Service Providers of the Information Society - Almost Half of East German Companies Use Integration Subsidies

Once older people have been unemployed for a longer period of time it gets increasingly difficult to find them a new placement. That is why the Federal Employment Agency supports their re-employment by offering integration and training subsidies, simplifying the limitation to labour relations and exempting employers from payments towards the promotion of employment. Service providers of the information society most frequently decide for integration subsidies. About 13 per cent of the companies in this economic sector state that they receive these benefits.

In this context, there are major differences between East- and West German companies as well as between the individual branches of the sector. In Eastern Germany, almost 45 per cent of the companies draw on integration subsidies; in Western Germany only about ten per cent. This form of support is most frequently used by companies in the research and development branch (32 per cent). But also architects, software providers and lenders as well as technical consultants and planners take advantage of this funding measure relatively often. Compared to this, the seven per cent share of business consultancies and ICT trade companies is rather small. Tax advisers, certified public accountants, advertising companies and telecommunication service providers do not attach great importance to integration subsidies.

This is the result of a business survey among German IT-related service providers conducted by the Centre for European Economic Research (ZEW), Mannheim, and the credit reference agency Creditreform, Neuss, in March and April 2005. About 1,000 companies participated in the survey. The economic sector IT-related service providers comprises the Information and Communication Technology (ICT) service providers (firms in the branches of software and IT services, ICT-specialised trade as well as telecommunication services) and knowledge intensive service providers (firms in the branches of tax consultancy and accounting, management consultancy, architecture, technical consultancy and planning, research and development as well as advertising).

In the economic sector service providers of the information society, a simpler limitation to labour relations of older employees is the second most frequently used measure after integration subsidies. A share of about nine per cent of the companies in East Germany and approximately 7.5 per cent of West German firms confirm the use of simpler limitations. This instrument is particularly important to ICT trade companies. 16 per cent of them put the measure into practice. Among technical consultants and planers, this share amounts to about 12 per cent. In the remaining branches of this economic sector, limiting labour relations with older employees plays a very minor role.

About six per cent of IT-related companies draw on training subsidies for the introduction and further education of elderly employees granted by the Federal Employment Agency. This share largely consists of software providers and lenders, the most frequent users of this support measure. Almost 24 per cent of of them receive training subsidies. The share of technical consultants and planners using training subsidies is almost eight per cent. All other branches rarely tend to draw on this kind of subsidy. Hardly any of the IT-related companies make use of the remaining measure introduced by the Federal Employment Agency, the exemption from payments towards the promotion of employment.

Contact

Jörg Ohnemus, Phone: +49(0)621/1235-354, E-mail: ohnemus@zew.de