# EUR-Lex - 52012PC0502 - EN

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# 52012PC0502

**Proposal for a
DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on the mobilisation of the European Globalisation Adjustment Fund in accordance with
point 28 of the Interinstitutional Agreement of 17 May 2006 between the European
Parliament, the Council and the Commission on budgetary discipline and sound
financial management (application EGF/2012/003 DK/Vestas from Denmark) /* */**
			 **

EXPLANATORY MEMORANDUM
Point 28 of the Interinstitutional
Agreement of 17 May 2006 between the European Parliament, the Council and the
Commission on budgetary discipline and sound financial management[1] allows for the mobilisation of
the European Globalisation Adjustment Fund (EGF) through a flexibility
mechanism, within the annual ceiling of EUR 500 million over and
above the relevant headings of the financial framework.
The rules applicable to the contributions
from the EGF are laid down in Regulation (EC) No 1927/2006 of the European
Parliament and of the Council of 20 December 2006 on establishing the European
Globalisation Adjustment Fund[2].
On 14 May 2012, Denmark submitted application EGF/2012/003 DK/Vestas
for a financial contribution from the EGF, following
redundancies in Vestas Group in Denmark.
After a thorough
examination of this application, the Commission has concluded in accordance
with Article 10 of Regulation (EC) No 1927/2006 that the conditions for a
financial contribution under this Regulation are met.
SUMMARY OF THE APPLICATION AND ANALYSIS
Key data: ||
EGF Reference no. || EGF/2012/003
Member State || Denmark
Article 2 || (a)
Primary enterprise || Vestas
Suppliers and downstream producers || 0
Reference period || 8.2.2012 – 8.6.2012
Starting date for the personalised services || 13.8.2012
Application date || 14.5.2012
Redundancies during the reference period || 720
Redundancies before and after the reference period || 0
Total eligible redundancies || 720
Redundant workers expected to participate in the measures || 720
Expenditure for personalised services (EUR) || 14 398 000
Expenditure for implementing EGF[3] (EUR) || 578 000
Expenditure for implementing EGF (%) || 3,9
Total budget (EUR) || 14 976 000
EGF contribution (50 %) (EUR) || 7 488 000
1.           The application was presented
to the Commission on 14 May 2012 and supplemented by additional information up
to 10 July 2012.
2.           The
application meets the conditions for deploying the EGF as set out in Article
2(a) of Regulation (EC) No 1927/2006, and was submitted within the deadline of
10 weeks referred to in Article 5 of that Regulation.
Link between the redundancies and major structural changes in world trade patterns due to globalisation
3.           In order to establish the
link between the redundancies and major structural changes in world
trade patterns due to globalisation, Denmark argues that the wind turbine manufacturing industry in the EU,
which is included in NACE Revision 2 Division 28 ('Manufacture of machinery and
equipment'), has been seriously affected by changes in world trade patterns, in
particular a significant reduction of the EU market share. Denmark explains
that, although the European production of wind turbines has increased in the
past few years, the global market for wind turbines has developed even faster,
especially in Asia and North America. For the first time in 2010, more than
half of all new wind power capacities were added outside the traditional
markets of Europe and North America. This development was mainly driven by the
continuing economic boom in China, which accounted for half of the new global
wind installations[4].
Resulting from the dynamic global growth of the sector, Europe's share in total
capacity was reduced from 65,5 % in 2006 to 43,7 % in 2010[5].
4.           Furthermore, Denmark argues
that this is a permanent trend. The demand for renewable energy, including wind
power, will be growing drastically, however the markets will shift. Whereas
wind energy was a European dominated industry until 2006 and there was balanced
growth between Europe, Asia and the USA up to now, there will be a surging
demand for wind power in Asia and North America in the near future, South
America tomorrow and Africa in the long-term future. Manufacturing and
servicing will move to places, where they are demanded and to regions with rapid
economic growth. Apart from considerably lower labour costs, the high costs of
transporting the big parts of wind turbines require European producers to move
their production closer to the most dynamic end-user markets to ensure their
competiveness and market position. As a result, production has been
progressively migrating out of the EU.
