Coronavirus: EU pledges €100 billion to save jobs

BRUSSELS

The European Commission on Thursday proposed a new financial package to contribute to the salaries at companies struggling with the economic effects of coronavirus.

The scheme named SURE would provide in total €100 billion ($109 billion) loan to EU member states to prevent millions from losing their jobs.

Based on the idea of the German Kurzarbeit (short work) system, employees would work in reduced hours due to the changing economic environment, but they could still receive full-time salaries.

The difference is reimbursed by the national social security system.

The European Commission would take loans at the international financial markets and lend the money to the member states, which means better conditions for countries with a particularly fragile economy.

Contrary to the €27 billion ($29 billion) coronavirus investment fund that channels a pre-disposed amount to each member state, the new employment initiative does not apply quotas for states.

The states can apply and the European Commission will decide on the size of the financial assistance.

The EU needs a €25 billion ($27 billion) guarantee from all the member states for the credit. The contributions for the collateral would be based on the country’s size and wealth.

Last week, the EU member states clashed over the similar idea of issuing Eurobonds to finance the bailout for countries in need.

It is highly uncertain if countries like Germany or the Netherlands, traditionally opposing against mutualizing debt, would approve the Commission’s latest proposal.