Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Council Regulation (EU) 2020/672 to Malta 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, Malta, 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) 464 final 2020/0217 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Council Regulation (EU) 2020/672 to Malta to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak  
 
EXPLANATORY MEMORANDUM 

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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, Malta requested Union financial assistance under the SURE Regulation. In 
accordance  with  Article  6(2)  of  the  SURE  Regulation,  the  Commission  has  consulted  the 
Maltese authorities to verify the sudden and severe increase in actual and planned expenditure 
directly related to measures regarding a wage supplement, a disability benefit, a parent benefit 
and a medical benefit caused by the COVID-19 pandemic. In particular, it concerns:  

(a) 

(b) 

(c) 

(d) 

a  COVID-19  wage  supplement,  which  covers  employees  and  self-employed 
individuals, to address the disruption caused by  the pandemic. Full-time employees 
working in the sectors hardest hit by the crisis listed in Annex A (e.g. the hospitality 
sector) are eligible for wage support of EUR 800 per month. In less affected sectors 
listed  in  Annex  B,  full-time  employees  may  receive  EUR 160  per  month.  In  July 
2020, the scheme was extended until September 2020 and the list of sectors included 
in the two annexes was revised. Sectors previously supported under the scheme but 
not  included  in  the  updated  Annex  A  or  Annex  B  will  be  assisted  with  a  wage 
supplement of EUR 600 for full-time employees. 

a  COVID-19  disability  benefit  enabling  persons  with  disability  working  in  the 
private sector to stay at home for health and safety reasons, whilst maintaining their 
contract  with  their  employer.  This  benefit  amounts  to  EUR 166.15  per  week  if 
working full-time. 

a  COVID-19  parent  benefit  scheme  providing  a  benefit  to  parents  working  in  the 
private  sector  who  are  required  to  stay  home  to  take  care  of  school-aged  children. 
The benefit is provided on condition that the parent cannot carry out their functions 
through  teleworking  arrangements.  Full-time  employees  are  eligible  to  receive  a 
weekly direct payment of EUR 166.15. 

a COVID-19 medical benefit measure, from 27 March 2020, for persons employed in 
the private sector who have not been able to leave their home to go to work because 
they have been ordered. Eligible persons are not able to work from home and are not 
paid by their employer during their absence from work. The eligible persons receive 
a weekly direct payment of EUR 166.15. 

Malta 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 Malta under the SURE Regulation 
for 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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2020/0217 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

granting temporary support under Council Regulation (EU) 2020/672 to Malta 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, Malta 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  Malta  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, Malta was expected to have a general government deficit and debt of 
6.7%  and  50.7%  of  gross  domestic  product  (GDP)  respectively  by  the  end  of  2020. 
According  to  the  Commission’s  2020  Summer  interim  forecast,  Malta’s  GDP  is 
projected to decrease by 6.0% in 2020.  

The  COVID-19  outbreak  has  immobilised  a  substantial  part  of  the  labour  force  in 
Malta. This has led to a sudden and severe increase in public expenditure by Malta in 
respect  of  a wage supplement measure, a disability benefit measure, a parent  benefit 
measure and in support of public health measures for a medical benefit measure, as set 
out in recitals 4 to 7.  

“Malta  Enterprise  Act  (Cap  463  of  the  Laws  of  Malta)  and  Government  Notice 
No. 389 of 13 April 2020”, as they are referred to in Malta’s request of 7 August 2020, 
introduced  a  COVID-19  wage  supplement,  which  covers  employees  and  self-
employed  individuals,  to  address  the  disruption  caused  by  the  pandemic.  Full-time 
employees working in the sectors hardest hit by the crisis listed in Annex A (e.g. the 
hospitality  sector)  are  eligible  for  wage  support  of  EUR 800  per  month.  In  less 
affected  sectors  listed  in  Annex  B,  full-time  employees  may  receive  EUR 160  per 
month.  In  July  2020,  the  scheme  was  extended  until  September  2020  and  the  list  of 
sectors included in  the two annexes was  revised. Sectors previously supported under 
the scheme but not included in the updated Annex A or Annex B will be assisted with 
a wage supplement of EUR 600 for full-time employees. 

1 

OJ L 159, 20.5.2020, p.1. 

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(5) 

(6) 

(7) 

“Government notice No. 331 of 25 March 2020”, as it is referred to in Malta’s request 
of  7  August  2020,  introduced  a  COVID-19  disability  benefit  enabling  persons  with 
disability working in the private sector to stay at home for health and safety reasons, 
whilst  maintaining  their  contract  with  their  employer.  This  benefit  amounts  to 
EUR 166.15 per week if working full-time. 

On the basis of “Government notice No. 330 of 25 March 2020”, as it is referred to in 
Malta’s  request  of  7  August  2020,  a  COVID-19  parent  benefit  scheme,  provides  a 
benefit to parents working in the private sector who are required to stay home to take 
care  of  school-aged  children.  The  benefit  is  provided  on  condition  that  the  parent 
cannot  carry  out  their  functions  through  teleworking  arrangements.  Full-time 
employees are eligible to receive a weekly direct payment of EUR 166.15. 

Finally, “Government notice No. 353 of 30 March 2020”, as it is referred to in Malta’s 
request of 7 August 2020, introduces a COVID-19 medical benefit measure, from 27 
March  2020,  for  persons  employed  in  the  private  sector  who  have  not  been  able  to 
leave their home to go to work because they have been ordered. Eligible persons are 
not able to work from home and are not paid by their employer during their absence 
from work. The eligible persons receive a weekly direct payment of EUR 166.15. 

(8)  Malta  fulfils  the  conditions  for  requesting  financial  assistance  set  out  in  Article  3  of 
Regulation  (EU)  2020/672.  Malta  has  provided  the  Commission  with  appropriate 
evidence that the actual and planned public expenditure has increased by EUR 243 632 
000 as of 1 February 2020 due to the increased amount directly related to the COVID 
wage  supplement,  COVID  disability  benefit  and  COVID  parent  benefit.  This 
constitutes a sudden and severe increase because the new measures cover a significant 
proportion of undertakings and of the labour force in Malta. 

(9) 

The Commission has consulted Malta 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  Malta  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)  Malta 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 Malta has implemented that expenditure. 

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

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HAS ADOPTED THIS DECISION:  

Malta 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  Malta  a  loan  amounting  to  a  maximum  of 
EUR 243 632 000. 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 Malta 
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.  

Malta 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. 

Malta may finance the following measures:  

Article 3  

(a) 

(b) 

(c) 

(d) 

the  COVID wage supplement, as provided for by Malta Enterprise Act (Cap 463 of 
the Laws of Malta) and Government Notice No. 389 of 13 April 2020;  

the COVID disability benefit, as provided for by Government notice No. 331 of 25 
March 2020;  

the  COVID  parent  benefit,  as  provided  for  by  Government  notice  No. 330  of  25 
March 2020;  

the  COVID  medical  benefit,  as  provided  for  by  Government  notice  No. 353  of  30 
March 2020. 

Malta  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 Malta. 

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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