Ministry says EU money possible in Eesti Energia lay-offs

An Estonian Unemployment Insurance Fund (Töötukassa) office on Vaksali Street in Tartu.
An Estonian Unemployment Insurance Fund (Töötukassa) office on Vaksali Street in Tartu. Source: Aili Vahtla/ERR

The Ministry of Social Affairs is the latest to offer solutions following news that state-owned energy provider Eesti Energia is to temporarily lay off over a thousand employees during the summer.

The announcement from Eesti Energia adds to 400 temporary lay-offs earmarked by the company in April, with cheap, EU carbon dioxide emissions fees-exempt Russian and Belarusian electricity flooding the market cited as the primary cause.

The social affairs ministry says that, while the state can support those made redundant, principally via the Unemployment Insurance Fund (Töötukassa), the possibility of requesting EU assistance is also open.

The ministry is to consider submitting an application to the European Globalization Adjustment Fund (EGF) when the circumstances become clearer.

"Töötukass has at present the means to start providing the services needed by those made redundant," Brit Rammul, Head of the Employment Department at the Ministry of Social Affairs told ERR's online Estonian news on Tuesday.

"However, if the need for additional services becomes evident, we will submit an application to the EGF," she added.

Rammul, said both the ministry and Töötukassa were working on identifying the more specific needs of those who have been made redundant, their profiles, possible new job opportunities, and other services which might be needed.

In order to recourse to the EGF, the requirement is generally have at least 500 redundancies in one enterprise or sector. The Eesti Energia case meets this requirement, although whether temporary lay-offs also qualify is not reported.

"It is also possible for Estonia to make use of the [EGF] small country exception and, in certain cases, the funds can be applied for smaller redundancies," Rammul said.

When Estonia asked for EGF support in 2016, this related to 1,500 redundancies, and the project's budget, together with self-financing, came to about €1.8 million, it is reported.

"The amount depends on the activities planned and the size of the target group," explained the head of department at the ministry.

The EGF contribution would paid to Estonia as a one-off lump sum, with the financing decision taken by two of the high level EU bodies, the European Parliament and the Council of the EU, on the proposal from another body, the European Commission. The process usually takes about six months, it is reported.

Since Eesti Energia stated that the redundancies would initially be just for the summer months, it is not clear whether the timescale thus works, though the company also noted that ending the redundancy period was as dependent on the market situation as initiating it.

"As a rule, countries start implementing activities before receiving EGF funds from their own resources, so as not to delay the provision of services to the redundant and maximize their impact," Rammul explained.

In the 2016 example, the request, concerning Ida-Virumaa, the same region mostly affected by Eesti Energia's decision, was put to the EGF in May, but the financing decision was only signed in late November. Again, domestic resources including Töötukassa were pressed into service that time, Rammul said.

Re-education programs were of particular interest to recipients in that case.

At present, the temporary redundancies would last a maximum of 90 days in a 12-month period, with a minimum cover pay of €540. On the other hand, unions stated that the number of redundancies could ultimately stretch into the thousands, depending on how long the crisis lasted.

Economic affairs minister Jaak Aab (Centre) said that a combination of domestic support programs already in place in the Ida-Viru County region, together with encouraging both traditional oil shale burning electricity generation, and renewables, ought to be pursued.

Eesti Energia reported a record turnover of €282.6 million for Q1 2019.

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Editor: Andrew Whyte

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