Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Council Regulation (EU) 2020/672 to Latvia 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, Latvia, 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) 468 final 2020/0221 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Council Regulation (EU) 2020/672 to Latvia 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, Latvia requested Union financial assistance under the SURE Regulation. 
In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the 
Latvian authorities to verify the sudden and severe increase in actual and planned expenditure 
directly related to a scheme for the compensation of idle workers, and its related expenditure - 
the downtime allowance and the workers’ bonus for children-, a scheme for wage subsidies 
for the export industry, wage support payments for medical professionals and workers in the 
cultural industry, as well as  health related expenditure on protective personal equipment and 
COVID-19  related  sickness  benefits  caused  by  the  COVID-19  pandemic.  In  particular,  it 
concerns: 

(1) 

(2) 

(3) 

(4) 

(5) 

a  scheme  for  the  compensation  of  idle  workers.  The  scheme  pays  wages  to 
employees of private sector companies who have been furloughed. It covers between 
50% and 75% of employees’ salaries, depending on the size of the business, with a 
cap  of  EUR  700  per  employee  per  month.  Attached  to  the  scheme  for  the 
compensation  of  idle  workers  are  the  related  downtime  allowance  scheme  and 
workers’ bonus for children. The downtime allowance scheme provides a minimum 
benefit to furloughed employees or self-employed persons who either do not qualify 
for  support  under  the  scheme  for  the  compensation  of  idle  workers  due  to  reasons 
unrelated to the employee, or receive less than EUR 180 from it. The benefit ensures 
a  minimum  level  of  support  is  provided,  ensuring  that  all  employees  or  self-
employed persons receive a benefit of no less than EUR 180 per month. The bonus 
for children scheme provides additional support to furloughed employees who have 
dependent children.  

a  scheme  for  wage  subsidies  for  the  tourism  and  export  industries,  which  is  a 
continuation of the idle workers scheme aimed specifically at tourism and exporting 
industries. The measure is dependent on the recipient proving that the resources will 
be used to cover salary costs. 

two  wage  support  payments  targeted  at  medical  professionals  and  workers  in  the 
cultural  industry.  The  wage  support  payments  provide  grants  to  the  medical  and 
cultural  industries  in  order  to  support  the  payment  of  wages  whilst  workers  are 
furloughed.  Both  schemes  are  conditional  on  the  grants  being  used  to  cover  salary 
costs.  

health  related  expenditure  on  personal  protective  equipment  and  other  medical 
supplies  to  ensure  the  health  and  safety  of  public  sector  employees,  in  particular, 
healthcare workers.  

COVID-19  related  sickness  benefits,  whereby  the  government  paid  the  sick  leave 
support to people who had to miss work due to a requirement to self-isolate or self-

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quarantine.  Normally,  part  of  the  sickness  benefit  would  have  to  be  paid  by  the 
employer, whereas under this scheme the state paid the entire cost.    

Latvia 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 Latvia under the SURE Regulation 
in support of the above measures. 

• 

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.  

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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. 

• 

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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2020/0221 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

granting temporary support under Council Regulation (EU) 2020/672 to Latvia 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 outbreak1, 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, Latvia 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  Latvia  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, Latvia was expected to have a general government deficit and debt of 
7.3%  and  43.1%  of  gross  domestic  product  (GDP)  respectively  by  the  end  of  2020. 
According  to  the  Commission’s  2020  Summer  interim  forecast,  Latvia’s  GDP  is 
projected to decrease by 7% in 2020.  

The  COVID-19  outbreak  has  immobilised  a  substantial  part  of  the  labour  force  in 
Latvia. This has led to a sudden and severe increase in public expenditure by Latvia in 
respect  of  the  scheme  for  the  compensation  of  idle  workers  and  the  related  support 
schemes - the downtime allowance and the workers’ bonus for children, a scheme for 
wage  subsidies  for  the  export  industry,  wage  support  payments  for  medical 
professionals  and  workers  in  the  cultural  industry,  as  well  as    health  related 
expenditure  on  protective  personal  equipment  and  COVID-19  related  sickness 
benefits, as set out in recitals 4 to 7.  

