Financial and insurance businesses in Luxembourg have been denied access to the Covid-19 partial unemployment aid. They are also ineligible for the new package to support the economic recovery.
When Luxembourg implemented partial unemployment on 18 March to support companies and their employees impacted by the COVID-19 crisis, around 320 claims from financial and insurance institutions for a total of €47.7 million were rejected by the authorities.
“According to our information, banks and insurance companies have not benefited from partial unemployment. Some have requested it, but it was turned down”, confirmed Sandra Carvalho, head of communications & strategy at Aleba, the main trade union in the financial industry.
Indeed, in a press conference on 14 April, Luxembourg’s labour minister Dan Kersch sent a strong message to companies from both industries: “The government feels that these two sectors are not in crisis”, he explained. “Twelve years ago, our society strongly contributed to help and save banks. Out of solidarity, these can now help in return: It is not a moral challenge for them, but a question of economic awareness,” he said.
Hence, since the beginning of the sanitary crisis, no financial institutions have benefited from the scheme: “The share of employees in partial unemployment (related to paid employment in 2019) was of 0% in finance and insurance activities between March and June 2020,” the Fondation Idea, a think tank connected to the Luxembourg Chamber of Commerce, writes in a document.
The latest figures from Commission de Surveillance du Secteur Financier (CSSF) show positive trends and improvement on financial markets. As at 31 May 2020, total net assets in UCITS funds amounted to €4,483 billion, a 1.81% increase over one month. Over the last twelve months, the volume of net assets rose by 3.83%.
On 30 July, a new short-time working scheme came into force to replace the old scheme, providing similar simplified procedures for the economic sectors most affected by the crisis. The new scheme is set to run out on 31 December.
Redundancies now allowed
Companies will continue receiving a pay compensation up to 80 % of the salaries. It ranges from 2,142 euro (social minimum wage for unskilled workers) to a maximum of 5,355 euro.
The eligibility conditions remain broadly unchanged: Businesses must be established in Luxembourg; They must hold, where applicable, a business permit granted by the competent authority; They have to be impacted by the economic or legal consequences of an external event which makes it impossible for them to continue its normal economic activity. The event must not have been caused by the business. The scheme applies to employees under a permanent or fixed-term contract.
As a consequence, both the financial and insurance industries seem de facto excluded from the new measure: The new programme supports “businesses in the industry, hotel, restaurant, tourism and events activities, and other economic sectors, which are not involved in the financial or insurance sectors”, the Luxembourg employment agency ADEM says explicitly.
The strict policy to exclude the financial sector in Luxembourg from benefiting from aid packages contrasts strongly with more lenient attitudes in other countries, notably the Netherlands, where 11 wealth managers applied succesfully for Covid 19-related financial support as our sister publication Fondsnieuws reported. https://www.fondsnieuws.nl/nieuws/noodpakket-subsidie-voor-11-vermogensbeheerders Some of the concerned wealth managers even admitted to Fondsnieuws they probably won’t need the support, and promised to pay it back to the state.