Explanatory Memorandum to COM(2020)464 - Proposal to grant temporary support under Council Regulation (EU) 2020/672 to Malta to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak

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dossier COM(2020)464 - Proposal to grant temporary support under Council Regulation (EU) 2020/672 to Malta to mitigate unemployment risks in an ...
source COM(2020)464 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 7 August 2020, Malta requested Union financial assistance under the SURE Regulation. In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the Maltese authorities to verify the sudden and severe increase in actual and planned expenditure directly related to measures regarding a wage supplement, a disability benefit, a parent benefit and a medical benefit caused by the COVID-19 pandemic. In particular, it concerns:

(a)          a COVID-19 wage supplement, which covers employees and self-employed individuals, to address the disruption caused by the pandemic. Full-time employees working in the sectors hardest hit by the crisis listed in Annex A (e.g. the hospitality sector) are eligible for wage support of EUR 800 per month. In less affected sectors listed in Annex B, full-time employees may receive EUR 160 per month. In July 2020, the scheme was extended until September 2020 and the list of sectors included in the two annexes was revised. Sectors previously supported under the scheme but not included in the updated Annex A or Annex B will be assisted with a wage supplement of EUR 600 for full-time employees.

(b)          a COVID-19 disability benefit enabling persons with disability working in the private sector to stay at home for health and safety reasons, whilst maintaining their contract with their employer. This benefit amounts to EUR 166.15 per week if working full-time.

(c)          a COVID-19 parent benefit scheme providing a benefit to parents working in the private sector who are required to stay home to take care of school-aged children. The benefit is provided on condition that the parent cannot carry out their functions through teleworking arrangements. Full-time employees are eligible to receive a weekly direct payment of EUR 166.15.

(d)          a COVID-19 medical benefit measure, from 27 March 2020, for persons employed in the private sector who have not been able to leave their home to go to work because they have been ordered. Eligible persons are not able to work from home and are not paid by their employer during their absence from work. The eligible persons receive a weekly direct payment of EUR 166.15.

Malta 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 Malta under the SURE Regulation for 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 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.


• 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.