# EUR-Lex - 52011PC0491 - EN

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# 52011PC0491

**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/2010/026 PT/Rohde from Portugal) /* COM/2011/0491 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 26 November 2010, Portugal submitted application EGF/2010/026 PT/Rohde for a financial contribution from the EGF, following redundancies in
Rohde Sociedade Industrial de Calçado Luso-Alemã, Lda ('Rohde') 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/2010/026

Member State || Portugal

Article 2 || (a)

Primary enterprise || Rohde - Sociedade Industrial de Calçado Luso-Alemã, Lda.

Suppliers and downstream producers || 0

Reference period || 19.05.2010 – 19.09.2010

Starting date for the personalised services || 20.05.2010

Application date || 26.11.2010

Redundancies during the reference period || 974

Redundancies before and after the reference period || 0

Total eligible redundancies || 974

Redundant workers targeted for support || 680

Expenditure for personalised services (EUR) || 2 135 000

Expenditure for implementing EGF[3] (EUR) || 95 000

Expenditure for implementing EGF (%) || 4,26

Total budget (EUR) || 2 230 000

EGF contribution (65 %) (EUR) || 1 449 500

1.
The application was presented to the Commission
on 26 November 2010 and supplemented by additional information up to 19 May
2011.

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 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
the clothing and footwear industries were strongly hit by the crisis. These
sectors are very vulnerable to external factors such as loss of consumer
purchasing power. The economic recession had a negative impact on the labour
market, unemployment levels rose, and this affected consumer confidence. As a
consequence, manufacturing industries experienced a sharp drop in sales and
production. The Portuguese authorities report that Portugal recorded a decline
in GDP over the last two quarters of 2008 and in 2009 (4% decrease according to
the Banco de Portugal). Both clothing and footwear industries recorded a
decrease in exports (EUR 24 million in clothing, EUR 6 million in footwear).
Portuguese footwear exports declined in 2009 to
EUR 1 207 million, representing 6,4 % less than those of
the previous year.

4.
The Rohde company kept a stable position on the
market despite the increasing difficulties due to intensified competition,
China becoming a global leader in the sector and growing importance of Vietnam,
India and Indonesia. However, the situation of Rohde was affected by the
decrease in sales, and the position of Rohde on the European market
deteriorated. As a result of the crisis and the reduced capacity to invest, the
parent enterprise based in Schwalmstadt, Germany, finally went bankrupt.

5.
The Rohde Group was then the subject of a
recovery plan: the company was bought by a joint venture between Square Four
and the Morgan Stanley Merchant bank in an attempt to save Rohde and its level
of production. The factory in Portugal was planned to remain in production.
However, finally the group substantially downsized. These circumstances,
including the declining orders from the parent enterprise, affected the
situation of the Rohde factory based in Santa Maria da Feira, Portugal, and as
a result, insolvency proceedings started in September 2009, leading to the
eventual closure of the factory and the dismissal of the workers.

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

6.
Portugal 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.

7.
The application cites 974[4] redundancies in Rohde during the four-month reference period from 19 May 2010 to 19 September 2010. 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
financial and economic crisis and its impact could not have been foreseen. The
redundancies in Rohde were not expected despite the gradually increasing
difficulties facing the company due to intensified competition, successive
growth in imports and decline in consumption. The enterprise was in a stable
position in the market until this was undermined by the crisis. Moreover, the
bankruptcy of the parent company in Germany was not initially seen as a
significant danger, since the company was the subject of a recovery plan in
2008/09.

Identification of the dismissing
enterprises and workers targeted for assistance

9.
The application cites a total of 974
redundancies in Rohde during the four-month reference period. Of this total,
680 are targeted for assistance: the Portuguese authorities estimate that some 70 %
of the redundant workers will participate in the measures co-financed by the
EGF, while the others will find another job, or travel abroad, retire or
participate in other measures complementary to those co-funded by the EGF.

