Europe has been particularly hard hit by the current pandemic. However the region is getting ready to rebound - and it’s putting together well thought out plans to rescue people and business in the short term, but also to support longer term growth and stability. The scheme could take Europe from what looks like last place and put it on solid footing so that both business and individuals can thrive. The manufacturing and retail sectors are at the top of the “most vulnerable” list, as the region could see the loss of 12 million full-time jobs, according to International Labor Organization (ILO) estimates. To mitigate some of the risk and help maintain economic and social stability, the European Union as put in place a 100 billion euro program called SURE (Support to mitigate Unemployment Risk in an Emergency). It’s part of a bigger 540 billion euro package to support European companies and employees. Earlier this month, a memorandum to the European Commission regarding an instrument to help reduce unemployment risks stated: “The crisis we face because of the COVID-19 pandemic has a very significant human dimension, as well as a major negative socio-economic impact. It is therefore essential that the Union and its Member States act decisively and collectively, in a spirit of solidarity to contain the spread of the virus and to help patients, to counter the economic fallout and to mitigate the negative social impacts.” <strong>The core objective:</strong> sustain families’ incomes while preserving the region’s productive capacity and human capital. <strong>SURE includes</strong> <ul> <li>100 billion euros of loans provided to Member States.</li> <li>25 billion euros of guarantees voluntarily committed by Member States to the EU budget to give the program financial power.</li> </ul> <em><a href="https://ec.europa.eu/info/sites/info/files/economy-finance/sure_factsheet.pdf" target="_blank" rel="noopener noreferrer">Download the SURE factsheet</a></em> <h3><strong>Saving Jobs vs Subsidies</strong></h3> SURE focuses on preserving employment rather than subsidising unemployment. This is critical since by getting people working again, they not only have income, but also companies are encouraged to move forward and rebuild. This is as important as the sociological impact of keeping people working. While some of the lost jobs in Europe and around the world will come back as economies restart, many won’t. Some of the new jobs won’t necessarily match the skills of recently unemployed workers. Retraining takes time - and money. <h3><strong>Mind Games</strong></h3> Unemployment is not just about the loss of income. For many there is a heavy psychological impact of not having a job. Idleness leads to despondency, anxiety and depression - and in the worst case a rise in crime. Once people get started relying on subsidies, it can be difficult to get them back to self-reliance. This is especially true for lower paying jobs where the wages are not much more - and in many cases less - than the subsidies. <h3><strong>Impact on Spending</strong></h3> One of the main factors influencing the demand for consumer goods is the level of employment. When people have stable income - and expect to continue to have this - they are more likely to make discretionary purchases. Financial insecurity leads to a contraction in spending. The longer people have no steady income, or fear that they might not have a steady income (fear of unemployment), the more reluctant they become to spend. If this persists long enough, extreme thrift becomes a habit, even after the economy improves. It becomes more difficult to convince those people to spend, even if they can afford to do so. Hence, the European strategy of saving jobs rather than directly subsidising individuals is likely to create both economic and social stability that will lead to a stronger rebound in both business and consumer spending.