Finance minister Martin Helme (EKRE) has called for compensation from the state to stores and businesses which have concessions in shopping malls, and which have lost business due to the coronavirus pandemic, yet who still have to pay ground rents.
The move is an about-turn on previous statements by IT and foreign trade minister Kaimar Karu, who was dismissed from his post by interior minister Mart Helme (EKRE) late last week. The sector is of huge significance in Estonia, employing more retail sellers alone than the entire volume of staff in the tourism and hotels sector, even before the crisis hit. Since it is coming up to a month since the government ordered most shopping mall stores closed, rental demands will have come in for most businesses, while turnover will have been zero.
In a memo submitted at a cabinet meeting Wednesday, an estimated €3 million in state aid specifically for ground rents was stated as needed, per month.
"As the greater proportion of commercial enterprises are located on rental premises, despite the lost turnover, rents must continue to be paid. This is a major financial cost for enterprises, which often cannot be overcome quickly. Therefore, state part-compensation would be an effective measure to alleviate the crisis," the memo, as seen by ERR, read.
The merchants' association (Kaupmeeste liit), the main lobbying group for the sector, had previously requested state support for rental payments demanded of shopping mall concessions throughout the emergency situation, the latter declared March 12.
Kaimar Karu, while still in his post, had said that no such aid would be forthcoming.
Martin Helme memo details
- Entitled "Proportional support for lease payments to commercial enterprises";
- states that stores in shopping malls have seen 90 percent fall in turnover due to the emergency restrictions;
- support would be forthcoming if turnover of company down by at least 30 percent, directly as a result of the emergency situation;
- lessor of rental space would also need to reduce notional rent amount for support to be forthcoming;
- overpaid state support would need to be returned;
- should the government agree with the Helme memorandum, the latter is authorized to conclude more specific procedures for processing and paying aid.
Shopping mall business facts and figures
- Total rents nationwide of potentially eligible businesses comes to €12 million per month, or four times the figure proposed by the finance minister (see above). This figure takes into account that some stores such as supermarkets are still working inside shopping malls, and covers malls greater in size than 5,000 square meters;
- merchant sellers make up about 20 percent of the total of Estonian registered companies (14,176 in total) and employ 72,000 staff. In provincial Estonia they are even more significant, employing at least 10 percent of the working populace in each of Estonia's 15 counties;
- there are 29,000 people working as sales staff in Estonia, compared with a total for the tourism and accomodation sector (pre-crisis layoffs) of 17,000;
- the merchants' sector paid out more than €500 million in labor taxes last year, and more than €1.7 billion in total, including VAT and corporate income tax;
- all stores inside malls have been closed since late March, except supermarkets, pharmacies, bank offices, mobile phone stores and medical equipment retailers. The malls' communal walkways are still open and owners and staff of closed stores can still access the properties to carry out tasks such as managing e-orders or caring for animals, in the case of pet stores.
Editor: Andrew Whyte