# EUR-Lex - 52011PC0664 - EN

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# 52011PC0664

**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/2011/005 PT/Norte-Centro Automotive from Portugal) /* COM/2011/0664 final */**

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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 6 June 2011, Portugal submitted application EGF/2011/005 PT/Norte-Centro
Automotive for a financial contribution from the EGF, following
redundancies in three enterprises operating in the NACE
Revision 2 Division 29 ('Manufacture of motor vehicles, trailers and
semi-trailers')[3] in the NUTS II regions of Norte (PT11) and Centro (PT16) in Portugal.

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/2011/005

Member State || Portugal

Article 2 || (b)

Enterprises concerned || 3

NUTS II regions || Norte (PT11) Centro (PT16)

NACE Revision 2 Division || 29 ('Manufacture of motor vehicles, trailers and semi-trailers')

Reference period || 1.7.2010 – 1.4.2011

Starting date for the personalised services || 1.7.2010

Application date || 6.6.2011

Redundancies during the reference period || 726

Redundant workers targeted for support || 726

Expenditure for personalised services (EUR) || 2 241 100

Expenditure for implementing EGF[4] (EUR) || 95 000

Expenditure for implementing EGF (%) || 4,07

Total budget (EUR) || 2 336 100

EGF contribution (65 %) (EUR) || 1 518 465

1.
The application was presented to the Commission
on 6 June 2011 and supplemented by additional information up to 18 July 2011.

2.
The application meets the conditions for
deploying the EGF as set out in Article 2(b) 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 or the global financial and economic crisis

3.
In order to establish the link between the
redundancies and the global financial and economic crisis, Portugal argues that
this crisis has put the automotive sector worldwide under particular pressure.
The Commission has already recognised that, as some 60-80 % (depending on
the Member State) of new cars in Europe are purchased with the aid of credit,
the financial crisis at the origin of the downturn hit the automotive industry
particularly severely. According to the European Automobile Manufacturers
Association (ACEA), demand for new motor vehicles in the European Union
decreased in 2009 by 5,6 % compared to 2008 and by 13,3 % compared to
the pre-crisis year 2007. The EU thus followed the trend noted at worldwide
level where demand for new motor vehicles dropped by 5,6 % in 2009
compared to 2008. Faced with this drop in demand, manufacturers of motor
vehicles reduced their production even more drastically. In 2009 the production
of motor vehicles in the EU decreased by 17 % compared to 2008 and by 23 %
compared to 2007. This downward trend continued in 2010. The production of
motor vehicles in the EU in the first three quarters of 2010 was 14 %
below that of the same period in 2008.

4.
The fall in demand for electrical equipment for
cars, which followed the decline in car manufacturing, combined with the
impossibility of further reducing production costs and/or access to credit,
resulted in the closure of Krombert & Schubert Portugal, Lda and the Lear
production plant in Guarda. The closure of Leoni Wiring Systems Viana, Lda was due
to the combination of a difficult economic situation due to the crisis and the relocation
of the production plant to Morocco.

5.
The arguments presented in previous cases[5] concerning the automotive
industry and in which the redundancies were a direct result of the crisis
remain valid.

Demonstration of the number of
redundancies and compliance with the criteria of Article 2(b)

6.
Portugal submitted this application under the
intervention criteria of Article 2(b) of Regulation (EC) No 1927/2006, which
requires at least 500 redundancies over a nine-month period in enterprises
operating in the same NACE Revision 2 Division in one region or two contiguous
regions at NUTS II level in a Member State.

7.
The application cites 726 redundancies in three
enterprises operating in the NACE Revision 2 Division 29 ('Manufacture of motor
vehicles, trailers and semi-trailers')[6] in the
NUTS II regions of Norte (PT11) and Centro (PT16)
during the nine-month reference period from 1 July 2010
to 1 April 2011. All of these redundancies were calculated in accordance with
the second indent of the second paragraph of Article 2 of Regulation (EC) No 1927/2006.

