# EUR-Lex - 52011PC0421 - EN

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# 52011PC0421

**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/2010/017 DK/Midtjylland Machinery from Denmark) /* COM/2011/0421 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 11 May 2010, Denmark submitted application EGF/2010/017 DK/Midtjylland Machinery for a financial contribution from the EGF, following redundancies in
6 enterprises operating in the NACE Revision 2 Division
28 ('Manufacture of machinery and equipment')[3] in the NUTS II region of Midtjylland (DK04) 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/2010/017

Member State || Denmark

Article 2 || (b)

Enterprises concerned || 6

NUTS II region || Midtjylland (DK04)

NACE Revision 2 Division || 28 ('Manufacture of machinery and equipment')

Reference period || 6.6.2009 – 6.3.2010

Starting date for the personalised services || 11.08.2010

Application date || 11.5.2010

Redundancies during the reference period || 813

Redundant workers targeted for support || 325

Expenditure for personalised services (EUR) || 5 627 125

Expenditure for implementing EGF[4] (EUR) || 441 500

Expenditure for implementing EGF (%) || 7,3

Total budget (EUR) || 6 068 625

EGF contribution (65 %) (EUR) || 3 944 606

1.
The application was presented to the Commission
on 11 May 2010 and supplemented by additional
information up to 21 March 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 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.

4.
Denmark quotes the World Wind Energy Report 2009
prepared by the World Wind Energy Association, which shows that the most
dynamic progress of the wind industry took place in Asia and North America and
the focus of the global wind sector moved away from Europe. Amid a dynamic
global growth of the sector, Europe's share in total capacity was reduced from
65,5 % in 2006 to 47,9 % in 2009. Asia is expanding most rapidly,
accounting for 40,4 % of the new wind capacity in 2009 (in comparison to
18,1 % in 2004) while Europe fell back from 70,7 % of new capacity in
2004 to only 27,3 % in 2009.

(Source: World Wind Energy Report 2009, WWEA
World Wind Energy Association)

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 (accounting for 95 % of all workers targeted for
support under this application) has been part of the trend described above.
Although its income has been growing (increase by 185 % over the past five
years) and the company increased the number of staff by 202 % over the
same period, it has also been losing its share in the rapidly growing world market
for wind energy (from 30 % in 2004 down to about 14 % at present).
These factors resulted in Vestas shifting the focus of its activities and its
production plants to the USA and Asia, where the bigger share of the customer
base is located and production is more cost-effective.

6.
In addition, the new economic context as a
result of the financial and economic crisis negatively affected the EU wind
industry in 2009. As a result, the Danish wind industry experienced a sharp
drop in employment in that year, as well as a drop in turnover.

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

7.
Denmark 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.

8.
The application cites 813 redundancies in six enterprises operating in the NACE Revision 2
Division 28 ('Manufacture of machinery and
equipment')[5] in the NUTS II region of Midtjylland (DK04) during the
nine-month reference period from 6 June 2009 to 6
March 2010. 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.

Explanation of the unforeseen nature
of those redundancies

9.
The Danish authorities
argue that that the reduction of employment in Midtjylland, which is the
subject of this application, was unforeseen because of the rapid expansion of
the global wind energy sector, and the positive expectations which had been
published by the producers in their quarterly reports in the period preceding
the lay-offs.

Identification of the dismissing
enterprises and workers targeted for assistance

10.
The application cites a total of 813 redundancies in the following six enterprises, of which 325 are
targeted for assistance:

Enterprises                                                                          Numbers of dismissals

