Four Norwegian business and labour organizations that normally would be quarreling in annual wage negotiations at this time of year have instead teamed up, along with the government, on a plan to infuse Corona-stricken businesses with badly needed cash. The goal is to prevent thousands of businesses in Norway, currently shut down to prevent virus infection, from going bankrupt.
Finance Minister Jan Tore Sanner of the Conservative Party summed up the objective: to “secure the suvival” of businesses that had to abruptly shut down two weeks ago when the government rolled out its first batch of strict Corona containment measures.
Now businesses like hair salons, dentists and physiotherapists in private practice, restaurants, bars, opticians, ski lift operators and a long list of others will be able to apply for emergency cash. The government has agreed to compensate a portion of actual costs like monthly rent payments, insurance costs and electricity bills that continue to arrive at a time when the business isn’t able to generate revenues.
“It’s a form of cash support,” Sanner announced, via a “simple and effective digital solution” that should allow businesses shuttered by the Corona virus threat to reopen, call back in their employees and simply get back to work when Corona containment measures can be eased.
‘Investment in the future’
Sanner said it’s expected to cost up to NOK 20 billion (roughly USD 2 billion) per month and will initially be in effect for two months, with extension possible if needed. The money will come right of the state treasury and, most likely, Norway’s sovereign wealth fund known as the Oil Fund, but the government views it as an investment in the future.
Economists and those involved in creating the bailout plan have also noted that failing to bail out otherwise healthy and well-functioning businesses suddenly threatened by the Corona crisis could cost a lot more in the long-run. The government and Norway’s largest employer and labour organizations have basically resorted to damage control, in an effort to prevent permanent damage to the Norwegian economy.
Sanner and others also stressed that controls will be in place to make sure the bailout isn’t abused. “Non-serious” applicants for aid will be weeded out, and the total amount of compensation will vary according to need.
Government, labour and business working together
Sanner made a point of thanking employers’ organizations Næringslivets hovedorganisjon (NHO) and Virke, the state organization representing financial institutions FinansNorge and Norway’s largest trade union confederation LO for their cooperation and input to quickly pull the bailout plan together during the past week. “We wouldn’t have managed this without your help and competence,” Sanner said.
His government colleague, Business and Trade Minister Iselin Nybø, said the rapid and effective cooperations among the three sectors “says something about how our country works.” She also thanked the business and labour organizations involved for helping the government and advising on how to act, noting that “hardly anyone is not affected” by the Corona crisis,.
New digital platform for rapid payouts
The plan has involved creation of a new portal set to be operational next week and spearheaded by FinansNorge. “We haven’t done this before,” FinansNorge’s leader Idar Kreutzer said at the government’s morning press conference, “but we are pretty good here in Norway at developing digital solutions.” He also credited the government for quickly coming up with clear and concrete guidelines for compensation and for supporting the mutual confidence needed to even initiate the pending cash payment process.
Businesses needing help will be able to fill out a digital application for compensation of actual costs, in some cases up to 100 percent. It will be controlled, money from a central state source will be transferred to commercial banks and cash compensation will be deposited directly into the business’ account.
Nybø of the Liberal Party said at the press conference that those businesses ordered to shut down because they involve close personal contact will receive the highest degree of access to the funds available. She also thanked the many businesses around Norway that had taken direct contact with the government to relate what they needed in order to survive the shutdown.
“We are all very glad the government listened,” said the leader of employers’ organization Virke, Ivar Horneland Kristensen. “We’re glad those now closed down should be able to reopen when this is all over.” His counterpart at NHO, Ole Erik Almlid, also thanked everyone involved in the project to help businesses that need cash, not credit through previously announced state loan guarantees.
Almlid said “a tsunami” has rolled over Norwegian businesses and that cash compensation from the state is “completely necessary” to keep them from going out of business. LO boss Hans-Christian Gabrielsen also believes the cash compensation needed to pay expenses that keep running during the shutdown will help preserve jobs. All six government, business and labour leaders agreed that it was most important that workers still have a job to return to when the Corona crisis eases.
Sanner was due to present the compensation package to Parliament immediately to secure political approval that was widely expected. Several top politicians from opposition parties in Parliament had already been urging such relief similar to that offered by Danish officials to Denmark’s own Corona-stricken businesses. Norwegian newspapers have also editorialized this week that businesses currently shut down should receive more help that also will help secure landlords that need to collect rent from closed tenants, insurance companies that need premium pauyments to insure coverage and banks that need liquidity as well.
“It’s burning out there,” real estate investor Christian Ringnes, who has many commercial tenants himself who suddenly have trouble meeting rent payments, told newspaper Dagens Næringsliv (DN) earlier this week. Without more state aid, “the wave of bankruptcies can be like nothing we’ve ever seen in our lifetimes.”