Opinion of the European Economic and Social Committee on Emergency measures to support employment and income during the pandemic crisis

(Own-initiative opinion)

(2021/C 517/03)

Rapporteur: Cinzia DEL RIO

Plenary Assembly decision 26.4.2021 Legal basis Rule 32(2) of the Rules of Procedure Own-initiative opinion Section responsible Employment, Social Affairs and Citizenship Adopted in section 7.9.2021 Adopted at plenary 22.9.2021 Plenary session No 563 Outcome of vote (for/against/abstentions) 211/1/4

1. Conclusions and recommendations

1.1. The EESC endorses the EU strategy for tackling the crisis triggered by the pandemic, ensuring the recovery and resilience of the Member States’ economic, social and health systems, and safeguarding the production system, employment and income support.

1.2. The EESC supports the establishment of SURE as an innovative financial instrument which delivers on European solidarity to preserve jobs, provide income support to workers and support businesses, as well as a tool for integration and socioeconomic resilience in the EU.

1.3. The EESC underlines the social value of SURE, which by issuing social bonds intended to finance initiatives with a social objective anticipates the Next Generation EU programme.

1.4. The EESC welcomes the SURE initiative, which by financing short-time work schemes, income support and business support has protected a quarter of the total working population, preserving jobs and businesses’ productive capacity, as well as having a positive impact on the economy and the labour market. However, these figures do not sufficiently highlight the individual measures financed by the various countries, the amounts involved and the categories of workers covered by the aid.

1.5. The EESC proposes that a SURE observatory be set up for as long as SURE is in operation, involving the social partners and other civil society organisations. The observatory would be tasked with monitoring and assessing the impact in individual countries of the measures which receive financing, in order, inter alia, to identify models for systems in the future that could be used to reduce working time and support incomes in similar crisis situations.

1.6. During times of economic crisis, the speed with which decisions and choices are made can make all the difference. For this reason, the EESC appreciates the speed with which the European Commission set up SURE and concluded negotiations with the Member States in a short space of time, demonstrating its capacity to respond to the severity of the crisis.

1.7. The EESC recommends combining the use of SURE with active labour market policies and vocational training and re-skilling programmes aimed at creating stable and quality employment, combating in-work poverty and fragmented and unstable forms of work, which do not provide any guarantee of adequate social security coverage and also affect public welfare systems.

1.8. The EESC believes that SURE is one of the tools that can provide incentives to employers to retain workers despite the fall in productive activity. Measures to allocate part of working time to training can be encouraged through collective agreements. This allows companies to adapt the skills of their workers by setting aside part of their hours for training, with the time staff spend in training being funded by SURE.

1.9. The EESC stresses the need to shape and complete Europe’s social dimension more consistently, while ensuring Europe’s competitiveness in the global context and including with a view to the new challenges of the green and digital transitions, drawing on the measures set out in the European Pillar of Social Rights Action Plan, including measures and investments to support employment, education and active labour market policies.

1.10. The EESC supports the Commission communication suspending the general escape clause of the Stability and Growth Pact and calls for a ‘shift’ towards a revised and rebalanced economic governance framework geared towards promoting productive investment. It will be essential to help Member States put their public finances on a sustainable footing and in this way increase confidence in investment.

1.11. The EESC believes that the support and participation of the social partners brings added value to European and national policies. It is therefore essential that they are involved in the measures co-financed by SURE, leveraging collective bargaining in specific sectors hit particularly hard by the crisis. However, this must not be merely a formality: the social partners must be given a genuine and legitimate role in proceedings.

1.12. The EESC fully acknowledges the positive results of SURE highlighted in the Commission’s report of March 2021 and endorses the proposal for its stabilisation in support of workers and businesses as a tool for the EU’s integration and socioeconomic resilience in times of crisis such as the current one. This should take place following monitoring and evaluation by the SURE Observatory, which the EESC proposes to set up.

