Explanatory Memorandum to COM(2020)473 - COUNCIL IMPLEMENTING DECISION granting temporary support under Council Reg. 2020/672 to Portugal to mitigate unemployment risks following COVID-19 outbreak - Main contents
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| dossier | COM(2020)473 - COUNCIL IMPLEMENTING DECISION granting temporary support under Council Reg. 2020/672 to Portugal to mitigate unemployment ... |
|---|---|
| source | COM(2020)473  |
| date | 25-08-2020 |
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, Portugal requested Union financial assistance under the SURE Regulation. In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the Portuguese authorities to verify the sudden and severe increase in actual and planned expenditure directly related to short-time work schemes and similar measures and health related measures, caused by the COVID-19 pandemic. In particular, it concerns:
a measure to support the maintenance of employment contracts through the temporary interruption of work or reduction of normal working time enshrined in Portugal’s Labour Code. The measure provides a benefit to eligible firms to cover 70 % of the employees’ compensation, with employees’ compensation equalling two-thirds of their normal gross salary. This two-thirds correction is subject to a lower limit equal to the national minimum salary and an upper limit equal to three times the national minimum salary. Eligible firms must have suspended their business activity or be experiencing significant revenue losses.
the new and simplified special support for the maintenance of employment contracts through the temporary interruption of work or reduction of normal working time. This measure is similar to the measure referred to point (1) but has simplified procedures to allow swifter access to funds. The measure provides a benefit to eligible firms to cover 70 % of the employees’ compensation, with employees’ compensation equalling two-thirds of their normal gross salary, as well as the exemption from the employer’s social security contributions. This two-thirds correction is subject to a lower limit equal to the national minimum salary and an upper limit equal to three times the national minimum salary. Eligible firms must have suspended their business activity or experienced revenue losses of at least 40% in the period of 30 days preceding the request for support, compared with the same month of the previous year or with the monthly average of the two months prior to that period. The measure has been extended a number of times, including by revising the calculation of employees’ compensation to four-fifths of their normal gross salary and introducing the phasing-out of relief for social security contributions of benefitting firms
in cases where firms are in crisis due to the COVID-19 outbreak, are benefitting from measures referred to in point (1) or (2) and have a training program approved by national public employment and training services, under the special vocational programmes, employees and companies can receive a training allowance to cover income replacement, as well as the linked costs for training, to take place during working hours as an alternative to reducing working time.
a special support for firms for the resumption of business activity. In order to
facilitate the transition back to work and facilitate the retention of jobs, firms whose employees benefited from the measures referred to in point (1) or (2) may receive a benefit equal to either the national minimum salary per relevant employee paid in one single instalment, or to twice the national minimum salary per such employee paid in a phased manner over six months. When support is provided in a phased manner, firms are also to benefit from a partial exemption of 50% from the respective employer’s social security contributions with reference to the relevant employees.
an income stabilisation supplement for employees benefitting from measures referred to in point (1) or (2). Eligible employees are those whose gross salary with reference to February 2020 did not exceed twice the national minimum salary. The employees receive a benefit equal to the difference between the gross salary of February 2020 and that of the period in which the employee was covered by one of the two above-mentioned support schemes, with a lower limit of EUR 100 and an upper limit of EUR 351.
a special support for self-employed persons, informal workers and managing partners. The measure provides a monthly benefit equal to either the individuals’ registered income, with an upper limit of EUR 438.81 when income is lower than EUR 658.21, or to two-thirds of the individuals’ registered income with an upper limit of EUR 438.81 when income is greater than EUR 658.21. An initial lower limit equal to EUR 219.41 was applied on the overall amount of monthly support between 13 March and 30 June 2020. Eligible persons are the individuals suspending their business activity or experiencing revenue losses of at least 40% in the period of 30 days preceding the request for support, compared with the same month of the previous year or with the monthly average of the two months prior to that period.
a family allowance for employees prevented from working due to the need to assist their children under 12 years old or other dependents. The measure provides a benefit covering 50% of the employees’ compensation. As a rule, employees’ compensation corresponds to two-thirds of the normal gross salary, with a lower limit equal to the national minimum salary and an upper limit equal to three times the national minimum salary.
a special support for the maintenance of trainers’ employment contracts in the light of the cancellation of vocational trainings. Public support consists in a benefit covering the of trainers’ salary in spite of the vocational trainings not taking place.
a number of regional employment-related measures in the autonomous region of the Azores. The specific measures, including a regional top-up on nation-wide schemes, namely on short-time work, support for the self-employed and for firms with a view to the resumption of business activity, are intended to preserve employment in the Azores during the COVID-19 outbreak. Support under the measures is conditional on preserving employment contracts and maintaining business activity.
a number of regional employment-related measures in the autonomous region of Madeira. The specific measures, including a regional top-up on nation-wide schemes, namely on short-time work, support for the self-employed and for firms with a view to the resumption of business activity, are intended to preserve employment in the Azores during the COVID-19 outbreak. Support under the measures is conditional on preserving employment contracts and maintaining business activity.
an allowance for employees and self-employed that are temporarily prevented from exercising their professional activity due to being in prophylactic isolation. Such workers are entitled to an allowance equal to their base salary.
a sickness allowance owing to the contraction of COVID-19. Compared with Portugal’s standard sickness allowance scheme, the granting of the COVID-19 sickness allowance is not subject to a waiting period. Public support consists in a benefit equal to the gross salary.
the purchase of personal protective equipment to be used in the workplace, notably in public hospitals, line ministries, municipalities and the autonomous regions of the Azores and Madeira as a health-related measure.
a school hygiene campaign aimed at ensuring the safe return to work of lecturers, other staff members and students.
the testing for the contraction of COVID-19 of inpatients and workers of public hospitals, as well as of employees of nursing homes and childcare facilities.
a special compensation for workers in the National Health Service involved in fighting the COVID-19 outbreak. It consists in a performance bonus, paid only once, corresponding to an amount equal to 50 % of the employee’s normal gross salary.
Portugal 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 Portugal 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
Contents
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.