Since regaining its independence, the Estonian government has followed policies of fiscal consolidation when responding to economic crises. Its response to the COVID-19-crisis has been quite different – it has authorized additional expenditures, cut taxes and incurred considerable debt. This paper gives an overview of the budgetary measures adopted and explores the question: why was it different this time?
The authors draw upon policy documents to zoom in on the main political, institutional and economic factors that help to explain Estonia's departure from extreme fiscal conservatism in the midst of the global pandemic.
The authors found the key political factors to be the party composition of the government, policy diffusion and policy learning. Key economic factors included Estonia's very low level of debt prior to the crisis and credit market advantages gained from Eurozone membership.
Estonia presents an interesting case because in all previous crises it responded with fiscal consolidation, whereas it is now responding with extensive fiscal stimulus.
Raudla, R. and Douglas, J.W. (2020), "This time was different: the budgetary responses to the pandemic-induced crisis in Estonia", Journal of Public Budgeting, Accounting & Financial Management, Vol. 32 No. 5, pp. 847-854. https://doi.org/10.1108/JPBAFM-07-2020-0094Download as .RIS
Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited
The Estonian government has been relatively successful in containing the spread of the novel coronavirus – at least as of June 2020. The number of infections and COVID-19 related deaths per capita have remained below the European average. On the same day that community spread of the virus was detected (March 12, 2020), the Estonian government declared a state of emergency, adopted a series of restrictions and closed the border. Most of the restrictions have been gradually lifted since mid-May. Although compared with many European countries, the lockdown ordinances were somewhat less strict (e.g. none of the essential industries were forced to close), the global pandemic and the containment measures still induced a considerable economic downturn: the GDP is expected to fall 10% in 2020 (Bank of Estonia (BOE) 2020).
During previous economic crises – in the early 1990s, late 1990s and in 2008–2009 ‒ the Estonian government had always responded with fiscal consolidation (Kattel and Raudla, 2013; Raudla and Kattel, 2011), but this time was different. Instead of cutting expenditures and increasing taxes, the government did the opposite, authorizing additional expenditures, cutting taxes and issuing government bonds to the tune of 4.5% of GDP (BOE, 2020). Given such a contrast to the actions taken in previous crisis episodes, the question arises: why was it different this time?
The existing literature on government responses to major economic shocks and recessions indicates that in order to understand and explain such responses, one should investigate political, economic, social, institutional and administrative factors (e.g. Armingeon, 2012; Campbell and Sances, 2013; Raess and Pontusson, 2015; Raudla and Kattel, 2011). In this article, we focus on key political, institutional and economic factors, since those are likely to present the strongest constraints for government action.
The general aim of our article is to provide insights into the fiscal policy measures adopted by the Estonian government in response to the COVID-19 crisis. We will address the following research questions: Which budgetary measures were adopted in response to the crisis in Spring 2020? Why did the Estonian government respond with fiscal stimulus rather than austerity measures? Which political, institutional and economic factors help to explain these measures, and why the fiscal response to an economic crisis was different this time?
The article proceeds as follows. Section 2 outlines the key theoretical starting points for our analysis. Section 3 provides an overview of the fiscal measures adopted by the Estonian government in response to the pandemic-induced economic crisis, drawing on policy documents and media articles. Section 4 discusses the main factors that help to explain these responses. Section 5 concludes.
In order to understand and explain fiscal policy choices in response to a major societal and economic crisis, the existing political economy literature would suggest analyzing the role of partisan politics, fiscal rules and economic conditions as an important starting point (Armingeon, 2012; Campbell and Sances, 2013; Cusack, 2001; Darvas, 2010; Pamp, 2008; Raess and Pontusson, 2015).
First, since the budget is primarily a political document, we would expect that the ideological stance of the governing parties is likely to influence the size and composition of the stimulus measures (Armingeon, 2012; Campell and Sances, 2013; Cusack, 2001; Pamp, 2008). Left-leaning governments can be expected to provide a more extensive stimulus in response to recessions than right-leaning ones, given the latter's resistance to expanding the role of government and its general skepticism about the effectiveness of counter-cyclical fiscal policies (e.g. Cusack, 2001; Pamp, 2008; Raess and Pontusson, 2015). In terms of choosing stimulus measures, left-leaning parties can be expected to support expenditure increases, while right-leaning parties are more inclined towards tax cuts (e.g. Raess and Pontusson, 2015; Starke et al., 2014). From a dynamic perspective, a government can engage in policy-learning (Dunlop and Radaelli, 2016) and draw lessons from previous crisis experiences and adjust their policy measures accordingly (Raudla et al., 2018a). Furthermore, a government's responses may also be shaped by policy diffusion: observing how other countries respond to a crisis and emulating measures that are perceived to be successful (Douglas et al., 2015; Marsh and Sharman, 2009).
