Icelandic Government Presents Third COVID-19 Response Package Skip to content
Katrín Jakobsdóttir Bjarni Benediktsson Sigurður Ingi Ráðherra
Photo: Golli.

Icelandic Government Presents Third COVID-19 Response Package

Iceland will extend its partial employment benefits scheme, streamline the financial restructuring process for businesses, and help companies pay severance packages to mitigate the economic impact of COVID-19. The measures are part of the government’s third COVID-19 response package, which was presented by Prime Minister Katrín Jakobsdóttir at a press conference in Reykjavík’s Culture House this morning.

Partial employment benefits extended throughout summer

Katrín stated that 35,000 workers are already receiving partial employment benefits through a government scheme instituted last month in order to help businesses avoid layoffs. The scheme was originally scheduled to last until May 31, but will be extended until the end of August. While currently, the government has taken on up to 75% of salaries for struggling businesses, that ratio will be lowered to 50% from July 1.

While the partial employment benefits cannot be applied to employees that have received a notice of termination, the third response package introduces financial help for companies that must resort to layoffs. Companies that have seen a drop in income of 75% or more can now apply for government funds toward severance pay, which in Iceland corresponds to three months’ salary for most employees. This measure is intended to help failing companies avoid bankruptcy.

The government will also temporarily streamline rules on financial restructuring for businesses. The changes are aimed at providing companies with support while assessing their status and until more certainty is reached about future prospects.

Measures should help tourism industry, say ministers

When questioned on whether the government was considering specific measures to help Icelandair stay afloat, Katrín Jakobsdóttir responded that the third response package measures are useful to the airline as well as other businesses in tourism. Other ministers present confirmed that while the government has been following Icelandair’s situation closely, it is the company’s management and shareholders who are responsible for the privately-owned airline’s operations.

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