and then a rebound in 2021 with GDP growth of 8%.
• In a second scenario, Sweden keeps the spread of infection at a low level from June onwards, but a new wave of infection during October to December affects the economy. The second wave is somewhat lower, taking advantage of the experience of the first wave and more people being immune. They expect a GDP contraction of -9% in 2020 and then upwards in 2021 with GDP growth of 2%. Unemployment figures rise upwards of 15% in 2020. Consumption falls sharply in this scenario as precautionary saving in the household sector increases.
• A third scenario keeps the spread of infection in Sweden at a low level from June but is more strongly affected by the rest of the world. The domestic economy opens up in June but foreign trade is negatively affected from July 2020 onwards. We have a GDP that is largely affected by foreign trade, so this has a negative impact on the economy in this scenario. There are new sectors that dampen the economy to a greater extent and the economy does not really take off. They expect a GDP decline of -11% in 2020 and we do not resume growth in 2021 but the scenario ends up at - 2%.

Radar
Radar has developed different scenarios for how the Covid-19 pandemic will affect the Swedish IT market. The scenario that Radar holds as most likely is that everything will turn around before the fourth quarter of 2020 and Covid-19 will peak for the holidays.

Annualized GDP will be around minus 4-5% in 2020. This will be a relatively big shock to the IT business. We will only work on the bare essentials in 2020 and very little will be started up. The focus will be on savings and cost reduction.

For the IT market, there will be a big impact on service providers with short contracts or a large share of hourly business. Those with long contracts will fare slightly better. Brief upturn in hardware and software (security and collaboration solutions) for home working, but not sustained after Q2.

Radar expects the IT market to shrink by 12% in 2020, with a recovery of +6% in 2021 and 4-5% per year thereafter. This means that the Swedish IT market will not reach pre-COVID-19 levels until 2023, but this will require a stronger recovery than during the 2008-2009 financial crisis. However, it is not all doom and gloom - we have accelerated our digital maturity in Sweden by a few years when it comes to meeting and working. What we still have to work on is the ability to manage relationships, business and decisions in the same way in the digital world. These are probably the next steps in the development.

Update April 8, 2020

On April 2, Parliament voted through a crisis package.
We presented parts of the proposals at our webinar on April 2. The package includes, among other things, reduced employer contributions, a temporary abolition of deductions for sick leave, the possibility for employers to defer certain tax payments and the state taking over employers' responsibility for sick pay for a period. In addition, short-time work will be introduced, which means that staff can reduce their working hours while the government covers part of the wage costs. Together with Almega and the Confederation of Swedish Enterprise, we are working to draw the attention of the government, the opposition and the relevant authorities to various aspects of the crisis and demand immediate action. On several points, we have been successful and several supports are now available to companies today:

• The government will take over responsibility for sick pay from companies in April and May.
• State guarantee for loans to small and medium-sized enterprises up to SEK 100 billion. The government takes about 70 percent of the credit risk.
• Employer contributions are reduced by two-thirds for 30 employees in each company.
• All companies receive a three-month deferral of employer contributions, preliminary taxes and VAT.
• State aid for short-term layoffs will be introduced on April 7 but will apply from March 16. The support is valid throughout the year.
• The activity of "electronic communications infrastructure" is considered an essential function with the right to childcare in the event of a closure of a nursery or school.

Many of the measures presented by the government are good. Unfortunately, more will be needed. Together with Almega, we continue to work for further measures. Some of the issues we are pushing, which we do not think are adapted to our sector, are that the support for short-term layoffs should be expanded so that it is possible to reduce working hours down to zero (0) percent and that the conditions for those who do not have collective agreements should be improved. The reduction in social security contributions should also be reduced for companies with more than 30 employees, and the state, municipalities and regions must honor agreements with private subcontractors and not terminate contracts during the crisis. We also want to see increased investment in skills development so that businesses can recover faster once the economy turns around.

On April 7, the Moderate Party presented its proposal to ensure that Swedish businesses suffer as little damage as possible from the crisis. It is positive that they want to extend temporary short-term layoffs so that it is also possible to lay off between 80-100 percent. In businesses that have completely ceased, we must expand the systems with the possibility of full-time layoffs if we are to save jobs and companies. The Moderates also propose that employer contributions be completely abolished for two months. It is good that the proposal is being broadened so that more companies are affected and receive a noticeable reduction.

The Moderates' proposals are in the right direction. Broader and stronger measures are needed going forward to enable businesses and jobs to weather this exceptional crisis.

