European Parliament committee green lights €1.1m in support for laid off workers in Northeastern Estonia

A VKG refinery in Kohta-Järve. (Tairo Lutter/Postimees/Scanpix)
10/25/2016 11:36 AM
Source: BNS
Category: Business

On Monday evening, the European Parliament's Committee on Budgets approved of the allocation 1.1 million euros from the European Globalization Adjustment Fund to help 800 workers laid off in petroleum and chemical product manufacturing in Northeastern Estonia find new jobs.

The budget committee endorsed the motion with a 29-7 vote and one abstention.

The allocation of the money must also be approved by the European Council on Nov. 8 as well as the plenary of the European Parliament on Nov. 22, spokespeople for the European Parliament said.

Estonia submitted an application for the funds on May 11 following a wave of layoffs in the petroleum and chemical sectors in the country's northeast.

In July 2015, Nitrofert, a company producing synthetic ammonia and urea, shut down its production plant. State-owned Eesti Energia, the largest company in the world to work with oil shale, decided to reduce shale oil production due to dramatically fallen profits caused by lower oil prices. The third enterprise subject to the application was Viru Keemia Grupp (VKG), another shale oil producer in Ida-Viru County facing similar problems caused by the drop in oil prices.

The personalized services to be provided to laid off workers would consist of support for formal training, training cost reimbursement for employers, labor market training, Estonian language training as well as work practice and psychological counseling.

In order to establish the link between the layoffs and major structural changes in world trade patterns due to globalization, Estonia argued that the country is a small open economy with high reliance on exports of goods and services, which account for nearly 80 percent of the national GDP in 2015, compared to 43.5 in the EU28.

The Estonian economy took a major hit following recent turbulence in the global oil market and a general decrease in Europe's international trade position. Ida-Viru County, located in Northeastern Estonia, was hit particularly hard not only due to its geopolitically remote position at the Russian border but also due to the high concentration of industries dependent on oil and gas prices in the region.

Editor: Aili Vahtla

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