European Union

Pro-European centrist Keir Starmer was on Saturday (4 April) unveiled as new Labour party leader, heralding a shift in Britain's main opposition party after a crushing election defeat under veteran socialist Jeremy Corbyn and years of ideological infighting.

In Europe, officials, doctors and engineers are looking at how smartphones could be enlisted in the war against the spread of the new coronavirus.

Defence ministers will hold a video conference on the military implications of the COVID-19 pandemic.

The EU issued a declaration on the UN Secretary General’s appeal for an immediate global ceasefire.

The EU issued a declaration on Venezuela calling upon all stakeholders to put the interests of the nation above all other considerations and engage in a credible, representative and serious negotiation process.

The Council appointed Mr. Miroslav Lajčák as EU Special Representative for the Belgrade-Pristina Dialogue and other Western Balkan regional issues.

The UK opened its first emergency field hospital to combat the coronavirus pandemic on Friday (3 April) but the government continues to face growing criticism about its plans to increase testing for the virus.

Written by Klaus Müller,

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The coronavirus pandemic is affecting all 27 European Union (EU) Member States, but not all to the same extent, although the impact could spill over onto those Member States not (yet) badly hit.

A common European unemployment insurance scheme has been considered as one potential response to the lack of stabilisation instruments under economic and monetary union (EMU). Short-time work schemes could provide such a stabilisation instrument, as well as a starting point for the implementation of a Europea n unemployment insurance scheme.

During the financial crisis, ‘short-time work’ (STW) schemes in Member States allowed firms to temporaril y reduce working time and to receive support from government or public employment services (PES) for the hours not worked. This instrument stabilised employment levels, by avoiding dismissals (even in cases where working time was reduced to zero), sharing the burden and retaining the skilled workforce.

A common STW scheme for the EU-27 could reinforce existing national schemes, and support them in the countries most affected by the coronavirus pandemic. The proposal fully respects the principle of subsidiarity.

Short-time working schemes in Member States

A majority of EU Member States have STW schemes, which differ in the way they are implemented:

• Austria, Belgium, France, Germany, Italy, Luxembourg and Portugal have relatively large (in Belgium, Germany and Italy) and well-established schemes.

• In Denmark, Finland, Ireland, the Netherlands and Spain, support for employees on short-time work is provided through ‘partial unemployment benefits’.
• Bulgaria, Croatia, Slovakia and Sweden can also activate STW schemes (for Bulgaria, specific funding is needed).

Today, Member States without STW schemes in place, including Cyprus, Denmark, Estonia, Latvia, Greece, the Netherlands and Slovenia, are taking measures to avoid dismissals, and granting support to workers and companies.

Existing STW schemes can be used if external events (bad weather conditions in the construction or agricultural sector and incidences of force majeure), affect economic activity. In response to the coronavirus pandemic, many Member States have now qualified the situation as a case of force majeure.

Short-time work schemes generally cover all employees, irrespective of their type of contract (full-time or part-time, temporary or permanent). Furthermore, in many Member States, apprentices and temporary agency workers are excluded. As a response to the current situation, Member States have extended the coverage of their STW schemes, e.g. to temporary agency workers in Germany. In Spain, employees can receive support regardless of the period for which they have contributed to unemployment insurance.

The use of short-time work is limited in time. The limits can vary, depending on whether work is fully suspended (i.e. 0 hours), or only partially reduced (e.g. from full-time to part-time). For a partial suspension of work, the maximum duration can range from three months (Belgium) to up to two years (Italy). In case of a full suspension of work, the maximum duration is generally shorter.

Evaluation

A Europe-wide evaluation of STW schemes 1 concluded that there are advantages in adopting such measures. However, only countries with pre-existing STW schemes would be ‘able to fully exploit the benefits of STW’, and ‘the effect of STW is strongest when GDP growth is deeply negative’. An STW scheme has to be boosted at the beginning of a recession and results indicate that STW is most effective when used as a fast-responding automatic stabiliser.

