The economic affairs ministers of the Federation and the Länder, together with the Federal Minister of Finance, today adopted the reorientation of the Joint Federal/Länder Task for the Improvement of Regional Economic Structures (GRW).
The revision of the programme is the Federation and Länder’s response to the changed policy environment for regional economic development – in particular the transition to climate neutrality by 2045 and the ageing population.
Federal Minister for Economic Affairs Dr Habeck said: “The Federation and the Länder have adopted one of the biggest reforms of regional economic support for decades today. This is an important signal at this time, and a clearly forward-looking decision. Regional structural policy is an important element of our socio-ecological market economy. We want to see equivalent standards of living across Germany. This is a shared task for the Federation and the Länder and we have therefore restructured the funding system.
“In addition to the creation and safeguarding of jobs, a greater priority is also being placed on climate action and sustainability. Going forward, we will not only support companies which sell their products and services outside the region, but will also help regionally active companies which form part of local value chains. A greater emphasis will be placed on research-intensive companies because innovative firms offer the promise of more regional value creation in the long term. We will also be expanding the funding of commerce-related infrastructure, and the area of regional services of general interest will now also be funded. In this way, we will make the regions more attractive and help to safeguard the availability of skilled labour.”
Overview of the elements of the reform
The GRW is Germany’s main regional policy instrument. Since the early 1970s, GRW funding for structurally weak areas has helped more than 150,000 corporate investment projects as well as improvements in commerce-related municipal infrastructure. The most important elements of the biggest reform in the more than 50 years of the existence of the GRW are:
- An expanded target system which is no longer solely oriented to the creation of jobs. In future, there will be three main aims: offsetting disadvantages affecting commercial activity; creating and safeguarding jobs, boosting growth and prosperity; accelerating the transition to a climate-neutral and sustainable economy.
- The previous requirement that funding go to companies that sell some of their products or services outside the region, at least 50 km away from their base, no longer applies. In future, the GRW will also focus on the regional value chains and economic cycles, and will thus strengthen the foundations for autonomous regional development.
- Relaxed preconditions for funding for climate-friendly investments and research-intensive companies. Also, the possibilities are being expanded to fund investment in environmental protection by companies which goes beyond the national and EU requirements.
- For the first time, aspects of “decent work” are anchored in the GRW: for certain projects, it is expected that companies will be subject to collective agreements or will realise certain wage increases in the course of the funding.
- In the field of funding for commerce-related infrastructure, help will go to climate-friendly and sustainable measures. For example, more comprehensive funding will go towards continued use or new use of former industrial and commercial sites than towards the development of new sites. The same will apply to in-house generation of renewable energy and other activities which serve a sustainable economy.
- A new funding area is introduced for measures of regional services of general interest where these are closely related to economic activity and make a big contribution towards how attractive places are for commercial activity.
The new GRW rules will enter into force on 1 January 2023. Following this, the Länder can choose between the old and the new rules during a one-year transitional period.
The economic affairs ministers of the Federation and the Länder, together with the Federal Minister of Finance, also adopted a GRW special programme entitled “Accelerating the transformation in the eastern German refinery sites and ports” to run from 1 January 2023 until 31 December 2032.
A video statement by Federal Minister Robert Habeck on the GRW reform (in German) can be found here.
You can find a detailed presentation (in German) of the GRW reform here.
The new GRW rules and the rules governing the special programme can be found (in German) here.