Explanatory Memorandum to COM(2020)448 - Proposal to grant temporary support under Council Regulation 2020/672 to the Czech Republic to mitigate unemployment risks in an emergency situation in light of COVID-19 - Main contents
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| dossier | COM(2020)448 - Proposal to grant temporary support under Council Regulation 2020/672 to the Czech Republic to mitigate unemployment risks ... |
|---|---|
| source | COM(2020)448  |
| date | 24-08-2020 |
1. CONTEXTOFTHE PROPOSAL
• Reasons for and objectives of the proposal
Council Regulation 2020/672 (“SURE Regulation”) lays down the legal framework for providing Union financial assistance to Member States, which are experiencing, or are seriously threatened with, a severe economic disturbance caused by the COVID-19 outbreak. Support under SURE serves for the financing, primarily, of short-time work schemes or similar measures aimed at protecting employees and the self‐ employed and thus reducing the incidence of unemployment and loss of income, as well as for the financing, as an ancillary, of some health-related measures, in particular in the workplace.
On 7 August 2020, the Czech Republic has requested the Union financial assistance under the SURE Regulation. In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the Czech authorities to verify the sudden and severe increase in actual and planned expenditure directly related to the short-time work scheme called “Antivirus” Programme (with its sub-programmes Option A and Option B) and similar measures targeting non-wage labour costs (“Antivirus” Programme Option C) and support for the self-employed, incurred in response to the COVID-19 pandemic. In particular it concerns:
(a) Antivirus Programme options A and B, which is designed to partially compensate wage costs of private employers forced to suspend or significantly scale down their economic activity as a direct consequence of measures taken by the authorities (Option A), or indirectly due to adverse economic effects of the pandemic (Option B), for example employees not able to work due to travel restrictions, shortage of inputs and/or reduced demand for outputs. Under Option A, the state contribution is provided for 80% of the wages paid but not more than 39,000 CZK per employee per month. Under option B, the state contribution amounts to 60% of the wages paid but not more than CZK 29,000 per employee per month. Employees benefiting from the scheme cannot be dismissed during the employer’s participation in the scheme. The measures run from 12 March to 31 August 2020.
(b) Antivirus Programme option C, which partially compensates non-wage labour costs (for example social security contributions paid by the employer) of small companies (up to 50 employees) that maintain employment and the wage bill at a level of at least 90% of what it was at the end of March 2020. The base of the calculation is capped at 150% of the average gross wage in the Czech Republic. The support can be provided for some or all of the period from June to August 2020.
(c) “Pětadvacítka” Programme, which provides self-employed persons who are forced to suspend or significantly scale down their economic activity due to public health risks or crisis measures taken by public authorities with a tax bonus of CZK 500 per calendar day per person. The program is split into two bonus periods: from 12 March to 30 April 2020, and from 1 May to 8 June 2020.
(d) the partial waiver of social and health security contributions due by the self-employed who maintain activity during the provision of support. The state assumes payment of the corresponding contribution due each month from March to August 2020. The waived amount is capped at a level established in the law.
(e) the “Care allowance” for self-employed which compensates the loss of income incurred by self-employed persons as a consequence of the need to take care of children or care-dependent people due to the closure of child and social care
facilities. The daily amount of support is CZK 424 for March and CZK 500 for April to June. .
The Czech Republic provided the Commission with the relevant information.
Taking into account the available evidence, the Commission proposes to the Council to adopt an Implementing Decision to grant financial assistance to the Czech Republic under the SURE Regulation in support of the above measures.
• Consistency with existing policy provisions in the policy area
The present proposal is fully consistent with Council Regulation 2020/672, under which the proposal is made.
The present proposal comes in addition to another Union law instrument to provide support to Member States in case of emergencies, namely Council Regulation (EC) No 2012/2002 of 11 November 2002 establishing the European Union Solidarity Fund (EUSF) (“Regulation (EC) No 2012/2002”). Regulation (EU) 2020/461 of the European Parliament and of the Council, which amends that instrument to extend its scope to cover major public health emergencies and to define specific operations eligible for financing, was adopted on 30 March.
• Consistency with other Union policies
The proposal is part of a range of measures developed in response to the current COVID-19 pandemic such as the “Coronavirus Response Investment Initiative”, and it complements other instruments that support employment such as the European Social Fund and the European Fund for Strategic Investments (EFSI)/InvestEU. By making use of borrowing and lending in this particular case of the COVID-19 outbreak for supporting Member States, this proposal acts as a second line of defence to finance short-time work schemes and similar measures, helping protect jobs and thus employees and self-employed against the risk of unemployment.
2. LEGALBASIS, SUBSIDIARITYAND PROPORTIONALITY
• Legal basis
The legal basis for this instrument is Council Regulation 2020/672.
• Subsidiarity (for non-exclusive competence)
The proposal follows a Member State request and shows European solidarity by providing Union financial assistance in the form of temporary loans to a Member State affected by the COVID-19 outbreak. As a second line of defence, such financial assistance supports the government’s increased public expenditure on a temporary basis in respect of short-time work schemes and similar measures to help them protect jobs and thus employees and self-employed against the risk of unemployment and loss of income.
Such support will help the population affected and helps to mitigate the direct societal and economic impact caused by the present COVID-19 crisis.
• Proportionality
The proposal respects the proportionality principle. It does not go beyond what is necessary to achieve the objectives sought by the instrument.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER
ANDIMPACTASSESSMENTS
Stakeholder
consultations
Due to the urgency to prepare the proposal so that it can be adopted in a timely manner by the Council, a stakeholder consultation could not be carried out.
• Im pact assessment
Due to the urgent nature of the proposal, no mpact assessment was carried out.
4. BUDGETARY IMPLICATIONS
The Commission should be able to contract borrowings on the financial markets with the purpose of on-lending them to the Member State requesting financial assistance under the SURE instrument.
In addition to the provision of Member State guarantees, other safeguards are built into the framework in order to ensure the financia solidity of the scheme:
• A rigorous and conservative approach to financial management;
• A construction of the portfolio of loans that limits concentration risk, annual exposure and excessive exposure to individual Member States whilst ensuring sufficient resources could be granted to Member States most in need; and
• Possibilities to roll over debt.