1.13. The EESC welcomes the Commission Recommendation (EU) 2021/402 ( 1 ) (EASE), which takes the strategic approach of gradually shifting from the emergency measures deployed during the pandemic to the new ones needed to ensure a job-rich recovery, notably active labour market policies such as temporary hiring incentives for vulnerable groups, upskilling and reskilling opportunities and entrepreneurial support, including for the social economy.

2. Introduction

2.1. The European economy has been severely damaged by the ongoing pandemic. The EESC welcomes the economic and social measures put in place by the EU using extraordinary tools to tackle the fallout of the crisis triggered by the pandemic, considering that they are a great opportunity to shape a fairer and more solidarity-based Europe and a competitive social market economy and to tackle the new challenges arising from the green and digital transitions. In addition to the Next Generation EU plan, these tools include: — national measures implemented on the basis of the easing of EU fiscal rules; — national measures to support liquidity, approved under the temporary and more flexible rules on State aid; — bolstering the lines of credit for businesses guaranteed by the European Investment Bank (EIB), with the establishment of a new guarantee fund; — the European Stability Mechanism (ESM), which was established by amending the Lisbon Treaty with a view to providing unconditional loans to finance healthcare; — the European instrument for temporary support to mitigate unemployment risks in an emergency (SURE).

2.2. This opinion seeks to analyse the impact of the emergency measures aimed at limiting unemployment, supporting income and helping businesses, with a particular focus on the SURE instrument.

2.3. By April 2020, more than 50 million workers in European countries had been included in short-time work programmes ( 2 ) or similar ad hoc measures intended to deal with the partial or total loss of working hours. Eurofound recorded 500 measures, most of them aimed at supporting businesses (35 %), keeping up income (in addition to short-time work measures, 20 %) and protecting employment (13 %) ( 3 ) . Businesses operating in the field of manufacturing, trade, services, tourism and culture have been most affected by the crisis ( 4 )

2.4. Short-time work schemes covering hours not worked had already been deployed in most European countries and are the most widely used tool for protecting jobs during periods of economic crisis, as they have a positive impact on both workers and businesses. In its 2020 report on the SURE programme, the European Commission points out that ‘By avoiding wasteful redundancies, short-time work schemes can prevent a temporary shock from having more severe and long-lasting negative consequences on the economy and the labour market in Member States. This helps to sustain families’ incomes and preserve the productive capacity and human capital of enterprises and the economy as a whole ( 5 ) .’

2.5. In countries where these programmes were already in place, governments rolled out ad hoc measures to make access easier, simplify eligibility criteria, extend coverage and increase economic support, but there are major differences between countries ( 6 )

2.6. These measures have enabled companies to cover the reduction in working hours triggered by the contraction in economic activity at little or no cost to themselves, significantly reducing the number of jobs at risk due to lack of liquidity. In several EU countries, some categories of workers in atypical jobs were not eligible for support, particularly workers on casual contracts, and, in some cases, even agency workers and workers on fixed-term contracts; in other countries, public support schemes were extended to cover certain forms of self-employment ( 7 ) . Procedures and criteria for accessing these subsidies differ from one country to another in terms of coverage, beneficiaries, duration, etc. ( 8 )

2.7. Short-time work schemes have helped to prevent the rupture of the employment relationship, which is very costly for companies and workers. In the second quarter of 2020, these job retention schemes significantly reduced job losses from an estimated 12 % to 4 % in OECD countries. In the EU, figures show that the number of workers officially employed but working zero hours doubled to 17 % in the second quarter of 2020 compared to the same period in 2019 ( 9 )

2.8. The employment crisis has hit women and young people particularly hard; they often have atypical contracts and low-paid jobs and are more vulnerable to unstable employment which does not provide any guarantee of adequate social security coverage. In addition, they account for a very high proportion of the workforce in the particularly hard-hit tourism, hotel and catering sectors, as well as in culture and leisure and in the non-profit social services sector. The economic recovery will need to include specific reforms and measures coordinated with the social partners to address the various forms of gender- and age-based inequality, including that existing even before this crisis, and deploy actions geared to the short, medium and long term ( 10 )

