# EUR-Lex - 52011PC0420 - EN

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# 52011PC0420

**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/2009/019 FR/Renault from France) /* COM/2011/0420 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 9 October 2009, France submitted application EGF/2009/019
FR/Renault for a financial contribution from the EGF, following
redundancies in Renault s.a.s. and seven of its subsidiaries in France.

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/2009/019

Member State || France

Article 2 || (a)

Primary enterprise || Renault s.a.s.

Suppliers and downstream producers || 7

Reference period || 1.4.2009 – 31.7.2009

Starting date for the personalised services || 15.10.2008

Application date || 9.10.2009

Redundancies during the reference period || 1 384

Redundancies before and after the reference period || 3 061

Total eligible redundancies || 4 445

Redundant workers targeted for support || 3 582

Expenditure for personalised services (EUR) || 37 628 780

Expenditure for implementing EGF[3] (EUR) || 53 566

Expenditure for implementing EGF (%) || 0,14

Total budget (EUR) || 37 682 346

EGF contribution (65 %) (EUR) || 24 493 525

1.
The application was presented to the Commission
on 9 October 2009 and supplemented by additional information up to 10 February
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, France argues that
Renault suffered from the increasing cost of credit and the hardening of credit
conditions from 2008 onwards, which seriously affected the ability of the
enterprise to fund its own activities in the short term as well as its
investment plans or the future. Thus, the interest rate with which Renault
could theoretically fund itself for five years[4]
rose from 5,60 % in January 2008 to more than 14,50 % in October of
the same year. At the same time, consumers also felt the tightening of credit
and the effects of the global financial and economic crisis, leading to anxiety
about job security and the postponement of vehicle purchases. Despite the
temporary measures introduced by some Member States (e.g. scrappage schemes),
registrations of new Renault cars in Europe dropped by 6,5 % between 2007 and
2008. This downward tendancy accelerated during the fourth quarter of 2008,
when new registrations dropped from -15,2 % in October 2008 to -27,5 %
in December 2008 compared with the same period of 2007.

4.
The Commission has already recognised in
response to previous applications concerning the automotive sector that the
financial crisis at the origin of the economic slow-down affected this sector
particularly seriously, since 60 to 80 % (varying from one Member State to
another) of new vehicles sold in Europe are bought on credit[5]. During the second quarter of 2009,
the total number of vehicles constructed in the European Union was 39,5 %
lower than that recorded a year earlier. The crisis weighed heavily on the
major car manufacturers in Europe and their suppliers[6].

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

5.
France 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.

6.
The application cites 1 384 redundancies in
Renault s.a.s. and six suppliers during the four-month
reference period from 1 April 2009 to 31 July 2009 and
a further 3 061 redundancies in Renault s.a.s. and seven suppliers outside
the reference period, but included in the same voluntary redundancy plan. All of
these redundancies were calculated in accordance with the first indent of the
second paragraph of Article 2 of Regulation (EC) No 1927/2006.

Explanation of the unforeseen nature
of those redundancies

7.
The French authorities argue that the global
financial crisis led to a sudden collapse of the world economy, with serious
effects for many sectors. Since the second half of 2008, the economic situation
has developed very differently from the gradual decline known in previous business
cycles, for which enterprises could have prepared themselves.

Identification of the dismissing
enterprises and the workers targeted for assistance

8.
The application relates to 1 384
redundancies in Renault and seven of its suppliers.

Name of the entreprise || Number of redundancies during the reference period

Renault s.a.s. || 1 333

ALPINE || 7

Fonderie de Normandie || 12

MCA Maubeuge construction auto || 15

RST || 3

STA Société de transmission auto || 7

SOFRASTOCK || 7

SOVAB || 0

Total || 1 384

As provided for by Article 3a(b) of Regulation
(EC) No 1927/2006, a further 2 198 workers made redundant by the same
eight enterprises before and after the reference period, as a result of the
same plan for voluntary redundancies, are targeted for support in addition to
the workers dismissed during the reference period. The total number of workers
to benefit from the co-funded package of personalised services is therefore
3 582.

