Brussels Proposes a European Scheme of Employment Aid to Help Spain Under the Pandemic

Spain has achieved its goal. Europe will help workers who have been affected by the COVID-19 crisis.

Tomorrow, the European Commission (EC) will present an project which aims to provide public subsidies supported by the European Union as a whole to help maintain employment in those countries worst affected by the coronavirus, specifically through systems such as  Temporary Employment Regulation Files (ERTEs).

In an unprecedented decision, the President of the Executive, Ursula von der Leyen announced on Wednesday the presentation of this scheme, dubbed “Sure”, although she did not specify how this programme would be financed, what requirements needed to be met to receive aid, or the volume of this aid.

This innovative proposal was debated on Wednesday by the college of commissioners and is expected to be adopted and presented tomorrow, although a Commission spokesperson has assured that it is still a work in progress.

“This is intended to help Italy, Spain, and other countries who have been hit hard by the crisis, and it will be done thanks to the solidarity of other Member States”, von der Leyen said in a video in several languages which was published on Twitter.

Brussess proposes that countries put in place temporary work schemes, by which they give companies public subsidies, allowing htem to keep their workers employed and continue to pay their wages even when their activity has been reduced by the pandemic.

Von der Leyen suggested that to keep them employed, in their free time, workers could take training courses, and that a steady flow of wages would allow individuals to continue to pay rent or make purchases which in turn has a positive impact on the economy.

This scheme aligns well with the German “Kuzarbeit” scheme, which consists of a reduction in working hours but with employment guarantees, which in Spain is equivalent to an ERTE.

This initiative responds to the demands set out by Spain and other countries for the Commission to accelerate its proposal to create an unemployment reinsurance system in the European Union, which in principle it was going to present at the end of this year.

The coronavirus crisis has forced the EC to anticipate these measures and begin to pave the way for its acceptance, since the idea has generated less reluctance in Germany and other states than the idea of the so called “coronabonds” to use the eurozone bailout fund that ha been suggested so far.

The Eurogroup could discuss it at its meeting on April 7 in which ministers of Finance and Economy are expected to adopt more measures to mitigate the economic impact of a pandemic which will potentially lead the euro into a recession this year, and have a significant impact on employment.