5.           Vestas Group has been part
of the trend described above. In order to maintain their leadership on the
market, Vestas has recently implemented a new strategy led by the principle
"In the region for the region" with the aim of reducing production
and transport costs, ensuring shorter distances to customers and markets and
making Vestas more robust towards exchange rate fluctuations[6]. Following the globalisation
process, wind turbines will be manufactured where they are needed (already in
2011 80-90 % of turbines were manufactured regionally). Moreover, whereas
most of the components of a wind turbine were produced in-house in the past,
component production will be increasingly outsourced to regional partners and
as a result, Vestas will have a lower need for investments and will reduce its
staff.
6.           This is the third EGF case
in the wind turbines sector. The arguments presented in the two previous cases
(EGF/2010/017 DK Midtjylland Machinery[7]
and EGF/2010/022 DK/LM Glasfiber[8])
remain valid.
Demonstration of the number of
redundancies and compliance with the criteria of Article 2(a)
7.           Denmark submitted this
application under the intervention criteria of Article 2(a) of Regulation (EC)
No 1927/2006, which requires at least 500 redundancies over a four-month period
in an enterprise in a Member State, including workers made redundant in its
suppliers and downstream producers.
8.           The application cites 720
redundancies in Vestas Group during the four-month
reference period from 8 February 2012 to 8 June 2012. All
of these redundancies were calculated in accordance with the third indent of
the second paragraph of Article 2 of Regulation (EC) No 1927/2006. The
Commission has received the confirmation required under the third indent of the
second paragraph of Article 2(2) that this is the actual number of redundancies
effected.
Explanation of the unforeseen nature
of those redundancies
9.           The Danish authorities recall
that the redundancies already made by Vestas Group in the municipality of Ringkøbing-Skjern
in 2009/2010 were unforeseen because of the rapid expansion of the global wind
energy sector. In 2009 mostly low and unskilled workers were affected following
the new global trading pattern to outsource manufacturing to countries with
lower labour costs. Meanwhile, the dismissals in 2012 in the Vestas Group
affected to a large extent highly skilled, specialised and well-educated
employees. This was not anticipated, since Denmark had made considerable
investments into research and development in the renewable and wind energy
sectors. Moreover, the Danish government had been negotiating an ambitious
energy policy for the years 2012-2020 with plans to promote the deployment of
more wind turbines. Finally, the municipality of Ringkøbing-Skjern had made
large-scale investments into transport facilities for Vestas windmills. It was
expected that the new generation of Vestas windmills would be produced in the
municipality.
Identification of the dismissing
enterprises and workers targeted for assistance
10.         The application relates to 720
redundancies in Vestas Group and all of them are targeted for assistance.
11.         The break-down of the
targeted workers is as follows:
Category || Number || Percent
Men || 452 || 62,78
Women || 268 || 37,22
EU citizens || 717 || 99,58
Non EU citizens || 3 || 0,42
15-24 years old || 3 || 0,42
25-54 years old || 630 || 87,50
55-64 years old || 81 || 11,25
> 64 years old || 6 || 0,83
12.         In terms of occupational
categories, the break-down is as follows:
Category || Number || Percent
Directors, CEO Production and operations department managers || 45 || 6,25
Engineers, including project managers, heads of departments || 155 || 21,53
Engineering science technicians || 223 || 30,97
Office clerks || 50 || 6,94
Service workers || 67 || 9,31
Metal, machinery and related trade workers || 2 || 0,28
Machine operators and assemblers || 144 || 20,00
Manufacturing labourers || 34 || 4,72
13.         In accordance with Article
7 of Regulation (EC) No 1927/2006, Denmark has confirmed that a policy of
equality between women and men as well as non-discrimination has been applied,
and will continue to apply, during the various stages of the implementation of
and, in particular, in access to the EGF.
Description of the territory
concerned and its authorities and stakeholders
14.         The redundancies affect
five municipalities located in the bordering regions of Midtjylland (Randers,
Favrskov, Aarhus and Ringkøbing-Skjern) and Syddanmark (Varde). There were also
a few redundancies in the Region of Sjælland and the Capital region –
Copenhagen. What all the municipalities affected have in common is a rapid rise
in unemployment (especially long-term) and a steep decline in job vacancies
(especially in industry and production).
15.         Ringkøbing-Skjern invested
considerably in infrastructure for Vestas and the wind energy sector. Other
major employment sectors are tourism, agriculture, construction and the public
service.