“Regulation No. 179 (Adopted 31 March 2020) Regulations Regarding the Allowance 
for  Idle  Time  for  the  Self-employed  Persons  Affected  by  the  Spread  of  COVID-19” 
and  “Regulation  No.  165  (Adopted  26  March  2020)  Regulations  Regarding  the 
Employers  Affected  by  the  Crisis  Caused  by  COVID-19  which  are  Eligible  for  the 
Allowance  for  Idle  Time  and  Division  of  the  Payment  for  Late  Tax  Payments  in 
Instalments  or  Deferral  Thereof  for  up  to  Three  Years”,  as  they  are  referred  to  in 
Latvia’s request of 7 August 2020, introduced a scheme for the compensation of idle 
workers. The scheme pays wages to employees of private sector companies who have 

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OJ L 159, 20.5.2020, p.1. 

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been furloughed.  It  covers between 50% and 75% of employees’ salaries,  depending 
on the size of the business, with a cap of EUR 700 per employee per month. Attached 
to  the  scheme  for  the  compensation  of  idle  workers  are  the  related  downtime 
allowance  scheme  and  workers’  bonus  for  children.  On  the  basis  of  “Cabinet  of 
Ministers  No.  236  "On  the  Allocation  of  Financial  Resources  from  the  State  Budget 
Program "Funds for national emergencies"”, as it is referred to in Latvia’s request of 7 
August  2020,  the  downtime  allowance  scheme  provides  a  minimum  benefit  to 
furloughed employees or self-employed persons who either do not qualify for support 
under the scheme for the compensation of idle workers due to reasons unrelated to the 
employee, or receive less than EUR 180 from it. The benefit ensures a minimum level 
of support is provided, ensuring that all employees or self-employed persons receive a 
benefit of no less than EUR 180 per month. The bonus for children scheme provides 
additional  support  to  furloughed  employees  who  have  dependent  children.  The 
measure  can  be  considered  as  a  similar  measure  to  short-time  work  schemes,  as 
referred to in Regulation (EU) 2020/672, as it provides income support to employees 
and the self-employed,  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 

The “Information report on measures to  overcome the Covid-19 crisis  and economic 
recovery”  has  established  a  scheme  for  wage  subsidies  for  the  tourism  and  export 
industries,  which  is  a  continuation  of  the  idle  workers  scheme  aimed  specifically  at 
tourism  and exporting industries. The measure is  dependent  on the  recipient  proving 
that the resources will be used to cover salary costs. 

The  authorities  have  introduced  two  wage  support  payments  targeted  at  medical 
professionals  and  workers  in  the  cultural  industry.  On  the  basis  of  the  “Law  On 
Measures  for  the  Prevention  and  Suppression  of  Threat  to  the  State  and  Its 
Consequences  Due  to  the  Spread  of  COVID-19  and  Law  on  the  Suppression  of 
Consequences of the Spread of COVID-19 Infection” and “Cabinet of Ministers order 
No.  303  "On  the  Allocation  of  Financial  Resources  from  the  State  Budget  Program 
"Contingency  Funds""  respectively,  as  they  are  referred  to  in  Latvia’s  request  of  7 
August  2020,  the  wage  support  payments  provide  grants  to  the  medical  and  cultural 
industries  in  order  to  support  the  payment  of  wages  whilst  workers  are  furloughed. 
Both schemes are conditional on the grants being used to cover salary costs.  

Finally,  Latvia has  introduced two health-related measures. On the basis of “Cabinet 
of Ministers order No. 79, 118 and 220 "On Allocation of Financial Resources from 
the  State  Budget  Program  "funds  for  emergencies""”,  as  it  is  referred  to  in  Latvia’s 
request of 7 August 2020, the authorities have increased health related expenditure on 
personal  protective  equipment  and  other  medical  supplies  to  ensure  the  health  and 
safety of public sector employees,  in  particular, healthcare workers. Additionally, on 
the basis of “09.06.2020. Cabinet Regulation No. 380 "regulations on the resources for 
ensuring  epidemiological  safety  necessary  for  institutions  included  in  the  list  of 
priority  institutions  and  needs"”,  as  it  is  referred  to  in  Latvia’s  request  of  7  August 
2020,  the  authorities  have  paid  COVID-19  related  sickness  benefits,  whereby  the 
government  paid  the  sick  leave  support  to  people  who  had  to  miss  work  due  to  a 
requirement  to  self-isolate  or  self-quarantine.  Normally,  part  of  the  sickness  benefit 
would have to be paid by the employer, whereas under this scheme the state paid the 
entire cost.    

