The Swedish and Austrian governments have been given an additional year to spend the EUR15.6m in earmarked European Union (EU) subsidies for the auto sector previously announced by the European Commission.

These payments – EUR9.8m for Sweden and EUR5.7m for Austria – come from the EU’s Globalisation Adjustment Fund, which is designed to help industries hit by unavoidable international competition.

Normally its handouts must be spent within 12 months but, announcing yesterday it had made these payments, the European Commission said it would for the first time allow two years for Stockholm and Vienna to use these subsidies.

It stressed the money should co-finance “active labour market policy measures, specific to the needs of the workers in each of the sectors, such as occupational guidance, job search assistance and job search allowances, the promotion of entrepreneurship as well as training and incentives for companies recruiting redundant workers.”

In Sweden, the national government is adding funding to make EUR15.1m available, largely in the Västsverige (west Sweden) region bordering Norway, where close to 4,500 workers lost their jobs between December and March at Volvo Cars, Volvo AB, Saab, suppliers and downstream producers.

Swedish government documents supplied to the Commission fretted about how the “highly developed research and development (R&D) sector would also be affected, as the automotive industry is responsible for 16% of Sweden’s R&D expenditure.”

It added: “In some municipalities, the redundancies from the automotive industry represent a high percentage of total employment, eg in Färgelanda (8.1 %), Olofström (6 %) and Dals-Ed (4.2%).”

It warned: “The redundancies can be seen to have a significantly negative effect on the local and regional economy.”

In Austria, the government will boost the funding to EUR8.7m to help 400 former autoworkers in Styria, Austria’s vehicle industry heartland.