European Commission gives nod to ferry companies' state aid

Ship arriving in Tallinn Bay.
Ship arriving in Tallinn Bay. Source: Siim Lõvi /ERR

Estonia has been given permission by the European Commission to compensate labor costs affecting shipping companies which provide international passenger transport by sea. The Ministry of Economic Affairs and Communications has sent the proposed reimbursement scheme to companies in that sector.

Minister of Economic Affairs and Communications Taavi Aas (Center) said: "We have the state aid permit now, and can urgently continue the necessary preparations to help the maritime sector in this complicated situation."

Estonia acquired the permit from the European Commission, allowing the state to turn to the Maritime Administration to partly reimburse social and income taxes for companies providing regular international travel. The ministry's spokespeople said Estonian shipping line Tallink, along with the Estonian subsidiary of Scandinavian firm Viking Line, are prime examples of such companies, with the move allowing them to apply for further state aid.

The permit allows for compensation measures to be used within the next four years if necessary. Preliminary forecasts see up to €3.7 million paid out in support this year to cover labor costs. The numbers for 2021 and 2022 are expected to be €7.7 million and €8 million respectively.

Minister of Finance Martin Helme (EKRE) said: "This kind of aid will improve the competitiveness of our ferry companies to the level of our neighboring countries, where the maritime sector is supported well."

Economic affairs minister Taavi Aas added that turnover for ferry companies has fallen by 85-90 percent due to large drops in passenger travel and cargo. The state has now developed three separate solutions for the sector, also allowing companies to turn to KredEx and the Unemployment Insurance Fund (Töötukassa).

In addition to this measure, the state acquired a permit in August to allocate €20 million in state aid to shipping lines and related Estonian-registered subsidiaries, covering up to 75 percent of their lost income after the coronavirus pandemic and concurrent economic crisis.

As figures for new COVID-19 cases have grown both in Estonia and in the world, additional travel and movement restrictions have been established, leading to immense expected losses in sectors related to travel and accommodation.

After news broke on Wednesday that more than 2,000 jobs are at risk in ferry company Tallink if salary compensation schemes are not extended in Estonia and Finland, such schemes are bound to be more discussed going forward.


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Editor: Kristjan Kallaste

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