Explanation of the unforeseen nature
of those redundancies

8.
The Portuguese authorities argue that the
suppliers had been put under pressure for some time by the motor vehicle
manufacturers to reduce their margins. The sudden and drastic crisis related
reduction in demand for motor vehicles in 2009, which could not have been
foreseen, resulted in a significant reduction in production capacity
utilisation. European manufacturers of automotive components, in order to reduce
production costs, chose to optimise the production capacity of some of its
plants, closing others.

Identification of the dismissing
enterprises and workers targeted for assistance

9.
The application relates to 726 redundancies in
the following three enterprises:

Enterprises and number of dismissals

Leoni Wiring Systems Viana, Lda || 332

Kromberg & Schubert Portugal, Lda || 120

Delphi Automotive Systems – Portugal, S.A. || 274

Total Enterprises: 3 || Total Dismissals: 726

10.
All 726 redundancies will be targeted for
assistance. However the Portuguese authorities -based in previous experiences
managing EGF contributions- estimate that about 500 workers will opt for EGF
support.

11.
The break-down of the targeted workers is as
follows:

Category || Number || Percent

Men || 248 || 34,16

Women || 478 || 65,84

EU citizens || 726 || 100,00

Non EU citizens || 0 || 0,00

15-24 years old || 3 || 0,41

25-54 years old[7] || 709 || 97,66

55-64 years old || 14 || 1,93

> 64 years old || 0 || 0,00

12.
Three of the workers have a longstanding health
problem or disability.

13.
In terms of occupational categories, the
break-down is as follows:

Category || Number || Percent

Managers || 15 || 2,07

Professionals || 14 || 1,93

Technicians and associated professionals || 99 || 13,64

Clerks || 57 || 7,85

Service workers || 1 || 0,13

Craft and related trade workers || 9 || 1,24

Plant and machine operators || 474 || 65,29

Elementary occupations || 57 || 7,85

14.
In terms of educational level, the break-down is
as follows:

Educational level || Number || Percent

Basic education[8] || 469 || 64,60

Secondary education || 221 || 30,44

Tertiary education || 36 || 4,96

15.
In accordance with Article 7 of Regulation (EC)
No 1927/2006, Portugal 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

16.
The Norte region is the most densely populated
of the country, as well as being the region with the lowest per capita income
and the highest rate of unemployment. The education and qualification levels of
the population are low. The region depends heavily upon industry, and finds its
greatest strength in traditional industries such as textiles, clothing,
footwear and cork, where it has been successful in export markets. Agriculture
is strong in milk and wine (particularly Port Wine) and forestry is a sector
with potential for the future.

17.
The Centro region is more thinly populated, with
an ageing population (ageing index of 153 % in 2009, outpacing the
national average of 118 %). The region's industrial base is composed of a
variety of traditional productive structures depending on cheap labour and
lacking competitiveness. This, combined with the low level of education and
qualification of the population (about 46 % of the workforce has six or
fewer years of schooling) may explain the low regional productivity.
Unemployment is low, mainly because of migration by the active population to
urban areas or abroad.

18.
The main authorities concerned are the Instituto
do Emprego e Formação Profissional (IEFP, I.P.), a public administration
institution with decentralised job centres and vocational training centres;
trade unions: STIMM, SINDEL and SIMA; and Associação de Fabricantes para a
Industria Automóvel-AFIA (the Portuguese Association of Manufacturers for the
Automotive Industry). Other relevant stakeholders are vocational joint training
centers (centers whose management is shared between IEPF, I.P and sector
partners -- employer organisations and/or trade unions -- such as CINEL, CEPRA,
INOVINTER and CEFOSAP).

Expected impact of the redundancies
as regards local, regional or national employment

19.
According to the National Institute of
Statistics (INE), the unemployment level in Portugal in the third quarter of
2010 was 10,9 %, i.e. 1,1 % higher than in the same period of 2009.
The unemployment rate in the Norte region increased from 11,6 % in the
third quarter of 2009 to 13,2 % in the same period of 2010 and it is the
highest unemployment rate in the country. The Centro region experienced a slight
increase in the unemployment rate (from 7,2 % to 7,4 % in the same
period as above).

