FILE PHOTO: A man smokes a cigarette next to a closed business during the coronavirus disease (COVID-19) outbreak in Madrid, Spain, February 2, 2021. REUTERS/Susana Vera
March 22, 2021
BRUSSELS (Reuters) – A scheme based on cheap European Union loans helped up to 30 million people keep jobs in 18 EU countries last year when the coronavirus pandemic froze economies across the bloc, stabilising employment in 2.5 million firms, a European Commission report said.
Under the scheme, the EU used its AAA credit rating to make available 100 billion euros in loans to governments that used short-term work schemes to keep people in jobs by subsidising part of their salary, rather than putting them on unemployment.
While the EU loans may not have been attractive to those with the lowest borrowing costs like Germany or the Netherlands, the 90.6 billion euros disbursed among 18 countries saved them 5.8 billion in interest payments, the Commission said.
“The instrument supported between 25 and 30 million people in 2020,” the EU executive arm said in a statement. “This represents around one quarter of the total number of people employed in the 18 beneficiary Member States.”
Such labour support kept unemployment barely changed during the 27-nation bloc’s biggest ever recession last year, with the jobless rate edging up from 6.5% in March to a peak of 7.8% in August before easing again to 7.3% in January.
By comparison in the United States, where such schemes were not widely used, unemployment surged to 14.8% of the workforce in April, 2020 from 4.4% in March before gradually sliding back to 6.3% in January this year.
To keep borrowing costs to a minimum, the EU plan, called Support to mitigate Unemployment Risks in an Emergency, or SURE, had 25 billion euros in guarantees from all EU governments.
“The SURE initiative has proven its value by keeping people in jobs and businesses afloat during the crisis. SURE has successfully supported tens of millions of people and firms across the EU, protecting against the risk of unemployment and safeguarding livelihoods,” Commission Vice President Valdis Dombrovskis said.
(Reporting by Jan Strupczewski, editing by Ed Osmond)