► What does this device consist of?
The idea is to offer financial support to European workers whose work is threatened because of the economic downturn brought on by the Coronavirus epidemic. “Thanks to this new instrument of solidarity, we will mobilize 100 billion euros to allow workers to keep their jobs and businesses to continue their activities”, welcomed the President of the European Commission, Ursula von der Leyen, on Thursday 2 April.
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This unemployment reinsurance scheme was already in the pipeline. The head of the European executive had explicitly included him in his plan for the evolution of Europe. “There are of course unemployment insurance at national level, but we must establish a euro systemreinsurance to cope with severe external shocks “, she had defended at the start of the mandate.
► How will “SURE” work?
Concretely, the Commission will borrow on the financial markets, which will allow member countries to benefit “Low borrowing costs” from the EU. These loans will help the unemployment benefit system in the hardest-hit countries to better bear the costs of short-time working. They will particularly benefit the regions of Milan or Madrid, which have been hit hard by the Coronavirus.
A company in difficulty will be able to reduce the hours worked, and the State, thanks to the financial means made available by “SURE”, will compensate for the hours not worked. Self-employed workers may have their income replaced. This system will be combined with specific support for the temporary cessation of fishing activities, and for farmers, thanks to the relaxation of the payment of the Maritime Affairs Fund and CAP aid.
These measures arrive at “Point named”, welcomed MEP Anne Sander (LR) from the Employment Committee in the European Parliament. “While being careful not to rush into an uncontrolled debt spiral, the crisis we are going through involves taking exceptional measures at European level”, she comments.
► What effects can we expect from such a mechanism?
Xavier Ragot, president of the French Observatory for Economic Conditions (OFCE), sees it “A powerful economic stabilization tool in the euro zone”. Everything will now depend on the level of involvement of the Member States. Ursula von der Leyen has expressed confidence in the accession of member states to the program, including Germany and the Netherlands, who have been very reluctant to pool economic risk.
German finance minister Olaf Scholz has so far declared himself in favor of a European unemployment reinsurance system without debt capacity. But on March 31, the Social Democrat showed signs of flexibility. “We are ready for solidarity, but well thought out solidarity”, did he declare.
The SURE device will be presented on Tuesday 7 April to the EU finance ministers, gathered to discuss the various means of reviving activity in Europe, once the Covid-19 pandemic has been brought under control, and it should, unless surprised, be adopted . A minimum amount of 25 billion euros in guarantees will have to be mobilized for the instrument to function fully, the Commission said.