The Government promises state aid for companies that invest in areas with high unemployment rates and give interest-free loans to the young

The Government has launched its Legislative Program for 2018 in which a “legislative priority” is represented by a draft law on the establishment of the “State aid scheme for the construction of service housing”.

The project aims to reduce labor shortages in the major economic centers of Romania, stimulate employment and investment through labor mobility (accommodation for workforce from other areas of the country), according to the government’s document.

The conditions for granting state aid will mainly be the following:

• 50 percent of the amount requested for a housing complex, up to a maximum of EUR 15,000 for an apartment (1-2 rooms), represents non-reimbursable aid paid under the scheme at the final reception of the complex;
• 50 percent is the private source (the effort of the investor or private partner, if it is a service home for teachers and doctors) that will benefit from a state guarantee, if it is attracted by crediting by the investor;
• if the PPP variant (public-private partnership) is chosen, in the project unit the public source will represent no more than 49 percent;
• the private partner must demonstrate the capacity to ensure the co-financing of the investment, which must not be in difficulty, in accordance with the legislation in force.

20,000 new jobs

The initiators of the Government Legislative Program show that the inventory of private investments announced in 2018 shows that their value amounts to about EUR 2 billion, out of a total of EUR 5.5 billion in the period 2018-2020 so achieving these numbers would mean reducing labor shortages in the major economic centers of Romania, stimulating employment and investment through labor mobility. Also it would mean roughly 20,000 new jobs that will require recruitment or training.

For an assessment of the state aid scheme, it is estimated that around 20 percent of new entrants will need housing if they do not have a living space in the area or a less than 50 km away.

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“Based on the assessments, it is necessary to build 5,000 service homes in the period 2018-2020. If we take into account the national average price of EUR 30,000, the equivalent of approx. RON 138,000 for a two-room apartment with an area of ​​42 sqm would require an investment of approx. EUR 150 million (about RON 690 million) for a period of three years.

The Legislative Program also states that there will aid for investors in areas with high level of unemployment (above 5 percent). There will be a compensation foe expenses needed to create those new jobs but only if the employees will have wages bigger than average gross monthly salary. The scheme means a business support up to a maximum EUR 100,000 of which 50 percent is to be covered by non-reimbursable help from the budget.

Help for the young

The program for 2018 also includes as a legislative priority a draft law for the establishment of the state aid scheme “Interest-free loans for young people”, noting that there is no need for the young beneficiaries to have a source of income.

The program aims at facilitating access to financing for young people under 26 who do not have a job or who are enrolled in studies, the maximum amount of the loan being  RON 40,000.

The state guarantee will be 80 percent and will be granted through the Guarantee Fund (most likely through the SME Guarantee Facility) and there is no need for the young people to have an income.  The same project also stipulates that the interest rate will be calculated according to the formula ROBOR 3M plus 2 percent and the interest is subsidized by the state, while the duration of the loan will be 5 years.

The purpose of the loan will be to meet the needs of a young person: education, health, culture, or sports. The initiator is the General Secretariat of the Government.