2.9. In addition to measures offsetting reduced working hours, various countries adopted measures to protect against layoffs in companies receiving public support under short-time working schemes. This was done both to prevent abuse during the period of crisis and to impose conditions on the use of national and European funds, which must be used to stave off layoffs and to support businesses on a temporary basis until the economy gets back on track. In some countries, collective agreements forbid companies laying off workers when those companies are receiving financial support ( 11 )

2.10. Collective bargaining has played an important role, with specific agreements and protocols to address and manage the health crisis in the workplace and bring in ad hoc contractual provisions during the pandemic. These have changed both the way in which work is organised and working conditions (e.g. Germany, France, Italy, Sweden, Spain, Austria and Denmark). Some countries have also adopted other forms of business support (such as moratoria on mortgage payments and deferral or suspension of tax payments, rent or social security dues), which hold off payment commitments and are intended to support businesses, particularly SMEs, and self-employed people with a view to maintaining jobs and providing short-term liquidity.

3. SURE: features, regulation and initial results

3.1. The EU’s SURE instrument is a temporary fund providing financial assistance of up to EUR 100 billion in the form of loans granted to the Member States on favourable terms to stave off unemployment, support short-time work schemes and support the income of all workers. The fund will remain operational until 31 December 2022.

3.2. The bonds issued for the first time by the European Commission under the SURE instrument are ‘social bonds’, enabling investors to know for certain that the funds raised are going to be used for social purposes. Demand has been ten times higher than supply and ensured competitive returns on the market.

3.3. Since its introduction, over 90 % of the total envelope has been allocated by the Council — based on Commission proposals — to 19 Member States ( 12 ) . Of these, 15 countries have used it to help finance short-time work schemes or similar measures and 14 have used it also to finance measures to help the self-employed.

3.4. Some countries did not apply for SURE funding. Their governments have given various reasons for this: in some countries, the national funds available were sufficient to cover the additional public expenditure incurred by the increase in unemployment; additional resources could be raised on the market at equally advantageous rates; the administrative procedures for accessing SURE were too costly, and other countries have used the temporary measures put in place by the Commission on budget flexibility and state aid ( 13 )

3.5. Based on the reports submitted by the Member States, the Commission’s March 2021 report ( 14 ) estimates that SURE supported between 25 and 30 million workers in 2020: a quarter of the workforce in those Member States which received SURE funds. Specifically, it supported about 21,5 million employees and 5 million self-employed people. In addition, SURE helped between 1,5 million and 2,5 million businesses, or 12 to 16 % of businesses in the Member States which received SURE funds ( 15 )

3.6. The report points out that the public support schemes financed by SURE are reducing labour costs for businesses and providing an alternative form of household income support, with better outcomes than traditional unemployment benefits. Furthermore, the Commission points out that the employment support schemes are most effective in countries that already had national support schemes to mitigate the impact of unemployment.

3.7. By the end of 2020, 80 % of the budget for eligible measures had been disbursed. Almost all Member States have already spent or plan to spend the total amount granted under SURE.

3.8. Member States saved around EUR 5,8 billion of interest by using SURE rather than issuing sovereign debt themselves, thanks to the high credit rating of the Commission. Future disbursements are likely to generate further savings.

4. General comments

4.1. The EESC endorses the EU strategy for tackling the crisis triggered by the pandemic, ensuring the recovery and resilience of the Member States’ economic, social and health systems, and safeguarding employment. The EESC considers that the strategy will be able to shape and complete Europe’s social dimension, while ensuring Europe’s competitiveness in the global context. The action plan for implementing the European Pillar of Social Rights sets out the measures to be taken to encourage the investments needed for sustainable and inclusive growth.