9.
The break-down of the targeted workers is as
follows:

Category || Number || Percent

Men || 2 987 || 83,4

Women || 595 || 16,6

EU citizens || 3 468 || 96,8

Non EU citizens || 114 || 3,2

15-24 years old || 4 || 0,1

25-54 years old || 999 || 27,9

55-64 years old || 2 579 || 72,0

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

10.
Amongst the targeted workers are included 422
(11,8 %) suffering from a longstanding health problem or a disability.

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

Category || Number || Percent

Senior executives ("Cadres supérieurs") || 69 || 1,9

Middle-ranking executives ("Cadres") || 878 || 24,5

Employees, technicians and supervisors ("Employés, techniciens et agents de maîtrise" or "ETAM") || 1 579 || 44,1

Workers ("Ouvriers") || 1 056 || 29,5

12.
In accordance with Article 7 of Regulation (EC)
No 1927/2006, France 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 redundancies covered in this application
occurred mainly in three regions of France : the Ile-de-France (53 %), the
Haute-Normandie (29,5 %) and the Nord-Pas-de-Calais (12,5 %).

14.
The responsible authorities in the affected
areas are the Préfet of the relevant Department and the Departmental Directors
for Employment and Vocational Training (directeur départemental du travail, de
l'emploi et de la formation professionnelle). Renault itself will be a major
stakeholder, and will be co-ordinating the scheme.

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

15.
In the Ile-de-France, the redundancies occur
mainly in the plant of Guyancourt Aubevoie (941) and the headquarters of the
company (448). As this concerns the region of Paris, unemployment levels are
relatively low (4,7 % and 5,9 % respectively) and employment levels
as a whole are rising (by respectively 3,6 % and 5,2 % between 2003
and 2007), while manufacturing employment is declining (respectively by
3,9 % and 15,2 % over the same period).

In the Haute-Normandie, the redundancies occur
in Cléon (334) near Rouen and Sandouville (887) near Le Havre. The latter
region in particular has been suffering industrial decline (a drop in
industrial employment by 8,9 % between 2003 and 2007) and thus offers
fewer opportunities to the redundant workers.

In the Nord-Pas-de-Calais, the redundancies
occur mainly in Douai (306) and Maubeuge (153). These are located in zones of
already high unemployment (13,8 % and 15,5 % as opposed to the
national unemployment rate of 9,1 %). These zones have been suffering a
decline in industrial employment (by respectively 9,1 % and 13,9 %
between 2003 and 2007).

16.
As Renault employs more than 1 000 workers,
it is obliged to contribute to the revitalisation of these regions under
Article L1233-84 of the Code du Travail. This means that the Renault Group will
contribute to the creation of new activities and jobs so as to alleviate the
impact of the dismissals in these regions.

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

17.
The "Projet Renault Volontariat",
which is the object of this EGF application from France, aims to support the 4 445
workers who volunteered to leave the company and specifically the 3 582
targeted workers.

Until 30 April 2009, each of the participating
workers could opt for:

(1)
a "projet professionnel ou personnel", or

(2)
a "congé de reclassement", or

(3)
early retirement, or

(4)
help to return to their country of origin.

The EGF application only concerns the first two
of these provisions.

The projet professionnel ou personnel is for
those workers who already know what they wish to do, have a future sector or
employer in mind and need some transitional help (e.g. advice, training, etc.)
to reach their aim. The congé de reclassement is for those workers who do not
yet have a specific objective and are willing to spend a period of up to or
even beyond nine months being retrained and being helped with advice and
guidance. Both schemes may also include the creation of a new business by the
redundant worker. Each worker has to decide which of these two schemes to enter
- they cannot be combined by any one worker.

Of the workers targeted in the application,
2 910 opted in favour of the congé de reclassement and 679 for the projet
professionel ou personnel. The difference between this total of 3 589
workers budgeted for and the 3 582 workers finally participating, lies in
the fact that seven workers passed away after the start of the measures.

In the case of the congé de reclassement
(article L1233-71 of the Code du Travail), an employer of more then 1 000
persons is obliged to offer the measures there defined for a period which may
vary between a minimum of four and a maximum of nine months. Pursuant to the
above mentioned law, months five to nine of this period are therefore optional
and can be eligible for an EGF contribution in accordance with Article 6(1) of
the EGF Regulation. Renault decided to offer these measures for up to nine
months, depending on the worker's occupation, seniority and site. The
application does not contain any expenditure on the congé de reclassement for
the first four months of the scheme, which is the minimum laid down by the law,
and also excludes all periods when the workers are still covered by their
notices of dismissal.