Update 31 March 2020

IT&Telecom companies welcome more training places, but want to see more investment in flexible forms of learning

On Monday, the government proposed a jobs and transition package that included an investment in education of SEK 11 billion, which opens up almost 50,000 training places distributed between higher education, vocational colleges and other forms of adult education.

Universities and universities of applied sciences are very important sources of digital excellence, and IT&Telecom companies welcome these initiatives. The IT and telecom sector has suffered from a severe skills shortage for decades, and experience from the previous crises (the so-called IT bubble of 2001-2002 and the financial crisis of 2008-2009) shows that the demand for IT technical skills leveled off only to quickly return to strong demand.

However, the government's efforts focus exclusively on the formal education system. The skills needs in the digital sector, and also other sectors, are increasingly focusing on informal skills where formal education is not enough. IT&Telecom companies would therefore like to see a complementary investment in individual tech checks that can go to shorter practical courses, coaching and other forms of flexible learning.

Update March 30, 2020

Deferred invoicing of membership fees We know that many of our members are going through a difficult time. That's why we are postponing the invoicing of membership fees for the first half of the year - from April 1, 2020 to June 1, 2020.   

We are in the midst of an extraordinary crisis that is affecting our society, our industry and ourselves in different ways. Some of you are working at full speed to meet the increased demand at a time when the digital transformation is happening faster than ever. Others of you are clearly feeling the impact of the shutdown of essential parts of your society and the drastic reduction in demand for your services. Whatever your situation, we are here to do our utmost to help you. We are working flat out to provide your members with the best possible support in this time of turbulence. Our employment lawyers and industry experts want to support you and influence policy in a direction that helps you. Get in touch - and take advantage of the help and support available!

We at IT&Telecom companies are also continuously reviewing what we can do further to support your member companies in the best way. It is a given that we are reprioritizing and directing large parts of our resources to deal with the corona crisis and its effects on the industry.

Read more about deferred invoicing atalmega.se.

Guidance on business-related contractual issues due to the coronavirus crisis

Almega and our unions receive many questions from members who are concerned about how their existing business agreements are affected by the crisis that has arisen as a result of corona/covid-19. In light of this, Almega has, with the support of business law expertise, developed a comprehensive guide and tips to support its members in these situations. Click on the link to read the guidance almegas-guidance-on-business-related-contractual-issues-resulting-from-the-corona-crisis

Update March 27, 2020

IT&Telecom companies' letter to ministers Magdalena Andersson and Anders Ygeman regarding rules on short-term layoffs:

The spread of the coronavirus is affecting the whole of society and, not least, it is a major shock to the business community. As you know, the situation for businesses is acute. We therefore welcome the fact that the Government is presenting measures to mitigate the effects on the Swedish economy both in the short and long term. Concrete measures to help employers have been put forward, and this is good in many areas, both in terms of deferred tax payments and the state's commitment to sick pay. But as regards the proposal linked to short-term layoffs, we urge the government to review the rules again.

IT&Telekomföretagen brings together 1,300 companies that together have almost 100,000 employees. Our member companies contribute strongly to Swedish competitiveness and welfare. It is also clear in this crisis what a crucial role our industry plays in maintaining businesses, services and social life as far as possible. If it were not for our world-leading digital sector, our digitally competent population and the fact that Sweden has, after all, come a long way in its digital transformation, we would be even weaker in this crisis. In other words, it is important that the IT and telecom industry can tackle the current crisis in a good way, not only for its own sake but also for other parts of the business community, for the public sector and for the general public.

Our member companies include many companies that have collective agreements, but also several companies that do not have collective agreements. For those without collective agreements, the regulations mean that in reality they have very little opportunity to use short-term layoffs. The reason for this is that the requirements set are so high that it will not be possible to conclude an agreement. The fact that 70% of staff at each site must agree to and participate in short-time work, and that all staff must be offered the same conditions, poses major difficulties. Employers may therefore be forced to lay off highly qualified staff, instead of retaining and laying them off. We therefore call on the government to reduce or remove the requirement. Maintaining the requirements at the proposed level will lead to redundancies, which is what the measure was intended to prevent. In addition, we would also like to reiterate what we have said before regarding the need to review and raise the salary cap to SEK 80,000 per month and allow working hours to be reduced by up to 100%.

