March 19, 2020 / 9:23 PM / 15 days ago

Czech government will compensate wage costs to firms affected by coronavirus

PRAGUE (Reuters) - The Czech government will compensate companies affected by measures taken to slow the spread of the coronavirus for their costs of paying wages, Prime Minister Andrej Babis said on Thursday.

The government has pledged to pour up to about $40 billion, including $4 billion in aid and the rest in loan guarantees, to firms to help the economy recover from huge losses caused by shutdowns aimed to reduce infections.

Firms have called for quick action to avoid mass layoffs in industries such as leisure, travel, retail and hospitality that have been forced to close.

The Central European country had 134 new cases of illness caused by the coronavirus on Thursday, bringing the total to 694, with no deaths so far.

Ministers told a news conference the government would reimburse 80% of wages to workers during forced closures of operations, while the companies would pay the remaining 20%.

The government will also foot the bill for partial wage payments to workers who have been quarantined or looking after children during school closure.

Industry and Trade Minister Karel Havlicek said the government would also provide interest-free loans and guarantee and subsidise more interest-free credit to be given via commercial banks, to bring about 40 billion crowns in interest-free credit to firms in the first such programme.

The country’s main union group said on Thursday the economy, heavily dependent on manufacturing and exports, would drop by 5-8% this year if the coronavirus crisis lasted for three months.

Reporting by Robert Muller and Jan Lopatka in Prague; Editing by Chris Reese and Matthew Lewis

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