A government package of financial support for the hospitality industry announced yesterday is on hold after senior Centre Party politicians raised objections to the way some aspects of it would be calculated.
Broadsheet paper Helsingin Sanomat first reported (link in Finnish) that Finance Minister Katri Kulmuni wants to look again at plans to calculate businesses’ lost earnings based on an average of takings in January and February this year – traditionally a quiet period for bars and restaurants.
"At the beginning of the year, many restaurants are trading less, so it’s right that parliament look again at the time period for compensation," Kulmuni confirmed in a text message to Yle.
Her Centre Party colleague Mika Lintilä, who is the Minister for Economic Affairs, also confirmed the move on Twitter.
The Centre Party’s surprise objections, coming a day after the government unveiled its long-awaited support measures, echo complaints made by business owners about the inflexibility of the proposals.
Bars and restaurants hit hardest
"What if you have a bar that’s only open in the summer, or only open from 1 May? What if you have a bar that was being renovated in February," Oulu bar owner Pekka Paurola told Yle.
"If you're going to base it on turnover, maybe do the last the last full year and divide that by 12," he said.
The Finnish Hospitality Association (MaRa) says bars and restaurants are "undoubtedly" some of the businesses hit hardest by the Covid-19 pandemic, along with the tourism sector which experts say could lose almost 11 billion euros this year.
The government’s stalled support package comprises 120 million euros for restaurants, cafes and bars forced to close by emergency legislation aimed at slowing the spread of coronavirus.
Outside of concerns over basing compensation on the quieter winter months, bar and restaurant owners are also raising the alarm over their concerns that the government money will disproportionately benefit businesses that already cut costs by laying off staff during the crisis.
The Ministry of Economic Affairs and Employment says "only the amount of inflexible running costs of the change will be compensated," and that "15% is considered a reasonable compensation."
'It doesn’t seem fair'
But an average bar’s fixed costs are often closer to a third of its spending, covering things like rent, electricity and maintenance said Pekka Paurola, owner of 1bar in Oulu. "If you can only pay 15%, that might get you the rent," he said.
Paurola is the vice president of the Oulu chapter of MaRa, although he spoke to Yle in a personal capacity as a bar owner affected by the coronavirus crisis.
He argued that the government’s funding package will effectively penalise those companies who have kept staff in work, or landlords who have reduced or waived rents for their tenants.
"Those landlords that have forgone rents and have contributed in this crisis, they get nothing," he said. "Those that have decided that it's business as usual, they get something, and it doesn't seem fair."
It’s a concern echoed by Josh Wert, CEO of the Fat Ramen noodle bar in Helsinki.
'A knee-jerk reaction'
Wert said his company has kept all but three members of staff in work by pivoting heavily to making food for delivery, opening three new "dark kitchens" – restaurant kitchens that exist only to serve delivery services like Wolt or Foodora. He said the three employees laid off were unable to come in to work as they either belong to groups at high risk from Covid-19, or live in households with an at-risk person.
"Who actually gains from all of the measures that have been put in place by the government is companies who had a knee-jerk reaction at the beginning of this crisis, laid off everybody, closed the restaurants," Wert argued.
"So the people who took no risk, who put the burden of their staff on somebody else, the government, the unemployment fund, those people are going to take a 15% profit off imaginary sales," he said.
"The effects of the coronavirus crisis on the business of restaurant and café entrepreneurs have been remarkably severe, and the forms of support or other measures prepared to mitigate the effects so far are not sufficient to meet Parliament's requirements. For these reasons, we have prepared a support model for the restaurant sector," Minister of Employment Tuula Haatainen said in a statement released on Wednesday.
"Our objective is to reasonably compensate for the restrictive measures and encourage companies to employ workers.
"With this model we can support not only companies but also enable a return to work for as many people as possible who have been laid off or dismissed as a result of the coronavirus epidemic," she continued.
Innovation funding
The businesses who spoke to Yle News also raised concerns over conflict between funding available from Business Finland and the new package.
Both Wert and Paurola's businesses have received so-called "business innovation" funding from Business Finland, which is intended to help pay for businesses to adapt to the coronavirus pandemic.
This funding would be offset against the compensation companies could receive for their fixed costs. According to the Ministry for Economic Affairs and Employment, "any other support received by a company may affect the final amount of support."
Paurola fears that this means his business could miss out on money intended to pay for costs like rent and utility bills, despite being in receipt of government money from another source.
"There has been no leniency given to Business Finland or, I believe ELY Keskus," said Paurola. "If you do decide to use those for rent or something, you may have to pay it back."
Yle News has contacted the Ministry of Economic Affairs and Employment for a response.