10.
The break-down of the targeted workers is as
follows:

Category || Number || Percent

Men || 88 || 13,00

Women || 592 || 87,00

EU citizens || 680 || 100,00

Non EU citizens || 0 || 0,00

15-24 years old || 1 || 0,15

25-54 years old || 632 || 92,94

55-64 years old || 45 || 6,62

> 64 years old || 2 || 0,29

It is to be noted that 78,5 % of these
workers did not complete elementary education (nine years of schooling), while
just 17,8 % concluded elementary and 1,2 % secondary education. There
are 7 workers with a longstanding health problem or disability included in the
categories above.

11.
In terms of occupational categories, the
break-down is as follows:

Category || Number || Percent

Legislators, senior officials and managers || 2 || 0,29

Professionals || 1 || 0,15

Technicians and associate professionals || 17 || 2,50

Clerks || 34 || 5,00

Service workers and shop and market sales workers || 3 || 0,44

Craft and related trades workers || 537 || 78,97

Plant and Machine operators and assemblers || 20 || 2,94

Elementary occupations || 66 || 9,71

12.
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

13.
The territory concerned is mainly the
municipality of Santa Maria Da Feira where Rohde was established. However the
redundancies also affected the contiguous municipality of Ovar. They are
located respectively within two NUTS II regions: Norte and Centro.

14.
Norte is the most densely populated region of
Portugal and the most highly industrialised of the country, with a strong
concentration of traditional industries (textiles, clothing, footwear, wood),
while the services sector has been developing recently too. In all these
sectors, the small and medium sized enterprises predominate. The region still
suffers from a low educational base, particularly affecting the older
generation, and from long-term unemployment.

15.
Centro is a region characterised by low
population density and sharp demographic imbalances which are mainly the
results of ongoing depopulation and the progressive ageing of the population.
The productive structure is diversified, but the industry is dominated by
traditional productive specialisations. Similarly to the Norte region, Centro
is characterised by a low level of education. Unemployment has become
problematic due to the regression of the primary and traditional industrial
sectors.

16.
Both regions are characterised by vulnerability
in the employment structure and the struggle with the low qualifications of the
labour force, low salaries, and precarious employment.

17.
The principal stakeholders are the Instituto do
Emprego e Formacao Profissional (IEFP, I.P.), a public administration
institution with decentralised job centres and vocational training centres,
social partners (the employer organisations include Portuguese Association of
Footwear, Leather Components and Articles and their branches; the trade unions
structures include Federation of the Unions of Textile, Wool Products,
Clothing, Footwear and Leather Workers of Portugal). An important role is also
played by the municipalities and their associations (mainly of the Metropolitan
Area of Porto), Universities and Polytechnic Institutes and the Footwear
Technological Centre.

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

18.
According to the National Institute of
Statistics (INE) the unemployment level in Portugal in the third quarter of
2010 was 10,9 % which is 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 was 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).

In the municipality of Santa Maria da Feira,
where Rohde was established, the unemployment rate was the highest in the NUTS
III region Entre Douro e Vouga. In the municipality of Ovar in the Centro
region, unemployment rates are higher than the national average.

In this context, the direct impact of closing
Rohde was the dismissal of about 980 workers, which severely affected these municipalities
already having unemployment rates above the national average.

19.
The Portuguese authorities report that the
unemployed population of the most traditional industrial sectors, including
footwear, are characterised by very low education levels and as a result, have
greater difficulty in retraining for other activities.

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

(1)
Information and guidance: The information 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. This
profiling will be carried out by Job Centres and it is not co-financed by the
EGF. It is expected that 250 of the targeted workers will proceed to follow
more complex guidance sessions. These will encourage the workers towards
vocational training, occupational reconversion and personal development
including promotion of self-esteem and job search techniques. During these
actions, the workers will receive meals and transport allowances.

(2)
Recognition, validation and certification of
competences: With the help of recognised New
Opportunities Centres (NOC), 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.
Special panels will be organised for those workers who need specific
competences to obtain a school or vocational certificate. NOC will be promoted
by the Vocational Training Centres under Joint Management.

