Considerations on COM(2022)505 - Amendment of Implementing Decision (EU) 2020/1354 granting temporary support to Portugal to mitigate unemployment risks following the COVID-19 outbreak

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dossier COM(2022)505 - Amendment of Implementing Decision (EU) 2020/1354 granting temporary support to Portugal to mitigate unemployment risks ...
document COM(2022)505 EN
date October 25, 2022
 
table>(1)Further to a request from Portugal on 11 August 2020, the Council, by means of Implementing Decision (EU) 2020/1354 (2), granted financial assistance to Portugal in the form of a loan amounting to a maximum of EUR 5 934 462 488 with a maximum average maturity of 15 years, and with an availability period of 18 months, with a view to complementing Portugal’s national efforts to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of that outbreak for workers and the self-employed.
(2)The loan was to be used by Portugal to finance short-time work schemes, similar measures and health-related measures, as referred to in Article 3 of Implementing Decision (EU) 2020/1354.

(3)Further to a second request from Portugal on 9 December 2021, the Council, by means of Implementing Decision (EU) 2022/99 (3), extended the list of measures for which financial assistance had already been granted by means of Implementing Decision (EU) 2020/1354, with a view to complementing Portugal’s national efforts to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of that outbreak for workers and the self-employed.

(4)The COVID-19 outbreak has immobilised a substantial part of the labour force in Portugal. This has led to repeated sudden and severe increases in public expenditure in Portugal in respect of the measures referred to in Article 3 of Implementing Decision (EU) 2020/1354.

(5)The COVID-19 outbreak and the extraordinary measures implemented by Portugal in 2020, 2021 and 2022 to contain that outbreak and its socioeconomic and health-related impact had and are still having a dramatic impact on public finances. In 2020, Portugal had a general government deficit and debt of 5,8 % and 135,2 % of gross domestic product (GDP) respectively, which narrowed to 2,8 % and 127,4 % respectively at the end of 2021. According to the Commission’s 2022 spring forecast, Portugal is expected to have a general government deficit and debt of 1,9 % and 119,9 % of GDP, respectively, by the end of 2022. According to the Commission’s 2022 summer interim forecast, Portugal’s GDP is projected to increase by 6,5 % in 2022.

(6)On 17 September 2022, Portugal requested further financial assistance from the Union in the amount of EUR 300 000 000 with a view to continuing to complement its national efforts undertaken in 2020, 2021 and 2022 to address the impact of the COVID-19 outbreak and respond to the socioeconomic consequences of the outbreak for workers and the self-employed. In particular, Portugal further extended or amended the short-time work schemes and similar measures set out in recitals (7) to (21).

(7)Articles 298 to 308 of ‘Law No 7/2009 of 12 February’, as further specified by Article 142 of ‘Law No 75-B/2020 of 31 December’, introduced 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 is described in Article 3, point (a), of Implementing Decision (EU) 2020/1354. Initially, the measure provided 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.

(8)‘Decree-Law No 10-G/2020 of 26 March’, as amended by the ‘Declaration of Rectification No 14/2020 of 28 March’, Article 4 of ‘Decree-Law No 14-F/2020 of 13 April’, Article 3 of ‘Decree-Law No 20/2020 of 1 May’, Article 6 of ‘Decree-Law 20-H/2020 of 14 May’, Article 2 of ‘Decree-Law No 27-B/2020 of 19 June’, and Article 2 of ‘Decree-Law No 6-C/2021 of 15 January’, and as further specified by Article 142 of ‘Law No 75-B/2020 of 31 December’, introduced the new and simplified special support for the maintenance of employment contracts through the temporary interruption of work or reduction of normal working time. The measure is described in Article 3, point (b), of Implementing Decision (EU) 2020/1354. This measure was similar to the measure referred to in recital (7) but had simplified procedures to allow swifter access to funds. Initially, the measure provided 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 2 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. Since the relief of social security contributions constitutes foregone revenue for the general government, for the purposes of Regulation (EU) 2020/672 it can be considered to be equivalent to public expenditure.

(9)Articles 5(2) and 7 to 9 of ‘Decree-Law No 10-G/2020 of 26 March’ established that, when firms were benefiting from the measures referred to in recitals (7) or (8), and had a training programme approved by the national public employment and training services (‘Instituto do Emprego e 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. The measure is described in Article 3, point (c), of Implementing Decision (EU) 2020/1354.

