Explanatory Memorandum to COM(2020)462 - Proposal to grant temporary support under Council Regulation (EU) 2020/672 to Slovakia to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak

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dossier COM(2020)462 - Proposal to grant temporary support under Council Regulation (EU) 2020/672 to Slovakia to mitigate unemployment risks in an ...
source COM(2020)462 EN
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 6 August 2020, Slovakia requested Union financial assistance under the SURE Regulation. In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the Slovakian authorities to verify the sudden and severe increase in actual and planned expenditure directly related to the national short-time work scheme and similar measures caused by the COVID-19 pandemic. The national short-time work scheme aims at protecting employees and the self‐ employed and thus reducing the incidence of unemployment and loss of income. It allows businesses experiencing economic difficulties to temporarily reduce the hours worked by their employees, who are provided with public income support for the hours not worked. The scheme can be accessed by employers who have temporarily furloughed some of their employees from March 2020 to December 2021. Such employers can request a reimbursement of wage costs of up to 80% of the usual gross salary of the employee furloughed up to a maximum of EUR 880 per month, conditional on employee retention. In addition to the national short-time work scheme, Slovakia also introduced the following accompanying measures (a) a flat-rate contribution per employee from March to the end of September 2020 contingent on a decrease in sales of at least 20% (monthly support from EUR 180 to EUR 540 depending on the sales decrease); (b) a flat-rate contribution until the end of September 2020 payable to self-employed persons with compulsory social insurance contingent on a decrease in sales of at least 20% (monthly support from EUR 180 to EUR 540 depending on the sales decrease); (c) a reimbursement of 80% of the employee’s gross salary (up to a maximum of EUR 1 100) until the end of September 2020 for enterprises closed by decree; and (d) a flat-rate allowance of EUR 210 per month until the end of September 2020 for workers working under a contract, single-person companies and the self-employed.

Slovakia 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 Slovakia under the SURE Regulation in support of the measures above.

• 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 CONSULTATIONSANDIMPACTASSESSMENTS

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.

• Impact assessment

Due to the urgent nature of the proposal, no impact assessment was carried out.

4. BUDGETARYIMPLICATIONS

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.