16.         The principal stakeholder
is the municipality of Ringkøbing-Skjern. The municipality has responsibility
for supporting the unemployed in their search for new employment, including
making arrangements for activities to upgrade workers' skills, to aid
job-seeking skills and to help with the goal-setting process. Other stakeholders
are: the municipalities of Varde, Favrskov, Randers, Aarhus, Roskilde and
Copenhagen; trade unions, unemployment insurance funds (A-kasser), employers'
representatives, the regions of Midtjylland, Syddanmark, Sealand, the Capital
Region; the regional Employment Councils; the Ministries of Employment,
Enterprise and Growth; local enterprises.
Expected impact of the redundancies
as regards local, regional or national employment
17.         Following the large-scale collective
redundancies in 2009/2010, which affected approx. 800 Vestas employees in Ringkøbing-Skjern
and surrounding municipalities, the new wave of redundancies is a great
challenge for the affected municipalities. This time mainly highly-educated
employees were dismissed. Only in Varde a larger number of semi-skilled and
skilled workers are affected since the plant will be completely closed down in
August 2012. The impact of the redundancies will be locally significant, especially
when taking into account the fact that Vestas Group will make a total of 1 300
employees redundant (many of the workers were hired on temporary contracts and these
were not, or will not, be renewed).
18.         Attracting such innovative
enterprise such as Vestas which provided many high-skilled and high-quality
industrial jobs was a great success for the municipalities concerned. The loss
of these has put the region into difficulties. All the municipalities concerned
have reported that there are no suitable job openings for the new target group
and as a result, the highly skilled dismissed workers will have to move away in
search for a job and it will therefore be even more difficult to attract new
companies.
19.         The redundancies happen at
a time when unemployment is rising rapidly. In February 2012, it was 36 426
in Midtjylland and 40 004 in Syddanmark (compared with 28 402 and 29 751
respectively in August 2011).
Co-ordinated package of personalised
services to be funded and a breakdown of its estimated costs, including its
complementarity with actions funded by the Structural Funds
20.         Denmark proposes a package
of measures in support of the redundant workers that is in coherence with the
Europe 2020 strategy to promote smart, sustainable and inclusive growth. The
package will offer individualised, targeted, flexible and innovative help to prepare
the redundant workers for new jobs in the future growth areas.
21.         Mentoring and coaching.
It is estimated that all targeted workers will benefit from this action
throughout the project. The action aims to support workers as they define their
needs, manage their own learning, select the right upskilling packages to
maximise their potential and develop their personal, social and professional
skills. The general objectives are to screen and map the competences of participants,
provide individual counselling, maintain motivation throughout the project by
means of ongoing coaching, develop and identify the best practice cases,
communicate with the training providers and enterprises. The measure will start
with an in-depth information session which will be followed by individual
counselling sessions during which the competences of the participants will be
screened and mapped. The process will be constantly monitored to assess its
impact through questionnaires and interviews. The services will be offered
together with UddannelesesCenter Ringkøbing-Skjern (education center), the
project management team and representatives from the Job Centres in the
municipalities involved.
Individualised targeted training packages. These packages will be available to all the workers in the target
group. However, a number of dismissed workers are likely to find new employment
after the coaching process, thus it is estimated that about 600 workers will participate
in this measure. The training packages designed by the project team in
cooperation with the redundant workers and provided by educational institutions
throughout Denmark include:
- intercultural
competencies courses (one-day workshops to make participants aware of the
need to acquire intercultural skills in a globalised environment);
- language courses
(including business skills in English, the language of meetings, discussions
and presentations; technical languages; possibility to develop tailor-made
language training packages);
- entrepreneurship
training (an introductory entrepreneurship workshop with the aim to
motivate participants to become self-employed or start up their own businesses;
the participants will learn how to develop a business plan and will receive
information on legal issues, tax and VAT, sales and marketing, e-business);
- off-the-shelf
courses and training programmes (all the participants will have an
opportunity to register for courses and training programmes of their own
choice).
Entrepreneurship grants up to EUR 25 000 per business start-up will be made
available after an intensive screening of 25 persons after their participation
in the entrepreneurship courses and their development of a solid business plan.
Criteria for an assessment of the business plans will be: creativity,
innovation and sustainability. All the beneficiaries will be required to attend
monitoring sessions on a regular basis and to prepare a status report at the
end of the EGF project. The progress of the start-ups will be closely
monitored.