(5) 

(6) 

(7) 

(8) 

Latvia fulfils the conditions for requesting financial assistance set out in Article 3 of 
Regulation  (EU)  2020/672.  Latvia  has  provided  the  Commission  with  appropriate 

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evidence that the actual and planned public expenditure has increased by EUR 212 808 
280 as of 1 February 2020 due to the increased amount directly related to the scheme 
for  compensation  of  idle  workers  and  related  support  schemes,  the  scheme  for  wage 
subsidies for the export industry, medical professionals and the cultural industry. This 
constitutes a sudden and severe increase because the new measures cover a significant 
proportion of undertakings and of the labour force in Latvia. Latvia intends to finance 
EUR 20 108 280 of the increased amount of expenditure through its own financing. 

(9) 

The Commission has consulted Latvia 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  referred  to  in  the  request  of  7  August  2020,  in 
accordance with Article 6 of Regulation (EU) 2020/672.  

(10)  Financial  assistance  should  therefore  be  provided  with  a  view  to  helping  Latvia  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)  Latvia 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 Latvia has implemented that expenditure. 

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

Article 1 

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

Article 2 

1. 

2. 

3. 

The Union shall make available to Latvia a loan amounting to a maximum of EUR 
192 700 000. The loan shall have a maximum average maturity of 15 years. 

The availability period for financial assistance  granted by 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 Latvia 
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.  

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4. 

5. 

6. 

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.  

Latvia  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.  

Latvia may finance the following measures: 

Article 3  

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

the scheme for compensation of idle workers, as provided for by Regulation No. 179 
(Adopted  31  March  2020)  Regulations  Regarding  the  Allowance  for  Idle  Time  for 
the Self-employed Persons Affected by the Spread of COVID-19 and Regulation No. 
165 (Adopted 26 March 2020) Regulations Regarding the Employers Affected by the 
Crisis Caused by COVID-19 which are Eligible for the Allowance for Idle Time and 
Division  of the Payment for  Late Tax Payments  in  Instalments  or Deferral  Thereof 
for up to Three Years; 

the  downtime  allowance,  as  provided  for  by  Cabinet  of  Ministers  No.  236  "On  the 
Allocation  of  Financial  Resources  from  the  State  Budget  Program  "Funds  for 
national emergencies"; 

the workers’ bonus for children, as provided for by Cabinet of Ministers No.178 "On 
the  Allocation  of  Financial  Resources  to  the  State  Budget  Program  "Funds  for 
National emergencies"; 

the scheme for wage subsidies for the tourism and export industries, as provided for 
by  Information  report  on  measures  to  overcome  the  Covid-19  crisis  and  economic 
recovery;  

wage  support  payments  for  medical  professionals  and  the  cultural  industry,  as 
provided for by  Law On Measures for the Prevention and Suppression of Threat to 
the  State  and  Its  Consequences  Due  to  the  Spread  of  COVID-19  and  Law  on  the 
Suppression of Consequences of the Spread of COVID-19 Infection and Cabinet of 
Ministers  order  No.  303  "On  the  Allocation  of  Financial  Resources  from  the  State 
Budget Program "Contingency Funds"" respectively; 

health  related  expenditure  on  protective  personal  equipment,  as  provided  for  by 
Cabinet  of  Ministers  order  No.  79,  118  and  220  "On  Allocation  of  Financial 
Resources from the State Budget Program "funds for emergencies"";  

COVID-19  related  sickness  benefits,  as  provided  for  by  09.06.2020.  Cabinet 
Regulation No. 380 "regulations on the resources for ensuring epidemiological safety 
necessary for institutions included in the list of priority institutions and needs". 

Latvia  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 Latvia. 

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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