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

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, 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)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.

(b)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.

(c)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.

(d)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.

•Consistency with existing policy provisions in the policy area

•Consistency with other Union policies

2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

•Legal basis

•Subsidiarity (for non-exclusive competence)

•Proportionality

3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

•Stakeholder consultations

•Impact assessment

4.BUDGETARY IMPLICATIONS

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.

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 outbreak 1 , and in particular Article 6(1) thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)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.

(2)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.

(3)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.

(4)“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.

(5)“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.

(6)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.

(7)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,

HAS ADOPTED THIS DECISION:

Article 1

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

Article 2

1.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.

2.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.

3.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.

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.

5.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.

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

Article 3

Malta may finance the following measures:

(a)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;

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

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

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

Article 4

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 5

This Decision is addressed to the Republic of Malta.

Article 6

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

Done at Brussels,

(1)    OJ L 159, 20.5.2020, p.1.