Second, an important institutional factor that likely shapes fiscal responses to a crisis is the set of fiscal rules that the government is bound by. Specifically, the leeway for adopting stimulus measures is influenced by whether the fiscal rules foresee escape clauses in the case of a major economic downturn (Armingeon, 2012; Barnes et al., 2016; Campbell and Sances, 2013). If the fiscal rules focus on the structural balance rather than a nominal one and if there is an escape clause for economic crises, the government would have more space for borrowing than in the case of stricter fiscal rules (Barnes et al., 2016; Raudla et al., 2018b).
Third, fiscal policy measures adopted in response to the crisis are likely to be affected by economic constraints (Armingeon, 2012; Darvas, 2010). Governments with low levels of existing debt and ample fiscal space can be expected to adopt more generous fiscal stimulus measures, while those with more constrained fiscal space would opt for smaller stimulus (e.g. Campbell and Sances, 2013; Darvas, 2010). A government's ability to borrow would be affected by the lending conditions on domestic and international financial markets: if lenders perceive it to be risky, it will pay higher interest rates, making debt financed stimulus measures more costly (Darvas, 2010; Kattel and Raudla, 2013).
Fiscal measures adopted by the Estonian government
On April 15, a €2 billion rescue package was passed by the Estonian parliament – a sizable response given that the annual budget is €11.6 billion. It included expenditure and revenue measures, government loans and loan guarantees (Whyte, 2020).
A key instrument in addressing the immediate effects of the crisis was a new and temporary labor market support measure. Alongside the existing unemployment insurance scheme, the Unemployment Insurance Fund agreed to pay 70% of salaries (max €1,000) for up to two months to employees of companies which were in financial difficulty due to the impact of the coronavirus (Wright, 2020). To be eligible for compensation, employers had to demonstrate that their earnings had fallen by at least 30%, salaries had been reduced at least 30%, or 30% of the workforce had been laid-off. Through this measure, the government sought to avoid layoffs and bankruptcies and to allow viable firms to “go back to normal” as quickly as possible after the crisis (Turovski, 2020). Although initially intended for only two months, this measure was extended by another month (for June), albeit with stricter conditions. Altogether, €300 million were foreseen for this measure.
The government also provided businesses with opportunities to acquire loans and loan guarantees, and offered compensation for sectors starkly hit by the crisis (e.g. tourism and sports). For example, €25 million were appropriated for the tourism sector, €25 million for culture and sports and €15 million for education and youth organizations (Aru et al., 2020). The supplementary budget also sought to support businesses deemed strategically important (Vahtla, 2020) by authorizing the government to buy shares of companies that are large exporters and influence the development of the economy.
In addition, the Health Insurance Fund started to pay for workers' first three sick leave days. Additional funds were also provided to the health care sector (hospitals, ambulances, GPs) to help cover the costs of overtime, reorganization of work, additional workforce, and for procuring protective equipment, ventilators, coronavirus test kits and pharmaceuticals. (Aru et al., 2020).
In order to boost the economy, a number of stimulatory investment measures were passed. For example, €140 million were allocated for road construction, €200 million for rural entrepreneurship, €73 million for renovating apartment buildings, and €15 million for building the “last mile” Internet connections (Aru et al., 2020).
In terms of revenues, excise taxes on diesel, natural gas and electricity were lowered and the VAT on digital periodicals and audiobooks was reduced. Contributions from the social tax to private pensions funds were suspended (from July 2020 to August 2021) – which was the only revenue measure that increased revenues for the state budget (by €142 million) (Nael, 2020a).
