On 1st April, European Commission President von der Leyen announced the proposal to create a European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE). This instrument is to provide loans-based financial support to member states facing a sudden increase in public expenditure due to their quest to preserve employment. In this policy brief, the authors argue that SURE is a timely and welcome instrument to support member states as they address the short-term challenges of the Covid-19 crisis.
Yet SURE also has some limitations and is thus insufficient in the medium to long term for tackling the bleak employment outlook across the EU. On the one hand, SURE’s value added consists of its focus on job protection, its lack of conditionality attached to loans, its smooth application procedure to gain access to financing, and its broad scope to include both short-time work (STW) schemes and similar measures for the self-employed. On the other hand, however, there are also certain limitations apparent in SURE’s current design.
The first is the limited amount of guarantees, which makes it impossible to increase the size of SURE unless other guarantees are added.
The second limitation is related to the fact that SURE is a temporary loans-based vehicle and will therefore inevitably imply an increase in the public debt of countries hit by the crisis.
The third limitation is that SURE consists of short-term relief for national budgets, and these will likely be burdened in the long term by increasing unemployment rates.
This therefore suggests that in order to increase its effectiveness in the medium to long term, SURE should be accompanied by complementary measures at European level, such as a European Unemployment Reinsurance Scheme (EURS).