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The EU's 100 billion euro scheme to tackle unemployment caused by COVID-19

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The EU's 100 billion euro scheme to tackle unemployment caused by COVID-19
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The Coronavirus pandemic is having a huge impact on the European labour market.

The International Labour Organization foresees the loss of 12 million full-time jobs in Europe in 2020.

The sectors most at risk include accommodation and food services, manufacturing, retail and administration.

To mitigate the issues, the European Union has put in place a scheme called SURE, which stands for Support to mitigate Unemployment Risks in an Emergency. It’s part of a 540 billion euro package to support European companies and workers.

There are up to 100 billion euros available for the SURE scheme, supported by 25 billion euros in guarantees from EU members. States can apply for the cash after they’ve activated schemes to help those either in regular work or self-employed people who've lost income. The assistance comes in the form of a loan on favourable terms.

So how does it work in practice? We visited a company and employees who would fit the profile of likely beneficiaries of the scheme in northern Italy.

Gemma Monterverdi lives in Brescia near Milan. She works for the family-run textile company Ciocca SpA. Gemma has moved to reduced working hours and this month will receive 80% of her salary:

"My husband also works in the company, so the two salaries will obviously drop. If it is a matter of a month we’ll deal with it. If it is two, we’ll clench our teeth.

"If it's longer, we will obviously have to make a new plan. The company where I work is in good shape. My fear is that they will be forced to do a staff reduction."

Ciocca SpA has almost stopped its production and already lost 35% of its annual turnover. In order to avoid further losses, company president Filippo Ciocca is ready to gradually put his employees back to work:

"We definitely have to find the tools by which people can be retained, but we cannot immediately start working from the first moment we open the company.

"Reduced working hours schemes were created for moments of normal crisis. I think that the tools that have to be adopted by the state on one side and the European community on the other must also be exceptional."

Almost half of Italian workers are experiencing a loss of income. Since the beginning of the coronavirus crisis, the government has allocated eight billion euros to around seven million workers and another four million people who are self-employed.

Giovanni Scandale is a self-employed taxi driver who's still waiting for some money. He no longer has enough customers to pay for his mortgage or his outgoings. He should get €600 from the government for March and €800 for April.

But it's not enough:

"It's a figure that is really too small and I hope that the European Union can give us a hand to be able to pay all the various expenses we have," he says.

Italy is the second most indebted country in Europe, and the International Monetary Fund forecasts that its GDP will drop by 9.1% this year.

Without appropriate assistance, the workers most affected by this crisis are at risk of experiencing great difficulties.

Lucas Visentini, head of the European Trade Union Confederation warns that this recession will deeply damage the European economy and jobs - unless the EU makes really generous provisions:

"We think that the recovery plan should imply at least double the amount of money for the European budget, not only 1% of the GDP of the EU but 2%. So we need an additional one trillion euros made available and the only way to finance all of this and to make sure that it is real financing, fresh money, is to have some kind of European bonds in place."

European Employment Commissioner Nicolas Schmit agrees that, with a forecast of 12 million full-time jobs being lost in Europe, that as many people as possible need to retain their jobs:

"That’s what we try to do through the instrument of short-time work - the SURE instrument which I hope can be adopted very, very soon.

"Second, we have to prepare for the recovery, we have to be very bold to restart our economy as soon as possible and by watching certainly the health constraints which are still very, very tight but this is something member states have started now cautiously and progressively in order to limit the impact on employment. This is something which has to be done immediately and has to last for some time."

Some of the hardest-hit countries such as Italy or Spain already have weak economies and their economies rely on struggling sectors such as tourism. What does the Commissioner think can be done to help them?

Commissioner Schmit believes the issue is complicated by countries having not been hit in an equal way:

"When you look at some countries where tourism represents more than 10 per cent, sometimes 20 per cent like in Greece, approximately 20 per cent of GDP, that will be a real blow. So firstly, (we need to help) these countries to maintain as many companies in the tourism business or in the tourism-related business. And this means we have to have in Europe a level of solidarity."

There is a huge part of the European population working in the so-called “black economy”; they lost income and they cannot legally claim unemployment benefits. How can these people be protected? Is the Commissioner considering including them in the new scheme?

"When I launched a few weeks ago the initiative to tackle undeclared work, it was before the virus came. I insisted on the fact that (black market working) is not something which should happen in Europe anymore. But I'm realistic. Unfortunately, in some member states, this undeclared economy is still very high and still very broad.

"Giving these people the possibility to have an income is absolutely indispensable and then try to bring them into normal declared jobs - and continue fighting undeclared work.

"Because that's bad for the people. It's bad for the economy. It's bad for public finance. It's bad for our Social Security systems," Commissioner Schmit concludes.