4.2. The EESC has repeatedly stressed the need to achieve greater economic and social convergence in the EU. This will make the European social market economy more competitive and ensure that everyone can enjoy their rights without hindrance, and support the establishment of a labour market able to adapt to the changes taking place with measures and strategies in line with the European Pillar of Social Rights and the green and digital transitions. It is essential that Member States make good use of the support they receive from the Recovery and Resilience Facility ( 16 )

4.3. It is important to support the growth and productivity of sustainable businesses, including SMEs and micro-enterprises. SURE is one of the tools that can provide incentives to employers to retain workers despite the fall in productive activity. Collective agreements should also be encouraged on new forms of adjustment of working time providing access to training courses, as well as measures to support businesses to preserve jobs, skills and income.

4.4. SURE is key for protecting workers and mitigating the severe socioeconomic repercussions of the pandemic on the entire system of employment. It provides financial support for national short-time work schemes and similar measures, including in ongoing employment relationships, protecting jobs and limiting unemployment and workers’ loss of income, while also alleviating the costs of unemployment benefits and social security dues for businesses, as they are largely covered by public resources through the emergency measures.

4.5. The EESC welcomes the speed with which the Commission drafted the proposal to set up SURE and the way negotiations were immediately held with Member States and concluded within a few weeks. SURE highlights the importance of short-time work and short-term income support programmes and encourages Member States to use them. One of the goals of the European Semester, in the medium and long term, is to promote investment geared towards full and stable employment and towards tackling new forms of poverty, including through socially sustainable structural reforms.

4.6. The EESC considers that the financial support granted by the EU to the Member States in the form of loans on good terms is important, and is pleased that the bonds issued by the Commission are ‘social bonds’ for specific purposes.

4.7. The financing of short-time work schemes and the forms of income support have a positive impact on the economy as a whole. They maintain the relationship between employer and employee, helping to preserve workers’ skills and the productive capacity of companies, and ensure that the pandemic does not cause further lasting harm to the economy and the labour market.

4.8. The EESC believes that the establishment of SURE is another step on the road towards a solidarity-based system in the EU that respects the principles of subsidiarity and proportionality, as it is a form of European safe asset, which can be reinforced by the European bonds that will be used to finance the Next Generation EU programme ( 17 ) . The EESC stresses that an important benefit of SURE is that it demonstrates the EU’s ability to, where necessary, create a lending capacity and issue a ‘common safe asset’ using the Community method, rather than intergovernmental agreements as for the ESM and the EFSF.

4.9. The EESC calls for a review of SURE’s assistance and access procedures with a view to simplifying the administrative procedures and reporting mechanisms.

4.10. The EESC recommends combining using SURE with active policy measures and vocational training and retraining initiatives that are beneficial for both workers and businesses ( 18 ) . The current circumstances have reignited the debate on how to make employment services more efficient, including in times of crisis. In periods when workers are necessarily less taken up with work, training should be encouraged for re-skilling or to support them as they switch to new jobs which are both skilled and stable. Unfortunately, there are very few examples of active policies in this field ( 19 )

4.11. The EESC considers that the SURE programme in individual Member States should guarantee coverage of all employees and all types of self-employment and atypical work, where young people figure significantly.

4.12. The limited data available show that both the European institutions and the national institutions have failed to engage with the social partners in determining the best use of SURE; the EESC recommends that provision be made for a mechanism to ensure ongoing consultation.

4.13. The EESC has taken note of the estimates regarding the individuals and businesses supported by SURE ( 20 ) , but notes that these figures fail to identify either the individual measures financed by the Member States and the respective budgets, or their impact on the capacity to mitigate the risks of unemployment and on income protection.

5. Specific comments — what is the impact?

5.1. The crisis triggered by the pandemic has placed great strain on the EU’s economic, social and health systems and has affected people’s lives and the operations of companies, increasing forms of inequality within each country and, in some cases, between countries. For this reason, the EESC points to the need to define and complete the EU’s social dimension more fully and consistently, drawing on the measures set out in the European Pillar of Social Rights Action Plan, while ensuring Europe’s competitiveness in the global context.

