Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Council Regulation (EU) 2020/672 to Lithuania to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak
Date: 2020-08-24
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU loan, Lithuania, emergency aid, employment aid, epidemic, fight against unemployment, infectious disease, public expenditure, self-employed person

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   EUROPEAN COMMISSION  Brussels, 24.8.2020  COM(2020) 463 final 2020/0216 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Council Regulation (EU) 2020/672 to Lithuania to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak  
 
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Council  Regulation  2020/672  (“SURE  Regulation”)  lays  down  the  legal  framework  for 
providing  Union  financial  assistance  to  Member  States,  which  are  experiencing,  or  are 
seriously threatened with, a severe economic disturbance caused by the COVID-19 outbreak. 
Support  under  SURE  serves  for  the  financing,  primarily,  of  short-time  work  schemes  or 
similar measures aimed at protecting employees and the self‐ employed and thus reducing the 
incidence of unemployment and loss of income, as well as for the financing, as an ancillary, 
of some health-related measures, in particular in the workplace. 

On  7  August  2020,  Lithuania  requested  Union  financial  assistance  under  the  SURE 
Regulation.  In  accordance  with  Article  6(2)  of  the  SURE  Regulation,  the  Commission  has 
consulted  the  Lithuanian  authorities  to  verify  the  sudden  and  severe  increase  in  actual  and 
planned  expenditure  directly  related  to  short-time  work  schemes  and  similar  measure.  In 
particular, it concerns: 

(1) 

(2) 

(3) 

(4) 

a scheme to pay subsidies to employers to cover estimated wages for each employed 
person facing idle time. The employer could decide whether to avail of subsidies to 
cover 70% of the salary, up to a maximum of 1.5 times the minimum wage, or 90% 
of the salary (100% in the case of employees aged 60 and above), up to a maximum 
of the minimum wage. Employers that have participated in the scheme must retain at 
least 50 % of their employees for at least 3 months after the pay subsidy ends. 

subsidies  for  employees  returning  from  idle  time,  for  up  to  six  months  following 
their  return  to  work.  Subject  to  a  cap  of  the  minimum  wage  or  two  times  the 
minimum wage depending on the economic activity performed by the employer, the 
amount of the subsidies paid in the first and second months following return can be 
as high as 100% of an employee’s salary, in the third and fourth month, 50% and in 
the fifth and sixth month, 30%.  

benefits  for  the  self-employed,  including  the  self-employed  engaged  in  agricultural 
activity with an agricultural holding or farm of no less than four economic size units, 
amounting  to  EUR  257  a  month  and  paid  during  the  quarantine  period  and  the 
following two months.  

benefits for the self-employed engaged in agriculture with an agricultural holding or 
farm  of  less  than  four  economic  size  units,  who  were  not  covered  by  the 
aforementioned measure. The measure consists of a one-time payment of EUR 200, 
for those small farmers who had no other employment, or of EUR 200, for each of 
the  three  months  of  the  quarantine  and  period  of  state  emergency  if  they  were 
employed,  in  addition  to  their  self-employed  agricultural  activity,  and  earned  not 
more than the minimum wage.  

Lithuania provided the Commission with the relevant information.  

Taking into account the available evidence, the Commission proposes to the Council to adopt 
an  Implementing  Decision  to  grant  financial  assistance  to  Lithuania  under  the  SURE 
Regulation in support of the above measures. 

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• 

Consistency with existing policy provisions in the policy area 

The present proposal is fully consistent with  Council Regulation 2020/672, under which the 
proposal is made. 

The present proposal comes in addition to another Union law instrument to provide support to 
Member States in case of emergencies, namely Council Regulation (EC) No 2012/2002 of 11 
November 2002 establishing the European Union Solidarity Fund (EUSF) (“Regulation (EC) 
No 2012/2002”). Regulation (EU) 2020/461 of the European Parliament and of the Council, 
which amends that instrument to  extend its scope to  cover major public  health emergencies 
and to define specific operations eligible for financing, was adopted on 30 March.   

• 

Consistency with other Union policies 

The proposal is part of a range of measures developed in response to the current COVID-19 
pandemic  such  as  the  “Coronavirus  Response  Investment  Initiative”,  and  it  complements 
other  instruments  that  support  employment  such  as  the  European  Social  Fund  and  the 
European Fund for Strategic Investments (EFSI)/InvestEU. By making use of borrowing and 
lending in this particular case of the COVID-19 outbreak for supporting Member States, this 
proposal  acts  as  a  second  line  of  defence  to  finance  short-time  work  schemes  and  similar 
measures,  helping  protect  jobs  and  thus  employees  and  self-employed  against  the  risk  of 
unemployment.  

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The legal basis for this instrument is Council Regulation 2020/672.   

