Considerations on COM(2020)469 - Proposal to grant temporary support under Council Regulation 2020/672 to Latvia 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)469 - Proposal to grant temporary support under Council Regulation 2020/672 to Latvia to mitigate unemployment risks in an ...
document COM(2020)469 EN
date September 25, 2020
 
table>(1)On 3 August 2020, Spain requested financial assistance from the Union 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.
(2)The COVID-19 outbreak and the extraordinary measures implemented by Spain to contain the outbreak and its socioeconomic and health-related impact are expected to have a dramatic impact on public finances. According to the Commission’s 2020 Spring forecast, Spain was expected to have a general government deficit and debt of 10,1 % and 115,6 % of gross domestic product (GDP) respectively by the end of 2020. According to the Commission’s 2020 Summer interim forecast, Spain’s GDP is projected to decrease by 10,9 % in 2020.

(3)The COVID-19 outbreak has immobilised a substantial part of the labour force in Spain. This has led to a sudden and severe increase in public expenditure by Spain in respect of the short-time work scheme, similar schemes specifically targeted at the self-employed and workers in the tourism sector, and in support of public health measures, as set out in recitals (4) to (9).

(4)More specifically, ‘Royal Decree-Law 8/2020’, ‘Royal Decree-Law 11/2020’ and ‘Royal Decree-Law 24/2020’, which are referred to in Spain’s request of 3 August 2020, introduced wage compensation of up to 70 per cent of the employees’ basic salary for employees furloughed under the short-time work scheme ‘ERTE’ (Expediente de Regulación Temporal de Empleo). The compensation is capped at a maximum of EUR 1 098,09 per month, which may be increased to EUR 1 254,96 per month or EUR 1 411,83 per month, depending on the beneficiary’s number of dependent children.

(5)The authorities have also introduced a full or partial social security contribution exemption, depending on the employers’ size and the month of the year, in respect of employees participating in ‘ERTE’. The exemption consists in forgone revenues for the Government, which for the purpose of the implementation of Regulation (EU) 2020/672 can be considered equivalent to public expenditure.

(6)For the self-employed, the authorities have introduced a benefit for the ‘cessation of activity’ (that is to say, the suspension, in full or in part of self-employed activity) and accompanying social security contribution exemptions. The measure provides monthly payments whilst businesses are required to be closed or, if opened, where turnover has been reduced by more than 75 %.

(7)Specific support measures, consisting of benefits and social security contribution exemptions for employees participating in ‘ERTE’, have also been introduced for ‘permanent seasonal workers’ who have not been able to return to their activity on the scheduled dates due to the COVID-19 outbreak, on the basis of ‘Royal Decree-Law 15/2020’ and in application of ‘Royal Decree-Law 8/2020’, which is referred to in Spain’s request of 3 August 2020.

(8)‘Royal Decree Law 8/2019’, ‘Royal Decree Law 12/2019’, ‘Royal Decree Law 7/2020’ and ‘Royal Decree Law 25/2020’, which are referred to in Spain’s request of 3 August 2020, have introduced an exemption for employers from payment of social security contributions (by 50 %) to support ‘employment conservation in the tourism sector’ during the state of emergency and beyond, while maintaining a minimum level of social protection for several categories of workers. An average of total monthly expenditure and the number of persons for whom companies have received subsidies gives an average expenditure per person per month of approximately EUR 192.

(9)Finally, Spain has extended health benefits for workers absent due to COVID-19 (either in preventive isolation or infected workers) on the basis of ‘Royal Decree-Law 6/2020’ and ‘Royal Decree-Law 13/2020’, which are referred to in Spain’s request of 3 August 2020. The measure is similar to the scheme for accidents at work (that is to say, the benefits are more generous and are paid for by the Social Security Fund as of the first day of leave), with benefits capped at 75 % of the basic salary.

(10)Spain fulfils the conditions for requesting financial assistance set out in Article 3 of Regulation (EU) 2020/672. Spain has provided the Commission with appropriate evidence that the actual and planned public expenditure has increased by EUR 23 803 573 600 as of 1 February 2020 due to the national measures taken to address the socioeconomic effects of the COVID-19 outbreak. The increased amount directly related to the short-time work scheme ‘ERTE’ and similar measures specifically targeted at the self-employed and workers in the tourism sector constitutes a sudden and severe increase because of the almost immediate and unprecedented increase in the number of beneficiaries covered by those schemes and the magnitude of the related benefits in Spain. Spain intends to finance EUR 1 660 000 000 of the increased amount of expenditure through Union funds.

(11)The Commission has consulted Spain and verified the sudden and severe increase in the actual and planned public expenditure directly related to short-time work schemes and similar measures, as well as the recourse to relevant health-related measures related to the COVID-19 outbreak, referred to in the request of 3 August 2020, in accordance with Article 6 of Regulation (EU) 2020/672.

(12)Financial assistance should therefore be provided with a view to helping Spain to address the socioeconomic effects of the severe economic disturbance caused by the COVID-19 outbreak. The Commission should take the decisions concerning maturities, size and release of instalments and tranches in close cooperation with national authorities.

(13)This Decision should be without prejudice to the outcome of any procedures relating to distortions of the operation of the internal market that may be undertaken, in particular under Articles 107 and 108 of the Treaty. It does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 108 of the Treaty.

(14)Spain should inform the Commission on a regular basis of the implementation of the planned public expenditure, in order to enable the Commission to assess the extent to which Spain has implemented that expenditure.

(15)The decision to provide financial assistance has been reached taking into account existing and expected needs of Spain, as well as requests for financial assistance pursuant to Regulation (EU) 2020/672 already submitted or planned to be submitted by other Member States, while applying the principles of equal treatment, solidarity, proportionality and transparency. In particular, the amount of the loan has been established to ensure compliance with the prudential rules applicable to the portfolio of loans as specified in Regulation (EU) 2020/672,