The ongoing COVID-19 crisis continues to paralyse Europe’s economy, the number of unemployed is on the increase and millions of workers live in fear of losing their jobs. The new instrument for short-time work, which has been proposed by the EU Commission, shall protect both employees and businesses in equal measure.
On 2 April 2020, the EU Commission presented SURE (Support mitigating Unemployment Risks in Emergency), a proposal for a new Instrument for short-time work. According to Commission President Ursula von der Leyen, SURE “can mitigate the effects of the recession, it keeps people in work, it enables companies to return to the market with renewed vigour”.
What is short-time work?
Short-time work schemes enable companies to (significantly) reduce their employees’ working hours over a limited period in crisis situations. The State compensates for the hours not worked by paying an income support, which can vary according to the respective scheme. With regard to the Austrian scheme for example, workers – depending on their net pay – receive between 80 and 90 % of their salary. The main purpose of short-time work is to prevent redundancies. This does not only secure the basis of existence of workers, it also contributes to retaining their purchasing power. Apart from that, it shall be ensured that companies will have the skilled workforce when Europe’s economic engine gets off the ground again.
Short-time work schemes have also been implemented in other EU countries, whereby the schemes – for example in respect of the paid short-time working allowance – vary from country to country. The Institute of Economic and Social Research (WSI) of the Hans Böckler Foundation provides a good overview of the short-time work schemes in Europe. For example, the WSI shows that the net replacement rate in Germany – depending on the collective agreement – is only 60 %, whilst some other countries pay 100 % of the net (Ireland) or gross salary (Denmark, the Netherlands) as short-time working allowance. The WSI urges Germany to increase the short-time working allowance and calls the Austrian scheme a possible example.
The SURE Instrument, which has now been presented by the Commission, shall enable Member States to take out loans at reduced rates of interest of up to 100 billion Euro in total to fund short-time work. To make it possible for the Commission to borrow funds in this magnitude on the capital markets, Member States shall provide counter guarantees amounting to at least 25 billion Euro. Member States that implemented short-time work schemes in response to the crisis are able to ask the Commission for financial support within the framework of SURE. Prior to presenting the Council with a proposal for an appropriate decision, the Commission will examine the request and negotiate – based on the investments made by the respective Member State – the conditions of the loan. In a first step, SURE should have been adopted by the Finance Ministers of the Eurozone on 7 April 2020; however, the talks on the three-pronged package of measures and possible Corona bonds have hitherto not produced a result; they are though continued today (9 April 2020).
Short-time work as a socially just solution
The European Trade Union Confederation (ETUC) welcomes the proposal of the Commission and urges the EU Finance Ministers and the Council to agree to it. Schemes such as short-time work should be implemented in all Member States and ensure that all workers and companies can be included. ETUC urges a swift coming into force of the new mechanism and requests the introduction of clear guidelines for its implementation. However, for the purpose of a socially just solution, short-time work schemes have to meet certain requirements; a minimum replacement rate with regard to the short-time working allowance and social partner agreement should be minimum requirements.
Chamber of Labour welcomes SURE
The Chamber of Labour too welcomes the proposal of the short-time work instrument SURE at European level and urges the swift implementation of the measure, involving the social partners. Austria has just done that and succeeded – with both Chamber of Labour and Austrian Trade Union Federation (ÖGB) playing a leading role – to implement a short-time work scheme with international role model effect. To halt the rise in unemployment and to protect millions of workers throughout the EU against the loss of their job, must currently take absolute priority. Not less than the economic livelihood of the people is at stake; hence, it is of vital importance that workers receive an appropriate level of short-time working allowance. Minor loss of earnings does not only help people, they stabilise the economy at the same time. “The EU Member States must show solidarity and agree to the plan”, demands AK President Renate Anderl.