18.
The following measures are proposed, all of
which combine to form a coordinated package of personalised services aimed at
re-integrating the 3 582 targeted workers into employment.

–
Advisory services for workers who opted for a
project professionnel ou personnel ("Cellule de reclassement pour
projet professionnel ou personnel"): These
advisory services are at the disposal of the relevant group of workers,
providing guidance on job search and available training, access to the training
itself, and advice on business start-up (search for funding, help with a
business plan, introduction to management, etc.).

–
Advisory services for workers who opted for
the congé de reclassement ("Cellule de reclassement pour congé de
reclassement"): These advisory services
are at the disposal of the relevant group of workers, providing guidance on job
search and available training, access to the training itself, and advice on
business start-up (search for funding, help with a business plan, introduction
to management, etc.). The 24 teams of advisers active in the Renault sites and
those of the suppliers concerned, combine services to both groups of workers.

–
Training for workers who opted for a projet
professionnel ou personnel ("Formation pour projet professionnel ou
personnel"): The training measures are
varied according to the plans of the redundant workers.

–
Training for workers who opted for the congé
de reclassement ("Formation pour congé de reclassement"): The training measures are varied according to the plans of the
redundant workers and may even extend beyond the nine months of the congé de
relassement if they are included in the training pathway agreed with the cellule
de reclassement.

–
Allowance provided under the congé de
reclassement ("Allocation de congé de reclassement"): This allowance is paid on a monthly basis until the end of the
congé de reclassement. It amounts to 65 % of the workers' former salary,
except for those who worked for the Renault site located in Sandouville. The
latter benefit from an allowance equal to 100 % of their former salary for
a duration of six months (minus their respective periods of notice), then 65 %
until the end of their congé de reclassement. This allowance will be paid at a
rate of EUR 8 988 to the 2 689 workers made redundant by Renault
and EUR 6 189 to the 231 workers made redundant by the suppliers,
making for an average of EUR 8 765,40. It is calculated on the
assumption that the workers are occupied on a full-time basis in active labour
market policy measures; should this not be the case, the allowance will be paid
by the EGF on a pro rata basis for each worker.

–
Support for business creation ("Aide
à la création d'entreprise"): This measure
is provided both under the projet professionnel ou personnel and the congé de
reclassement. It can grant up to EUR 12 000 for investments per
business created, together with EUR 1 500 for interest on loans and
up to EUR 500 for registration fees. A further EUR 3 000 can be
paid for the recruitment of a worker from among the group of targeted workers
of this application.

19.
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 activities as well as
information and publicity. The French authorities explained that the low
level of expenditure provided under these headings and the zero rating of
management and control measures were due to the fact that they did not price
activities which they were in any case obliged to carry out as part of the
management of the State.

The information activities proposed by France
include the distribution of the Commission's EGF leaflet to the local stakeholders
and for placement on notice boards at the production sites. This activity will
aim at the active workers there, and will not include the redundant workers who
will already have benefited from the EGF support.

The French
proposal also includes a press release upon adoption of the EGF support and a
mention on the relevant Ministry web site.

20.
The personalised services presented by the French
authorities are active labour market measures within the eligible actions
defined by Article 3 of Regulation (EC) No 1927/2006. The French authorities
estimate the total costs of these services at EUR 37 628 780 and
the expenditure for implementing the EGF at EUR 53 566 (0,14 %
of the total amount). The total contribution requested from the EGF is EUR 24 493 525
(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)

Advisory services for workers who opted for a project professionnel ou personnel ("Cellule de reclassement pour projet professionnel ou personnel") || 679 || 1 981,58 || 1 345 491

Advisory services for workers who opted for the congé de reclassement ("Cellule de reclassement pour congé de reclassement") || 2 910 || 1 880,90 || 5 473 413

Training for workers who opted for a projet professionnel ou personnel ("Formation pour projet professionnel ou personnel") || 88 || 1 430,25 || 125 862