A short-time work scheme for the EU-27

A common STW scheme for the EU 27 could reinforce the existing national STW schemes. Such a scheme would limit severe economic crisis through its stabilising effect on disposable income and aggregate demand. It could ensure a stabilisation function, because the insurance scheme would intervene in areas where the economic impact is higher. It could also reduce the pressure on social policies and complement national schemes, when the level of current support is too low.

A growing number of workers are temporary agency workers, external collaborators, project-based workers, task-based workers, and workers identified as (but not actually) ‘self-employed’, for instance, platform-based workers. A European scheme could provide more universal cover than national schemes, and could also enhance protection for people facing a high risk of poverty, thereby strengthening the social dimension of the EU-27 and demonstrating European solidarity. Analysis estimates the costs of such a system (under four ‘shock scenarios’), to amount to between 0.6 and 0.8 % of the GDP of participating countries per year, with an estimated 20 % stabilisation effect.

European Parliament position

The European Parliament considers that ensuring compensation during a downturn has significant macro-economic stabilisation potential, as demonstrated by previous experience in the EU and the United States of America. A second important benefit is that this type of expenditure goes where it is most needed: to the countries most concerned and to support the capacity of households whose labour income is going to be reduced; it gives the economies affected greater space to invest where it is needed for long-term sustainable recovery.

In its resolution of February 2017 on the budgetary capacity of the euro area, the Parliament expressed the view that an EMU-wide basic unemployment benefit scheme would contribute directly to stabilising household income. Short-time working schemes could have more sustainable results, because they avoid dismissals. The workers would remain ’employed’.

Commission and Council responses to date

In May 2018, the Commission presented, within the proposals for the 2021-2027 multiannual financial framework (MFF), a regulation on the establishment of a European Investment Stabilis atio n Function (EISF). This regulation envisages support for Member States hit by an asymmetric shock and/or increase in the unemployment rate.4

In June 2018, France and Germany decided to examine the issue of a European Unemployment Stabilisation Fund, for the case of severe economic crises, without transfers. While the intention was to set up a working group with a view to making concrete proposals by the European Council meeting of December 2018, there has been no result to date.

On 1 April 2020, the Commission made a proposal for a Council regulation on the establishment of a European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) following the coronavirus outbreak.

Read this ‘At a glance’ on ‘EU-27 support for national short-time work schemes‘ in the Think Tank pages of the European Parliament.

In countries stricken by conflict, where health systems have already collapsed, "the worst is yet to come" as the coronavirus continues to spread, UN Secretary-General Antonio Guterres warned on Friday (3 April), reiterating his call for a global ceasefire to help contain the COVID-19 pandemic.

The EU Commission on Friday approved requests from EU countries plus Britain to temporarily waive customs duties and VAT on imported medical devices and protective equipment amid the coronavirus epidemic. The duty-free gear includes masks, testing kits and ventilators. The exemption will apply for a period of six months, with a possibility for extension. The decision takes effect retroactively from January 30.

Airline group Air France-KLM is in talks with banks to receive up to €6bn in loans, guaranteed by the French and Dutch governments, due to the coronavirus crisis, Reuters reported. The two states each own 14 percent of Air France-KLM. Air France could get around €4bn in French-guaranteed loans while KLM could receive around €2bn backed by The Hague. The group appointed BNP and Societe Generale to advise on refinancing.

The coronavirus outbreak hit the world just a few weeks after Robert Shiller published ‘Narrative economics'. Europe now presents the American economist a unique case study.

The European Commission proposed numerous changes to its cohesion policy rulebook on Thursday (2 April) in order to draw €37 billion of unused funds to finance various measures during the coronavirus pandemic. But these measures can only help to a limited extent. EURACTIV Germany reports.

It's in the EU's interest to step up humanitarian, social and economic aid and do whatever it takes to support African economies about to be hit by the coronavirus, writes Luca Jahier.

