1. Draft Guidance on designing recruitment subsidies
ESF Technical Working Group Ahens, 18 June 2014

2. Overview of the presentation
I. Well-designed recruitment subsidies: why and how ?
II. Recruitment subsidies and State aid
III. Recruitment subsidies supported by the ESF

3. I. Well-designed recruitment subsidies: why ? (1)
Policy design makes a difference
Recent studies find that wage subsidies are one of the most successful types of active labour market policies (ALMPs).
Evaluations of wage subsidy programmes tend to find positive effects from these measures on the future probability of entry into unsubsidised employment
BUT….

4. I. Well-designed recruitment subsidies: why ? (2)
But
These "findings, however, have to be qualified since most evaluations tend to disregard "indirect" effects, which are generally important in employment subsidy schemes."
Some studies estimate that "for every 100 jobs subsidised by these schemes only 10 were net gains in employment'".

5. I. Well-designed recruitment subsidies: how ? (1)
8 Guidelines:
Targeting: those hardest to place
Close monitoring of firm’s behaviour
Skills and competence development
Job counselling
Period of the subsidy: not less than one year
Type of the subsidy, level of support, size of scheme & administrative burden on employers
Plan for the phasing out
Other conditions: job creation, no redundancies, firm size

6. II. State aid: when is a measure considered to be State aid ?
See draft communication from the Commission on the notion of State aid :
Existence of an undertaking
State origin: imputability & State resources
Advantage
Selectivity
Potential effect on competition & trade within the Union

7. New General Block Exemption Regulation (GBER):
II. State aid: New GBER
New General Block Exemption Regulation (GBER):
Aid for the recruitment of (severely) disadvantaged workers in the form of wage subsidies (Art. 32)
Aid for compensating the costs of assistance provided to disadvantaged workers (Art. 35)
Aid for the employment of workers with disabilities in the form of wage subsidies (Art. 33)
Aid for compensating the additional costs of employing workers with disabilities (Art. 34)
Training aid (Art. 31)

8. II. Aid for the recruitment of (severely) disadvantaged workers in the form of wage subsidies (1)
Definition of disadvantaged worker extended (Art. 2(4)): includes now also young people years and any person who is within 2 years after completing full-time education and who has not previously obtained his/her first regular paid employment
Definition of severely disadvantaged worker extended (Art. 2(99)): includes now also any person who has not been in regular paid employment for at least 12 months and belongs to one of the categories under the definition of disadvantaged worker

9. II. Aid for the recruitment of (severely) disadvantaged workers in the form of wage subsidies (2) - Conditions
Eligible costs: wage costs over period of 12/24 months following recruitment of a disadvantaged/severely disadvantaged worker
Recruitment = net increase, unless…
Worker to be entitled to continuous employment for a maximum period consistent with national legislation concerned or any collective agreements on employment contracts
If employment is shorter than 12/24 months, the aid is to be reduced pro rata
Maximum aid intensity:50% of the eligible costs
Notification threshold: €5 Mio per undertaking per year

10. II. Aid for compensating the costs of assistance provided to disadvantaged workers
What: measures to support the disadvantaged worker's autonomy and adaptation to the work environment, in accompanying the worker in social and administrative procedures, facilitation of communication with the entrepreneur, managing conflicts
Eligible costs:
Costs of employing staff solely for time spent on the assistance of the disadvantaged workers over a max period of 12/24 months following recruitment of a disadvantaged worker/ severely disadvantaged worker;
Costs of training such staff to assist disadvantaged workers.
Maximum aid intensity:50% of the eligible costs
Notification threshold: €5 Mio per undertaking per year

11. III. Recruitment subsidies and the ESF (1)
Aim: contribute to LM integration of the unemployed or inactive persons
Possible investment priorities (IPs) under which recruitment subsidies can be programmed are:
Access to employment
Sustainable integration of young people into the LM
Active inclusion
National co-financing is required and contribution of the ESF will be calculated with reference to :
Total eligible expenditure, including public and private expenditure
Eligible public expenditure
 Choice has important implications as to what can constitute the national co-financing

12. III. Recruitment subsidies and the ESF (2)
When designing recruitment subsidies to be supported by the ESF the following has to be ensured;
there must be expenditure incurred by the beneficiary and paid : e.g. reduction/compensation for social security contribution employer
Keep in mind that national co-financing can be provided by private expenditure
MA to verify that expenditure declared by the beneficiary has been paid and complies with applicable law (Art. 125 (4)(a) CPR)  State aid rules: conditions imposed by GBER
CA to certify that the expenditure entered in the accounts complies with applicable law (Art. 126 (c) CPR).

13. THANK YOU FOR YOUR ATTENTION !