The key source of funding for these additional commitments have been loans taken by the government. In March, it issued short-term (6–12 months) bonds for €200 million (with a negative average yield of −0.3%) and in May, a further €375 million (with a negative average yield of −0.2%). On March 26, the government also borrowed €750 million from the Nordic Investment Bank – for 15 years (interest: 6 months euribor + 0.32%). In May, the government initiated international emission of 10-year bonds for €1 billion (Riispapp, 2020). The international emission of the 10-year bonds turned out to be so popular and the conditions so favorable (0.125% interest rate) that the government decided to borrow €1.5 billion (Nael, 2020b). In mid-June, the government borrowed an additional €200 million from the Council of Europe Development Bank to fund crisis measures for local governments and to support micro, small and medium-sized enterprises (Oja, 2020).
In sum, the rescue package constituted 4.5% of GDP, among the largest in the Eurozone (BOE, 2020). According to the BOE (2020), the projected budget deficit for 2020 will be 10.3% of GDP. About half of the deficit is projected to arise from automatic stabilizers and the drop in tax revenues.
Analysis and discussion
Political factors and fiscal rules
A number of political factors help to explain how the Estonian government responded fiscally to the COVID-19-induced recession: the ideology of the parties in the coalition government, policy learning from the previous crisis, ideational shifts concerning fiscal policy over the past decade, and policy diffusion.
First, ideology played a role in the government's willingness to adopt extensive fiscal measures and incur a considerable amount of debt. The coalition government in Estonia consists of three parties; the conservative Pro Patria (PP), the right-leaning populist Conservative People's Party of Estonia (CPPA), and the left-leaning Centre Party (CP). Although ideologically speaking, such a party configuration is rather unusual, it provided a fertile ground for a more interventionist approach. Already before the onset of the 2020 crisis, the CPPA and CP had been critical of excessive fiscal conservatism and promoted the idea of incurring debt to stimulate the economy and lower taxes (Luts, 2018). PP, which has traditionally been fiscally conservative (pushing for fiscal consolidations during all post-independence crises) (Raudla and Kattel, 2011), went along with the pro-stimulus stance of its coalition partners, although with some expressions of dissent. In order to secure the support of PP, the other coalition partners gave in to its demand of suspending social tax contributions to the private pension pillar. Reforming this pillar of the pension system had been a core electoral promise of PP. While this measure is questionable from the viewpoint of being necessary to address the ongoing crisis, it was part of the coalition compromise.
Second, the policy response was driven by policy learning from the previous crisis. During the financial crisis and economic recession of 2008–2009, the Estonian government adopted harsh austerity measures. This fiscal consolidation was motivated by a prevalent belief that borrowing was fiscally irresponsible and hope that fulfilling the Maastricht deficit criterion and joining the Eurozone would help to stabilize the economy (Raudla and Kattel, 2011; Kattel and Raudla, 2013). However, these austerity measures aggravated the economic recession (in 2009, GDP declined almost 15%). As a result, policy actors are now more inclined than before to engage in counter-cyclical fiscal policies (Raudla et al., 2018a).
Third, the EU's Fiscal Compact facilitated an ideational shift in Estonia, whereby the government moved its focus from nominal deficits to structural deficits. As Raudla et al. (2018b) explained, unlike most countries in Europe where the reformed fiscal governance framework brought about the tightening of fiscal policy, in Estonia it enabled some relaxation since the government could now point to structural balance as being fiscally responsible (even if there were nominal deficits). In addition, although the overall stance of the Estonian government over the last decade has been that of fiscal discipline, increasingly, arguments have been expressed that the fiscally “irresponsible” states in the Eurozone, like Greece, have been able to spend and invest in infrastructure while Estonia has lost out on potentially productive investments.
Fourth, in all other European countries, fiscal measures were announced in Spring 2020 in response to the crisis. Hence, there is likely to have been some policy diffusion effect. In Spring 2020, the Estonian finance minister even argued in the media that in such a situation it would be “totally stupid” not to borrow (Randlaid, 2020). In his words, “if all other countries are making use of the money print to stimulate their economies … and we do not do it, then we would be irresponsible” (Randlaid, 2020).
Finally, it is important to note that more extensive borrowing in Estonia (and also in other EU countries) became possible owing to activation of the escape clause in the EU’s Stability and Growth Pact, which suspended the deficit ceilings for member states.