Written by Marcin Grajewski,

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The coronavirus pandemic continues to spread around the world. Governments have adopted preventive measures of varying degrees of severity. Analysts and commentators continue to call for a more coordinated response to the disease, notably at European Union level, without always agreeing on what the precise response should be. Meanwhile, some are beginning to try to envisage how the world will have changed once the virus is finally contained.

This note offers links to recent commentaries and reports from international think tanks on the coronavirus and related issues. Earlier publications on the topic can be found in the previous edition item in this series, published by EPRS on 26 March.

Monitoring Covid-19 contagion growth in Europe
Centre for European Policy Studies, March 2020

Pulling through the coronavirus together: European and international solutions to the pandemic
European Council on Foreign Relations, March 2020

Europe needs a Covid-19 recovery programme
Bruegel, March 2020

International order and the European Project in times of COVID19
Instituto Affari Internazionali, March 2020

The multilateral system still cannot get its act together on COVID-19
Council on Foreign Relations, March 2020

China, Italy and COVID-19: Benevolent support or strategic surge?
Instituto Affari Internazionali, March 2020

What you need to know about the Coronavirus pandemic
Council on Foreign Relations, March 2020

Covid-19 and European solidarity: The fight for who we are
European Council on Foreign Relations, March 2020

The COVID-19 pandemic: The EU must think and act globally
Centre for European Reform, March 2020

EU: Strongly united for health; Deeply divided on the economy
Council on Foreign Relations, March 2020

Is Coronavirus good for our sick planet?
Instituto Affari Internazionali, March 2020

Coronavirus and power: The impact on international politics
Egmont, March 2020

Why the EU will play a greater global role post-Corona
Friends of Europe, March 2020

Creating an EU ‘Corona Panel’
Centre for European Policy Studies, March 2020

Coronavirus and transatlantic security: Implications for defense planning
Atlantic Council, March 2020

Route de la soie de la santé : Comment la Chine entend profiter de la pandémie pour promouvoir sa diplomatie sanitaire
Fondation pour la Recherche Stratégique, March 2020

Extending the MFF: The need for an ‘emergency’ 2021 budget
European Policy Centre, March 2020

COVID-19 Fiscal response: What are the options for the EU Council?
Bruegel, March 2020

Yes, medical gear depends on global supply chains: Here’s how to keep them moving
Peterson Institute for International Economics, March 2020

This time is different
Centre for European Policy Studies, March 2020

In a COVID-19 World, Russia sticks to international distancing
Chatham House, March 2020

The fiscal response to the economic fallout from the coronavirus
Bruegel, March 2020

Leadership in a time of contagion
European Council on Foreign Relations, March 2020

Winning the peace against coronavirus
European Policy Centre, March 2020

After the pandemic: Why Europe must restore its economic and social safety margins
European Council on Foreign Relations, March 2020

From G7 to G20: Passing three hot potatoes
Bruegel, March 2020

How leaders can stop Corona from undermining the EU
Deutsche Gesellschaft für Auswärtige Politik, March 2020

How the coronavirus threatens a geopolitical Europe
zertyuiop
European Council on Foreign Relations, March 2020

What the EU should do and not do on trade in medical equipment
Bruegel, March 2020

‘Whatever it takes’: Getting into the specifics of fiscal policy to fight COVID-19
Peterson Institute for International Economics, March 2020

The COVID-19 crisis and reflections on systems transformation
Brookings Institution, March 2020

Does COVID-19 pose a threat to the EU’s climate neutrality efforts?
European Policy Centre, March 2020

Coronavirus and the politics of a common fiscal instrument
Bruegel, March 2020

Polling shows Americans see COVID-19 as a crisis, don’t think US is overreacting
Brookings Institution, March 2020

The Coronavirus killed the revolution
Brookings Institution, March 2020

Let’s emerge from COVID-19 with stronger health systems
Chatham House, March 2020

Wrong tools, wrong time: Food export bans in the time of COVID-19
Peterson Institute for International Economics, March 2020