20.
The impact at local level of these redundancies
is high due to the combination of these factors, which together pose an unusual
and difficult situation for the workers and the regions concerned.

21.
The two regions where these redundancies
occurred have already been accepted for EGF support in a previous case,
EGF/2009/001 PT/Norte-Centro.

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

22.
The following types of measures are proposed,
all of which combine to form a co-ordinated package of personalised services
aimed at re-integrating the workers into the labour market:

–
Information profiling and guidance: The information and profiling actions consist of updating all
potential beneficiaries on the available measures, encouraging the workers to
actively participate in them, providing information on the labour market, as
well as defining and adjusting their respective Personal Employment Plans,
which should describe the measures in which the workers intend to participate. Information
and profiling will be carried out by Job Centres and it is not co-financed by
the EGF. Guidance will include actions on horizontal issues such as motivation
to work and motivation for training and retraining, lifelong learning; personal
development and self-steem promotion; and coaching on job-search. Allowances
for meals and transport will be provided within strict limits and conditions.

–
Recognition, validation and certification of
competences: With the help of recognised 'Centros
de Novas Oportunidades - CNO' (New Opportunities Centres), the workers will
identify the knowledge and skills acquired throughout their lives in formal and
informal contexts. During individual and group sessions, together with
professional trainers, they will prepare a portfolio that will contain the
evidence of their learning process which will lead to the validation of school
certification and/or vocational certification.

–
Vocational Training: The workers will receive the training most appropriate to their
educational and skills levels, helping them to reintegrate rapidly into
employment. There will be adult training courses leading to double
certification (educational and vocational), some will be given on a modular
basis (flexible training organised in short-term training units, presented in
the training benchmarks of the National Qualifications Catalogue) and some will
be specific training, suitable to the specific needs of the labour market. The
training courses will be delivered by the Vocational Training Centres and other
entities of recognised competence identified by IEFP, IP[9]. Allowances for training,
meals, transport, personal accident insurance and accommodation will be provided
within strict limits and conditions.

–
Grant for training at personal initiative: This will enable workers to participate in suitable training
courses, agreed as part of their personal employment plans and which are
delivered by recognised training institutions. They will be given the
possibility of attending, consecutively or simultaneously, more than one course.
The participants of this form of training will be offered a grant of up to EUR 8 000
(covering both the expenses of the training and a training allowance) under
strict conditions.

–
Support for self-placement: This is a grant awarded to workers who, during the implementation
period of the EGF personalised package of measures, find themselves a new full
time job. The amount varies depending on the length of the contract offered,
and can be increased if the new workplace is more than 100 km from the
location of the worker's residence.

–
Hiring incentive:
For the purposes of stimulating the creation of new jobs, financial support may
be allocated to employer entities which sign full-time contracts with an EGF
beneficiary worker. The minimum duration of the contract has to be 12 months,
and a higher incentive is paid to those taking on workers with contracts of
unlimited duration.

–
Entrepreneurial support: For those workers wishing to create their own businesses, training
in specific knowledge and competences for the creation and management of small
businesses will be organised. Attendance of the training is compulsory before
the decision to support the business creation is issued, except in cases where
there is confirmed pre-existing training or relevant experience. Technical
support to the project includes activities to support the development of the
business idea, preparation of the business plan, constitution of the company
and follow-up of the project during the first year of its operations. Personal
accident insurance and allowances for meals and transport will be provided within
strict limits and conditions.

–
Support to business creation: Upon completion of the entrepreneurship training and preparation,
the workers will be helped with a non-reimbursable subsidy of EUR 20 000
for each job created, including that of the promoter, up to a maximum of three.
The jobs created should be filled by other EGF beneficiaries, or by unemployed
persons registered in the job centres of the region, and should be full-time
for a minimum duration of two years.

