Explanatory Memorandum to COM(2022)505 - Amendment of Implementing Decision (EU) 2020/1354 granting temporary support to Portugal to mitigate unemployment risks following the COVID-19 outbreak - Main contents
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| dossier | COM(2022)505 - Amendment of Implementing Decision (EU) 2020/1354 granting temporary support to Portugal to mitigate unemployment risks ... |
|---|---|
| source | COM(2022)505  |
| date | 28-09-2022 |
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 11 August 2020, Portugal requested financial assistance from the Union and on 25 September 2020, with its Implementing Decision (EU) 2020/1354, the Council granted financial assistance to Portugal 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 9 December 2021, Portugal requested the Union to extend the list of measures in Council Implementing Decision (EU) 2020/1354. Further to this request, the Council Implementing Decision (EU) 2020/1354 was amended by Council implementing decision (EU) 2022/99 of 25 January 2022.
On 17 September 2022, Portugal requested again 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 the Portuguese labour market measures and health-related measures caused by the COVID-19 pandemic. In particular, this pertains to existing measures referred to in Council Implementing Decision (EU) 2020/1354:
(a)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. Initially, the measure provided for a benefit to eligible firms to cover 70% of employees’ compensation, with employees’ compensation equalling two-thirds of their normal gross salary. This two-thirds correction was 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 activities or have suffered significant revenue losses. Subsequently, the measure was extended, including by temporarily increasing employees’ compensation to 100% of their normal gross salary.
(b)a 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 was similar to the measure referred to in point (a) but had simplified procedures to allow swifter access to funds. Initially, the measure provided for a benefit to eligible firms to cover 70% of employees’ compensation, with employees’ compensation equalling two-thirds of their normal gross salary, as well as the exemption from employer’s social security contributions. This two-thirds correction was 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 activities or have 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. Subsequently, the measure was extended a number of times, including by temporarily increasing employees’ compensation to 100% of their normal gross salary in specific circumstances.
(c)when firms were benefitting from the measures referred to in points (a) or (b), and had a training programme approved by the national public employment and training services (“Instituto do Emprego de Formação Profissional”, IEFP), under the special vocational programmes, training allowances could be granted to cover income replacement, as well as the linked costs for training, to take place during working hours, as an alternative to reducing employees’ working time.
(d)a new special support for firms for the resumption of their business activities. Initially, in order to facilitate the transition back to work and support the retention of jobs, firms whose employees benefited from the measures referred to in points (a) or (b) could 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 was provided in a phased manner, firms were also to benefit from a partial exemption of 50% from the respective employer’s social security contributions with reference to the relevant employees. Subsequently, the measure was extended a number of times, including by adding as eligible firms micro-entreprises whose employees had benefited from the measure referred to in point (f), which could then receive a benefit equal to twice the national minimum salary per such employee paid in a phased manner over six months.
(e)a new income stabilisation supplement for employees benefitting from measures referred to in points (a) or (b) during at least one month (later specified as 30 consecutive days) in the period from April to June 2020. Eligible employees were those whose gross salary with reference to February 2020 did not exceed twice the national minimum salary. The employees were entitled to receive a benefit equal to the difference between the gross salary of February 2020 and that of the period in which the employees were covered by one of the two above-mentioned measures, with a lower limit of EUR 100 and an upper limit of EUR 351.
(f)a new and progressive special support for the maintenance of employment contracts through the temporary reduction of normal working time. Initially, the measure provided for a benefit to eligible firms to cover 70% of employees’ compensation for hours not worked, with that compensation equalling two-thirds of their normal gross salary corresponding to hours not worked in August and September 2020, or to four-fifths of their normal gross salary corresponding to hours not worked in October to December 2020. The resulting overall gross salary of employees was subject to a lower limit equal to the national minimum wage. The measure also provided for the total or partial exemption from the respective employer’s social security contributions, calibrated according to eligible firms being either micro-, small- and medium-sized, or big enterprises. Eligible firms must have suspended their business activities or have 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 maximum temporary reduction of normal working time was calibrated to increase according to the size of the revenue losses of eligible firms. Subsequently, the measure was extended a number of times, including by making eligible firms that experienced revenue losses of at least 25%, recalibrating the maximum temporary reduction of normal working time according to the size of the revenue losses of eligible firms, temporarily increasing employees’ compensation to 100% of their normal gross salary corresponding to hours not worked, and introducing the phasing-out of relief for employer’s social security contributions.
