Emergency Aid Chaos: The ordeal

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The promise made by Minister of Economic Affairs Peter Altmaier

The cost of living privately

chaos

What’s next?

A speculation

image: Luca Nardone / Pexels

There is increasing chaos in emergency aid for the self-employed in the Corona crisis, and political promises are not kept. There is a risk of bankruptcy

The federal and state governments have put together impressive billions to support the economy in the corona crisis. Large corporations receive loans, the short-time work allowance for workers is extended and increased, the self-employed receive emergency aid, and the cultural sector, which is particularly affected, is also to be supported.

As good as it all sounds in theory – in practice it hooks and hangs. Aid often does not arrive where it is needed, constantly changing rules and conditions unsettle those who would actually be entitled to support, and now NRW has also stopped the repayment process for emergency business aid because its modalities are in line with the original application requirements disagree.

The promise made by Minister of Economics Peter Altmaier months ago not to leave anyone behind has long since become an impenetrable chaos of responsibilities and more than bumpy implementation.

North Rhine-Westphalia at the end of March 2020: When it became clear that the fight to curb the corona pandemic about a partial lockdown including business closures could no longer avoid, the state government rushed ahead and submitted a form even before the federal government had nailed it online, through which the self-employed can easily apply for emergency aid, between 9,000 and 25,000 euros, depending on the size of the company and to bridge the coming three months.

The tender explicitly states that the money may not only be used to cover operating costs, but also for private living. However, the Federal Ministry of Economics is opposed to this by announcing that it will not take over funds for private living – the country itself has to raise this. Apparently you get cold feet in Düsseldorf – and the passage disappears without comment on April 1st. Many of those affected cannot laugh at it. An April Fool’s Day, a bad one.

Now it is legally clear – it is contractually what was agreed and recorded at the time of application. That means: From a purely legal point of view, anyone who submitted their application before April 1 can use the approved funds to live their lives. However, the state of North Rhine-Westphalia does not want to know anything about it, and those affected have not yet received a binding answer.

This is just one of the innumerable examples of the chaos that has arisen around the world about emergency aid, the implementation of which is quite far from “uncomplicated”. This chaos, as well as other constantly changing and contradicting rules – including the question of which aids can and should not be combined – have ensured that a large number of self-employed persons who are entitled to a claim have not even made an application. And that continues.

Some examples:

• Since the federal emergency aid was only allowed to be used for operating costs in the first round (some federal states have installed different solutions), the self-employed were referred to unemployment benefit II to cover their living expenses. For those affected, there should be a greatly simplified application and approval procedure without an asset check and with full rental cost assumption. That was politically agreed. However, according to reports from those affected, it was found that many employment agencies did not implement the new regulations and in some cases have not yet implemented them.

• The simplified ALG II should actually be combinable with the emergency aid for operating costs (there is no other way if the emergency aid is earmarked) – but this also did not work in many places because employment agencies counted the help on the ALG II, which means the whole construct collapsed in some sufferers.

• Initially, it was said that the emergency aid did not have to be paid back, but it was quickly collected again. Now it has to be calculated up to September: Those who, contrary to expectations, have generated enough income to be able to cope without state support must repay the money received by the end of the year.

This is legitimate – but suddenly rules appear in the small print that did not exist when the application was made: individual items of expenditure may not exceed EUR 800 (which is absolutely unrealistic in some industries), and personnel costs must not be claimed. NRW Minister for Economic Affairs Andreas Pinkwart then stopped the billing process. He only wants clarity from the federal government on these controversial points.

• Surveys have shown that more than half of the previous recipients of emergency aid must repay the funds in whole or in part – which is often not due to the fact that they got through the lockdown so well, but rather because of unclear rules regarding the allocation of funds.

• Minister of State for Culture Monika Grütters has meanwhile launched an aid package worth EUR 52 million to support the cultural sector. That sounds like a lot of money. If you put it as a nationwide pot in relation to the 105 million euros that NRW alone is sending to the artists, the number is already significantly less impressive.

And here, too, the Kulturrat NRW criticizes the award modalities: The grants and grants that come from Grütters apparently exclude several branches of art. So it says at the cultural council:

“This is an ill-considered approach, which we criticize. The mistake is the same one that the federal government made at the start of state aid in the Corona crisis: it refrains from taking a plan that is appropriate to the scene, because limited funding instruments are already available The self-employed do not receive economic aid because there are already job centers, as little as they are suitable to compensate for loss of earnings.The early music scene does not receive any scholarships because the music fund exists as if it were an instrument for the whole Musical life, but his statute has no relevance for large parts of musical life. ”

The cultural sector is particularly affected by the crisis, as the main revenue is generated from public events – and until further notice, these are not possible or can only be carried out to an extremely limited extent.

The number of infections, which is now rising sharply due to unreasonableness in the population and uncoordinated and hesitant politics, should make a second lockdown inevitable, unless countermeasures are taken immediately. And many entrepreneurs and the self-employed will not survive this.

Even with the emergency aid, many have got into trouble. An insolvency wave towards the end of the year would be a social as well as an economic catastrophe, since there are other companies and therefore jobs attached to every small business and also to every solo self-employed person, and with them jobs that are dragged into the depths.

The bottom line is a simple calculation: which is more expensive? Now to provide those affected with money as simply as previously promised and thus help them through the crisis – or to let them go bankrupt, which not only immensely affects Germany’s economic performance, but also the social security funds through exploding expenses with falling revenues Would be subjected to an ordeal for years?
(Gerrit Wustmann)

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