The design of corporate and pandemic support - miss or match?

Since the start of the pandemic, comprehensive financial aid packages have been introduced by the government. Financial aid packages introduced in the initial stages of the pandemic was done so under time pressure and uncertainty. Besides the requirement of a certain level of economic decline, companies had to meet a set of additional requirements to receive financial aid. These requirements differ among aid packages. In this report, we investigate whether these additional requirements are expected to be easier to attain for companies of different size and industry branch.

This report examines the four largest financial aid packages targeted towards companies:

  • Short-time work allowance
  • Adjustment support (aid for fixed costs)
  • Temporary payroll tax cut
  • Deferment of tax payment

During 2020, confirmed financial aid from these four aid packages totaled 138 billion SEK, where the deferment of tax payments was the largest, amounting to 72 billion SEK, followed by short-time work with approximately 32 billion SEK in total and the temporary payroll tax cut with approximately 28 billion SEK.

We study to which degree companies attain to the requirements of each aid package before the pandemic. This displays results that are unaffected by the potentially changing behavior of companies due to the requirements and formulations of the aid packages. Companies are classified by size (measured in company revenue), where we examine the applicability of aid package requirements between industry branches for small, median, and large model-companies, where model-companies are constructed from the average values of all companies in the respective size categories.

We find no general tendencies of company size affecting financial aid. When examining all financial aid packages, small and large companies acquire on average similar levels of relative aid.

More substantial differences are found when comparing industry branches. The manufacturing industry stands out as a relatively clear winner. Requirements connected to the short-time work allowance appear to be particularly well suited towards this industry branch. Requirements connected to the other aid packages are meanwhile not specifically unfit for the manufacturing industry. Companies within the hotel and restaurant industry can on the other hand be described as disadvantaged by the requirements of most aid packages. Companies within this industry branch are the least likely, in the case of the short-time work package, to fulfill the requirement of having employees that were employed three months prior.

The fact that the branch of industry which displays the largest drop in revenue during the pandemic also is expected to be the least likely to qualify for financial aid doesn’t necessary mean that the aid package requirements were wrongly formulated for the pandemic. As has been shown in the government’s preparatory work prior to the introduction of the aid packages, there are several arguments for different requirements. It does however highlight the need for reconsideration for future crises by applying aid package requirements more suited or reserved for severely affected industries.

In the report we analyze to which degree companies of different size and industry branch ex ante meet the requirements connected to the different pandemic-related aid packages. An inherent question is whether our results covaries with actual aid payments. Have the most severely affected industries also received more aid? Tillväxtanalys (PM 2021:11) has previously examined the question using a survey. We hope to also answer this question in the future by using register data from Statistics Sweden and the Swedish Tax Agency.

The design of corporate and pandemic support - miss or match?

Serial number: PM 2022:03

Reference number: 2021/181

Download the report in Swedish Pdf, 1.8 MB.


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