(g)a new special support for self-employed persons, informal workers and managers. Initially, the measure provided a monthly benefit equal to the individuals’ registered income, with an upper limit equal to Portugal’s social support index (“Indexante dos Apoios Sociais”, IAS, at EUR 438.81 in 2020). Eligible persons were the individuals suspending their business activities. Subsequently, the measure was extended a number of times, including by making eligible persons 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, and recalibrated so as to make the monthly benefit equal to either the individuals’ registered income, with an upper limit equal to Portugal’s social support index, when individuals’ registered income was lower than 1.5 Portugal’s social support index, or to two-thirds of the individuals’ registered income, with an upper limit equal to the national minimum salary, when individuals’ registered income was equal or greater than 1.5 Portugal’s social support index, and setting a lower limit equal to 50% of Portugal’s social support index.
(h)a family allowance for employees prevented from working due to the need to assist their children or other dependents under the age of 12, or, regardless of age, with a disability or chronic illness. The measure provided a benefit corresponding to two-thirds of the normal gross salary, paid in equal parts by the employer and social security, with a lower limit equal to the national minimum salary and an upper limit equal to three times the national minimum salary.
(i)a special support for the maintenance of trainers’ employment contracts in the light of the cancellation of vocational trainings. Public support consisted in a benefit covering the trainers’ salary in spite of the vocational trainings not having taken place.
(j)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 was not subject to a waiting period. Public support consisted in a benefit equal to the gross salary.
(k)an allowance for employees and self-employed persons that were temporarily prevented from exercising their professional activities due to being in prophylactic isolation. The granting of the allowance was not subject to a waiting period. Benefiting employees or self-employed persons were entitled to an allowance equal to their normal gross salary.
(l)a number of regional employment-related measures in the autonomous region of the Azores. The specific measures were intended to preserve employment in the Azores during the COVID-19 outbreak, including a regional top-up on nation-wide schemes, namely on short-time work, as well as support for the self-employed and for firms for the resumption of their business activities. Support under these measures was conditional on firms preserving employment contracts and maintaining their business activities.
(m)a number of regional employment-related measures in the autonomous region of Madeira. The specific measures were intended to preserve employment in Madeira during the COVID-19 outbreak, including a regional top-up on nation-wide schemes, namely on short-time work, as well as support for the self-employed and for firms for the resumption of their business activities. Support under these measures was conditional on firms preserving employment contracts and maintaining their business activities.
(n)an extraordinary support scheme for self-employed workers, workers without access to other social protection mechanisms, and managers whose income was particularly affected by the COVID-19 pandemic. In the case of self-employed workers, the measure provided a benefit equal to two-thirds of the drop in the workers’ monthly income, with an upper limit equal to EUR 501.16. Eligible self-employed workers were those experiencing a drop in income of at least 40% in the period from March to December 2020, compared with 2019. In the case of workers without access to other social protection mechanisms, the measure provided: (i) for employees, a benefit equal to the difference between the monthly reference value of EUR 501.16 and the average monthly wage per adult in the respective household; or, (ii) for self-employed workers, a benefit equal to two-thirds of the drop in the workers’ monthly income, with an upper limit of EUR 501.16. In the case of managers, the measure provided a benefit equal to either their reference average monthly income, when this was below 1.5 Portugal’s social support index (“Indexante dos Apoios Sociais”, IAS, at EUR 438.81 in 2021), or two-thirds of their reference average monthly income, when this was equal or above the aforementioned index. Eligible managers were those whose business activities had been temporarily suspended due to the COVID-19 pandemic, or that were 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. In all cases, the benefit had a lower limit equal to EUR 50, increased to 50% of the observed monthly income drop when the latter fell between 50% and 100% of Portugal’s social support index, or to 50% of Portugal’s social support index when the income drop exceeded the aforementioned index.
(o)a social support scheme for artists, authors, technicians and other art professionals. The measure provided for a monthly benefit equal to Portugal’s social support index (“Indexante dos Apoios Sociais”, IAS, at EUR 438.81 in 2021).
(p)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.
(q)a school hygiene campaign aimed at ensuring the safe return to work of lecturers, other staff members, and students.
(r)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.
(s)a new special compensation for workers in the National Health Service involved in fighting the COVID-19 outbreak. The measure provided for a performance bonus, paid only once, corresponding to an amount equal to 50% of the employee’s normal gross salary.
(t)the hiring of additional health professionals and overtime work in the National Health Service to help address pandemic-related challenges.
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 measures above.
Health-related measures, as requested by Portugal, including on 17 September 2022, amount to EUR 1 382 230 075.
• 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.