Commission approves €1.1 billion Italian State aid scheme to support employment of young people and women

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

The European Commission has approved, under EU State aid rules, an estimated €1.1 billion Italian scheme to support the employment of young people and of female workers. The scheme contributes to the EU’s social and employment policy objectives and is partly funded through the European Social Fund Plus (ESF+).

The Italian scheme

Italy notified to the Commission a €1.1 billion scheme which consists of two measures targeting: i) young people under the age of 35, who have never had an indefinite employment contract; and ii) women who reside in Mezzogiorno, Southern Italy, and have not been in regular employment in the previous 6 months. These two measures form part of a wider Italian employment scheme. 

The scheme will support more vulnerable groups of workers who face higher levels of unemployment than other categories of workers (e.g. older than 35 or male workers). In addition, the scheme addresses female unemployment in the regions of Mezzogiorno, where the unemployment rate is considerably higher compared to the rest of Italy and to the EU average.

Under the scheme, employers, who hire young people or female workers with a contract of indefinite duration, will be exempted from the payment of mandatory social security contributions. The maximum amount of aid is€650 per worker per month, and €500 in case of young people in areas other than Mezzogiorno. To be eligible under the scheme, the employment contract must be concluded before 31 December 2025. Eligible employers will receive the aid for a period of 24 months following the recruitment.

Italy estimates that the scheme will lead to the creation of more than 180,000 employment contracts of indefinite duration.

The Commission’s assessment

The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU (‘TFEU’), which enables Member States to support the development of certain economic activities subject to certain conditions, and the Employment Aid Communication.

In particular, the Commission concluded that:

• The scheme is necessary and appropriate to support stable employment for workers who are facing significant difficulties to enter the labour market, or to remain active on a long-term basis.
• The aid is proportionate since it is limited to what is necessary to support stable employment of vulnerable groups of workers, and to approximately 30% of the employer’s wage costs.
• The scheme has sufficient safeguards to ensure that it will not be abused, for example by dismissing existing employees and replacing them with new employees under one of the aided measures or for the sole purpose of reducing labour costs for the employers.
• The measures do not result in undue distortions of competition, as the aid is limited in time, and is open to all sectors of the economy.

On this basis, the Commission approved the Italian scheme under EU State aid rules.

Background

The 2009 Employment Aid Communication provides guidance on how the Commission assesses compatibility of employment measures targeting disadvantaged and disabled workers which are subject to the notification requirement under Article 107(3)(c) TFEU.

The non-confidential version of the decision will be made available under the case number SA.114799 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.