On April 4th, the European Union (EU) agreed on a €540 billion ($590 billion) rescue package (for a background on the EU, see my previous post). However, in light of much opposition particularly by the Netherlands and Germany, the Eurogroup decided against the launch of the so-called “Corona bonds”—joint (or mutualized) debt issued by the European Central Bank. The package includes two institutions:
In light of the COVID-19 crisis, the bailout fund makes €240bn available to guarantee spending by indebted countries that are part of the Eurozone. Each country will be able to request up to 2% of their GDP to finance “direct and indirect” costs related with the crisis.
The “COVID-19 package” includes €200bn in guarantees from the European Investment Bank and a European Commission for small businesses. In addition, 100 billion euro will be allocated to finance unemployment benefits. Part of these funds will be used support short-time working schemes (or kurzarbeit) in member states. Some have argued that the these aids will not be sufficient to tackle what some have called the worst crisis since the Great Depression. In the same manner, others continue emphasize how the limited powers of the EU in the health policy area has costed thousands of lives.
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s hard-hit Spain struggles with the effects of COVID-19, the coalition government continues to launch a variety of measures to protect workers (both typical and atypical), firms, and the most vulnerable in society. In a previous post, I discussed a first wave of measures in this country. Since then, Spain is increasingly looking like an innovator. SUPRANATIONAL: In the last couple of days, this country and Italy have also been active at the supranational level in pushing for an European solidarity package (here we can refer to Milton Friedman’s notion of “helicopter money” in which Central Banks print money and states spend it), or at least some type of concerted EU instrument including the so-called “Corona-bonds.” For an overview of Central Banks’ measures to support their economies, refer to this article. RECENT MEASURES: SPAIN (for a full list):
THE RESURRECTION OF SOCIAL CONCERTATION? As discussed in the Danish post, most European countries actively involve the social partners (i.e., labor unions and employers’ organizations) in policy-making and decision-making processes, particularly in the fields of employment and labor market policy. Pedro Sánchez has called upon social partners, the presidents of the Comunidades Autonómas (i.e., Spanish regions/sub-national levels), and the political parties to join him on the bargaining table. The President of the government noted that he wants to resurrect the “Moncloa Pacts”—a series of political and economic agreements signed in 1977 when Spain was making a transition to democracy and was facing acute economic crisis. When referring to Spanish employment policy and welfare states, these pacts were extremely significant as they: 1) marked the inclusion of labor unions in decision-making processes (in a newly created democracy), and 2) established the pillars of the Spanish welfare state (including key elements of labor law and workers’ rights). Still, the opposition does not support this solution. In my next entry, I will discuss another somewhat “innovative” solution—the use of Kurzarbeit in Germany. |
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Mariely Lopez-Santana is a Political Scientist and an Associate Prof. at the Schar School of Policy and Government at George Mason University. In the last two decades she has spent much time studying, teaching, and writing about employment policy. She is working on a book project on state intervention and municipal distress. Categories
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