Given the government's decisions to close the border and adopt restrictive social distancing measures – whereby many market actors were forced to discontinue their activities – it would have been difficult for the government to sustain the position of not supporting businesses. Furthermore, the promise of offering wage supports, subsidies, loans, and guarantees was necessary to secure the cooperation of the market actors in the lock-down situation. Indeed, for the government, the situation was different from any other crises it had experienced. The pandemic constituted an external shock and thus it was not possible to point to the idea that the market had become “overheated” and the public sector bloated, necessitating “letting some air out” via fiscal consolidation (as governments had done during the previous three crises) (Darvas, 2010; Raudla and Kattel, 2011).
The capacity of the Estonian government to borrow at highly favorable terms was aided by the following factors (in addition to the overall prevalence of low interest rates on the financial markets). First, before the onset of the pandemic, Estonia had the lowest level of public debt among EU countries – 8.5% of GDP in 2019 (Eurostat). This low level of pre-existing debt provided considerable fiscal space for adopting the stimulus package. Second, borrowing at favorable rates was also facilitated by Estonia's membership in the Eurozone, which reduced exchange rate risks. Indeed, one of the reasons the Estonian government faced high interest rates on its bonds (exceeding 10%) in 2009 if it had wanted to borrow was the speculation by international investors that it may devalue the kroon (the domestic currency until 2011) (Darvas, 2010; Kattel and Raudla, 2013). In contrast, in Spring 2020, the international rating agencies granted favorable ratings to Estonian government bonds: AA – by Fitch and S&P and A1 by Moody's (Nael, 2020b).
The adoption of the new labor market measure offered by the Unemployment Insurance Fund – which played a considerable role in avoiding a sudden surge in unemployment during the lockdown ‒ was facilitated by the fact that the Fund had accumulated a considerable reserve (€838 million). This had been possible owing to favorable labor market conditions which implied low payouts and keeping the contribution rates relatively high, inter alia, in order to maintain a high general government balance.
On a more critical note, however, the report of the National Audit Office, published in May 2020, indicated that the government had overspent in 2018 and 2019 (€208 million and €220 million more than planned, respectively) due to optimistic revenue forecasts (National Audit Office, 2020). If the budget had been structurally balanced in 2016–2019, the state would have had over €750 million in reserves, which would have lowered the need to borrow in Spring 2020 (BOE, 2020).
This time, the crisis really was different in Estonia. Instead of responding to the economic downturn with expenditure cuts and tax increases, the Estonian government passed a stimulus package that constituted ca 4.5% of GDP, which was higher than the average in the EU (BOE, 2020). Which political and economic factors can explain that?
The party composition of the government – which was different in Spring 2020 than during previous crises – is likely to have played some role. At the same time, although the government consisted of two right-leaning parties and one left-leaning one, it opted for an extensive rescue package, which appears to defy the traditional predictions of the political economy literature where right-leaning parties typically avoid expenditure-heavy stimulus measures (e.g. Cusack, 2001; Pamp, 2008; Raess and Pontusson, 2015). In explaining such deviation, the uniqueness of the situation (e.g. government-imposed lockdowns) and policy diffusion (observing what other countries in Europe were doing) are likely to have played a role. In addition, the stimulus response is likely to have been facilitated by policy learning from the previous crisis (where pro-cyclical fiscal policies aggravated the recession) and an overall ideational shift in fiscal policy-making whereby the government adopted a more counter-cyclical understanding of fiscal policy. Furthermore, extensive borrowing was made possible by the activation of the escape clause in the Stability and Growth Pact of the European Union.
In terms of economic factors, the government's fiscal position (including the lowest public debt-load in Europe) and Eurozone membership help explain why the Estonian government was able to borrow so extensively and at such favorable rates.
Thus, an important lesson for other countries in Europe is that commitment to fiscal discipline and low levels of debt can help to build up fiscal space for borrowing, which might be urgently needed when a crisis of the COVID-19 magnitude hits. In particular, avoiding deficits during “good times” and keeping the budget in structural balance (which entails channeling the surplus revenues into a rainy-day fund) – as envisioned also by the Fiscal Compact of the EU ‒ can provide governments with reserves that can be used when a sudden crisis hits.
