Coronavirus: Commission proposes €4.5 million to support over 5,000 dismissed tourism workers or self-employed in Estonia

This article is brought to you in association with the European Commission.

Today the European Commission proposes to support over 5,000 tourism workers and self-employed in Estonia who lost their jobs or whose activities have ceased as a consequence of the COVID-19 pandemic. The proposed €4.5 million from the European Globalisation Adjustment Fund (EGF) will help those people to find new jobs through further education or training or to start their own business. This is the first time the EGF is being deployed as a result of the COVID-19 pandemic.

Commissioner for Jobs and Social Rights, Nicolas Schmit, said: “The COVID-19 pandemic has put businesses that depend on tourism across the EU in an unprecedented situation. Europe is showing solidarity with the Estonian workers and self-employed at this difficult time by financially helping over 5,000 people find new jobs, retrain or start up a new business. Thanks to the €4.5 million in funding from the EGF, these people will be able to adapt their skills to new job opportunities in any promising sector”.

Travel restrictions to contain the spread of the virus have severely disrupted operations in the tourism industry spanning travel companies, accommodation, catering and conference services, event organisation, and transport. Estonia applied for support from the EGF to help the most vulnerable people, in particular those with no professional qualifications or a low level of education, affected by this development.

The measures co-financed by the EGF range from job-searching advice to apprenticeships, educational opportunities and support to start a business. Participants are expected to receive additional incentives, such as training, transport or accommodation allowances, to help them make use of these opportunities. The local employment services in Estonia will contact the affected workers to identify their needs and arrange tailor-made training, mentoring and job-matching assistance.

The total estimated cost of the support measures is €7.5 million, of which the EGF will provide €4.5 million. The remaining amount will be financed by the Estonian authorities.

The Commission’s proposal will need to be approved by the European Parliament and the Council now.

Background

Before the outbreak of the pandemic, the Estonian tourism industry enjoyed record-high numbers of visitors with more than 10 million passengers travelling through the Port of Tallinn and 3.3 million through the Tallinn Airport. Following travel restrictions introduced to contain the spread of the virus, the number of tourists plummeted, with a 99% reduction compared to the previous year at the peak of lockdown. Tourism contributes largely to Estonia’s national economic growth and competitiveness and is an important source of employment. The sector has a large share of low-skilled workers, young people, self-employed and seasonal and part-time workers.

According to data collected by the Estonian Ministry of Finance, in 2019, workplaces in the tourism industry accounted for 13.5 % of the total workplaces in Estonia. The difficulties faced in the tourism industry are directly spilling over into connected sectors.

In general, the labour market in Estonia has been heavily impacted by the COVID-19 pandemic. The unemployment rate increased significantly during 2020 peaking at 8.1% in fall and has gone down to 6.9% in December 2020, still 2.5 percentage points higher year-on-year. In December 2020, some 49,000 people were unemployed in Estonia.

Since 2007, the European Globalisation Adjustment Fund has been providing support to people losing their jobs or self-employed whose activities have ceased as a result of major structural changes in world trade patterns due to globalisation, e.g. when a large company shuts down or production is moved outside the EU, or as a result of the global economic and financial crisis.

So far, the Fund has received 169 applications. Some €656 million have been requested to offer help to more than 161,000 workers and more than 4,400 young people not in employment, education or training in 21 Member States. Measures supported by the EGF come in addition to national active labour market measures.

In 2021-2027, the EGF will continue to show solidarity and support workers and self-employed whose activity has been lost, while shifting the focus from the cause of restructuring to its impact. Under the new rules, all reasons for restructuring, including the economic effects of the coronavirus crisis, as well as larger economic trends like decarbonisation and automation, can be eligible for support. A political agreement on the future EGF has been reached and is awaiting final approval by the European Parliament and the Council for the Regulation to enter into force.