(10)Articles 4 and 5 of ‘Decree-Law No 27-B/2020 of 19 June’ and Article 14-A of ‘Decree-Law No 46-A/2020 of 30 July’, as amended by Article 4 of ‘Decree-Law No 6-C/2021 of 15 January’, Article 2 of ‘Decree-Law No 23-A/2021 of 24 March’, and Article 2 of ‘Decree-Law No 32/2021 of 12 May’, and as specified in ‘Government Order No 102-A/2021 of 14 May’, introduced a new special support measure for firms for the resumption of their business activities. The measure is described in Article 3, point (d), of Implementing Decision (EU) 2020/1354. 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 recitals (7) or (8) 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 6 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-enterprises whose employees had benefited from the measure referred to in recital (12), which could then receive a benefit equal to twice the national minimum salary per such employee paid in a phased manner over 6 months.

(11)Article 3 of ‘Decree-Law No 27-B/2020 of 19 June’, as amended by Article 2 of ‘Decree-Law No 58-A/2020 of 14 August’, introduced a new income stabilisation supplement for employees benefiting from measures referred to in recitals (7) or (8) for at least 1 month (later specified as 30 consecutive days) in the period from April to June 2020. The measure is described in Article 3, point (e), of Implementing Decision (EU) 2020/1354. 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 employee was covered by one of the two above-mentioned measures, with a lower limit of EUR 100 and an upper limit of EUR 351.

(12)Article 4 of ‘Decree-Law No 46-A/2020 of 30 July’, as amended by Article 2 of ‘Decree-Law No 90/2020 of 19 October’, Article 142 of ‘Law No 75-B/2020 of 31 December’, Article 3 of ‘Decree-Law No 6-C/2021 of 15 January’, Article 2 of ‘Decree-Law No 23-A/2021 of 24 March’, and Article 2 of ‘Decree-Law No 71-A/2021 of 13 August’, introduced the new and progressive special support for the maintenance of employment contracts through the temporary reduction of normal working time. The measure is described in Article 3, point (f), of Implementing Decision (EU) 2020/1354. Initially, the measure provided a benefit to eligible firms to cover 70 % of the 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 salary.

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 2 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 had 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. Since the relief of social security contributions constitutes foregone revenue for the general government, for the purposes of Regulation (EU) 2020/672, it can be considered to be equivalent to public expenditure.

(13)Article 26 of ‘Decree-Law No 10-A/2020 of 13 March’, as amended by Article 2 of ‘Decree-Law No 12-A/2020 of 6 April’, Article 2 of ‘Decree-Law No 14-F/2020 of 13 April’, Article 4 of ‘Decree-Law No 20-C/2020 of 7 May’, Article 9 of ‘Law No 27-A/2020 of 24 July’, and Article 2 of ‘Law No 31/2020 of 11 August’, as well as Article 325-G of ‘Law No 2/2020 of 31 March’, as added by Article 3 of ‘Law No 27-A/2020 of 24 July’, introduced a new special support measure for self-employed persons, informal workers and managers. The measure is described in Article 3, point (g), of Implementing Decision (EU) 2020/1354. 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 2 months prior to that period, recalibrated so as to make the monthly benefit equal to either the individual’s registered income, with an upper limit equal to Portugal’s social support index, when the individuals’ registered income was lower than 1,5 times Portugal’s social support index, or to two-thirds of the individual’s registered income, with an upper limit equal to the national minimum salary, when the individual’s registered income was equal or greater than 1,5 times Portugal’s social support index, and setting a lower limit equal to 50 % of Portugal’s social support index.

(14)Article 23 of ‘Decree-Law No 10-A/2020 of 13 March’, as amended by Article 2 of ‘Decree-Law No 12-A/2020 of 6 April’, and Article 3 of ‘Law No 16/2021 of 7 April’, introduced a family allowance for employees prevented from working due to the need to assist their children or other dependants under the age of 12, or, regardless of age, with a disability or chronic illness. The measure is described in Article 3, point (h), of Implementing Decision (EU) 2020/1354. 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. This measure can be considered to be a similar measure to short-time work schemes, as referred to in Regulation (EU) 2020/672, as it provides income support to employees, which will help to cover the costs of childcare during school closures and therefore help parents to continue working, preventing putting the employment relation at risk.