Vestas assembly A/S || 138

Vestas Blades A/S || 506

Vestas Control Systems A/S || 105

Vestas Machining A/S || 24

I.P.L Transmissioner || 18

Lind Jensens Maskinfabrik || 22

Total enterprises: 6 || Total dismissals: 813

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

Category || Number || Percent

Men || 251 || 77,23

Women || 74 || 22,77

EU citizens || 325 || 100,00

Non EU citizens || 0 || 0

15-24 years old || 28 || 8,62

25-54 years old || 247 || 76,00

55-64 years old || 50 || 15,38

> 64 years old || 0 || 0

12.
None of the workers dismissed have longstanding health problems or
disablilities.

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

Category || Number || Percent

Professionals || 2 || 0,62

Technicians and associate professionals || 26 || 8,00

Clerical support workers || 1 || 0,31

Craft and related trades workers || 133 || 40,92

Plant and machine operators, and assemblers || 149 || 45,84

Elementary occupations[6] || 14 || 4,31

14.
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

15.
The territory concerned is Central Denmark
Region (Midtjylland, NUTS II – DK04) and particularly the municipality of
Ringkøbing-Skjern. Midtjylland is the first in area and second in population
among Denmark's five regions, with an area of 13 053 square
kilometres and a population of above 1,2 million. Its capital city is
Viborg. The affected municipality of Ringkøbing-Skjern is located in the western
part of the region. Ringkøbing-Skjern, with an area of 1 485 km2, has
a population of 58 803 (2009).

16.
The principal stakeholders are the municipality
of Ringkøbing-Skjern and the social partners. 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.
The municipality will be responsible for implementation of the activities in
the application, as well as registration and control. The social partners, i.e.
the trade unions and the employers' organisations involved in the project are
the following: Ringkøbing Fjord Business Development Centre (Ringkøbing Fjord
Erhvervscenter), Ringkøbing-Skjern Vocational College (UddannelsesCenter
Ringkøbing-Skjern), Danish Confederation of Trade Unions (LO), Danish Metal
(Dansk Metal – union for workers in metal industries), 3F (union for unskilled
workers), Danish Employers' Organization (DI – organization for employers in
industry), Local Employment Advisory Council (LBR – council of partners with
interests in the employment sector), Regional Employment Advisory Council (RBR
– regional council of partners), Vestas Wind Systems A/S.

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

17.
The workers in the iron and metal industry, to
which the manufacture of wind turbines sector belongs, constitute a higher
share in the total number of workers in the municipality of Ringkøbing-Skjern,
than in Denmark as a whole (19 % and 6 % respectively), thus making
the region more vulnerable to the negative changes in the sector.

18.
Denmark expects the impact of the redundancies
to be locally significant; notified redundancies of the affected workers
represent about 2,5 % of the total number of workplaces in the
municipality of Ringkøbing-Skjern. The municipality has been affected by rising
unemployment much more than the region of Midtjylland and Denmark as a whole
(respective increase between July 2008 and September 2010: Ringkøbing-Skjern:
290 %, Midtjylland: 192 %, Denmark: 176 %, source:
www.jobindsats.dk).

19.
Based on the figures published by the government's
Labour Market Commission, the consultancy firm M-ploy A/S estimates that these
redundancies may bring about a rise in unemployment support expenditure of
about EUR 940 000 per annum, as well as reduced tax revenue of up to
EUR 3,2 mln per annum.

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.
Clarification and reorientation: The target group will be offered a clarifying basic programme to
determine their goals and draw up an action plan. The basic programme will run
for 12 weeks and will focus on reorientation for the workers concerned, with
particular emphasis on development areas in the municipality, such as green
energy and tourism. Two analyses have been launched to better identify future
development areas. Other elements of this measure will be qualification
assessment, individual careers counselling, workshop activities at vocational
colleges or vocational training centres and on-the-job-training. For foreign
nationals who do not speak or understand Danish fluently, interpreter
assistance will be provided.

Supplementary support for further education
and training: Participants
who have one or more education goals determined in the clarification process,
are offered the opportunity to start/complete an education programme.

Innovation laboratory: The goal of this measure is to focus on upgrading workers’ skills
to enable them to take part in clean-tech based prototype work in existing
companies. This will be achieved through course activities and apprentice-based
learning from peers in market leading companies in the cleantech/innovation
field. The key part of the measure will be a placement in a host company, where
the worker can try out an idea coming from either the host company or the
worker him/herself.

