Montenegrin Employers Federation (MEF) supports the Government of Montenegro in implementing the measures aimed at protecting citizens from the new coronavirus (COVID-19). Protection and preservation of citizens’ health and lives is a joint priority of the entire society. It is why the MEF efforts in the coming period will focus on actions directed at preserving public health and providing support to businesses. As usual, MEF will remain committed to providing support and help to employers aiming to preserve the liquidity and continuity of their businesses as well as to keep jobs.
The first Proposal of measures was adopted by the MEF Management Board on March 17th 2020 for the sake of timely action and in order to mitigate the effects of coronavirus on the economy, while the additional measures were created based on the requirements and needs of MEF members. In addition to supporting the economic measures the Government adopted on March 19th, the MEF MB wishes to point out that despite their obvious quality these measures are not sufficient and must be upgraded depending on daily changing circumstances which duration cannot be predicted.
We believe that the Government of Montenegro will have in mind that the new proposal of measures by the MEF MB is actually a continuity of MEF activities providing a wide review of what business sector really needs and expects from policy creators and decision makers. In that sense, MEF expects that the Government and competent bodies consider these suggestions with due attention adopting those they assess as the most urgent and concrete sort of help and support to economy in these new circumstances.
Having in mind the above mentioned, the new set of measures proposed to the Government and National Coordination Body is the following:
A – Institutional framework measures
- The Board for Support to the Economy which under the NCB deals with issues related to preservation of economic activities, companies’ liquidity and jobs (such as labor relations, social protection, economic and financial issues) should involve representatives of MEF and representative trade unions;
B – Financial and credit support measures
- Ensure state guarantees to cover up to 50% of the loan to businesses prohibited to work according to temporary measures or those businesses with significantly reduced volume of work. This would influence the commercial banks in a way to enable them to create more favorable credit lines, offering lower interest rates and less complicated loan approval procedures;
- IDF to reduce interest rates on current loans to 0.5 -1.2% depending on the level of risk a concrete company is exposed to;
- IDF and commercial banks to ensure the extension of moratorium on loan repayment for companies in accordance with crisis duration;
- Provide sources and allocate grant support to entrepreneurs, micro and SMEs operating in the affected sectors with an aim to ensure working capital needed for overcoming the liquidity problems in the period after termination of temporary measures;
C – Tax-related measures
- Ensure postponement of deadlines for due tax liabilities payment and for tax application submission as well as for payment of all other taxes (including contributions on wages) from the day of entrance into force of temporary measures with the possibility of payment in up to 24 monthly installments
- Entrepreneurs and companies prohibited to work or those having drop in revenues by more than 50% should be given wage subsidies in the amount of minimum wage and exempt from payment of taxes and contributions to wages as long as the temporary measure is in force;
- Entrepreneurs and companies with reduced volume of work due to temporary measures and having drop in revenues by 20 to 50% should be given wage subsidies in the amount of minimum wage ensuring postponed payment of taxes and contributions in 24 monthly installments after the temporary measures are called off;
- Reduced VAT rate of 7% should be extended and applied on accommodation services or accommodation, food and beverages preparation and serving services in hotels and similar facilities (a proposal MEF submitted earlier to the line ministry referring to Law on VAT amendments);
- Temporary reduce rates of taxes and contributions on wages and suspend the obligation of paying other contributions related to wages during the extraordinary circumstances and while temporary measures are in force and six months following the crisis.
- Businesses in tourism and hospitality industry to be exempt from paying local utilities fees as well as fees for using temporary objects in the zone of Morsko Dobro for 2020.
- Tax Administration controls should be limited to issuance of warnings and reminders during the extraordinary circumstances and at least two months after the suspension of temporary measures while the calculation of interest rates on due tax obligations should be suspended until the temporary measures are called off;
- Enable reprogramming/suspension of obligations towards public enterprises and local administrations along with their reduction in proportion to duration of extraordinary circumstances and temporary measures applying them as such for six (6) months after the termination of measures;
- As permanent measure, amend the Law on VAT by introducing the obligation of charging the VAT after the invoice is paid starting from April 1st 2020 for deliveries completed after April 1st 2020;
- All tax payers should be exempt from paying membership contribution to tourist boards for 2020;
- In consultation with companies’ representatives and local administrations, enable the creation of a model of multilateral compensation and call for settlement of mutual obligations between companies as well as between companies and state/local administration;
D – Labor-legal relations measures
- Suspend the General Collective Agreement provisions on the obligation of employer to pay 70% of wage compensation to employee ensuring thereby the direct application of the Labor Law provision on employers’ obligation to pay 60% of wage compensation in circumstances of termination of business operations;
- Ensure wage subsidies for employers whose employees have been assign a measure of self-isolation and quarantine as well as for those employers who ensured the absence from work to parents of children less than 11 years old;
- Enable employers to introduce shorter working hours by shortened procedure, reducing wages proportionately during the extraordinary circumstances.
We are sure that employers will do everything in their power to, given the current circumstances, keep workplaces and sustainability of their companies, providing along the way full contribution to common goal of preservation of national interests.
However, these are the times when, in the hardest circumstances, we face numerous problems and when we must all agree that our regulatory framework lacks a necessary level of flexibility. We believe that all the societal actors, each in line with their role, once this situation is over, will be ready for an urgent dialogue on the analysis and termination of a large number of parafiscal charges so burdensome for companies. MEF have been initiating it many times over the past years and is ready to deploy all its capacities in order to contribute to finding the best possible solutions.
Although appreciating the Government’s efforts and quick reaction to business community requests (related to postponement of loans repayment, taxes and contributions related obligations and creation of favorable credit line by the IDF), we think that these measures must be complemented while at the same time a clear mark should be made between social policy and economic measures. Concerned by the scope of the crisis and its consequences, in the best intention we point out to the fact that the moment we are living in demands general social consensus and effective social dialogue over the essentially important issues.