5.2. The EESC has already highlighted ( 21 ) the need to resume the process of reviewing the EU’s economic governance framework, which was suspended until 2022 by the Commission communication of 20 March 2020 ( 22 ) . The EESC supports this communication, which expresses the intention of deciding on a future deactivation of the general escape clause of the Stability and Growth Pact informed by an overall assessment of economic performance based on quantitative criteria. For this reason, the EESC calls for a ‘shift’ towards a revised and rebalanced economic governance framework geared towards prosperity, preferably with simplified rules and less pro-cyclicality reflecting the post-pandemic context. It will be essential to help Member States put their public finances on a sustainable footing and so increase confidence in investment.

5.3. The EESC supports the adoption of SURE, one of the measures included in the economic and social package which aims to counter the impact of the pandemic. The EESC considers that SURE is an innovative financial instrument which delivers on European solidarity and which has anticipated the Next Generation EU programme by issuing the first social bonds.

5.4. SURE has proved to be a safety net able to secure and protect existing jobs and safeguard businesses of various types and with due regard for national competences in terms of social protections. However, the social protection measures adopted under SURE must be accompanied by active labour market policies for creating quality, stable jobs and systems for adapting skills, combating in-work poverty and fragmented and unstable forms of work which do not provide any guarantee of adequate social security coverage and also affect public welfare systems.

5.5. The EESC welcomes the European Commission’s ‘EASE’ Recommendation, which was adopted as part of the process of implementing the European Pillar of Social Rights and which is geared towards providing effective and active support for employment in the wake of the COVID-19 crisis. This recommendation takes the strategic approach of gradually shifting from the emergency measures deployed during the pandemic to the new measures needed to ensure a job-rich recovery, especially in the green and digital sectors. Effective policies fostering quality job creation and job to job transitions should be accompanied by well-performing employment services delivering tailor-made support for jobseekers, particularly youth, women and social entrepreneurs.

5.6. The support and participation of the social partners is a priority for the EESC. It is therefore fundamental that they be given a role at European and national levels in discussing, engaging in and negotiating the measures co-financed by SURE, leveraging collective bargaining in specific sectors hit particularly hard by the crisis. However, this must not be merely a formality: the social partners must be given a genuine and legitimate role in proceedings.

5.7. The EESC considers that it is important to point out that SURE resources should also be used to finance initiatives to curb the spread of the virus in the workplace. These initiatives should comprise health and safety measures geared towards prevention and protection, with a view to alleviating the costs incurred by companies as they adapt production to safety protocols.

5.8. The EESC proposes that a SURE observatory be set up for as long as SURE is in operation, which the social partners and other civil society organisations can join. The observatory would be tasked with monitoring and assessing the impact in individual countries of the measures which receive financing, and analysing best practices and protection schemes deployed in each country in order to identify models for systems that could also be used in the future to reduce working time and support incomes in similar crisis situations.

5.9. The EESC fully acknowledges the positive results of SURE highlighted in the Commission’s report of March 2021. The SURE programme meets the temporary criteria for support to Member States in helping workers and businesses surmount the crisis, save jobs and pave the way for economic and social recovery. The EESC endorses the proposal for its stabilisation in support of workers and businesses as a tool for the EU’s integration and socioeconomic resilience in times of crisis such as the current one. This should take place following monitoring and evaluation by the SURE Observatory. This proposal stems from the debate involving governments, social and economic partners, civil society organisations, academics and scholars from the various European countries, as well as within the Commission itself ( 23 )

5.10. In the event of an economic crisis, the EESC calls on the European institutions to play a more effective and supportive role in social matters, role in social matters, particularly by regulating and financing measures to support workers and businesses. The European institutions should promote a public debate for the establishment of a permanent European unemployment reinsurance scheme with a different legal basis, taking into account previous EESC opinions ( 24 )

Brussels, 22 September 2021. The President of the European Economic and Social Committee Christa SCHWENG

(1) Commission Recommendation (EU) 2021/402 of 4 March 2021 on an effective active support to employment following the COVID-19 crisis (EASE) (OJ L 80, 8.3.2021, p. 1).

