“SURE is Europe-supported short-time work. This scheme can mitigate the effects of the recession, it keeps people in work, it enables companies to return to the market with renewed vigour,” Ursula von der Leyen (President of the EU Commission) expalined today on the press conference held after her first presentation of SURE to the EU Council.
How does SURE work?
“we have learned the lessons from the financial crisis in 2008. Member States who have this instrument have helped people to stay in their jobsand companies go through the financial crisis with the employees. This is SURE State supported short time work. It has medicated the effects of the recession, kept people in work, and enabled companies to return to markets with renewed voigour. And the idea is simple. If there are no orders and companies are run out of work because a temporary external shock like corona, they should not lay off their workers. They continue to employ them, even if there’s less work. In the spare time, workers might be taught for example new skills, that will benefit both the company and themselves. This way people can spare the whole in their wallets, they can continue to pay their rents and buy what they need, and this also has a positive imact on the economy.
The idea is that the member State pay for the 100% or the part of the salary that the employee will not receive due to the reduction of his/her work time.
SURE loans can be applied also to support the salary of self employed workers or the workers with their contract suspended by the COVID crisis.
SURE is a temporary financing scheme, which was initially meant to help Spain and Italy, the European countries most hit by the coronavirus, but any Member State can apply for the SURE loans. There will be no conditionality in the national schemes, except for an evidence -based increase in current or expected spending on thosde schemes.
“Thanks to SURE more people will keep their job during the corona crisis. And they will go back to full work as soon as the lock down will be over.Whrn th demand picks up again and the orders come back. This is crucial to restart Europe’s economic engine without delay,” Von der Leyen pointed.
How will SURE be funded?
SURE will take the form of a lending scheme up to €100 Bn underpinned by a system of voluntary guarantees provided by Member States.
With this instrument the EU could borrow on the markets by issuing bonds with low interest rates benefiting from credibility pf the EU signature. Then the EU would lend the proceed to the Member States concerned. This is a Back-to-back loan, a technique used frequently by the Commission, especially also in the past financial crisis.
“The Commission will provide loans to those Member States that need them, to strengthen their short-time work schemes. These schemes now exist and are planned straight across the European Union. So SURE can benefit all Member States who want to use it,” von der Leyen explained.
Following the data provided by the EU Commission, before crisis, 18 Member States have schemes in place; currently all Member States are setting up schemes compatible with SURE.
“We can mobilise €100 Bn to do this. And this will be made possible thanks to Member States’ guarantees of €25 Bn. And this, this is European solidarity in action.
The structural funds can also be of help here, to keep people in employment. We take out conditions to ease the access to European money. So full flexibility across regions, across priorities in every country. We recognise that Member States are already investing massively to deal with the corona crisis. And therefore, there is no reason to ask them for additional national funding. All of this will allow Member States to access all the remaining funding that they are entitled to, and this very quickly,” The President of the EU Commission pointed.
Following the background information prvided bu the EU Commission, the financial assistence through SURE loans will only become available after all Member States have contributed to the squeme :
a) With contributions totalling at least a 25% of the amount of the loans
b) With individual contribution corresponding to the GNI key
Other safeguards that guarantees are built in to ensure the financial solidity of the scheme (maximum limit to concentration risk and annual exposure, possibilities to roll over debt).
Recovery depends on EU skilled workforce, the reason why SURE is needed not only by workers, bt by all the EU members
“The lockdown paralysed the demand and it paralysed the supply. Many companies are now left with no income and if we do nothing, they will have to lay off their workers, their employees. And this has as a consequence, when the engine will restart, when the world economy will restart, they will not have the skilled workforce they need to take the offers. So we will lose markets and this will limit our recovery. And this is why we introduced today SURE,” Ursula von der Leyen underscored.
Just EU Council approval still needed
“These are the central planks of today’s proposals. We have also adopted other measures to help in particular fishermen and the most vulnerable in society. For these proposals to become reality, I count on Parliament and Council to act swiftly,” said Von der Leyen.
But the background information provided bu the EU Commission explains that the SURE could be approved under the Article 122 . 1 and .2 of EU Treaty a quick procedure involving just the approval of the EU Council. This procedure has been already used to create the EFSM (Europena Financial Stabilisation mechanism).
Next EU budget, the best tool to support recovery after COVID-19 crisis
“This huge package we have today is our second step in our response to the corona crisis. To date, the European Union, that is the European institutions and Member States, have mobilised €2,770 Bn. And this is the largest answer to a European crisis ever given. But we need to start preparing the long-term recovery. And this will take a lot of strength and a lot of breath. And there, the European budget, the so-called ‘MFF’ (Multiannual Financial Framework), is our strongest, it is our most important instrument. It is established, it is trusted by all Member States, and it is accepted as an outstanding tool of investment and convergence. So I think the next European budget, as a central pillar, will have to embody our response to the corona crisis,” Ursula von der Leyen said.
One among many other meassures taken from EU Institutions to cope with the coronavirus crisis
“In the present circumstances, fighting to save peoples’ lives, and to protect peoples’ livelihoods, is the overriding mission of all public authorities across the European Union. And the Commission is doing just that. When Europe was freezing up with uncoordinated border closures and export bans, we acted to keep goods and key personnel moving to where they were needed. That was the most urgent task. And I think that things are improving right now.
“In parallel, we moved to give the Member States all the breathing space they needed to provide the necessary oxygen to their economies, their businesses and their workers. So how did we do that? We put in place the most flexible state aid framework ever. It is unprecedented. And we triggered for the very first time the general escape clause. And this allowed a massive injection of liquidity into the European economy.
“The ECB launched purchasing programmes, and the EIB provided a dedicated corona response to give loans to small and medium enterprises hit by the corona crisis. All of this has been done in record time and it helped keep the European economy on its feet,” Von der Leyen added.
Image over the headline.- Ursula von der leyen during the mid-day press conference held on 02/04/2020. Caption from the video provided for publishing by the EU Commission.