During the COVID-19 lockdown in 2020, the German government provided billions in support to small businesses, the self-employed and freelancers. Now they are being asked to repay the aid. Many are resisting.
Hairdresser Marion Alemeier still remembers March 23, 2020. It was day two of Germany’s first lockdown in an effort to contain the spread of COVID-19, when then Economics Minister Peter Altmaier (CDU) and then Finance Minister Olaf Scholz (SPD) made bold promises. In his explanation of the coronavirus emergency aid for microenterprises and self-employed individuals, Scholz said: “It is very important to me that we are providing a grant, not a loan. This means that nothing needs to be repaid.”
To which Altmaier added: “We will not leave anyone behind!”
Five and a half years later, Marion Alemeier now feels quite abandoned.
“There was a lot of hype, but none of the promises were kept,” she told DW. “Many colleagues and friends warned me at the time: ‘Be careful, you’ll have to pay this back.’ And I replied, ‘No, that’s not possible; they can’t do that.'”
At the time, Alemeier received €9,000 ($10,400) in emergency aid, money she urgently needed because for six weeks she had lost all her income. It was not until May 4, 2020, that the social distancing rules were relaxed in Germany and hair salons were allowed to reopen.
Faulty calculations
Later, however, it was announced that the subsidy had only been awarded based on an estimate of what was needed to bridge the “liquidity gap” caused by the pandemic. The reason for this was that the Federal Economy Ministry estimated that of the approximately €13 billion that the federal and state governments had paid in emergency pandemic aid for the months of March to June 2020, €5 billion had been overpaid.
As a result, tens of thousands of requests for repayment were sent out — including to Marion Alemeier. The hairdresser was asked to repay €7,000. She took legal action against the official decision and won, but the North Rhine-Westphalian state government still wants half of the money from her, €3,500, as a settlement.
Self-employed individuals such as Alemeier were able to apply for €9,000, businesses with up to ten employees could get up to €15,000, and €25,000 were available for companies with ten to 50 employees. For many, this financial support was a lifeline at the time, or at least an enormous help.
This was also the case for hairdresser Guido Wirtz, a representative of hairdressers in the neighboring state of Rhineland-Palatinate.
In an interview with DW, he said: “Politicians made promises that they did not keep. There is a tremendous sense of disappointment and anger among all hairdressers. It wasn’t until mid- to late 2024 that sales returned to pre-pandemic levels, but with significantly fewer customers.”
Many of his colleagues were so desperate that they even canceled their retirement plans to make ends meet, while others simply gave up: “Us hairdressers are dying quietly.”
Downside of German federalism
What really gets small business owners and the self-employed riled up is Germany’s federal regulatory patchwork in which each state handles the issue of repayment differently.
In Bavaria and Baden-Württemberg, those affected were unable to appeal the decision and had to take legal action immediately. The Administrative Court of Baden-Württemberg has now ruled in favor of the entrepreneurs in five cases: they were not ordered to repay the money received during the COVID-19 pandemic.
The reasoning behind the ruling will be provided at a later date, as the judgments are not yet final.
In North Rhine-Westphalia, the repayment terms on the websites changed no less than 15 times in just a few weeks.
Hesse has now imposed a moratorium, temporarily halting the review of coronavirus emergency aid. Hesse’s Minister of Economic Affairs, Kaweh Mansoori, explains the reasoning behind this decision: “Ultimately, this is not about large global corporations, but about the self-employed, small and medium-sized businesses and skilled trades. I therefore want to exhaust all legal options to give relief to those affected. For me, it is also a question of fairness.”
Hairdresser Wirtz now has one fewer employee and is repaying his €15,000 in emergency aid in monthly installments of €635.
“Politicians no longer know how to get out of this situation,” Wirtz said. “A politician once told me that they estimate the costs of processing the repayments to be significantly higher than the repayments themselves. After all, a lot of staff were hired to keep track of and handle the procedures.”
Political disenchantment
Rainer Hermann is one of the people in North Rhine-Westphalia who knows the most about the details of the COVID-19 emergency aid. In mid-2020, the lawyer founded the IG NRW-Soforthilfe (IG NRW Emergency Aid) and now supports almost 11,000 people who are fighting back against the repayment requests, including Marion Alemeier.
In his opinion, the emergency aid program is a disgraceful administrative disaster. People are not only depressed, but also extremely angry, he told DW: “I have seen highly educated people, seasoned entrepreneurs, slip into extremism — you can’t talk to them anymore. Others are completely desperate and broken. Many have already filed for bankruptcy or will have to do so shortly because, of course, the other economic aid measures are now being settled.”
Source: https://www.dw.com/en/german-businesses-asked-to-repay-covid-19-emergency-aid/a-74295702
