Swiss government extends coronavirus economic support

Since April, over 190,000 companies have applied for short-time compensation for nearly two million employees - around 36% of the workforce in Switzerland. Keystone / Gian Ehrenzeller

The government is extending short-term unemployment benefits by another six months and plans to help cushion financial losses faced by public transport.

On Wednesday, the government announced that it is extending the maximum period for receiving partial unemployment support from 12 to 18 months to counteract a rise in unemployment.

Economics Minister Guy Parmelin said this was important to “stabilise the situation”.

Since April, over 190,000 companies have applied for short-time compensation for nearly two million employees – around 36% of the workforce in Switzerland.

The government also submitted a proposal on Wednesday to provide rent relief on commercial properties that had to close as a result of the pandemic. Under the billExternal link, tenants will only be expected to pay 40%, with landlords absorbing the remaining rent. Landlords that suffer hardship as a result will be able to apply for financial compensation from the government.

Parmelin indicated that additional stabilisation measures are being considered, for example for the travel industry. In a reportExternal link released on Wednesday, the United Nations estimated that the pandemic could cost Swiss tourism as much as over CHF31 billion or around 5% of GDP, if restrictions stay in place for one year.

Public transport support

The government also proposed earmarking CHF800 million to help public transport and rail freight. In a statement, the government wrote that the industry is unable to compensate for all of the financial losses as a result of coronavirus restrictions.

Simonetta Sommaruga, who holds the rotating Swiss presidency, underscored the importance of public transport in Switzerland: “They are central to our country,” she said.

The government also extended the loan limit for the Swiss national railway operator from CHF200 million to CHF750 million.The proposal is now available for consultation until July 22.

From surplus to deficit

Finance Minister Ueli Maurer announced on Wednesday that he expects a budget deficit of at least CHF1 billion next year as the government shells out money to prop up businesses affected by the pandemic. Without the virus, the 2021 budget was expected to have a surplus of CHF2.2 billion. It is estimated that coronavirus debt will eventually reach CHF20-35 billion.

The government doesn’t plan to submit the 2021 budget until September and will not decide how to pay back the debt until later this year. He doesn’t anticipate this will require raising taxes.

Maurer expressed confidence in an economic recovery and the country’s market attractiveness. “We will come out of this with a black eye,” he told the press.