(3)
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
(actions not included in the National Qualifications Catalogue). The training
courses will be delivered by the Vocational Training Centres and other entities
of recognised competence identified by IEFP. Allowances for training, meals,
transport, personal accident insurance and accommodation will be offered within
strict limits and conditions.

(4)
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. The participants of this form of
training will be offered a grant under strict conditions. They can attend,
consecutively or simultaneously, more than one course, on condition that they
keep within the set limits.

(5)
Support for self-placement: This is a grant awarded to workers who, during the implementation
period of the EGF package, find themselves a new job with either an indefinite
contract or one for at least six months. 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.

(6)
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.

(7)
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.

(8)
Support for the creation of a business: The workers will be helped with a non-reimbursable subsidy of
EUR 20 000 per job created, including that of the promoter, up to a
maximum of three. The jobs created should be filled by EGF beneficiaries, or by
unemployed persons in the job centres of the region, and should be full-time
for a minimum duration of two years. Allowances for meals, transport and
personal accident insurance will be offered within strict limits and
conditions.

(9)
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 is to make sure
that these workers do not lose contact with other workers, do not suffer from
isolation and loss of motivation, and gain 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.

21.
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.

22.
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 2 135 000
and the expenditure for implementing the EGF at EUR 95 000 (4,26 %
of the total amount). The total contribution requested from the EGF is EUR 1 449 500
(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 and guidance || 250 || 160 || 40 000

Recognition, validation and certification of competences || 250 || 640 || 160 000

Vocational Training || 150 || 6 000 || 900 000

Grant for training at personal initiative || 20 || 4 000 || 80 000

Support for self-placement || 80 || 1 000 || 80 000

Hiring incentive || 50 || 2 300 || 115 000

Entrepreneurial support || 30 || 2 000 || 60 000

Support for the creation of a business || 20 || 20 000 || 400 000

Integration plan || 100 || 3 000 || 300 000

Sub total personalised services || || 2 135 000

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 || || 2 230 000

EGF contribution (65 % of total costs) || || 1 449 500

23.
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

24.
Portugal started the personalised services to
the affected workers included in the co-ordinated package proposed for
co-financing to the EGF on 20 May 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

25.
The EGF application was presented to the meeting
of the IEFP, I.P. Board of Directors on 29 November 2010. The IEFP, I.P, which
is the Managing and Paying Authority for the EGF in Portugal, is itself a
tripartite body.

26.
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

27.
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

28.
Portugal has notified the Commission that the
financial contribution will be managed and controlled by Instituto do Emprego e
Formação Profissional, I.P., the public employment service. The overall
management is carried out by the Employment Department, and with the help of
the Vocational Training Department, Financial and Management Control Department
and the Regional Delegations of the Norte and Centro regions. The overall
financial management has been taken on by the Financial and Management Control Department.
The approval and payment of aids is the responsibility of the Regional
Delegations of the Norte and Centro regions. The Job Centres and the Partner
Entities, namely Vocational Joint Training Centres of the most affected
municipalities 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.

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

29.
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 1 449 500, representing 65 % of the total
cost. The Commission's proposed allocation under the Fund is based on the
information made available by Portugal.

30.
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.

31.
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.

32.
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.

33.
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

34.
Amending budget 2/2011 increased EGF budget line
04.0501 by EUR 50 000 000 in payment appropriations.
Appropriations from this budget line will be used to cover the amount of
EUR 1 449 500 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/2010/026 PT/Rohde 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[5], 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[6], and in particular Article
12(3) thereof,

Having regard to the proposal from the European
Commission[7],

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 the enterprise Rohde, on 26 November 2010 and supplemented it by additional information up to 19 May 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 1 449 500.

(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 1 449 500 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]               In accordance with the third paragraph of Article 3
of Regulation (EC) No 1927/2006.

[4]               The Portuguese authorities explained that the
redundancies concerned 983 workers in the reference period, however nine of these
did not register in Job Centres and therefore are not eligible for inclusion in
this application.

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

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

[7]               OJ C [...], [...], p. [...].