EU to Help Former Finnish Shipyard Workers

EU to Help Former Finnish Shipyard Workers
STX shipyard in Turku

The European Commission has proposed to provide Finland with €1.4 million (USD 1.77m) from the European Globalisation Adjustment Fund (EGF) to help 565 former workers of the shipyards STX Finland Oy to find new jobs.

The proposal now goes to the European Parliament and the EU’s Council of Ministers for approval.

EU Commissioner for Employment, Social Affairs and Inclusion László Andor, said: “The crisis has accelerated the transformation of the shipbuilding sector, with much of this industry moving to Asia. This proposal for 1.4 million euros from Europe’s Globalisation Fund would help prepare the dismissed workers for new job opportunities in other promising sectors.”

Finland applied for support from the EGF following the dismissal of 634 workers in STX Finland Oy in Rauma and Turku. The dismissals were the result of increased competition from Asian shipyards.

The measures co-financed by the EGF would help the 565 workers facing the greatest difficulties in finding new jobs by providing them with coaching and other preparatory measures, training and re-training, entrepreneurship promotion, as well as pay subsidies and various allowances.

The total estimated cost of the package is €2.3 million (USD 2.91), of which the EGF would provide €1.4 million.

The redundancies are caused by the closure of the STX shipyard in Rauma, with some ensuing job losses at the bigger STX shipyard in Turku.

Following a dramatic increase in demand for ships before the global economic and financial crisis, new shipyards were built, most of them in Asia. However, the crisis halved the demand between 2007 and 2013.

Thus, the sector is currently suffering from a global overcapacity leading to severe competition. The EU share of the global shipbuilding market has plummeted from 13% in 2007 to 5% in the first three quarters of 2013 (measured by production volume), while the combined share of China, South Korea and Japan has increased from 77 to 86% in the same period.

The Korean STX Group, which owned the shipyards in Turku and Rauma, experienced difficulties in early 2013. In May, the group put all its European shipyards on the market, including the one in Rauma, but no potential buyers could be found. In September of the same year, STX Finland announced that it would stop its operations at the Rauma shipyard and would concentrate them in Turku.

The areas affected by the redundancies are Rauma and, to a lesser extent, the region of Turku in Southwest Finland. The closure of the shipyard is expected to increase the unemployment rate in the Rauma region by more than 2 percentage points.

Press Release; October 14, 2014; Image: STX Europe