(15)‘Government Order No 3485-C/2020 of 19 March’, ‘Government Order No 4395/2020 of 10 April’, and ‘Government Order No 5897-B/2020 of 28 May’, introduced a special support measure for the maintenance of trainers’ employment contracts in the light of the cancellation of vocational trainings. The measure is described in Article 3, point (i), of Implementing Decision (EU) 2020/1354. Public support consisted of a benefit covering the trainers’ salary even if the vocational training did not take place.

(16)‘Order of the Ministers of Labour, Solidarity and Social Security, and of Health No 2875-A/2020 of 3 March’, Article 20 of ‘Decree-Law 10-A/2020 of 13 March’, as amended by Article 2 of ‘Decree-Law No 62-A/2020 of 3 September’, and Article 325-F of ‘Law No 2/2020 of 31 March’, as amended by Article 3 of ‘Law No 27-A/2020 of 24 July’, introduced a sickness allowance owing to the contraction of COVID-19. The measure is described in Article 3, point (m), of Implementing Decision (EU) 2020/1354. Compared with Portugal’s standard sickness allowance scheme, the granting of the COVID-19 sickness allowance was not subject to a waiting period. The public support consisted of a benefit equal to the beneficiaries’ normal gross salary.

(17)Article 19 of ‘Decree-Law No 10-A/2020 of 13 March’, as amended by Article 2 of ‘Decree-Law No 62-A/2020 of 3 September’, and Article 325-F of ‘Law No 2/2020 of 31 March’, as amended by Article 3 of ‘Law No 27-A/2020 of 24 July’, introduced an allowance for employees and self-employed persons who were temporarily prevented from exercising their professional activities as a result of being in prophylactic isolation. The measure is described in Article 3, point (l), of Implementing Decision (EU) 2020/1354. The granting of the allowance was not subject to a waiting period. The benefiting employees or self-employed persons were entitled to an allowance equal to their normal gross salary.

(18)‘Resolution of the Council of the Regional Government of the Azores No 97/2020 of 8 April’, ‘Resolution of the Council of the Regional Government of the Azores No 120/2020 of 28 April’, ‘Resolution of the Council of the Regional Government of the Azores No 128/2020 of 5 May’, ‘Resolution of the Council of the Regional Government of the Azores No 129/2020 of 5 May’, ‘Resolution of the Council of the Regional Government of the Azores No 195/2020 of 15 July’, ‘Resolution of the Council of the Regional Government of the Azores No 196/2020 of 15 July’, and ‘Resolution of the Council of the Regional Government of the Azores No 200/2020 of 17 July’, introduced a number of regional employment-related measures in the autonomous region of the Azores. The measures are described in Article 3, point (j), of Implementing Decision (EU) 2020/1354. 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 for the resumption of their business activities, were intended to preserve employment in the Azores during the COVID-19 outbreak. Support under those measures was conditional on firms preserving employment contracts and maintaining their business activities.

(19)‘Resolution of the Regional Government of Madeira No 101/2020 of 13 March’ and ‘Ordinance No 133-B/2020 of the Vice-Presidency of the Regional Government of Madeira and of the Regional Secretariat for Social Inclusion and Citizenship of 22 April’ introduced a number of regional employment-related measures in the autonomous region of Madeira. The measures are described in Article 3, point (k), of Implementing Decision (EU) 2020/1354. 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 for the resumption of their business activities, were intended to preserve employment in Madeira during the COVID-19 outbreak. Support under these measures was conditional on firms preserving employment contracts and maintaining their business activities.

(20)Article 156 of ‘Law No 75-B/2020 of 31 December’, and subject to the conditions set out in points (2)(c) to (f) therein, as further specified in ‘Government Ordinance No 19-A/2021 of 25 January’, and as extended by Article 12 of ‘Decree-Law No 104/2021 of 27 November’, introduced 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. The measure is described in Article 3, point (r), of Implementing Decision (EU) 2020/1354. 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 who experienced 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; and, (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 it was below 1,5 times 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 it was equal to or above that index. Eligible managers were those whose business activities had been temporarily suspended as a result of the COVID-19 pandemic, or who had 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 2 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 that index.

