Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2020/1348 granting temporary support under Regulation (EU) 2020/672 to the Republic of Croatia to mitigate unemployment risks in the emergency following the COVID-19 outbreak
Date: 2022-09-20
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Croatia, EU loan, coronavirus disease, emergency aid, employment aid, epidemic, fight against unemployment, public expenditure, self-employed person

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   EUROPEAN COMMISSION  Brussels, 20.9.2022  COM(2022) 476 final 2022/0293 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2020/1348 granting temporary support under Regulation (EU) 2020/672 to the Republic of Croatia 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  6  August  2020,  Croatia  requested  financial  assistance  from  the  Union    and  on  25 
September  2020,  with  its  Implementing  Decision  (EU)  2020/1348,  the  Council  granted 
financial assistance to Croatia with a view to complementing its national efforts to address the 
impact  of  the  COVID-19  outbreak  and  respond  to  the  socioeconomic  consequences  of  the 
outbreak for workers. 

On  25  July  2022,  Croatia  requested  again  Union  financial  assistance  under  the  SURE 
Regulation. 

In accordance with Article 6(2) of the SURE Regulation, the Commission has consulted the 
Croatian  authorities  to  verify  the  sudden  and  severe  increase  in  actual  expenditure  directly 
related to Croatia’s labour market measures caused by the COVID-19 pandemic. In particular, 
this  pertains  to  the  existing  measures  referred  to  in  Council  Implementing  Decision  (EU) 
2020/1348:  

(a) 
The  existing  measure  providing  co-financing  of  workers’  salaries  to  businesses  that 
experience  a  drop  in  revenue  compared  with  2019,  on  condition  that  the  employment 
relationship is not terminated. For March 2020, the amount of support is set at HRK 3 250 per 
full-time employee, and starting from the month of April 2020 the monthly amount of support 
is  set  at  HRK  4  000  per  full-time  employee.  The  amount  of  support  per  employee  remains 
unchanged over the period the measure remains active, but sectors that are eligible for support 
change over time, depending on economic conditions. For the period November 2020 – June 
2021, companies that are in lockdown by decision of the national authorities receive support 
per  full-time  employee  depending  on  the  number  of  days  of  lockdown  but  not  higher  than 
HRK 4 000 for a full month of lockdown. The measure was discontinued at the end of June 
2022.  

The existing measure providing support for the temporary reduction of working time1 
(b) 
in  the  period  between  June  2020  and  December  2022  to  businesses  employing  10  or  more 
employees  operating  in  any  sector,  on  condition  that  the  employment  relationship  is  not 
terminated. Up to HRK 2 000 per month per employee can be financed by the measure. The 
measure is planned to be enforced until the end of December 2022.  

Croatia provided the Commission with the relevant information.  

1 
Decline in the aggregate monthly working hours (i.e. of all workers) of at least 10% compared to the 
similar month of previous year for the period of June to December 2020. Starting from January 2021, the decline 
in monthly working hours needs to be of at least 20% compared to the similar month of the previous year. 

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

• 

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 2020.   

• 

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 (EU) 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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2022/0293 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision (EU) 2020/1348 granting temporary support under 
Regulation (EU) 2020/672 to the Republic of Croatia 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 outbreak2, and in particular Article 6(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Further  to  a  request  from  Croatia  on  6  August  2020,  the  Council,  by  means  of 
Implementing Decision (EU) 2020/13483, granted financial assistance to Croatia in the 
form  of  a  loan  amounting  to  a  maximum  of  EUR 1 020 600 000  with  a  maximum 
average  maturity  of  15  years,  and  with  an  availability  period  of  18  months,  with  a 
view to complementing Croatia’s national efforts to address the impact of the COVID-
19  outbreak  and  respond  to  the  socioeconomic  consequences  of  that  outbreak  for 
workers.  

The loan was to be used by Croatia to finance the short-time work schemes and similar 
measures, as referred to in Article 3 of Implementing Decision (EU) 2020/1348.  

The  COVID-19  outbreak  has  immobilised  a  substantial  part  of  the  labour  force  in 
Croatia.  This  has  led  to  a  still  sudden  and  severe  increase  in  public  expenditure  in 
Croatia in respect of the measures referred to in Article 3 (a) and (b) of Implementing 
Decision (EU) 2020/1348.  

