Explanatory Memorandum to COM(2021)163 - Amendment of decision 2020/1352 granting temporary support to Malta to mitigate unemployment risks in the emergency following the COVID-19 outbreak

Please note

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

dossier COM(2021)163 - Amendment of decision 2020/1352 granting temporary support to Malta to mitigate unemployment risks in the emergency ...
source COM(2021)163 EN
date 29-03-2021


1. CONTEXTOFTHE PROPOSAL

• Reasons for and objectives of the proposal

Council Regulation (EU) 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 25 September 2020 the Council granted financial assistance to Malta with a view to complementing its national efforts to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of the outbreak for workers and the self-employed.

On 10 March 2021, Malta submitted a new request for 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 Malta’s labour market measures and caused by the COVID-19 pandemic. In particular, the increased expenditure for which additional financial assistance is being requested pertains to the existing measure referred to in Council Implementing Decision (EU) 2020/1352:

(a)         a COVID-19 wage supplement, which covers employees and self-employed

individuals, to address the disruption caused by the pandemic. Between March to June 2020, full-time employees working in the sectors hardest hit by the crisis listed in Annex A were eligible for wage support of EUR 800 per month (EUR 500 per month for part-time employees). In less affected sectors listed in Annex B, full-time employees were able to receive EUR 160 per month (EUR 100 per month for parttime employees). In July 2020 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 B were assisted with a wage supplement of EUR 600 for fulltime employees. The scheme featuring these conditions was extended until the end of 2020. As of January 2021, the size of the wage supplement reflects a drop in sales over six months between March and October 2019 against turnover declared over six months between March and October 2020. Where no VAT records are available, the wage supplement is disbursed based on the criteria applicable in 2020. The scheme is envisaged to run until the end of 2021. In the second half of 2021, support will remain in effect in line with the set parameters for the accommodation and catering activities. For other eligible activities it will decline to 66% in the third quarter and further to 33% in the last quarter of the year. The scheme will remain available only for those enterprises who were eligible for the support already under the original scheme. According to the new rules, the scheme will also cover replacement of employees (i.e. replacing those who voluntarily terminated their employment after June 2020) as long as the original number of employees as at end of May 2020 is not exceeded. Only the part of the public expenditure related to the employees who were

continuously in employment was requested by the authorities and excluding the part for these newly hired employees.

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 in support of the measure above.

• Consistency with existing policy provisions in the policy area

The present proposal is fully consistent with Council Regulation (EU) 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 (EU) 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.