–
Integration plan:
This will provide the workers with work experience of at least 30 hours
per week during a period from six to twelve months. The objective of the
measure is to make sure that these workers do not lose contact with other
workers, do not suffer from isolation and loss of motivation by giving them the
opportunity to acquire new knowledge and skills and thus to improve their
employability following the integration period. The workers will be placed with
non profit-making employer entities for a limited period; this will entitle
them to meals and transport allowances, insurance and a monthly subsidy instead
of wages.

23.
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 and control
activities as well as information and publicity.

24.
The personalised services presented by the Portuguese
authorities are active labour market measures within the eligible actions
defined by Article 3 of Regulation (EC) No 1927/2006. The Portuguese
authorities estimate the total costs of these services at EUR 2 241 100
and the expenditure for implementing the EGF at EUR 95 000 (4,24 %
of the total amount). The total contribution requested from the EGF is EUR 1 518 465
(65 % 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)

Information, profiling and guidance[10] (Orientação profissional) || 100 || 165 || 16 500

Recognition, validation and certification of competences (RVCC) || 40 || 640 || 25 600

Vocational Training (Formação profissional) || 100 || 6 000 || 600 000

Grant for training at personal initiative (Subsidio à formação por iniciativa individual) || 75 || 4 000 || 300 000

Support for self-placement (Apoio à auto-colocação) || 100 || 1 100 || 110 000

Hiring incentive (Apoio à contratação) || 60 || 2 400 || 144 000

Entrepreneurial support (Apoio à criação do proprio emprego ou empresa - formação e apoio técnico ao projecto) || 50 || 2 100 || 105 000

Support to business creation (Apoio à criação da empresa) || 35 || 20 000 || 700 000

Integration plan (Planos de integração) || 75 || 3 200 || 240 000

Sub total personalised services || || 2 241 100

Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006)

Preparatory activities || || 2 000

Management || || 90 000

Information and publicity || || 2 000

Control activities || || 1 000

Sub total expenditure for implementing EGF || || 95 000

Total estimated costs || || 2 336 100

EGF contribution (65 % of total costs) || || 1 518 465

25.
Portugal confirms that the measures described
above are complementary with actions funded by the Structural Funds. Portugal
will also ensure a clear audit trail for EGF funded activities, and confirms
that no other EU funding is sought or used for these activities.

Date(s) on which the personalised
services to the affected workers were started or are planned to start

26.
Portugal started the personalised services to
the affected workers included in the co-ordinated package proposed for
co-financing to the EGF on 1 July 2010. 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

27.
The EGF application was presented to the meeting
of the IEFP, I.P. Board of Directors on 21 June 2011 The IEFP, I.P,
which is the Managing and Paying Authority for the EGF in Portugal, is itself a
tripartite body (government, employers' and workers' representatives).

28.
The Portuguese 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

29.
As regards the criteria contained in Article 6
of Regulation (EC) No 1927/2006, the Portuguese 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;

· demonstrated 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

30.
Portugal has notified the Commission that the
financial contribution will be managed and controlled by Instituto do Emprego e
Formação Profissional, I.P. (IEFP, I.P.), the public employment service.
The overall management will be carried out by the Employment Department, while
the operational management will be carried out by the Norte and Centro regional
Delegations of the IEFP, I.P. The overall financial management will be
taken on by the Financial and Management Control Department. The approval and
payment of aids will be the responsibility of the Regional Delegations of the
Norte and Centro regions. The job centres and partner entities, namely the vocational
joint training centres will be carrying out most of the active measures.
Portugal has confirmed that the principle of separation of functions among and
within the relevant entities will be respected.

31.
The Instituto de Gestão do Fundo Social Europeu
(IGFSE, I.P.), the European Social Fund Management Institute, will be
responsible for auditing and control as regards this EGF application.

Financing

32.
On the basis of the application from Portugal, the
proposed contribution from the EGF to the coordinated package of personalised
services (including expenditure to implement EGF) is EUR 1 518 465, representing 65 % of the total
cost. The Commission's proposed allocation under the Fund is based on the
information made available by Portugal.