The covid-19 crisis: A crash test for EU energy and climate policies
Centre on Regulation in Europe

The G20’s pandemic moment
Chatham House, March 2020

Five steps to combat the infodemic
German Marshall Fund, March 2020

Cybersecurity in the time of COVID-19
Council on Foreign Relations, March 2020

Will European defence survive Coronavirus?
Real Instituto Elcano, March 2020

Campaign foreign policy roundup: Campaigning amid a pandemic
Council on Foreign Relations, March 2020

Unmasking differing U.S. and South Korean approaches to COVID-19
Council on Foreign Relations, March 2020

Viktor Orbán’s Hungary: A new risk to the EU from Coronavirus
Deutsche Gesellschaft für Auswärtige Politik, March 2020

Transatlantic take 360: Too early to say nationalists are winners of the Coronavirus crisis
German Marshall Fund, March 2020

Coronavirus: The world’s first digital pandemic
Cingendael, March 2020

The EU needs a more comprehensive vision to tackle pandemic
Carnegie Europe, March 2020

The multilateral system still cannot get its act together on COVID-19
Council on Foreign Relations, March 2020

COVID 19’s next target: Fragile states and emerging markets
Atlantic Council, March 2020

Here’s how to fight Coronavirus misinformation
Atlantic Council, March 2020

Is China winning the coronavirus response narrative in the EU
Atlantic Council, March 2020

L’exode sanitaire: Nouvelle manifestation de la sécession des catégories supérieures
Fondation Jean Jaurès, March 2020

Five steps to combat the infodemic
German Marshall Fund, March 2020

Read this briefing on ‘Coronavirus: What should policy-makers do?‘ in the Think Tank pages of the European Parliament.

It will take time for the EU to get a large numbers of ventilators quickly to treat Covid-19 patients, a commission spokesperson said Friday. The executive launched a joint procurement in March, suppliers had been selected, and countries can begin negotiating deliveries. "Taking into account the difficult situation of the markets and the complexity of products like ventilators, their production and delivery is expected to take time," the spokesperson said.

Hungarian Prime Minister Viktor Orbán said Friday (3 April) he has "no time" for scathing criticism by EU allies of sweeping powers he took on this week to tackle the coronavirus threat.

Written by Angelos Delivorias and Carla Stamegna,

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The idea of issuing joint debt instruments, in particular between euro-area countries, is far from new. It has long been linked in various ways to the Union’s financial integration process and in particular to the implementation of economic and monetary union. In the first decade of the euro, the rationale for creating joint bonds was to reduce market fragmentation and thus obtain efficiency gains. Following the financial and sovereign debt crises, further reasons included managing the crises and preventing future sovereign debt crises, reinforcing financial stability in the euro area, facilitating transmission of monetary policy, breaking the sovereign-bank nexus and enhancing the international role of the euro.

While joint debt instruments present considerable potential advantages, they also present challenges. These include coordination issues and reduced flexibility for Member States in issuing debt, the potential to undermine fiscal discipline by removing incentives for sound budgetary policies, and the fact that adoption of joint debt instruments would eventually entail the difficult political choice of transferring sovereignty from the national to the EU level.

In the context of the current crisis caused by the COVID-19 pandemic, joint debt instruments have once more come to the fore as a potential medium-term solution to help Member States rebuild their economies following the crisis. In Eurogroup and European Council meetings, the solution is not favoured by all Member States and alternative – possibly complementary – approaches have been proposed, such as a credit line through the European Stability Mechanism.

Read the complete briefing on ‘Joint debt instruments: A recurrent proposal to strengthen economic and monetary union‘ in the Think Tank pages of the European Parliament.

The situation of refugees in Greece calls for a concerted EU response to avoid a Covid-19 outbreak, according to MEPs on the civil liberties committee.

Source : © European Union, 2020 - EP

The situation of refugees in Greece calls for a concerted EU response to avoid a Covid-19 outbreak, according to MEPs on the civil liberties committee.

Source : © European Union, 2020 - EP