Further practical implications of our study for the COVID-19 response are the following. Incurring public debt in order to make up for drastic revenue shortfalls during the COVID-19 crisis is quite reasonable given the increased spending needs demanded by the crisis and in light of very favorable interest rates. This unprecedented societal and economic situation requires a broad range of measures in order to support citizens, businesses and public organizations. These measures include increased healthcare spending, direct payment of benefits and subsidies, and loans and loan guarantees. In choosing the specific mix of measures, drawing on the examples of other countries can be insightful, as demonstrated by the Estonian wage support measure, which emulated other countries' examples and played a major role in avoiding a large surge in unemployment. Ideally, the package of measures should include only those that have a direct bearing on the crisis. If political actors use the emergency situation to “smuggle in” their political pet projects with no direct relevance for the crisis (like the suspension of II pillar contributions in Estonia), the legitimacy of the package can be more easily questioned by the opposition and also the public.
It still remains to be seen how deep the economic recession caused by the COVID-19 pandemic will be in Estonia. Since Estonia is a small open economy, its economic fate is strongly influenced by external factors and how well its trading partners are doing. During the state of emergency (mid-March to mid-May 2020), the unemployment rate increased from 5.7 to 7.8% (BOE). Additionally, GDP in Estonia is predicted to fall by 10% in 2020 and unemployment is forecast to rise to 13% by the end of the year (BOE, 2020). The longer-term impacts of the fiscal measures adopted in Estonia can be explored in future studies. This article relied on the analysis of political documents, verbatim records of the legislature, government press briefings, and media articles as sources of data. Future research should certainly triangulate these data sources with expert interviews in order to provide a more in-depth understanding of the Estonian case and the explanatory factors behind the strategies and decisions.
Although undertaken as an idiographic case study, the Estonian experience uncovered in this manuscript points to significant interactions between partisan politics, fiscal rules, and economic constraints, which may have been insufficiently theorized in the existing discussions on political economy and which can be investigated in future research. In particular, it would be insightful to explore more systematically, both theoretically and empirically: (1) how policy learning and policy diffusion can influence the ideological preferences of the governing parties in fiscal policy-making; (2) how the changes in supranational and domestic fiscal rules influence the fiscal policy stance of different partisan actors; and (3) whether and how crisis-driven fiscal policies change the existing institutional constraints and set the government on a new policy path.
Armingeon, K. (2012), “The politics of fiscal responses to the crisis of 2008–2009”, Governance, Vol. 25 No. 4, pp. 543-565.
Aru, E., Sibrits, H. and Kirjanen, K. (2020), “Riik jagab shoki vastu sadu miljoneid”, Postimees 27.04, available at: https://leht.postimees.ee/6960274/riik-jagab-soki-vastu-sadu-miljoneid.
Barnes, S., Botev, J., Rawdanowicz, L. and Jan, S. (2016), “Europe's new fiscal rules”, Review of Economics and Institutions, Vol. 7 No. 1, pp. 1-29.
Bank of Estonia (2020), “Rahapoliitika ja majandus 2”, available at: https://www.eestipank.ee/publikatsioon/rahapoliitika-ja-majandus/2020/rahapoliitika-ja-majandus-22020.
Campbell, A.L. and Sances, M.W. (2013), “State fiscal policy during the Great Recession: budgetary impacts and policy responses”, The Annals of the American Academy of Political and Social Science, Vol. 650 No. 1, pp. 252-273.
Cusack, T.R. (2001), “Partisanship in the setting and coordination of fiscal and monetary policies”, European Journal of Political Research, Vol. 40 No. 1, pp. 93-115.
Darvas, Z. (2010), “The impact of the crisis on budget policy in Central and Eastern Europe”, OECD Journal on Budgeting, Vol. 10 No. 1, pp. 1-42.
Douglas, J.W., Raudla, R. and Hartley, R.E. (2015), “Shifting constellations of actors and their influence on policy diffusion: a study of the diffusion of drug courts”, Policy Studies Journal, Vol. 43 No. 4, pp. 484-511.
Dunlop, C.A. and Radaelli, C.M. (2016), “Policy learning in the Eurozone crisis: modes, power and functionality”, Policy Sciences, Vol. 49 No. 2, pp. 107-124.
Kattel, R. and Raudla, R. (2013), “The baltic republics and the crisis of 2008–2011”, Europe-Asia Studies, Vol. 65 No. 3, pp. 426-449.
Luts, P. (2018), “EKRE lubab laenuraha eest maksuleevendust”, ERR. 3.10, available at: https://www.err.ee/866153/ekre-lubab-laenuraha-eest-maksuleevendust.