• 

Subsidiarity (for non-exclusive competence)  

The  proposal  follows  a  Member  State  request  and  shows  European  solidarity  by  providing 
Union financial assistance in the form of temporary loans to a Member State affected by the 
COVID-19  outbreak.  As  a  second  line  of  defence,  such  financial  assistance  supports  the 
government’s increased public expenditure on a temporary basis in respect of short-time work 
schemes  and  similar  measures  to  help  them  protect  jobs  and  thus  employees  and  self-
employed against the risk of unemployment and loss of income. 

Such  support  will  help  the  population  affected  and  helps  to  mitigate  the  direct  societal  and 
economic impact caused by the present COVID-19 crisis.  

• 

Proportionality 

The proposal respects the proportionality principle. It does not go beyond what is necessary to 
achieve the objectives sought by the instrument.  

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

Due to the urgency to prepare the proposal so that it can be adopted in a timely manner by the 
Council, a stakeholder consultation could not be carried out. 

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• 

Impact assessment 

Due to the urgent nature of the proposal, no impact assessment was carried out. 

4. 

BUDGETARY IMPLICATIONS 

The  Commission  should  be  able  to  contract  borrowings  on  the  financial  markets  with  the 
purpose  of  on-lending  them  to  the  Member  State  requesting  financial  assistance  under  the 
SURE instrument.  

In  addition  to  the  provision  of  Member  State  guarantees,  other  safeguards  are  built  into  the 
framework in order to ensure the financial solidity of the scheme: 

 

 

A rigorous and conservative approach to financial management; 

A  construction  of  the  portfolio  of  loans  that  limits  concentration  risk,  annual 
exposure and excessive exposure to individual Member States whilst ensuring 
sufficient resources could be granted to Member States most in need; and 

 

Possibilities to roll over debt. 

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2020/0216 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

granting temporary support under Council Regulation (EU) 2020/672 to Lithuania to 
mitigate unemployment risks in an emergency situation following the COVID-19 
outbreak 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having regard to Council Regulation (EU) 2020/672 of 19 May 2020 on the establishment of 
a  European  instrument  for  temporary  support  to  mitigate  unemployment  risks  in  an 
emergency (SURE) following the COVID-19 outbreak 1, and in particular Article 6(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

On  7  August  2020,  Lithuania  requested  financial  assistance  from  the  Union  with  a 
view  to  complementing  its  national  efforts  to  address  the  impact  of  the  COVID-19 
outbreak and its socio-economic consequences for workers.  

The COVID-19 outbreak and the extraordinary measures implemented by Lithuania to 
contain the outbreak and its socio-economic and health-related impact are expected to 
have  a  dramatic  impact  on  public  finances.  According  to  the  Commission’s  2020 
Spring forecast, Lithuania was expected to have a general government deficit and debt 
of 6.9% and 48.5% of gross domestic product (GDP) respectively by the end of 2020 
According  to  the  Commission’s  2020  Summer  interim  forecast,  Lithuania’s  GDP  is 
projected to decrease by 7.1% in 2020  

The  COVID-19  outbreak  has  immobilised  a  substantial  part  of  the  labour  force  in 
Lithuania.  This  has  led  to  a  sudden  and  severe  increase  in  public  expenditure  in 
Lithuania  in  respect  of  wage  subsidies  during  and  after  idle  time  and  benefits  to  the 
self-employed,  including  benefits  for  the  self-employed  engaged  in  agricultural 
activities, as set out in recitals 4 to 7. 

“Law  on  Employment  No  XII-2470”,  as  it  is  referred  to  in  Lithuania’s  request  of  7 
August  2020,  introduced  a  scheme  to  pay  subsidies  to  employers  to  cover  estimated 
wages for each employed person facing idle time. The employer could choose between 
subsidies  to  cover  70%  of  the  salary,  up  to  a  maximum  of  1.5  times  the  minimum 
wage, or 90% of the salary (100% in the case of employees aged 60 and above), up to 
a  maximum  of  the  minimum  wage.  Employers  that  have  participated  in  the  scheme 
must retain at least 50 % of their employees for at least 3 months after the pay subsidy 
ends. 

(5) 

Subsidies are also paid for employees returning from idle time, for up to  six months 
following their return to work. Subject to a cap of the minimum wage or two times the 
minimum wage depending on the economic activity carried out by the employer, the 

1 

OJ L 159, 20.5.2020, p.1. 

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(6) 

(7) 

(8) 

amount of the subsidies paid in the first and second months following return can be as 
high as 100% of an employee’s salary, in the third and fourth months, 50% and in the 
fifth and sixth months, 30%. Those subsidies can be considered a similar measure to 
short-time work schemes, as referred to in Regulation (EU) 2020/672, as they aim to 
provide  income  support  to  employees  and  help  maintain  existing  employment 
relationships.  

