The Ministry of Social Affairs has drawn up a draft of the conditions of a job creation incentive directed to Ida-Viru County and the counties of Southeastern Estonia aimed at supporting the economic development of as well as reducing unemployment in these regions.
"Even though there is currently a workforce shortage in Estonia, many people in Southeastern Estonia and Ida-Viru County have no job," Minister of Health and Labour Riina Sikkut said in a press release on Thursday.
"The purpose of the assistance is to motivate employers to create jobs specifically in Ida-Viru County and Southeastern Estonia, where there is still workforce not employed," the minister explained. "Apart from location, a frequent obstacle to bringing together employer and job-seeker is a mismatch of expectations — for the skills of the worker on the part of the employer and for remuneration on the part of the worker. In order for job-creation not to get stuck behind this, the measure includes compensating employee training costs and precludes jobs paying the minimum wage."
According to the latest figures from the Estonian Unemployment Insurance Fund (Töötukassa), the rate of registered unemployment was 8.4% in Ida-Viru County, 8.5% in Valga County, 7.6% in Võru County and 6.6% in Põlva County; the nationwide average, in comparison, was just 4.6%.
The support for job-creation would be paid to employers who create at least five jobs over a period of two months. The jobs created must pay at least 1.5 times the national minimum wage, or €750 per month in 2018.
Under the measure, half of the hired employee's wage will be reimbursed to the employer, with the eligible wage capped at two times the minimum level of pay. The person hired must have been unemployed for more than six months and registered as unemployed in either Ida-Viru, Põlva, Valga or Võru County.
The maximum amount of training costs to be reimbursed to the employer is €2,500 per employee hired.
The regional job creation measure is to be financed from the European Social Fund and the application period will run from the beginning of 2019 through the end of 2021. Approximately €1.48 million has been been budgeted for the measure, which is expected to create an estimated 360 jobs.
While there have been no separate labour market measures for regions with structural problems in Estonia thus far, Töötukassa offered emergency measures in the country's northeast in connection with large-scale layoffs in 2015 and 2016. With the help of the measure available from May 2016 through the end of 2017, altogether 645 jobs were created at 17 companies in the northeastern county.
The new regional job creation incentive builds on these experiences with the Ida-Viru regional measure.
Editor: Aili Vahtla