The purpose of the recruitment subsidy is to lower companies’ threshold for hiring employees. The subsidy lowers the labour costs of recipient companies, which is expected to have a direct effect on the number of employees hired during the subsidy period. The magnitude of this impact depends on the elasticity of demand of the company’s labour force. In the case of sole traders, no reliable research data on this topic is available, making it difficult to estimate the anticipated magnitude of the impact.
If the recruitment subsidy is effective, companies that receive the subsidy will grow faster than those in the control group. Because the subsidy is offered only to companies selected for the trial group, the trial may result in a distortion of competition that affects various companies randomly and favours certain companies over others. However, this is essential for the implementation of the trial. In addition, the potential distortion of competition is estimated to be minor due to the subsidy’s small size.
The trial is designed to minimise the amount of administrative work required from companies applying for and receiving the subsidy. Administrative work relates mainly to matters that need to be reported when applying for the subsidy. Because the subsidy is paid on the basis of information reported in the Incomes Register, receiving the subsidy generally requires no other action from the company. After the subsidy has been granted, some amount of administrative work may be required in the form of responding to requests for information or reporting obligations. The trial will not result in any administrative work for companies that choose not to apply for the subsidy.