The  COVID-19  outbreak  and  the  extraordinary  measures  implemented  by  Croatia  in 
2020, 2021 and 2022 to contain that outbreak and its socioeconomic and health-related 
impact have had a dramatic impact on public finances. In 2020, Croatia had a general 
government  deficit  and  debt  of  7.3%  and  87.3%  of  gross  domestic  product  (GDP) 
respectively,  which  narrowed  to  2.9%  and  79.8%  respectively  at  the  end  of  2021. 
According  to  the  Commission's  2022  spring  forecast,  Croatia  is  forecasted  to  have  a 
general  government  deficit and debt  of  1.8%  and  73.1% of  GDP respectively by the 
end of 2022. According to the Commission’s 2022 summer interim forecast, Croatia’s 
GDP is projected to increase by 3.4% in 2022. 

2 
3 

OJ L 159, 20.5.2020, p. 1. 
Council  Implementing  Decision  (EU)  2020/1348  of  25  September  2020  granting  temporary  support 
under  Regulation  (EU)  2020/672  to  the  Republic  of  Croatia  to  mitigate  unemployment  risks  in  the 
emergency following the COVID-19 outbreak, OJ L 159, 20.5.2020, p. 1.  

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(5) 

(6) 

On 25 July 2022 Croatia requested further financial assistance from the Union in the 
amount  of  EUR 550 000 000  with  a  view  to  continuing  to  complement  its  national 
efforts  undertaken  in  2020,  2021  and  2022  to  address  the  impact  of  the  COVID-19 
outbreak and respond to the socioeconomic consequences of the outbreak for workers. 
In particular, Croatia further extended and amended the short-time work schemes and 
similar measures set out in recitals 6 to 7.  
On the basis of the  Labour Market  Act4, Croatia introduced a measure that  provides 
co-financing  of  workers’  salaries  to  businesses  that  experience  a  drop  in  revenue 
compared with 20195, on condition that the employment relationship is not terminated. 
For March 2020, the amount of support is set at HRK 3 250 per full-time employee, 
and  starting  from  the  month  of  April  2020  the  monthly  amount  of  support  is  set  at 
HRK  4  000  per  full-time  employee.  The  amount  of  support  per  employee  remains 
unchanged over the period the measure remains active, but sectors that are eligible for 
support  change  over  time,  depending  on  economic  conditions.  For  the  period 
November  2020  –  June  2021  companies  that  are  in  lockdown  by  decision  of  the 
national authorities receive support per full-time employee depending on the number 
of days of lockdown but not higher than HRK 4000 for a full month of lockdown. The 
measure  is  an  extension  of  the  measure  described  in  Article  3(a)  of  Council 
Implementing  Decision  (EU)  2020/1348,  as  provided  for  in  the  Administrative 
Council  of  Croatia  Employment  Service  (CES)  Decision  adopted  on  20 March  2020 
and amended on 25 March, 7 April, 9 April, 6 May, 28 May, 18 June, 25 June, 10 July 
and 29 July, 7 September, 22 October, 4 November and 4 December 2020. Subsequent 
amendments  by  the  CES  were  also  adopted  in  2021  through  decisions  taken  on  8 
January,  21  January,  3  March,  15  April,  30  April,  31  May,  23  July,  25  August,  29 
September,  15  October,  4  November,  and  in  2022  through  decisions  taken  on  27 
January and 31 May6. The measure was discontinued at the end of June 2022.  

(7)   Additionally, on the basis of the ‘Labour Market Act’, Croatia introduced a measure 
that  provides  support  for  the  temporary  reduction  of  working  time7  in  the  period 
between  June  2020  and  December  2022  to  businesses  employing  10  or  more 
employees  operating  in  any  sector,  on  condition  that  the  employment  relationship  is 
not  terminated.  Up  to  HRK  2  000  per  month  per  employee  can  be  financed  by  the 
measure.  The  measure  is  an  extension  of  the  measure  described  in  Article  3(b)  of 
Council 
the 
Administrative Council of Croatia Employment Service (CES) Decision adopted on 29 
June  2020  and  amended  on  10  July  and  22  October  2020,  amended  further  on  8 
January 2021 and 27 January 20228.  The measure is planned to be enforced until the 
end of December 2022. 

(EU)  2020/1348,  as  provided 

Implementing  Decision 

for 

in 

(8) 

Croatia fulfils the conditions for requesting financial assistance set out in Article 3 of 
Regulation  (EU)  2020/672.  Croatia  has  provided  the  Commission  with  appropriate 
evidence that the actual public expenditure has increased by EUR 2 220 567 523 as of 

4 
OG 118/18, 32/20 
5 
The drop in revenue criteria is of 20 % in the period March to May 2020, 50 % in the period June to 
December 2020, and starting from January 2021 there needs to be only a decrease in revenues compared to the 
similar month from 2019.  
6 
Decisions available at: https://www.hzz.hr/o-hzz/upravno-vijece/upravno-vijece_sjednice-2021.php  
7 
Decline in the aggregate monthly working hours (i.e. of all workers) of at least 10% compared to the 
similar month of previous year for the period of June to December 2020. Starting from January 2021, the decline 
in monthly working hours needs to be at least 20% compared to similar month of the previous year. 
8 

