The President of the European Commission, Ursula von der Leyen, announced on Wednesday 1 April the imminent presentation of a SURE instrument intended to temporarily support part-time activities at a time when the European economy is paralysed by the COVID-19 pandemic.
The details and extent of the financing of this new instrument vary between the various drafts of the regulation to be presented, but the available package could contain up to EUR 100 billion of guarantees to national schemes.
“We have developed a concept of partial retention for posts. It is designed to support Italy, Spain and all other countries that are hard hit, which is made possible thanks to the solidarity of the other Member States”, said the Commission President in an audiovisual message broadcast online. She recalled that Member States - such as her native Germany - that introduced short-time working had weathered the financial crisis of 2008 much better.
“The idea is simple: if there are no orders and companies are short of work because of an external shock, such as the coronavirus, they should not lay off their workers, but continue to employ them, even if there is less work. Thanks to SURE, we will compensate for the lack of income”.
The instrument, which should be similar to the one we described (see EUROPE 12452/2), is based on Article 122.2 of the TFEU Treaty, which provides for the possibility of setting up a solidarity mechanism between Member States facing “serious difficulties”.
According to a provisional version of the proposal from the beginning of the week, copied to EUROPE, the Union’s financial assistance will take the form of a loan to the relevant Member State. To this end, in accordance with an EU Council Decision, the Commission would be empowered, on behalf of the European Union, to borrow on the capital markets or from financial institutions.
The maximum amount of EU financial assistance is not fully fixed in the provisional version of the text, with a range between EUR 50 and 100 billion being mentioned. This financial assistance would be provided through guarantees committed on a voluntary basis by Member States to the Union at a rate of 25% of the amount lent.
According to another draft version dated Tuesday 31 March, the Commission will reportedly be empowered to borrow on the capital markets or from financial institutions on behalf of the Union “at the most opportune time, so as to optimise the cost of financing and to preserve its reputation as the Union’s issuer on the markets”. Above all, the maximum sum has been set at EUR 100 billion, according to this version.
It should be noted that emphasis will be placed on support for part-time working and income compensation arrangements for all workers, including the self-employed.
Procedure for applying for financial assistance
A Member State facing a socio-economic crisis as a result of the COVID-19 pandemic will be able to formally request assistance from the Commission under the management instrument. In particular, it is expected to account for a sudden increase in anti-crisis public spending from 23 February 2020.
Before submitting a proposal to the EU Council, the Commission will consult the relevant Member State. Then, once the application has been validated by the EU Council on a proposal from the Commission, the Union’s financial assistance would be made available.
The decision to make a loan available shall contain: - the amount, the maximum average duration, the financial costs, the maximum number of payments, the period of availability of the loan and the other terms and conditions necessary for the implementation of the assistance; - an assessment of compliance with the conditions for obtaining this assistance (in particular to support national systems in the short term); - a description of the national short-time working scheme(s) and/or similar measures that may be financed under the instrument.
On Tuesday 7 April, the proposal will be discussed by the Eurogroup meeting in enlarged format. Mandated by the European Summit (see EUROPE 12455/1), the euro area finance ministers will also discuss other proposals such as the provision of credit lines by the European Stability Mechanism (ESM), enhanced mobilisation of the EU budget and greater flexibility in the operation of the European Structural Funds (CRII 2) (see EUROPE 12458/1, 12458/2, 12458/6).
Mixed reaction from trade unions
The European Trade Union Confederation (ETUC) welcomed the European Commission’s announcement and hopes that the funding to be allocated to the instrument will be commensurate with the needs. It calls on the Commission to ensure that these short-time working measures are taken in all Member States and also concern workers on digital platforms.
Although Annelie Butenbach of the German Confederation of Trade Unions supported the initiative, she did not hide a certain amount of bitterness. For her, the proposal “no longer has anything to do with the originally planned unemployment reinsurance scheme”. Her trade union hopes that work will continue to cover minimum standards for national unemployment insurance schemes, “to ensure that all workers in Europe receive benefits that ensure their standard of living even in the event of unemployment”.
According to our information, the Commission seems to want to maintain its proposal for a permanent unemployment insurance mechanism. Only the date for the presentation, initially planned for the fourth quarter of 2020, remains uncertain. (Original version in French by Pascal Hansens)