Estonia: EU support boosted wages but not productivity: study

An analysis on the impact of EU financial support on Estonian firms revealed that while the subsidies led to higher sales revenues and wages, they did not significantly improve productivity, ERR reports. The study, conducted by researchers from the Stockholm School of Economics in Riga, examined data from 1,435 companies that received European Regional Development Fund (ERDF) grants in 2013-2020. The findings indicated that the grants had an immediate positive effect on sales revenues and employment growth, particularly benefiting smaller and younger companies. However, there was no observed increase in productivity for the recipient firms or their employees. The researchers noted that longer-term effects and factors such as economic cycles should be considered for a comprehensive evaluation. They also suggested improving access to support funds for small businesses and strengthening reporting requirements and transparency.

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