(21)Point 2.5.1 of ‘Annex to the Resolution of the Council of Ministers No 41/2020 of 6 June’, as further specified by Articles 10 to 12 of ‘Government Ordinance No 180/2020 of 3 August’, and extended by Articles 5 to 7 of ‘Annex to Government Ordinance No 37-A/2021 of 15 February’, introduced a social support scheme for artists, authors, technicians and other art professionals. The measure is described in Article 3, point (s), of Implementing Decision (EU) 2020/1354. 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).

(22)Portugal further extended or amended a series of health-related measures to address the COVID-19 outbreak. In particular, this concerns the measures set out in recitals (23) to (27).

(23)‘Norm No 012/2020 of 6 May’, as amended on 14 May 2020, and ‘Norm No 013/2020 of 10 June’, as amended on 23 June 2020, both issued by the Portuguese Directorate-General for Health, as well as ‘Decree-Law No 10-A/2020 of 13 March’, provided for 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. The measure is described in Article 3, point (n), of Implementing Decision (EU) 2020/1354.

(24)‘Decree-Law No 10-A/2020 of 13 March’ introduced a school hygiene campaign aimed at ensuring the safe return to work of lecturers, other staff members, and students. The measure is described in Article 3, point (o), of Implementing Decision (EU) 2020/1354.

(25)‘Norm No 012/2020 of 6 May’, as amended on 14 May 2020, and ‘Norm No 013/2020 of 10 June’, as amended on 23 June 2020, both issued by the Portuguese Directorate-General for Health, provided for 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. The measure is described in Article 3, point (p), of Implementing Decision (EU) 2020/1354.

(26)Article 42-A of ‘Law No 2/2020 of 31 March’, as amended by Article 3 of ‘Law No 27-A/2020 of 24 July’, and Article 291 of ‘Law No 75-B/2020 of 31 December’, introduced a new special compensation for workers in the National Health Service involved in fighting the COVID-19 outbreak. The measure is described in Article 3, point (q), of Implementing Decision (EU) 2020/1354. The measure consisted of a performance bonus, paid only once, corresponding to an amount equal to 50 % of the employee’s normal gross salary.

(27)Article 6 of ‘Decree-Law No 10-A/2020 of 13 March’, and Articles 4 to 8 of ‘Decree-Law No 10-A/2021 of 2 February’, provided for the hiring of additional health professionals and overtime work in the National Health Service to help address pandemic-related challenges. The measure is described in Article 3, point (t), of Implementing Decision (EU) 2020/1354.

(28)Portugal fulfils the conditions for requesting financial assistance set out in Article 3 of Regulation (EU) 2020/672. Portugal has provided the Commission with appropriate evidence that the actual and planned public expenditure has increased by EUR 6 920 192 416 as of 1 February 2020 as a result of the national measures taken to address the socioeconomic effects of the COVID-19 outbreak. This constitutes a sudden and severe increase because it is also related to an extension or amendment of existing national measures directly related to the short-time work scheme and similar measures that cover a significant proportion of undertakings and of the labour force in Portugal. Portugal intends to finance EUR 386 417 324 of the increased amount of expenditure through Union funds and EUR 299 312 604 through its own financing.

(29)The Commission has consulted Portugal 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, as referred to in the request of 17 September 2022, in accordance with Article 6 of Regulation (EU) 2020/672.

(30)The expenditure on health-related measures, as referred to in Portugal’s request of 17 September 2022 and in recitals (23) to (27), amounts to EUR 1 382 230 075.

(31)Financial assistance should therefore be provided with a view to helping Portugal 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.

(32)Given that the availability period indicated in Implementing Decision (EU) 2020/1354 has expired, a new availability period for the additional financial assistance is needed. The availability period for financial assistance of 18 months granted by Implementing Decision (EU) 2020/1354 should be extended by 21 months and, as a consequence, the total availability period should be 39 months starting from the first day after Implementing Decision (EU) 2020/1354 has taken effect.

(33)Portugal and the Commission should take this Decision into account in the loan agreement referred to in Article 8(2) of Regulation (EU) 2020/672.

(34)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 pursuant to 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.

(35)Portugal 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 Portugal has implemented that expenditure.

(36)The decision to provide financial assistance has been reached taking into account existing and expected needs of Portugal, 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,