19/05/2020
GERMANY – OVERVIEW: STATE AID MEASURES AND SUPPORT SCHEMES FOR FREELANCERS AND SELF-EMPLOYED
The self-employed often fall into the biggest gaps in the social safety net. But relief programs aimed at helping workers and companies weather the coronavirus are providing some temporary patches.
With freelancers, independent contractors and gig workers being around 2 million in Germany alone, a lot of those self-employed are facing the threat to lose their jobs and existence. New and expanded benefits are offering them a way to cope.
Federal aids (Hilfen des Bundes)
According to Handelsblatt (a leading newspaper in Germany), the German government has expanded its plans for 2020 with an additional budget of around 150 billion Euro due to the coronavirus crisis.
Part of this money is intended to be used for emergency funds for small businesses and self-employed persons amounting to 50 billion EUR.
Social protection for small businesses/solo self-employed
(Sozialschutz für Kleinunternehmer/Soloselbstständige)
The basic provision for job seekers (Hartz IV) according to SGB II (Zweites Buch des Sozialgesetzbuches, Second Book of the Social Security Code) secures their livelihood if no prioritised assistance to counteract the economic effects of the Coronavirus crisis is available. It provides immediate support for employees and self-employed persons, including those in the cultural and creative industries.
The access requirements to this state benefit will be simplified during the next six months in order to make these services available in a quick and unbureaucratic manner. Not substantial personal assets have not to be touched and the complex asset audit is temporarily not necessary. It will be guaranteed that people can stay in their homes (protection against lease termination during the next months) and families with income losses entering the income bracket of the child supplement benefit (Kinderzuschlag) will be temporarily redesigned. Benefits are granted quickly and with a minimum of control and restrictions by the responsible authorities.
Aid package for solo self-employed persons and micro-enterprises (Hilfspaket für Solo-Selbstständige und Kleinstunternehmen)
The Federal Government adopted immediate aid measures for solo self-employed (Solo-Selbstständige) persons and small companies (kleine Unternehmen) in economic difficulties due to the Coronavirus epidemic. Those aids total up 50 billion Euros in federal funding. The federal Government provide immediate financial help in form of grants securing the economic existence of the applicants and counteracting acute liquidity bottlenecks. Those funds can be used to pay current operating costs such as rent, loans for operating premises, lease payments and similar.
Micro-companies (Kleinstunternehmen) with up to five employees can receive a one-off payment of up to 9.000 Euro for three months. Companies with up to ten employees can take the advantage from a one-off payment of up to 15.000 Euro for three months.
Nevertheless, those aids from the Corona-Soforthilfeprograms (coronavirus income support scheme) are only aimed to support self-employed people in paying their business-related expenses but do not foresee the payment of personal income to cover immediate living costs like rent, social security and retirement contribution. Due to the competences of the individual federal states a few, like Baden-Württemberg, Berlin until the end of March, etc., paid-out benefits and aids allowing freelancers and self-employed to use a certain amount as personal income since many solo self-employed people don´t have huge business-related costs, but instead very interrelated personal and professional lives.
Actually, in Baden-Wurttemberg any self-employed of any sector will get 1.180 EUR a month tackling income loss. Although for many freelancers this amount won´t be a real help it is a step in the right direction and let self-employed feel a certain appreciation for their work. In comparison to other countries as the UK, Germany doesn’t offer freelancers and self-employed the best circumstances and conditions to develop and grow their businesses. Comparing the state aids adopted for companies and employees with the support schemes rolled out for self-employed in Germany, an unequal treatment and even discrimination against freelancers and self-employed can be noted.
Besides, most of the self-employed are reluctant to apply for Hartz IV (basic provision for job seekers) due to its stigmatisation and because they never had applied for state benefits so far.
After the meeting of the prime ministers of the federal states two weeks ago, the ministries of economics have shown awareness to the precarious situation of the solo self-employed and some have reacted immediately.
Bavaria: Special program for artists and publicists
Bavaria has adopted a special 90-million-euro aid program for solo self-employed artists and publicists. Grants will be paid out by the Staatsministerium für Wissenschaft und Kunst (State Ministry for Science and Fine Arts). All applicants have the right to access the maximum amount of 1.000 Euro three months in a row. This new aid measures refer only to self-employed paying contributions to the artists’ security fund (Künstlersozialkasse). Although this is a first step in the right decision, this program is restricted to only a few self-employed and should be extended to freelancers and self-employed of any sector.
Baden-Württemberg: Solo self-employed as “fictitious entrepreneur”
In Baden-Württemberg, a different approach is taken: Here, all solo self-employed persons are given the opportunity to attribute a "fictitious entrepreneurial wage" to themselves as part of the application for the aid programme of the Federal Ministry of Economics (maximum 9,000 euros/three months). However, this may not exceed the statutory attachment allowance of 1,178.59 euros per month. It does not replace the claim to basic security. The money for this is provided by the state.
Liquidity support (Liquiditätshilfen)
The Kreditanstalt für Wiederaufbau (KfW) will support companies, big and small, self-employed and freelancers in coping with the corona crisis by facilitating short-time financing through existing loans but with improved terms and conditions for access. Small companies, self-employed and freelancers in the cultural and creative industries will also be able to take advantage of these kind of support. Nevertheless, here we are speaking about loans, not about grants.
Aid programmes of the federal states (Hilfsprogramme der Bundesländer)
Since every federal state offers its own and very diverse support schemes and aid programmes, it is sometimes difficult not to lose the overview.
In one of the next posts my colleague Bettina Wild from Berlin is going to explain further the support schemes and aid programmes rolled out by the city state of Berlin.
Kerstin Wirnshofer
Sources:
Künstlersozialkasse: https://www.kuenstlersozialkasse.de/die-ksk/meldungen.html
Bundesministerium der Finanzen: Milliardenhilfsprogramme für alle Unternehmen; https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Schlaglichter/Corona-Schutzschild/2020-03-18-Corona-Hilfsprogramme-fuer-alle.html
SWR: https://www.swrfernsehen.de/marktcheck/soforthilfen-fuer-bw-kleinunternehmen-100.html
