Netherlands Restricts Dividends, Bonuses in New Wage-Aid Plan

(Bloomberg) --

The Netherlands plans a second round of financial aid worth more than 13 billion euros ($14.3 billion) to help cushion the blow of the coronavirus pandemic.

The package includes a new plan to help companies with fixed expenses after lockdown measures crippled demand. A wage-compensation program was extended for three months, but the government added conditions.

Companies seeking state support to pay large parts of wages will not be allowed to buy back shares, distribute dividends and pay management bonuses for 2020, tightening the program from the first one announced in March, according to a statement on Wednesday.

The Netherlands has started to cautiously lift restrictions on public life in an effort to restart the economy, which is projected to shrink 7.5% this year. In the next step to ease curbs, bars and restaurants will be able to reopen from June 1 under certain conditions, Prime Minister Mark Rutte said on Tuesday.

As part of the latest round of financial aid, the government will pay small- and medium-sized companies as much as 20,000 euros in the next three months for fixed costs such as rent and energy bills.

While the wage-compensation program comes with new strings attached, companies will be allowed to eliminate jobs -- a change from the previous plan, which imposed a penalty on recipients for reducing positions. Unions will still need to be consulted for cuts of more than 20 jobs.

The first round of rescue measures, announced in March, totaled tens of billions of euros, according to Finance Minister Wopke Hoekstra.

The impact from the outbreak on the Dutch economy and costs to pay for the rescue measures mean the Netherlands is estimated to post a 2020 budget deficit of 92 billion euros, Hoekstra said last month. In March, the government had still expected a surplus for the year.

©2020 Bloomberg L.P.