The International Labour Organisation has released a research note describing the COVID-19 as the, “Worst global crisis since World War II”, with devastating effects on businesses and workers. Increased lay-offs and reductions in wages and working hours are affecting 1.25 billion workers, with an additional 2 billion workers from the informal sectors (mostly in developing countries) also at risk.
Consequently, governments from each geographical region are adopting measures to try to limit economic impacts as much as possible.
A few weeks after it became clear how the COVID-19 outbreak would affect businesses, workers and States’ finances, the European Union proposed a new instrument for Support to mitigate Unemployment Risks in an Emergency (SURE). This will allow financial assistance of up to EUR 100 billion in the form of loans granted on favourable terms from the EU to affected Member States.
In particular, such loans will help governments to cover costs directly related to the creation or extension of national short-time work schemes and other similar measures they have put in place for the self-employed, with the aim of sustaining workers’ incomes, preserving the productive capacity, human capital and the economy as a whole. Such measures seem to be helpful in a moment where 15 million workers in the EU area have lost their jobs. Additional social measures related to unemployment are expected to be taken in the coming weeks.
Small and Medium Enterprises (SMEs) are also suffering drastic damages, for which extraordinary measures are being proposed. In particular:
- the European Union has redirected EUR 164 million to SMEs and startups for innovative solutions to tackle the COVID-19 outbreak
- the European Investment Bank created a pan-European guarantee fund of EUR 25 billion, which could support EUR 200 billion for financing for companies throughout the EU, with a particular focus on SMEs. This fund would serve as a protective shield for European firms facing liquidity shortages and would bridge short-term financial needs of SMEs
In the meantime, further State Aid Measures have been adopted by several European countries, including Austria, Bulgaria, Croatia, Greece, Hungary, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, Spain and the United Kingdom.
Further measures are expected to be introduced by EU Member States. amfori’s Advocacy team will keep you updated on related policy news.