33.
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.

34.
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.

35.
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.

36.
The Commission presents separately a transfer
request in order to enter in the 2011 budget specific commitment
appropriations, as required in Point 28 of the Interinstitutional Agreement of
17 May 2006.

Source of payment appropriations

37.
A reinforcement of the payment appropriations on
the EGF budget line will be requested through the Global Transfer.
Appropriations from this budget line will be used to cover the amount of EUR 1 518 465
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/2011/005 PT/Norte-Centro Automotive from Portugal)

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[11], 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[12], and in particular Article
12(3) thereof,

Having regard to the proposal from the European
Commission[13],

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 scope of the EGF was
broadened for applications submitted from 1 May 2009 to include support for
workers made redundant as a direct result of the global financial and economic
crisis.

(3)       The Interinstitutional
Agreement of 17 May 2006 allows the mobilisation of the EGF within the annual
ceiling of EUR 500 million.

(4)       Portugal submitted an
application to mobilise the EGF, in respect of redundancies in 3 enterprises
operating in the NACE Revision 2 Division 29 ('Manufacture of motor vehicles,
trailers and semi-trailers') in the NUTS II regions of Norte (PT11) and Centro
(PT16), on 6 June 2011 and supplemented it by
additional information up to 18 July 2011. 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 1 518 465.

(5)       The EGF should, therefore,
be mobilised in order to provide a financial contribution for the application
submitted by Portugal.

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the European
Union for the financial year 2011, the European Globalisation Adjustment Fund
(EGF) shall be mobilised to provide the sum of EUR 1 518 465 in
commitment and payment appropriations.

Article 2

This Decision shall be published in the Official
Journal of the European Union.

Done at [Brussels/Strasbourg],

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]               Regulation (EC) No 1893/2006 of the European Parliament
and of the Council of 20 December 2006 establishing the statistical
classification of economic activities NACE Revision 2 and amending Council
Regulation (EEC) No 3037/90 as well as certain EC regulations on specific
statistical domains (OJ L 393, 30.12.2006, p. 1).

[4]               In accordance with the third paragraph of Article 3
of Regulation (EC) No 1927/2006.

[5]               EGF/2010/002
Cataluña Automoción, COM(2010)453 final,
EGF/2010/004 Wielkopolskie, COM(2010)616 final,
EGF/2010/031 GM Belgium COM(2011)212 final, and
EGF/2011/003 Arnsberg and Düsseldorf COM(2011)447 final.

[6]               Regulation (EC) No 1893/2006 of the European
Parliament and of the Council of 20 December 2006 establishing the statistical
classification of economic activities NACE Revision 2 and amending Council
Regulation (EEC) No 3037/90 as well as certain EC regulations on specific
statistical domains (OJ L 393, 30.12.2006, p. 1).

[7]               22,6 % (25 to 34 years old), 55 % (35 to 44
years old) and 20,1 % (45 to 54 years old).

[8]               In Portugal, basic education/compulsory schooling is
nowadays nine years. However, the number of compulsory years of formal
education is determined in accordance with date of birth (born until 31 December
1966 = four years; born between 1 January 1967 and 31 December 1980 = six
years and born after 1 January 1981 = nine years).

[9]               'Instituto do Emprego e Formação Profissional-IEFP, IP'
(The Institute of Employment and Vocational Training) is the national public
employment service and aims to promote the creation and quality of employment
and tackle unemployment through the implementation of active employment
policies and training.

[10]             The measure will be offered to all 726 redundant
workers. However the information and profiling part of the measure will be carried
out by Job Centres and will not be co-financed by the EGF. The 100 participants
budgeted are those who will be receiving allowances for meals and transport or
participating in more specialised guidance sessions.

[11]             OJ C 139, 14.6.2006, p. 1.

[12]             OJ L 406, 30.12.2006, p. 1.

[13]             OJ C [...], [...], p. [...].