The Pandemic, the Politics, the Formula

In the handling of the COVID-19 crisis, it’s all about the appropriate response measures.

How varied those are and what their mechanisms are depends on – every Country’s economic and financial health, social support frameworks, their assessment of the impact per se and yes: the Country’s political colour. With that said, in terms of Labour Market Policy responses, Authorities have been able to unlock measures that were unthinkable before.

While the instruments to support companies can be bundled in: access to credit, subsidies for business costs, a postponement or cut of (tax) payments to Government, support / compensation to workers on sick leave and or the support to companies by covering parts of the wage sum, there are as many Formulas on how to set out these instruments as there are Countries, or even States / Regions / Cities, depending on the political system.

The same applies for economic support measures to workers, which can be bundled in expanded access to sick pay, increased or simplified access to unemployment benefits, a moratorium on dismissals, investments in skills or in certain countries income support for self-employed. The variations of country responses are ever most apparent when it comes to other social support measures, such as: the Government paying for the gas, water and electricity bills, “helicopter support” for childcare, extraordinary parental leave to care for children during school closures, Grocery vouchers or the suspension of mortgage payments.

Through this maze of interpretations and different applications, one country stands out right now: the Netherlands. Indeed, the Government and Social Partners have negotiated what for the country must be the “Magic Formula” - linked to one precondition: no dismissals for the period of application -: A x B x 3 x 1,3 x 0,9.

The details: A is the % of sales decline for March-May 2020 (based on the Full year 2019) / B are the total salaries in January 2020 / C are the 3 months of duration of the measure (see A) / D stands for the compensation of social charges and D refers to the compensation of 90% of wage levels.

Time will tell which Formula prevailed. And how Politics will react.