You are welcome,

Pär Fors, Chairman of the Board of IT&Telecomföretagen

Åsa Zetterberg, Association Director, IT&Telecom Industries

Update March 26, 2020

The government's new corona-crisis package for small businesses

Yesterday, Wednesday on March 25, the government presented, the Center Party and the Liberals presented a crisis package for small and medium-sized enterprises.

It is good that the government is presenting new measures. We would however wish a broader and more powerful package that is more focusedt on direct support. IT&Telecom companies have through our collaboration with Almega among other things that the system for short-term layoffs should be expanded and the reduction of the employer's contribution should include more companies.

In short, the crisis package is about:

• A state business emergency for affected SMEs is set up. Among other things, the government will guarantee 70% of new bank loans taken out by companies facing financial difficulties due to the the coronavirus outbreak. The guarantee is issued to banks, which in turn issue guaranteed loans to companies. Thehere is no formal limit on what counts as a small or medium-sized or medium-sized enterprise. Vt is proposed that each company may borrow a maximum of SEK 75 million, but exceptions can be made.

• The temporary reduction of employers' and employees' contributions for four months between March 1 and June 30 for small businesses in the country so that only the old-age pension contribution is paid. The reduction is proposed to apply to up to 30 employees and on the part of the employee's salary that does not exceed SEK 25,000 per month. The public finance cost of the proposals is estimated at SEK 33 billion.

• The temporary discount for rental costs in vulnerable sectors such as consumer durables, hotels, restaurants and certain other businesses during the period April 1 to June 30 to facilitate and accelerate renegotiation of rents. The aim is for the government to bear 50 percent of the rent reduction up to 50 percent of the fixed rent. SEK 5 billion is set aside for this.

• Vissa tax breaks for small businesses e.g. regarding the VAT requirement. Depending on how the situation develops, the proposal could cover more than SEK 7 billion if the entire liquidity boost is utilized.

 

Link to the government website: https://www.regeringen.se/pressmeddelanden/2020/03/krispaket-for-svenska-smaforetag/

Update March 25, 2020

Rescue package for businesses and jobs

In the coming weeks, large amounts of money will be paid out in the form of wages, social security contributions and VAT. These are major expenses that businesses are facing. It is a fast-moving event and an extremely vulnerable situation.

There is a risk that unemployment will rise sharply as economies slow down. We can expect a long period of low economic activity, which will be very damaging once the economy recovers from the pandemic. Mitigating the effects of the coronavirus outbreak is essential.

Yesterday, Tuesday, March 24, the Confederation of Swedish Enterprise presented proposals on how to alleviate the companies' acute crisis. IT&Telecom companies are positive to the proposals and the package contains several of the initiatives that we have pushed through our collaboration with Almega. The rescue package means that the companies will quickly receive up to SEK 200 billion, which corresponds to 4 percent of GDP, through five different measures:

• Turnover drop rescue aid - support to companies for their fixed costs where the turnover drop has exceeded 40%, SEK 100 billion.
• Strengthening the short-time work scheme - improved conditions and possibility to reduce employment down to 0%, SEK 14 billion.
• Temporary abolition of employers' and self-employed contributions for all companies - maximum SEK 3 million per company, SEK 70 billion.
• State bank guarantees and reduced interest rates on loans so that more liquidity can reach companies - adjust the interest rate on tax credits to a maximum of 1.25% and state credit guarantees, SEK 10 billion.
• Additional measures targeting the very smallest businesses, SEK 5 billion.

 

It is welcome that direct support for the country's companies is presented and not just measures that are mainly about loans. Waiving employers' and employees' contributions for three months is a good proposal that is about removing costs for companies. The possibility for affected companies to be able to lay off up to 100 percent is positive. This is crucial in a number of sectors where activity has come to a complete standstill. We will have to wait until the decision is formally taken in the Riksdag on April 2 to see the exact wording of the proposal on short-time work.

The government now needs to take further measures to support companies in this exceptional situation, and we hope that they will take on board the Confederation of Swedish Enterprise's proposed measures.

IT&Telecom will continue to monitor developments and will provide regular updates on the current situation.

The Confederation of Swedish Enterprise's proposal for a rescue package: https://www.svensktnaringsliv.se/fragor/corona-covid-19/200-miljarder-kronor-i-raddningspaket-for-foretag-och-jobb_772106.html

Update March 20, 2020

On the government's package of measures

The spread of the coronavirus is a major shock to the economy's growth prospects. To mitigate the effects of the coronavirus outbreak, several economic measures have been taken. Yesterday, the government's amending budget clarified and quantified several of these measures.

