# CE2004078EN.01095101.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/951 |
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27.3.2004

EN

Official Journal of the European Union

CE 78/951

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(2004/C 78 E/1006)

WRITTEN QUESTION P-0314/04

by Ulpu Iivari (PSE) to the Commission

(2 February 2004)

Subject:   Effect of EU support on the shift of jobs within the EU

Subject:

Wärtsila Oyj, a public limited company, is transferring its engine production from Turku in Finland to Trieste in Italy. What is happening in this case is that production and jobs are shifting from one Member State to another. Under certain circumstances support channelled via the EU Structural Funds can also lead to a situation in which companies are tempted to relocate production based in one EU country to another enjoying more attractive levels of support. The overall impact of such relocation can be very considerable in the country losing production and jobs.

| 1. | What kind of action does the Commission believe to be necessary to ensure that, instead of causing jobs to shift from one part of the EU to another, Structural Fund and other forms of EU support serve to create new jobs? |
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1.

What kind of action does the Commission believe to be necessary to ensure that, instead of causing jobs to shift from one part of the EU to another, Structural Fund and other forms of EU support serve to create new jobs?

| 2. | What steps will the Commission take to harmonise protection against dismissal for employees and the dismissal costs incurred by employers within the EU area? |
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2.

What steps will the Commission take to harmonise protection against dismissal for employees and the dismissal costs incurred by employers within the EU area?

Answer given by Mrs Wallström on behalf of the Commission

(3 March 2004)

(3 March 2004)

| 1. | Job shifts from one part of the EU to another should not be seen as related to Structural Fund interventions. Such shifts are rather linked to globalisation and differences in national policies (eg. labour and tax legislation) and practices.
  The Structural Funds aim to strengthen economic and social cohesion across the EU. In this respect, support for job creation is an essential tool within the wide scope of financed interventions. In particular, the European Social Fund (ESF) finances employment aids (according to Article 3.2.b of Regulation (EC) No 1784/1999 of the Parliament and of the Council of 12 July 1999 on the European Social Fund (1)). Such aids can be granted to enterprises for job creation and for job maintenance and recruitment of disadvantaged and disabled workers. Obviously, employment aids must be compatible with the common market rules and with the state aid rules as defined in Articles 87 and 88 of the EC Treaty and implemented in the Regulations concerned (e.g. Commission Regulation (EC) No 2204/2002 of 12 December 2002 on the application of Articles 87 and 88 of the EC Treaty to state aid for employment (2)).
  The ESF also promotes entrepreneurship. ESF support to various actions, including training and guidance, allows individuals to obtain the necessary knowledge and skills to set-up and run businesses. Support is also offered to entrepreneurs with a view to enable them to extend their economic activities. This entails the creation of new and better job places.
  Moreover, the rule aiming at avoiding the unfair competition between the regions was introduced by Article 30.4 of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (3). According to it, Member States must ensure that an operation retains the contribution from Structural Funds only if it does not, within five years of the date of the decision concerning Structural Funds contribution, undergo substantial modifications which could affect the nature of the operation, its implementation conditions or give to a firm or a public body an undue advantage. Moreover, the modification cannot result from a change in the nature of ownership as regards infrastructure or from change in location in a productive activity. |
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1.

Job shifts from one part of the EU to another should not be seen as related to Structural Fund interventions. Such shifts are rather linked to globalisation and differences in national policies (eg. labour and tax legislation) and practices.

The Structural Funds aim to strengthen economic and social cohesion across the EU. In this respect, support for job creation is an essential tool within the wide scope of financed interventions. In particular, the European Social Fund (ESF) finances employment aids (according to Article 3.2.b of Regulation (EC) No 1784/1999 of the Parliament and of the Council of 12 July 1999 on the European Social Fund (1)). Such aids can be granted to enterprises for job creation and for job maintenance and recruitment of disadvantaged and disabled workers. Obviously, employment aids must be compatible with the common market rules and with the state aid rules as defined in Articles 87 and 88 of the EC Treaty and implemented in the Regulations concerned (e.g. Commission Regulation (EC) No 2204/2002 of 12 December 2002 on the application of Articles 87 and 88 of the EC Treaty to state aid for employment (2)).