Outplacement will be offered in the last six months of the project to those who
have not yet found a new job (approximately 70 persons). Since those will be
the most disadvantaged due to their age, learning disabilities, gender, lack of
possibilities to commute, the Job Centres and collaboration partners will offer
them internships in selected companies which could provide employment after the
internship phase. Intensive mentoring and counselling will be provided to
people placed in the companies.
Subsistence allowances / student grants will be made available to all redundant workers strictly tied to the
participation of the worker in the active labour market measures. An average of
EUR 10 400 per person is estimated.
22.         The expenditure for
implementing the EGF, which is included in the application in accordance with
Article 3 of Regulation (EC) No 1927/2006, covers preparatory, management,
information and publicity as well as control activities. The municipality of
Ringkøbing-Skjern and the administrative project team involving all the municipalities
concerned will deploy a number of instruments to promote and communicate the
contribution from the EGF. Websites will be established on the municipalities'
portals. There will be regular press releases, press meetings and newsletters.
A final impact workshop will be organised with all project participants and
stakeholders. Promotion materials will be made available.
23.         The personalised services
presented by the Danish authorities are active labour market measures within
the eligible actions defined by Article 3 of Regulation (EC) No 1927/2006. The Danish
authorities estimate the total costs at EUR 14 976 000, of which
the expenditure for personalised services at EUR 14 398 000 and
the expenditure for implementing the EGF at EUR 578 000 (3,9 %
of the total amount). The total contribution requested from the EGF is EUR 7 488 800
(50 % of the total costs).
Actions || Estimated number of workers targeted || Estimated cost per worker targeted (EUR) || Total costs (EGF and national cofinancing) (EUR)
Personalised services (first paragraph of Article 3 of Regulation (EC) No 1927/2006)
Mentoring and coaching || 720 || 1 500 || 1 080 000
Individualized targeted training packages || 600 || 8 500 || 5 100 000
Entrepreneurship allowances || 25 || 25 000 || 625 000
Outplacement || 70 || 1 500 || 105 000
Subsistence allowances / student grants || 720 || 10 400 || 7 488 000
Sub total personalised services || || 14 398 000
Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006)
Preparatory activities || || 28 000
Management || || 220 000
Information and publicity || || 80 000
Control activities || || 250 000
Sub total expenditure for implementing EGF || || 578 000
Total estimated costs || || 14 976 000
EGF contribution (50 % of total costs) || || 7 488 000
24.         Denmark confirms that the
measures described above are complementary with actions funded by the
Structural Funds and that all double financing will be prevented.
Date(s) on which the personalised
services to the affected workers were started or are planned to start
25.         Denmark will start the
personalised services to the affected workers included in the co-ordinated
package proposed for co-financing to the EGF on 13 August 2012. This date
therefore represents the beginning of the period of eligibility for any
assistance that might be awarded from the EGF.
Procedures for consulting the social
partners
26.         All the municipalities
affected by the redundancies have been involved in the preparation of the
measures. A number of social partner organisations (trade unions,
representatives of Vestas, employers' organizations) have been consulted during
the meeting with the Employment Committee in the Municipality in January 2012.
Furthermore, two workshops with all affected municipalities, where social
partners were represented, were organised in Skjern in February and March 2012.
The social partners are regularly briefed about the status of the project in
their monthly Committee meetings.
27.         The Danish authorities
confirmed that the requirements laid down in national and EU legislation
concerning collective redundancies have been complied with.
Information on actions that are
mandatory by virtue of national law or pursuant to collective agreements
28.         As regards the criteria
contained in Article 6 of Regulation (EC) No 1927/2006, the Danish authorities
in their application:
· confirmed that the financial contribution from the EGF does not
replace measures which are the responsibility of companies by virtue of
national law or collective agreements;
· confirmed that the actions provide support for individual workers
and are not to be used for restructuring companies or sectors;
· confirmed that the eligible actions referred to above do not receive
assistance from other EU financial instruments.
Management and control systems
29.         Denmark has notified the
Commission that the financial contribution will be managed and controlled by
the same bodies as the European Social Fund, which also has the Danish
Enterprise Authority as Managing Authority. The Certifying Authority will be
vested in a different department of the same body. The Auditing Authority will
be the EU Controllerfunction in the Danish Enterprise Authority.