The authorities have also introduced benefits for the self-employed, including the self-
employed persons engaged in agricultural activity with an agricultural holding or farm 
of  no  less  than  four  economic  size  units,  amounting  to  EUR  257  a  month  and  paid 
during the quarantine period and the following two months. The benefits for the self-
employed can be considered a similar measure to short-time work schemes, as referred 
to  in  Regulation  (EU)  2020/672,  as  they  aim  to  protect  the  self-employed  or  similar 
categories of workers from reduction or loss of income.  

Finally,  benefits  have  been  introduced  for  self-employed  persons  engaged  in 
agriculture with an agricultural holding or farm of less than four economic size units, 
who were not covered by the measure described in recital 6. The measure consists of a 
one-time payment of EUR 200, for those small farmers who had no other employment. 
For small farmers who were employed, in addition to their self-employed agricultural 
activity,  and  did  not  earn  more  than  the  minimum  wage,  the  measure  consists  of  a 
payment of EUR 200, for each of the three months of the quarantine period and of the 
period of state emergency. The measure can be considered a similar measure to short-
time  work  schemes,  as  referred  to  in  Regulation  (EU)  2020/672,  as  it  aims  at 
protecting the self-employed or similar categories of workers from reduction or loss of 
income. 

Lithuania fulfils the conditions for requesting financial assistance set out in Article 3 
of  Regulation  (EU)  2020/672.  Lithuania  has  provided  the  Commission  with 
appropriate evidence that the actual and planned public expenditure has increased by 
EUR 746 660 000 as of 1 February 2020 due to the national measures taken to address 
the socio-economic effects of the COVID-19 outbreak. This constitutes a sudden and 
severe  increase  because  the  new  measures  cover  a  significant  proportion  of 
undertakings  and  of  the  labour  force  in  Lithuania.  Lithuania  intends  to  finance  EUR 
144 350 000 of the increased amount of expenditure through Union funds. 

(9) 

The Commission has consulted Lithuania and verified the sudden and severe increase 
in  the  actual  and  planned  public  expenditure  directly  related  to  short-time  work 
schemes  and  similar  measures,  in  accordance  with  Article  6  of  Regulation  (EU) 
2020/672.  

(10)  Financial assistance should therefore be provided with a view to helping Lithuania to 
address the socio-economic effects of the severe economic disturbance caused by the 
COVID-19 outbreak. 

(11)  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 TFEU.  It  does not  override the  requirement  for Member 
States to notify instances of potential State aid to the Commission under Article 108 
TFEU. 

(12)  Lithuania 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 Lithuania has implemented that expenditure. 

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(13)  The  decision  to  provide  financial  assistance  has  been  taken  taking  into  account 
existing and expected needs of  Lithuania, 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 

HAS ADOPTED THIS DECISION:  

Lithuania fulfils the conditions set out in Article 3 of Regulation (EU) 2020/672. 

Article 1 

1. 

2. 

3. 

4. 

5. 

6. 

Article 2 

The  Union  shall  make  available  to  Lithuania  a  loan  amounting  to  a  maximum  of 
EUR 602 310 000. The loan shall have a maximum average maturity of 15 years. 

The availability period for financial assistance in line with this Decision shall be 18 
months starting from the first day after the entry into force of this Decision.  

The  Union  financial  assistance  shall  be  made  available  by  the  Commission  to 
Lithuania in a maximum of eight instalments. An instalment may be disbursed in one 
or several tranches. The maturities of the tranches under the first instalment may be 
longer than the maximum average maturity referred to in paragraph 1. In such cases, 
the maturities of further tranches shall be set so that the maximum average maturity 
referred to in paragraph 1 is respected once all instalments have been disbursed.  

The  first  instalment  shall  be  released  subject  to  the  entry  into  force  of  the  loan 
agreement provided for in Article 8(2) of Regulation (EU) 2020/672.  

Lithuania  shall  pay  the  cost  of  funding  of  the  Union  referred  to  in  Article  4  of 
Regulation (EU) 2020/672 for each instalment plus any fees, costs and expenses of 
the Union resulting from any funding.  

The Commission shall decide on the size and release of instalments, as well as on the 
size of the tranches.  

Lithuania may finance the following measures: 

Article 3  

(a) 

(b) 

(c) 

wage subsidies during and after idle time, as provided for in Article 41 of the Law on 
Employment No XII-2470;  

benefits  to  the  self-employed,  as  provided  for  in  Article  5-1  of  the  Law  on 
Employment No XII-2470;  

benefits to the self-employed engaged in agriculture, as provided for in Article 5-2 of 
the Law on Employment No XII-2470. 

Lithuania shall inform the Commission by [DATE: 6 months after date of publication of this 
Decision],  and  every  6  months  thereafter  of  the  implementation  of  the  planned  public 
expenditure until such time as that planned public expenditure has been fully implemented. 

Article 4 

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This Decision is addressed to the Republic of Lithuania. 

Article 5 

This Decision shall be published in the Official Journal of the European Union.  

Done at Brussels, 

Article 6 

For the Council 
The President 

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