Mentoring scheme in connection with
practical training: Practical
training with a mentoring scheme attached is for those in the target group who,
after the clarification process, are assessed to be suitable for further
training, and for people over 50 years of age who are not interested in
starting an education course. About 40 practical training programmes with
attached mentoring schemes are expected to be established.

Qualification hotline: The hotline centre will guide the
unemployed and the potential employers into finding the proper continuing
training programme. The hotline function must react as soon as need arises.
These may include situations such as a need for a mentor, clarification of
competencies or a need for new competencies, continuing training in the form of
vocational training courses etc. and guides to these.

Job-search allowances/unemployment
benefit/student grants: The purpose of this measure
is to minimise support-related barriers. Jobseekers are offered various
allowances depending on their status versus the national support system and
activities in which they are participating in the coordinated package of
activities. Denmark confirmed that these allowances will be provided only for
the duration of the active labour market measures.

Mobility allowances: For the workers who have to commute to be able to participate in
the measures mobility allowances have been envisaged.

21.
The expenditure for implementing 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 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 of these services at
EUR 5 627 125 and the expenditure for implementing EGF at
EUR 586 500 (10,4 % of the total amount). The total contribution
requested from the EGF is EUR 3 944 606 (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)

Clarification and reorientation || 150 || 7 535 || 1 130 250

Supplementary support for further education || 75 || 12 135 || 910 125

Innovation laboratory || 10 || 24 500 || 245 000

Mentor scheme in connection with practical training || 40 || 6 875 || 275 000

Qualification hotline || 50 || 7 100 || 355 000

Job-search allowances/unemployment benefit/student grants || 325 || 7 928 || 2 576 600

Mobility allowances || 85 || 1 590 || 135 150

Sub total personalised services || || 5 627 125

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

Preparatory activities || || 33 750

Management at local level || || 159 000

Management at national level || || 56 000

Information and publicity || || 33 750

Control activities || || 159 000

Sub total expenditure for implementing EGF || || 441 500

Total estimated costs || || 6 068 625

EGF contribution (65 % of total costs) || || 3 944 606

23.
Denmark confirms that the measures described
above are complementary with actions funded by the Structural Funds.

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

24.
Denmark started the personalised services to the
affected workers included in the co-ordinated package proposed for co-financing
to the EGF on 11 August 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.
A number of social partner organisations (see point 14) was consulted
during the preparation of the application and they will also be involved in
monitoring the implementation of the measures.

26.
The Danish authorities confirmed that the
requirements laid down in national and Community 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 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;

· 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 Community financial instruments.

Management and control systems

28.
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 and Construction
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 and Construction Authority.

Financing

29.
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 3 944 606,
representing 65 % of the total cost. The Commission's proposed allocation
under the Fund is based on the information made available by Denmark.

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 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.
As a reinforcement of the EGF budget line
04.0501 by EUR 50 000 000 is foreseen through AB2/2011, this
budget line will be used to cover the amount of               EUR 3 944 606
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/2010/017 DK/Midtjylland Machinery 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[7], 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[8], and in particular Article
12(3) thereof,

Having regard to the proposal from the European
Commission[9],

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)       Denmark submitted an application to mobilise the EGF, in respect of
redundancies in 6 enterprises operating in the NACE
Revision 2 Division 28 ('Manufacture of machinery and equipment') in the NUTS II region of Midtjylland (DK04), on 11 May 2010 and supplemented it by additional information up to 21 March 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 3 944 606.

(5)       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 2011, the European Globalisation Adjustment Fund
(EGF) shall be mobilised to provide the sum of EUR 3 944 606 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]               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).

[6]               The breakdown is based on International Standard
Classification of Occupations (ISCO) developed by International Labour
Organisation.

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

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

[9]               OJ C [...], [...], p. [...].