Decisions available at: https://www.hzz.hr/o-hzz/upravno-vijece/upravno-vijece_sjednice-2021.php  

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1  February  2020  until  the  end  of  April  2022  due  to  the  national  measures  taken  to 
address  the  socioeconomic  effects  of  the  COVID-19  outbreak.  This  constitutes  a 
sudden and severe increase because it is also related to an extension or amendment of 
existing  national  measures  directly  related  to  short-time  work  scheme  and  similar 
labor market  measures  that  cover  a significant  proportion of undertakings and of the 
labour force in Croatia. Croatia intends to finance EUR 631 536 540 of the increased 
amount  of  expenditure  through  Union  funds  and  EUR 18 430 983  through  its  own 
financing. 

(9) 

The Commission has consulted Croatia and verified the sudden and severe increase in 
the actual public expenditure directly related to short-time work schemes and similar 
measures, as referred to in the request of 25 July 2022, in accordance with Article 6 of 
Regulation (EU) 2020/672.  

(10)  Financial  assistance  should  therefore  be  provided  with  a  view  to  helping  Croatia  to 
address  the  socioeconomic  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.  

(11)  Given that the availability period indicated in Implementing Decision (EU) 2020/1348 
has expired, a new availability period for the additional financial assistance is needed. 
The  availability  period  for  financial  assistance  granted  by  Implementing  Decision 
(EU)  2020/1348  shall  be  extended  by  21  months  and  as  a  consequence  the  total 
availability period should be 39 months starting from the first day after Implementing 
Decision (EU) 2020/1348 has taken effect. 

(12)  Croatia  and  the  Commission  should  take  this  Decision  into  account  in  the  loan 

agreement referred to in Article 8(2) of Regulation (EU) 2020/672. 

(13)  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  pursuant  to  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. 

(14)  Croatia 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 Croatia has implemented that expenditure. 

(15)   The  decision  to  provide  financial  assistance  has  been  reached  taking  into  account 
existing  and  expected  needs  of  Croatia,  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:  

Implementing Decision (EU) 2020/1348 is amended as follows:  

Article 1 

(1)   Article 2 is amended as follows: 

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(a) paragraph 1 is replaced by the following:  

‘1.  The  Union  shall  make  available  to  Croatia  a  loan  amounting  to  a  maximum  of 
EUR 1 570 600 000. The loan shall have a maximum average maturity of 15 years.’; 

(b) paragraph 2 is replaced by the following:  

‘2. The availability period for financial assistance granted by this Decision shall be 39 
months starting from the first day after this Decision has taken effect.’ 

(c) paragraph 4 is replaced by the following:  

‘4.  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.  Any  further 
instalments shall be released in  accordance with the terms of that loan agreement or, 
where  relevant,  be  subject  to  the  entry  into  force  of  an  addendum  thereto,  or  of  an 
amended  loan  agreement  concluded  between  Croatia  and  the  Commission  replacing 
the original loan agreement.’; 

(2) 

Article 3 is replaced by the following:  

Croatia may finance the following measures: 

‘Article 3 

(a) 

the  job  preservation  subsidies  in  sectors  affected  by  COVID–19,  pursuant  to 
Articles 35 and 36 of the ‘Labour Market  Act’ and  as  provided  for in  the Croatian 
‘Employment  Service  decision  of  20  March  2020’  and  subsequent  amendments 
through the decisions taken on 25 March, 7 April, 9 April, 6 May, 28 May, 18 June, 
25 June, 10 July and 29 July, 7 September, 22 October, 4 November and 4 December 
2020.  Subsequent  amendments  by  the  Croatian  Employment  Service  were  also 
adopted  in  2021  through  decisions  taken  on  8  January,  21  January,  3  March,  15 
April,  30  April,  31  May,  23  July,  25  August,  29  September,  15  October,  4 
November; and in 2022, through decisions taken on 27 January and 31 May; and ; 

(b) 

the  aid  for  reduced  working  hours,  pursuant  to  Articles  35  and  36  of  the 
‘Labour  Market  Act’  and  as  provided  for  in  the  Croatian  ‘Employment  Service 
decision  of  29  June  2020’  and  subsequent  amendments  thereof  on  10  July  and  22 
October 2020, amended further on 8 January 2021 and 27 January 2022.’; 

This Decision is addressed to the Republic of Croatia. 

Article 2 

Done at Brussels, 

For the Council 
The President 

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