(2) COVID-19: Implications for Employment and working life, Eurofound, March 2021.

(3) COVID-19: Policy responses across Europe, Eurofound, June 2020.

(4) OECD Employment Outlook 2021, chap. 2.

(5) COM(2021) 148 final, SURE: Taking stock after six months, 22 March 2021; see also European Parliament Briefing SURE Implementation, April 2021.

(6) OECD — Employment Outlook 2021, ch. 2, table 2.1 Job retention schemes in OECD countries – ibid. Eurofound.

(7) COVID-19: Policy responses across Europe, Eurofound, June 2020.

(8) OECD data, ETUI, EC, EP factsheet.

(9) COVID-19: Policy responses across Europe, Eurofound, June 2020, Eurostat data compiled by Eurofound.

(10) EC analysis, Eurofound and see also ILO-UN Women Joint Programme , Policy tool, Assessing the gendered employment impacts of COVID-19 and supporting a gender-responsive recovery, March 2021.

(11) ETUI — Policy Brief No 7, 2020

(12) See COM(2021) 148 final, SURE: Taking stock after six months, 22 March 2021; see also European Parliament Briefing SURE Implementation, April 2021, and the European Commission’s SURE web page for updates on allocations to Member States.

(13) Eurofound, ibid., chap. 3, 2021.

(14) COM(2021) 105 final, Communication from the Commission to the Council — One year since the outbreak of COVID-19: fiscal policy response.

(15) COM(2021) 148 final, SURE: Taking stock after six months, 22 March 2021; see also European Parliament Briefing SURE Implementation, April 2021.

(16) EESC Resolution on the European Economic and Social Committee's contribution to the 2022 European Commission's work programme (June 2021) (OJ C 341, 24.8.2021, p. 1).

(17) Christina Katami, Protecting employment in 2021 and beyond: what can the new SURE instrument do?, ELIAMEP Policy Paper, 2021; L. Andor, Protecting Jobs and Incomes in Europe: Towards an EU Capacity for Employment Stabilisation in the Pandemic Period, 2021, in Caetano J:, Vieira I., Caleiro A., New Challenges for the Eurozone Governance.

(18) COVID-19: implications for employment and working life, Eurofound, March 2021.

(19) OECD — Employment Outlook, Chap. 2.5 Combining job retention policies with job reallocation, 2021 and Eurofound, ibid. with examples of measures adopted in some countries.

(20) COM(2021) 148 final, SURE: Taking stock after six months, 22 March 2021.

(21) EESC Resolution on the European Economic and Social Committee’s contribution to the 2022 European Commission’s work programme, adopted at the June 2021 plenary session (OJ C 341, 24.8.2021, p. 1).

(22) COM(2020) 123 final.

(23) See Christina Katami, Protecting employment in 2021 and beyond: what can the new SURE instrument do?, ELIAMEP Policy Paper, 2021; L. Andor, Protecting Jobs and Incomes in Europe: Towards an EU Capacity for Employment Stabilisation in the Pandemic Period, 2021, in Caetano J:, Vieira I., Caleiro A., New Challenges for the Eurozone Governance, and EC and Eurofound report + OECD COVID-19: Implications for Employment and working life, Eurofound, March 2021; COM(2021) 148 final. SURE: Taking stock after six months, 22 March 2021; see also European Parliament Briefing SURE Implementation, April 2021.

(24) EESC opinion on common minimum standards (OJ C 97, 24.3.2020, p. 32); Beblavy Miroslav, Karolien Lenaerts, Feasibility and added value of a European Unemployment Benefits Scheme, CEPS, 2017.