Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Regulation (EU) 2020/672 to Ireland to mitigate unemployment risks in the emergency following the COVID-19 outbreak
Date: 2020-11-16
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU loan, Ireland, coronavirus disease, emergency aid, employment aid, epidemic, fight against unemployment, public expenditure, wage cost

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   EUROPEAN COMMISSION  Brussels, 16.11.2020  COM(2020) 754 final 2020/0333 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION granting temporary support under Regulation (EU) 2020/672 to Ireland to mitigate unemployment risks in the emergency following the COVID-19 outbreak  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Council Regulation (EU) 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  27  October  2020,  Ireland  requested  Union  financial  assistance  under  the  SURE 
Regulation.  In  accordance  with  Article  6(2)  of  the  SURE  Regulation,  the  Commission  has 
consulted the Irish authorities to verify the sudden and severe increase in actual and planned 
expenditure directly related to a temporary wage subsidy scheme adopted in response to the 
COVID-19 pandemic. In particular, the scheme subsidises a portion of the employer wage bill 
in  circumstances  where  the  employer’s  business  has  been  affected  by  the  restrictions 
introduced due to the COVID-19 crisis. The scheme is open to employers who retain staff on 
their payroll and it aims at supporting firms’ viability and preserving the relationship between 
the employer and employee. The scheme was in place from 26 March 2020 until 31 August 
2020.  Initially,  and  until  3  May  2020,  the  subsidy  scheme  refunded  employers  up  to  a 
maximum of EUR 410 per week for each qualifying employee. From 4 May 2020, the subsidy 
payment  moved  to  a  system  based  on  the  previous  net  weekly  pay  for  each  employee, 
refunding employers between 70% and 85% of the employee’s net earnings, subject to a cap 
of EUR 350 or EUR 410 per week, depending on the salary level.  

Ireland 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 Ireland under the SURE Regulation 
in support of the above measure. 

• 

Consistency with existing policy provisions in the policy area 

The present proposal is fully consistent with Council Regulation (EU) 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 

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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. 

• 

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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2020/0333 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

granting temporary support under Regulation (EU) 2020/672 to Ireland to mitigate 
unemployment risks in the emergency 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  27  October  2020,  Ireland  requested  financial  assistance  from  the  Union  with  a 
view  to  complementing  its  national  efforts  to  address  the  impact  of  the  COVID-19 
outbreak and respond to the socio-economic consequences of the outbreak for workers 
and the self-employed. 

The  COVID-19  outbreak  and  the  extraordinary  measures  implemented  by  Ireland  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 
Autumn forecast, Ireland is expected to have a general government deficit and debt of 
6.8% and 63.1% of gross domestic product (GDP) respectively by the end of 2020 and 
Ireland's GDP is projected to decrease by 2.3% in 2020. 

The  COVID-19  outbreak  has  immobilised  a  substantial  part  of  the  labour  force  in 
Ireland. This has led to a sudden and severe increase in public expenditure in Ireland 
in respect of the Temporary Wage Subsidy Scheme as set out in recital (4). 

The    Emergency  Measures  in  the  Public  Interest  (Covid-19)  Act  2020  (Article  28) 
"Covid-19:  temporary  wage  subsidy  provisions",  which  is  referred  to  in  Ireland's 
request  of  27  October  2020,  introduced  a  scheme  that  subsidises  a  portion  of  the 
employer wage bill in circumstances where the employer’s business has been affected 
by  the  restrictions  introduced  due  to  the  COVID-19  crisis.  The  scheme  is  open  to 
employers who  retain staff on their payroll and  it  aims at  supporting  firms’ viability 
and preserving the relationship between the employer and employee. The scheme was 
in  place  from  26  March  2020  until  31  August  2020.  Initially,  until  3  May  2020,  the 
subsidy scheme refunded employers up to a maximum of EUR 410 per week for each 
qualifying  employee.  From  4  May  2020,  the  subsidy  payment  moved  to  a  system 
based  on  the  previous  net  weekly  pay  for  each  employee,  refunding  employers 
between 70% and 85% of the employee’s net earnings, subject to a cap of EUR 350 or 
EUR 410 per week, depending on the salary level.  

1 

OJ L 159, 20.5.2020, p.1. 

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(5) 

(6) 

(7) 

(8) 

(9) 

Ireland fulfils the conditions for requesting financial assistance set out in Article 3 of 
Regulation  (EU)  2020/672.  Ireland  has  provided  the  Commission  with  appropriate 
evidence  that  the  actual  public  expenditure  has  increased  by  EUR 2 473 887  900  as 
of 1 February  2020  due  to  the  increased  amount  directly  related  to  the  Temporary 
Wage Subsidy Scheme. This constitutes a sudden and severe increase because the new 
measure  covers  a  significant  proportion  of  undertakings  and  of  the  labour  force  in 
Ireland.  

The Commission has consulted Ireland and verified the sudden and severe increase in 
the actual public expenditure directly related to short-time work schemes and similar 
measures referred to in the request of 27 October 2020, in accordance with Article 6 of 
Regulation (EU) 2020/672. 

Financial  assistance  should  therefore  be  provided  with  a  view  to  helping  Ireland  to 
address the socio-economic effects of the severe economic disturbance caused by the 
COVID-19  outbreak.  The  Commission  should  take  the  decisions  concerning 
maturities,  size  and  release  of  instalments  and  tranches  in  close  cooperation  with 
national authorities. 

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

The  decision  to  provide  financial  assistance  has  been  reached  taking  into  account 
existing  and  expected  needs  of  Ireland,  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: 

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

Article 1 

Article 2 

1. 

2. 

3. 

4. 

The  Union  shall  make  available  to  Ireland  a  loan  amounting  to  a  maximum  of 
EUR 2 473 887 900. 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 this Decision has taken effect. 

The Union financial assistance shall be made available by the Commission to Ireland 
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. 

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5. 

6. 

Ireland  shall  pay  the  cost  of  the  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 related to the loan granted under paragraph 1 
of this Article. 

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

Article 3 

Ireland  may  finance  the  Temporary  Wage  Subsidy  Scheme  that  subsidises  a  portion  of  the 
employer wage bill in circumstances where the employer’s business has been affected by the 
restrictions introduced due to the COVID-19 crisis and where the employment relationship is 
maintained, as provided for in the Emergency Measures in the Public Interest (Covid-19) Act 
2020 (Article 28) "Covid-19: temporary wage subsidy provisions". 

This Decision is addressed to the Republic of Ireland. 

This Decision shall take effect on the date of its notification to the addressee. 

Article 4 

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

Done at Brussels, 

Article 5 

For the Council 
The President 

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