Financing
30.         On the basis of the
application from Denmark, the proposed contribution from the EGF to the
coordinated package of personalised services (including
expenditure to implement EGF) is EUR 7 488 000,
representing 50 % of the total cost. The Commission's proposed allocation
under the Fund is based on the information made available by Denmark.
31.         Considering the maximum
possible amount of a financial contribution from the EGF under Article 10(1) of
Regulation (EC) No 1927/2006, as well as the scope for reallocating
appropriations, the Commission proposes to mobilise the EGF for the total
amount referred to above, to be allocated under heading 1a of the financial
framework.
32.         The proposed amount of financial
contribution will leave more than 25 % of the maximum annual amount
earmarked for the EGF available for allocations during the last four months of
the year, as required by Article 12(6) of Regulation (EC) No 1927/2006.
33.         By presenting this proposal
to mobilise the EGF, the Commission initiates the simplified trialogue
procedure, as required by Point 28 of the Interinstitutional Agreement of 17 May
2006, with a view to securing the agreement of the two arms of the budgetary
authority on the need to use the EGF and the amount required. The Commission
invites the first of the two arms of the budgetary authority that reaches
agreement on the draft mobilisation proposal, at appropriate political level,
to inform the other arm and the Commission of its intentions. In case of
disagreement by either of the two arms of the budgetary authority, a formal
trialogue meeting will be convened.
34.         The Commission presents separately
a transfer request in order to enter in the 2012 budget specific commitment
appropriations, as required in Point 28 of the Interinstitutional Agreement of
17 May 2006.
Source of payment appropriations
35.         Appropriations from the EGF
budget line will be used to cover the amount of
EUR 7 488 000 needed for the present application.
Proposal for a
DECISION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
on the mobilisation of the European
Globalisation Adjustment Fund in accordance with point 28 of the
Interinstitutional Agreement of 17 May 2006 between the European Parliament,
the Council and the Commission on budgetary discipline and sound financial
management (application EGF/2012/003 DK/Vestas from Denmark)
THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union,
Having regard to the Interinstitutional
Agreement of 17 May 2006 between the European Parliament, the Council and the
Commission on budgetary discipline and sound financial management[9], and in particular point 28
thereof,
Having regard to Regulation (EC) No
1927/2006 of the European Parliament and of the Council of 20 December 2006
establishing the European Globalisation Adjustment Fund[10], and in particular Article
12(3) thereof,
Having regard to the proposal from the European
Commission[11],
Whereas:
(1)       The European Globalisation
Adjustment Fund (EGF) was established to provide additional support for workers
made redundant as a result of major structural changes in world trade patterns due
to globalisation and to assist them with their reintegration into the labour
market.
(2)       The Interinstitutional
Agreement of 17 May 2006 allows the mobilisation of the EGF within the annual
ceiling of EUR 500 million.
(3)       Denmark submitted an
application to mobilise the EGF, in respect of redundancies in the enterprise Vestas Group, on 14 May 2012 and supplemented it by additional information up to 10 July 2012. This application complies with the requirements for
determining the financial contributions as laid down in Article 10 of
Regulation (EC) No 1927/2006. The Commission, therefore,
proposes to mobilise an amount of EUR 7 488 000.
(4)       The EGF should, therefore,
be mobilised in order to provide a financial contribution for the application
submitted by Denmark,
HAVE ADOPTED THIS DECISION:
Article 1
For the general budget of the European
Union for the financial year 2012, the European Globalisation Adjustment Fund
(EGF) shall be mobilised to provide the sum of EUR 7 488 000 in
commitment and payment appropriations.
Article 2
This Decision shall be published in the Official
Journal of the European Union.
Done at Brussels,
For the European Parliament                       For
the Council
The President                                                 The
President
[1]               OJ C 139, 14.6.2006, p. 1.
[2]               OJ L 406, 30.12.2006, p. 1.
[3]               In accordance with the third paragraph of Article 3
of Regulation (EC) No 1927/2006.
[4]               'Global Wind Energy Council', Global wind report,
Annual market update 2010, Brussels, April 2011.
[5]               World Wind Energy Report 2010, WWEA World Wind Energy
Association
[6]               Vestas Annual Report 2011.
[7]               COM(2011)421 final
[8]               COM(2011)258 final
[9]               OJ C 139, 14.6.2006, p. 1.
[10]             OJ L 406, 30.12.2006, p. 1.
[11]             OJ C [...], [...], p. [...].