May 7, 2020 / 6:08 PM / 22 days ago

Czech government to give companies short reprieve on social contributions

PRAGUE, May 7 (Reuters) - The Czech government approved a deferral of payments into the social insurance system, hoping to leave companies with more cash as they face the economic hit from the coronavirus pandemic, Labour Minister Jana Malacova said on Thursday.

The companies would be able to postpone the payments, which amount to 24.8% of each employee’s gross salary, for May, June and July, before paying in October, with interest.

The payments, which fund the country’s pay-as-you-go pension system, usually amount to 28 billion crowns ($1.11 billion) a month, the minister said.

The postponement is aimed at helping businesses which have either stopped or severely curtailed activity because of measures aimed at curbing the coronavirus outbreak. The proposal requires approval by parliament.

The government is on course for a record budget deficit seen at 300 billion crowns in 2020. It has pledged more than 1 trillion crowns in aid the economy, mostly through loan guarantees. The Finance Ministry sees economic growth falling 5.6% this year, although others have forecast an even deeper drop.

The Czech Republic has seen a significant slowdown in the number of new cases of coronavirus in recent weeks, enabling the government to stick to its plan of gradually easing lockdown measures.

From Monday, restaurant terraces, hairdressers and larger shops are set to re-open for the first time in nearly two months. Another phase for bars, restaurants, hotels and more services is scheduled for May 25.

$1 = 25.1480 Czech crowns Reporting by Robert Muller; Editing by Kirsten Donovan

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