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The ESF also promotes entrepreneurship. ESF support to various actions, including training and guidance, allows individuals to obtain the necessary knowledge and skills to set-up and run businesses. Support is also offered to entrepreneurs with a view to enable them to extend their economic activities. This entails the creation of new and better job places.

Moreover, the rule aiming at avoiding the unfair competition between the regions was introduced by Article 30.4 of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (3). According to it, Member States must ensure that an operation retains the contribution from Structural Funds only if it does not, within five years of the date of the decision concerning Structural Funds contribution, undergo substantial modifications which could affect the nature of the operation, its implementation conditions or give to a firm or a public body an undue advantage. Moreover, the modification cannot result from a change in the nature of ownership as regards infrastructure or from change in location in a productive activity.

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| 2. | The Commission would like to remind the Honourable Member that several Community Directives may apply to relocations of production with job losses. In recent years, the European Union has developed a workers involvement policy for dealing adequately with the social consequences in cases of restructuring of enterprises. As a result of that policy restructuring operations must be preceded by information and consultation of employees' representatives with the aim of avoiding or reducing its social impact, in accordance with Community Directives on ‘Collective Redundancies’ (4), ‘Transfers of Undertakings’ (5), ‘European Works Councils’ (6) and, from March 2005 onwards, “Information and Consultation” (7).
  The Commission advocates the idea that, when restructuring, enterprises should always take into account the effects that those decisions could have on their employees as well as on the social and regional context. This has recently been underlined in the Commission Communication concerning Corporate Social Responsibility (CSR) A business contribution to Sustainable Development (8).
  Furthermore, in January 2002 the Commission invited the European social partners to engage in a dialogue on anticipating and managing change with a view to applying a dynamic approach to the social aspects of corporate restructuring. The social partners have recently sent to the Commission the results of their joint work on this topic. They consist of a set of reference orientations which should guide companies and their workers when restructuring occurs. The Commission very much hopes that those results as well as other follow-up actions contribute to disseminate throughout Europe good practices of corporate restructuring, thus helping companies and their workers to address adequately the social dimension involved. |
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2.

The Commission would like to remind the Honourable Member that several Community Directives may apply to relocations of production with job losses. In recent years, the European Union has developed a workers involvement policy for dealing adequately with the social consequences in cases of restructuring of enterprises. As a result of that policy restructuring operations must be preceded by information and consultation of employees' representatives with the aim of avoiding or reducing its social impact, in accordance with Community Directives on ‘Collective Redundancies’ (4), ‘Transfers of Undertakings’ (5), ‘European Works Councils’ (6) and, from March 2005 onwards, “Information and Consultation” (7).

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The Commission advocates the idea that, when restructuring, enterprises should always take into account the effects that those decisions could have on their employees as well as on the social and regional context. This has recently been underlined in the Commission Communication concerning Corporate Social Responsibility (CSR) A business contribution to Sustainable Development (8).

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Furthermore, in January 2002 the Commission invited the European social partners to engage in a dialogue on anticipating and managing change with a view to applying a dynamic approach to the social aspects of corporate restructuring. The social partners have recently sent to the Commission the results of their joint work on this topic. They consist of a set of reference orientations which should guide companies and their workers when restructuring occurs. The Commission very much hopes that those results as well as other follow-up actions contribute to disseminate throughout Europe good practices of corporate restructuring, thus helping companies and their workers to address adequately the social dimension involved.

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(1)  OJ L 213, 13.8.1999.

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(2)  OJ L 337, 13.12.2002.

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(3)  OJ L 161, 26.6.1999.

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(4)  Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies, OJ L 225, 12.8.1998 (This Directive consolidates Directives 75/129/EEC and 92/56/EEC).

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(5)  Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, OJ L 82, 22.3.2001.

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(6)  Council Directive 94/45/EC of 22 September 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees, OJ L 254, 30.9.1994.

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(7)  Directive 2002/14/EC of the Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community, OJ L 80, 23.3.2002.

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(8)  COM(2002) 347 final.

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