On Sunday, President Sebastián Piñera enacted two laws to increase the Emergency Family Income benefit to provide more resources to families throughout Chile and to set up a benefit for independent workers who bill their services using a type of invoice known as a boleta de honorarios.
The Emergency Family Income forms part of the cross-cutting agreement promoted by the President for social protection and the recovery of jobs. It has now been adjusted to complement the current income of each family group and it covers households that have no formal income and those with some formal income. It also includes families that receive other benefits, such as the Employment Protection Law benefit, unemployment insurance, benefits for independent workers, and income from contributory and non-contributory pensions.
“We are going through a period of emergency, and emergencies require emergency solutions,” the President said at a ceremony in La Moneda Palace. He was accompanied by First Lady Cecilia Morel, Interior Minister Gonzalo Blumel, Social Development Minister Cristián Monckeberg, Treasury Minister Ignacio Briones, Minister Secretary General of the Presidency Claudio Alvarado and Labor Minister María José Zaldívar.
The law increases the Emergency Family Income benefit from 65,000 to 100,000 Chilean pesos (around US$123) per person if the family does not have any formal income. This means that the income for a family of four will increase from 260,000 to 400,000 Chilean pesos (around US$492).
If the family has a formal income, the benefit will be equal to the amount needed to reach the threshold of 100,000 Chilean pesos per person.
This means that benefits will be provided to 80% of the neediest individuals in the short-term, up from 60%.
The amount of each family’s benefit will not drop. Once a family receives the benefit, the amount will remain stable for the duration of the support, though it may be increased if their socio-economic situation worsens. Furthermore, there is a possibility that a fourth month of support will be added to the three that have been approved thus far. That payment would be made in August.
“This is a source of help and relief, a contribution that is both necessary and urgent,” the President noted during the ceremony. He also praised the cross-cutting political agreement that allowed progress to be made with these social protection laws.
President Piñera also enacted the law to set up a benefit for independent workers whose income has been impacted by the pandemic. The goal is to support them and provide them with the cash flow that they need to face the crisis.
The law includes a subsidy that will cover 70% of the drop in boleta de honorarios income for those with average incomes of 320,500 Chilean pesos (US$390) or lower; 50% for those with average incomes of between 320,500 and 400,000 Chilean pesos (US$390-492); and 40% for workers with average income of between 400,000 and 500,000 Chilean pesos (US$492-609). The maximum subsidy in all cases will be 100,000 Chilean pesos (US$123) per month.
In addition to this subsidy, the worker may apply for a loan with a real interest rate of zero with a one-year grace period and three-year repayment period for the remainder up to 70% of their lost boleta income. The maximum benefit will be 650,000 (US$792).
In order to access the benefit, a worker must have issued boletas de honorarios for at least three months – consecutive or otherwise - out of the 12 months prior to April 1, 2020 or must have issued boletas de honorarios during at least six months out of the prior 24 months. Another requirement is that, during the month for which the benefit is requested, the income derived from the invoiced services must have decreased by at least 30% with regard to the average monthly income earned during the 12 months prior to April 1, 2020.
The benefit will be provided monthly for up to three months - consecutive or not - and may be received within the six-month period following May 1, 2020.
The Emergency Family Income and law to support independent workers form part of the social network provided by the Government to protect 10 million at-risk and middle class individuals who have been economically impacted by the Covid-19 health crisis.
“Chile is a family, and no family leaves one of its members alone or forsaken. That’s why I want to make clear our strong commitment to support and help all of the people and families who require assistance during this emergency,” the President said.