Marsh, D. and Sharman, J.C. (2009), “Policy diffusion and policy transfer”, Policy Studies, Vol. 30 No. 3, pp. 269-288.
Nael, M. (2020a), “Riigikogu kiitis heaks koroonakriisiga seotud maksumeetmed”, ERR 15.04, available at: https://www.err.ee/1077735/riigikogu-kiitis-heaks-koroonakriisiga-seotud-maksumeetmed.
Nael, M. (2020b), “Riik laenab võlakirjadega miljardi euro asemel 1,5 miljardit”, ERR 3.06, available at: https://www.err.ee/1097783/riik-laenab-volakirjadega-miljardi-euro-asemel-1-5-miljardit.
National Audit Office (2020), “Ülevaade rahandusprognoosi ja -seirega seotud riskidest riigi eelarvepoliitikas”, available at: https://www.riigikontroll.ee/tabid/206/Audit/2501/language/et-EE/Default.aspx.
Oja, B. (2020), “Eesti võttis kohalike omavalitsuste toetamiseks 200 miljonit eurot laenu”, ERR 10.06, available at: https://www.err.ee/1100233/eesti-vottis-kohalike-omavalitsuste-toetamiseks-200-miljonit-eurot-laenu.
Pamp, O. (2008), “Partisan preferences and political institutions: explaining fiscal retrenchment in the European Union”, European Political Economy Review, Vol. 8, pp. 4-39.
Raess, D. and Pontusson, J. (2015), “The politics of fiscal policy during economic downturns, 1981–2010”, European Journal of Political Research, Vol. 54 No. 1, pp. 1-22.
Randlaid, S. (2020), “Martin Helme: kui me seekord ei võta sellest rahast osa, siis oleme ikka täiesti lollakad”, Postimees 25.03, available at: https://majandus24.postimees.ee/6933481/martin-helme-kui-me-seekord-ei-vota-sellest-rahast-osa-siis-oleme-ikka-taiesti-lollakad.
Raudla, R. and Kattel, R. (2011), “Why did Estonia choose fiscal retrenchment after the 2008 crisis?”, Journal of Public Policy, Vol. 31 No. 2, pp. 163-186.
Raudla, R., Cepilovs, A., Kuokštis, V. and Kattel, R. (2018a), “Fiscal policy learning from crisis: comparative analysis of the Baltic countries”, Journal of Comparative Policy Analysis: Research and Practice, Vol. 20 No. 3, pp. 288-303.
Raudla, R., Cepilovs, A., Kattel, R. and Sutt, L. (2018b), “The European Union as a trigger of discursive change: the impact of the structural deficit rule in Estonia and Latvia”, Central European Journal of Public Policy, Vol. 12 No. 2, pp. 1-15.
Riispapp, J. (2020), “Üle hulga aja laenu võtnud Eesti plaanib veel laenata”, Postimees 27.05, available at: https://leht.postimees.ee/6982512/ule-hulga-aja-laenu-votnud-eesti-plaanib-veel-laenata?_ga=2.220508120.1168864392.1582804790-2091353243.1573022201.
Starke, P., Kaasch, A. and Van Hooren, F. (2014), “Political parties and social policy responses to global economic crises: constrained partisanship in mature welfare states”, Journal of Social Policy, Vol. 43 No. 2, pp. 225-246.
Turovski, M. (2020), “Kokk: No country can keep paying a 70 percent salary benefit for long”, ERR 19.04, available at: https://news.err.ee/1079327/kokk-no-country-can-keep-paying-a-70-percent-salary-benefit-for-long.
Vahtla, A. (2020), “Riigikogu passes supplementary budget bill into law”, ERR 15.04, available at: https://news.err.ee/1077760/riigikogu-passes-supplementary-budget-bill-into-law.
Whyte, A. (2020), “Economist: first wave of coronavirus economic crisis already in progress”, ERR 23.03, available at: https://news.err.ee/1067476/economist-first-wave-of-coronavirus-economic-crisis-already-in-progress.
Wright, H. (2020), “Temporarily unemployed workers to receive two months salary at 70 percent”, ERR 19.03, available at: https://news.err.ee/1066087/temporarily-unemployed-workers-to-receive-two-months-salary-at-70-percent.