Explanatory Memorandum to COM(2022)479 - Amendment of Implementing Decision (EU) 2020/1350 granting temporary support to Lithuania to mitigate unemployment risks following the COVID-19 outbreak

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dossier COM(2022)479 - Amendment of Implementing Decision (EU) 2020/1350 granting temporary support to Lithuania to mitigate unemployment risks ...
source COM(2022)479 EN
date 20-09-2022


1. CONTEXT OF THE 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 7 August 2020, Lithuania requested financial assistance from the Union and on 25 September 2020, with its Implementing Decision (EU) 2020/1350, the Council granted financial assistance to Lithuania 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 11 March 2021, Lithuania requested again Union financial assistance under the SURE Regulation. Further to this request, the Council Implementing Decision (EU) 2020/1350 was amended by Council implementing decision (EU) 2021/678 of 23 April 2021.

On 8 August 2022, Lithuania requested Union financial assistance under the SURE Regulation for the third time.

In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the Lithuanian authorities to verify the sudden and severe increase in actual and planned expenditure directly related to Lithuania’s labour market measures caused by the COVID-19 pandemic. In particular, this pertains to existing measures referred to in Council Implementing Decision (EU) 2020/1350:

(a)a scheme to pay subsidies to employers to cover estimated wages for each employed person facing time without work, as support during the quarantine and state of emergency. Before 1 January 2021, an employer could choose between subsidies to cover 70% of the salary, up to a maximum of 1,5 times the minimum wage, or 90% of the salary (100% in the case of employees aged 60 and above), up to a maximum of the minimum wage. From 1 January 2021, an employer can receive subsidies to cover 100% of the salary, up to a maximum of 1,5 times the minimum wage. Employers that have participated in the scheme must retain at least 50% of their employees for at least three months after the pay subsidy ends.

(b)a scheme to pay subsidies for employees returning from time without work, for up to six months following their return to work. Before 1 July 2021 subsidies were subject to a cap of the minimum wage or twice the minimum wage, depending on the economic activity carried out by the employer. The amount of the subsidies paid in the first and second months following return to work could be as high as 100% of an employee’s salary, in the third and fourth months as high as 50%, and in the fifth and sixth months as high as 30%. From 1 July 2021 subsidies were paid for employees returning from time without work, for a period of up to two months following their return to work. The subsidy in the first month consists of 100% of the employee’s salary, but not more than 0,9 times the minimum wage, in the second month 100% of the employee’s salary, but not more than 0,6 times the minimum wage. Those subsidies can be considered to be a similar measure to short-time work schemes, as referred to in Regulation (EU) 2020/672, as they aimed to provide income support to employees and help maintain existing employment relationships.

Lithuania has 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 Lithuania under the SURE Regulation in support of the measures 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 2020.

• 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. LEGAL BASIS, SUBSIDIARITY AND 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 CONSULTATIONS AND IMPACT ASSESSMENTS

• 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.

• Impact 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 financial 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.