Explanatory Memorandum to COM(2020)449 - Proposal to grant temporary support under Council Regulation (EU) 2020/672 to Greece to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak

Please note

This page contains a limited version of this dossier in the EU Monitor.

dossier COM(2020)449 - Proposal to grant temporary support under Council Regulation (EU) 2020/672 to Greece to mitigate unemployment risks in an ...
source COM(2020)449 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, Greece requested Union financial assistance under the SURE Regulation. In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the Greek authorities to verify the sudden and severe increase in actual and planned expenditure directly related to a) the special allowance provided to private sector employees whose labour contracts were suspended because of the crisis, b) the cost of their social security coverage during the suspension period, c) the special allowance provided to self-employed professionals; d) the short-time work scheme, and e) the employer social security contributions for employees in seasonal enterprises of the tertiary sector, caused by the COVID-19 pandemic. In particular,

a special allowance for private sector employees whose labour contracts have been suspended. That measure aims to protect employment in companies that cease their operations by public order or belong to economic sectors that are heavily affected by the COVID-19 outbreak, and concerns the provision of a special monthly allowance of EUR 543 to employees whose labour contracts are suspended from mid-March 2020. The precondition to benefit from the scheme is that the employer retains the same number of employees (meaning the exact same employees) for a period equal to the period for which the labour contract had been suspended.

The authorities additionally introduced the financing by the state of the social security coverage of employees that benefit from the special allowance referred to under (a). The precondition to benefit from the scheme is that the employer retains the same number of employees (meaning the same exact employees) for a period equal to the period for which the labour contract had been suspended.

a special allowance for self-employed professionals. The measure concerns a one-off special allowance of EUR 600 provided either in April or in June 2020 to self-employed professionals (economists, accountants, engineers, lawyers, medical doctors, teachers, and researchers).

a short-time work scheme that applies from 15 June 2020 until 15 October 2020 in all companies, with the exception of the airline industry where an extension is possible until the end of 2020. Eligible companies are those that have recorded a drop in their turnover of at least 20% and the measure allows for a reduction of up to 50% in the weekly working hours of employees under the condition that the employment relationship is retained. From 15 June 2020 until 30 June 2020, the state covers 60% of the employee’s net earnings and 60% of the employer’s social security contributions in respect of hours not worked. As of 1 July 2020, the state covers 100% of the employer’s and the employee’s social security contributions in

respect of hours not worked, in addition to 60% of net earnings of employees on hours not worked.

the financing by the state of the employer’s social security contributions in respect of

employees in seasonal enterprises. The measure targets seasonal enterprises in the tertiary sector, namely enterprises with 50% of their turnover concentrated in the third quarter of the year based on 2019 data, and aims to finance the employer’s social security contributions during the months of July, August and September 2020 under the condition that companies retain the same number of employees they had on 30 June 2020.

Greece 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 Greece 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

1.

CONSULTATIONS


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 impact 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.