Explanatory Memorandum to COM(2020)467 - Proposal to grant temporary support under Council Regulation 2020/672 to Slovenia 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)467 - Proposal to grant temporary support under Council Regulation 2020/672 to Slovenia to mitigate unemployment risks in an ...
source COM(2020)467 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, Slovenia requested Union financial assistance under the SURE Regulation. In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the Slovenian authorities to verify the sudden and severe increase in actual and planned expenditure directly related to short-time work schemes and similar measures caused by the COVID-19 pandemic. In particular, it concerns:

a wage compensation scheme for employees who did not work (or waited for work)

due to a temporary incapacity of the employers to provide work for business reasons. The benefit payable under the scheme is capped at 80% of the employees' average wage in the last three months, but is not lower than the minimum wage in Slovenia, and is conditional on employee retention during the employer’s participation. The scheme was in force from 13 March 2020 to 31 May 2020. The scheme has since been extended from 1 June 2020 until 31 August 2020 with a planned further

extension until the end of

September 2020.

(2)

an exemption from the payment of social security insurance contributions for employees benefitting from the wage compensation scheme. That scheme was also in force from 13 March 2020 to 31 May 2020.

a short-time work scheme that allows employers to temporarily introduce part-time work, whilst employees are paid a full-time salary. The employer receives a fixed-amount subsidy for the employees’ non-worked hours and is conditional on employee retention during the employer’s participation and for one additional month. The scheme is in force from 1 June 2020 to 31 December 2020.

a scheme that subsidised the payment of pension and disability insurance contributions (including contributions for professional pensions) for employees that remained in the workplace. The measure was coupled with an obligation for the employer to pay a monthly crisis allowance of EUR 200 to the working employees earning a wage below three times the minimum wage. Only for the part of the expenditure related to the employees who were continuously in employment up to the latest available outturn data was requested by the authorities. The measure was in force from 13 March 2020 to 31 May 2020.

a measure that provides financing of social security contributions for self-employed persons, farmers and religious workers. The measure covers all social security insurance contributions for the beneficiaries who were insured and could not perform their economic activity, or could only perform part of that activity, during the epidemic. The measure was in force from 13 March 2020 to 31 May 2020.

a basic income support for self-employed persons, farmers and religious workers that

provided support of EUR 350 in March and of EUR 700 in April and May for the beneficiaries who were insured and could not perform their economic activity, or could only perform part of that activity, during the epidemic. The measure was in force from 13 March 2020 to 31 May 2020.

Slovenia 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 Slovenia 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 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.