Wage subsidies to encourage hiring or maintaining employment in response to the crisis have been used in several Member States, but with most subsidies targeted at specific groups so that their fiscal cost remains limited. Most of these temporary measures are set to expire by end-2010. See Box 4 for more details on wage subsidies introduced or expanded since the onset of the economic crisis in the various Member States.
In Austria, a temporary wage subsidy equal to two thirds of labour costs has been introduced until end-2010 in order to promote employment for the long-term unemployed in municipal bodies or charitable organisations. In 2010 the target group for subsidisation has been expanded to include young people under 25 who cannot find a job after graduation (due to lack of qualifications and/or work experience). In France the number of subsidised jobs targeted at older workers and young people without qualifications has been expanded in 2009 and 2010, and bonus payments have been introduced for employers hiring apprentices.
In Hungary, a programme of wage support for firms that hire workers laid off by other firms was created but ended in 2009. In Ireland a scheme has been introduced to provide subsidies to vulnerable but viable companies which would have made people redundant without the subsidy. The subsidies are provided to enterprises which retain a set number of posts until the end of 2010.
In Malta, the Employment Aid Programme facilitates access to employment for disadvantaged people and the disabled through financial assistance and skills upgrading. The programme was launched in February 2009 and is expected to end by September 2013. In Romania the Employment Aid Scheme was launched in March 2009, aimed at supporting the employment of young people, the unemployed, the disabled, low-skilled people, and the socially vulnerable. This scheme has a maximum duration of three years.
In Slovakia, (until end 2010) new subsidies are provided to employers who hire unemployed people (who have been registered as unemployed for at least three months) in jobs lasting at least 12 months.
In the United Kingdom, a new programme to subsidise jobs in local authorities and other community organisations in areas of high unemployment has been created for young people and jobseekers. At the same time new incentive payments have been created for employers who employ and train people who have been unemployed for more than six months. This scheme will end in March 2011.
In Estonia, eligibility for wage subsidies has been temporarily relaxed so that in 2010 employers are entitled to wage subsidies if they hire a person who has been registered as unemployed for six months (or three months if the person is aged between 16 and 24), compared with 12 months previously.
In Finland, the conditions of wage subsidies for young job seekers (under 30 years of age) have been temporary relaxed until 2011.
In Slovenia, a pilot programme has been launched under which students who are about to graduate are given on-the-job training in their field of study, and are supported with employment subsidies after completing their studies by the designated deadline. This measure covers the period from 2009 until 2011.
In Belgium, the Flemish government increased the wage subsidy for hiring unemployed people over 50 on permanent contracts. The Walloon government introduced additional subsidies for young people in SMEs.
In Cyprus, temporary subsidies - ending by end-2010 - have been allocated to private sector employers for hiring unemployed people. Permanent subsidies were introduced to support the employment of disabled people and those from vulnerable groups.
In Poland, reimbursement of equipment costs of firms hiring unemployed people has been permanently increased.
In Spain, a State Fund for Local Investment was implemented in 2009, which aims to encourage local councils to undertake public works and investments which create employment. In 2010, the State Fund for Employment and Local Sustainability was introduced. This focuses on projects for sustainable renovation, energy saving, environmental sustainability and social facilities.
In Sweden, hiring payments for employers who recruit people who have been unemployed or sick for more than a year and newly-arrived immigrants were permanently increased.
In Greece, a programme of subsidised employment was launched during the first months of 2009 and targets small firms (up to 50 employees) and young unemployed people (mostly women and long-term unemployed), irrespective of educational level. Participating workers must be registered unemployed workers having received individual assistance from job counsellors, while participating firms must prove that any new recruitment will not be made at the expense of existing employees. Following the termination of the subsidies, the firm must keep the subsidised worker(s) for a period of three months.
Source: OECD-European Commission questionnaire on employment and social policy in the economic downturn – 2010 update.