My assessment is that many of the proposals are good and that they are in line with the proposals we have put forward in collaboration with Almega and the Confederation of Swedish Enterprise.

IT&Telecom companies, for example, have pushed the issue of short-time work. It is therefore welcome that the measure is being brought forward and that the government's share is being increased. It is also positive that the government has been responsive to the demands that the termination of consultants and hired staff should not be a prerequisite for support to be granted. Instead, the assessment should be made on a case-by-case basis based on business-critical information. However, this needs to be clarified on the Swedish Agency for Economic and Regional Growth's website, for example, so that it is not perceived as a prerequisite that all consultants and agency staff must be dismissed. Unfortunately, the proposal is not sufficient either. We believe that:

• The salary cap should be raised to SEK 80 000 to cover key staff and employees with specialist skills.
• It must be possible to reduce working hours even to 80% and 100%.
• It must be made clear that temporary work agencies are also eligible for support for short-term layoffs.

 

The possibility for companies to obtain deferral of payment of employer's contributions, employees' preliminary tax on salary and VAT that is now being presented is in line with the proposals for measures put forward by IT&Telekomföretagen and Almega. We also think that the deferrals should be made interest-free, but this is something that unfortunately has not gained a hearing. However, there is a small ray of hope in the text, which states that the government is monitoring the issue and may act to adjust the level if the current crisis becomes more protracted.

The proposal that the waiting period be abolished and that the state temporarily bear the entire cost of employers' sick pay costs is welcomed.

In summary, there is much in the proposal that is good, but more will unfortunately be needed. As we see the consequences in various affected industries, we need to be prepared for further measures.

 

Government Bill 2019/20:132 "Extra amending budget for 2020 - Measures due to the coronavirus ": https://www.regeringen.se/rattsliga-dokument/proposition/2020/03/prop.-201920132/

Update March 18, 2020

Worsening situation for the country's businesses - Extraordinary measures in a serious situation

The government has lowered growth forecasts earlier this year and this will be the first of many downward revisions. The economic consequences could be much larger and fall much deeper.

Our member companies will be affected and face major challenges from the spread of the coronavirus. Many companies will experience a drop in demand, disruption in production and start considering redundancies.

Collaboration

Through our collaboration with Almega and the Confederation of Swedish Enterprise, IT&Telekomföretagen has proposed measures to the government to mitigate the economic effects of the virus outbreak. In a crisis such as this, rapid and decisive action is needed.

What we saw from the financial crisis was that, in the first instance, adopting measures that strengthened firms' liquidity played an important role. In the event of a temporary slump in demand, this can be overcome by the availability of credit with long maturities and low costs. We have put forward clear and strong industrial policy measures that can have positive effects for our member companies.

Measures should be put in place such as:

• Reduces companies' liquidity problems.
• Stimulates demand for goods and services with a focus on affected industries.
• Can lead to the avoidance of redundancies due to lack of work.
• Relieves businesses and employees from costs related to illness and prevents the spread of infection. Part of this is to reward remote work and remote solutions.
• Strengthens the long-term competitiveness and adaptability of businesses and the workforce.
• Crises are a good opportunity to make necessary structural adjustments. One suggestion is targeted support for skills development linked to the growing demand for digital skills.

It is good that the government has acted and been responsive. The extended support for short-term work and the deferral of employer contributions announced last week are welcome. But more will unfortunately be needed. We therefore welcome the fact that on March 16, the government came up with additional measures regarding short-term layoffs, sick pay and liquidity reinforcements in line with what the Confederation of Swedish Enterprise and Almega have proposed.

Regarding the new rules and support for layoffs of employees in the context of short-time work, the government is working on finalizing documentation. One question that remains regarding the rules on support for layoffs of employees is whether companies must primarily take measures to make savings and that these measures include reviewing the use of temporary staff and consultants. IT&Telekomföretagen, with the support of Almega and the Confederation of Swedish Enterprise, has demanded that this wording be removed. Unfortunately, we do not see that any adjustment regarding temporary staff/consultants has taken place, but we are courting the government on this issue.

As we see the consequences in different affected sectors, we need to be prepared for further measures.

More reading:

SvD 2020-03-13: Ten business points to alleviate the Corona crisis

Confederation of Swedish Enterprise 2020-03-15: Proposal for further measures

Press release Ministry of Finance 2020-03-16: Crisis package for Swedish companies and jobs