Training for workers who opted for the congé de reclassement ("Formation pour congé de reclassement") || 2 299 || 711,34 || 1 635 377

Allowance provided under the congé de reclassement ("Allocation de congé de reclassement") || 2 910 || 8 765,40 || 25 507 307

Support for business creation ("Aide à la création d'entreprise") || 332 || 10 666,65 || 3 541 328

Sub total personalised services || || 37 628 780

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

Preparatory activities || || 51 566

Information and publicity || || 2 000

Sub total expenditure for implementing EGF || || 53 566

Total estimated costs || || 37 682 346

EGF contribution (65 % of total costs) || || 24 493 525

- The totals in each line are averages
calculated from the figures used for Renault itself and the seven suppliers;
they do not entirely tally due to rounding.

21.
France confirms that the measures described
above are complementary with actions funded by the Structural Funds and that,
as they benefit from no other EU or French public support, double funding is
excluded. An agreement to be concluded between the French State and Renault
will confirm the obligation to ensure the absence of double funding.

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

22.
France started the personalised services to the
affected workers included in the co-ordinated package proposed for co-financing
to the EGF on 15 October 2008, date when the guidance of the workers included
in the plan started. 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

23.
On 9 September 2008, the Comité Central
d'Entreprise of Renault was informed and consulted on the "Projet Renault
Volontariat" (PRV), the subject of this application from France, and made
its observations on the plan. Two meetings with the trade union organisations
were held to develop the measures included in the PRV. The Comité Central was
informed and consulted once more on 3 October 2008 on the measures for the
plants.

Following this phase, the Comités
d'Etablissement of Renault were informed and consulted on 6 and 7 October 2008,
following which the plan was put into effect on the various sites.

In parallel, the information and consultation
of the Comité d'Entreprise of the suppliers included in this application took
place.

24.
The French 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

25.
As regards the criteria contained in Article 6
of Regulation (EC) No 1927/2006, the French 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

26.
France has notified the Commission that the
financial contribution will be managed by the Mission du Fonds National de
l'Emploi (FNE) within the Délégation générale à l'emploi et à la formation
professionnelle (DGEFP) in the Ministry for the Economy, Industry and
Employment. The payments will be managed by the Mission du Financement, du
Budget et du Dialogue de Gestion (MFBDG) within the Département Financement,
Dialogue et Contrôle de Gestion of the same ministry. Audits and controls will
be carried out by the Mission Organisation des Contrôles (MOC) within the
Sous-Direction Politiques de Formation et du Contrôle of the same Ministry.
Certification will be provided by the Pôle de Certification of the Direction
Générale des Finances.

Financing

27.
On the basis of the application from France, the
proposed contribution from the EGF to the coordinated package of personalised
services is EUR 24 493 525 (including
expenditure to implement EGF), representing 65 %
of the total cost. The Commission's proposed allocation under the Fund is based
on the information made available by France.

28.
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.

29.
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.

30.
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.

31.
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

32.
The remaining amount of payment appropriations
initially entered on the budget line 04.0501 after adoption by both arms of the
budgetary authority of the proposals submitted to date for mobilising the EGF
is EUR 808 079 and is therefore not sufficient to cover the amount of
EUR 24 493 525 needed for the present application.

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 24 493 525 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/2009/019 FR/Renault from France)

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)       France submitted an
application to mobilise the EGF, in respect of redundancies in the enterprise Renault s.a.s. and seven of its suppliers,
on 9 October 2009 and supplemented it by additional
information up to 25 January 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 24 493 525.

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

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 24 493 525 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]               This theoretical interest rate is composed of the
interest rate on the premium against payment default -- CDS, i.e. Credit
Default Swap -- of a credit to Renault plus the interest on a risk free loan,
both for two to five years.

[5]               COM(2009)104 of 25.2.20096, "Responding to the
crisis in the European automotive industry".

[6]               Directorate General for Entreprise and Industry: "Impact
of the economic crisis on the manufacturing and construction industries - April
2009 update"

(http://ec.europa.eu/enterprise/newsroom/cf/itemshortdetail.cfm?&tpa_id=0&item_id=3437).

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

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

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