EXPLANATORY MEMORANDUM

CONTEXT OF THE PROPOSAL

1. The rules applicable to financial contributions from the European Globalisation Adjustment Fund (EGF) for applications submitted until 31 December 2013 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 (the ‘EGF Regulation’)[1].

2. On 2 April 2013, Belgium submitted application EGF/2013/002 BE/Carsid for a financial contribution from the EGF, following redundancies linked to the closure of the production plant of Carsid SA (‘Carsid’)[2] located in Marcinelle near Charleroi[3]. The application was supplemented by additional information up to 4 July 2014.

3. Having examined this application, the Commission has concluded, in accordance with the applicable provisions of the EGF Regulation, that the conditions for a financial contribution from the EGF are met.

SUMMARY OF THE APPLICATION

EGF application: || EGF/2013/002 BE/Carsid

Member State: || Belgium

Date of submission of the application: || 2.4.2013

Intervention criterion: || Article 2(a) of the EGF Regulation

Primary enterprise: || Carsid SA

Number of suppliers and downstream producers: || 0

Reference period: || 28.9.2012-28.1.2013

Date on which the personalised services to the targeted workers were started: || 1.10.2012

Number of redundancies during the reference period: || 939

Number of redundancies before and after the reference period: || 0

Total number of redundancies: || 939

Number of persons expected to participate in the measures: || 752

Budget for personalised services: || EUR 1 760 869

Budget for implementing the EGF: || EUR 63 000 (3.5 % of the total budget)

Total budget: || EUR 1 823 869

Financial contribution requested from the EGF: || EUR 911 934 (50 % of the total budget)

ANALYSIS OF THE APPLICATION

Link between the redundancies and major structural changes in world trade patterns due to globalisation

4. In order to establish the link between the redundancies and major structural changes in world trade patterns due to globalisation, the Belgian authorities argue that the sector of the production of continuously-cast crude steel (which includes billets, blooms and slabs), in which Carsid operated, has undergone serious economic disruption, in particular a rapid decline of the EU’s market share.

5. According to data referred to by the Belgian authorities[4], between 2006 and 2011, the production of continuously-cast crude steel in the EU-27 decreased from 197.1 million tonnes to 170.8 million tonnes (− 13.4 %; − 2.8 % annual growth[5]), whereas, at worldwide level, production increased from 1 149.6 million tonnes to 1 438.3 million tonnes (+ 25.1 %; + 4.6 % annual growth). This has led to a decrease of the EU-27’s market share in the production of continuously-cast crude steel, measured in volume terms, from 17.1 % in 2006 to 11.9 % in 2011 (− 30.7 %; − 7.1 % annual growth). By comparison, during the same period, China’s market share increased from 35.5 % to 46.8 % (+ 32.0 %; + 5.7 % annual growth), whereas the market shares of the five other largest producers (which account together for around 25 % to 30 % of worldwide production) either decreased, although to a lesser extent than for the EU-27 (Japan, USA, Russia), or increased moderately (South Korea, India). These data therefore show a rapid decline of the EU’s market share in the sector of the production of continuously-cast crude steel at worldwide level.

Market share in the production of continuously-cast crude steel at worldwide level (volume)

Source: World Steel Association, own calculations.

6. As shown in the figure below, between 2002 and 2011, imports of ingots and semi-finished steel products[6] in the EU-27 increased from 13.3 million tonnes to 18.1 million tonnes (+ 36.8 %; + 3.5 % annual growth), whereas exports of such products remained generally stable, going from 11.0 million tonnes to 10.8 million tonnes (− 1.8 %; − 0.2 % annual growth), thus leading to an overall deterioration of the trade balance (− 13.9 % annual growth).

Imports and exports of ingots and semi-finished steel products in the EU-27 (000 tonnes)

Source: World Steel Association.

7. The effects of these changes in trade patterns have been worsened by other factors such as a decrease in demand in steel in the automotive and construction sectors in the EU as a consequence of the economic crisis and a relative increase of production costs (raw materials, energy, environmental constraints, etc.). These factors have harmed the competiveness of the EU’s steel industry and have led to a high number of job losses in the steel sector in recent years due to plant closures and restructuring by several steel manufacturers in Europe[7]. For instance, between 2008 and 2013, the number of persons employed in the metallurgic industry (NACE Rev. 2 division 24 ‘Manufacture of basic metals’) in the EU-27 decreased by around 280 000 from 1.44 million to 1.16 million (− 19.4 %)[8].

8. Since the start of the EGF in 2007, there have been four EGF applications in the steel sector[9]. Three of these applications were linked to major structural changes in world trade patterns due to globalisation[10] and one to the global financial and economic crisis[11].

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

9. The application is based on the intervention criteria of Article 2(a) of the EGF Regulation, which requires at least 500 redundancies over a period of four months in an enterprise in a Member State.

10. The application relates to 939 redundancies made during a period of four months from 28 September 2012 to 28 January 2013. All the redundancies have been calculated from the date of the employer’s individual notice to lay off or to terminate the contract of employment of the worker, as laid down in the first indent of the second paragraph of Article 2 of the EGF Regulation (‘method 1’).

Explanation of the unforeseen nature of those redundancies

11. The Belgian authorities argue that the redundancies at Carsid could not have been foreseen. In 2007, Carsid invested EUR 100 million in the renovation of its blast furnace and EUR 27 million in environmental improvements. In 2008, it ordered equipment to start developing the production of vacuum steel and high value-added products. Carsid had also received CO2 emissions allowances for the period 2008-2013 and had requested CO2 allowances for the period after 2013. However, in November 2008, because of the reduction in demand due to the economic crisis, Carsid decided to temporarily stop its production activities. Following an agreement with the workers’ representatives, production-line workers were put on full-time temporary unemployment and office workers and executives were put on time-credit schemes or reduced working time. Between 2008 and 2011, Carsid recorded significant losses. In 2011, Carsid started looking for potential buyers but was unable to conclude a takeover deal. Eventually, in March 2012, Carsid informed its works council that it had decided to close the plant and to carry out collective redundancies.

Identification of the targeted workers

12. The Belgian authorities estimate that 752 of the 939 workers made redundant will take part in the measures cofinanced by the EGF[12].

13. The breakdown of targeted workers by sex, nationality and age group is as follows:

Category || Number of targeted workers

Sex: || Men: || 740

|| Women: || 12

Nationality: || EU nationals: || 723

|| Non-EU nationals: || 29

Age group: || 15-24 years old: || 0

|| 25-54 years old: || 595

|| 55-64 years old: || 157

|| Over 65 years old: || 0

14. None of the targeted workers have a longstanding health problem or disability.

15. The breakdown of targeted workers by occupational category[13] is as follows:

ISCO-08 major group || Number of targeted workers

1 Managers || 34

2 Professionals || 28

3 Technicians and associate professionals || 68

4 Clerical support workers || 27

5 Service and sales workers || 19

7 Craft and related trades workers || 256

8 Plant and machine operators and assemblers || 320

9 Elementary occupations || 0

Unknown / not available || 0

16. In accordance with Article 7 of the EGF Regulation, the Belgian authorities have confirmed that the principles of equality of treatment and non-discrimination will be respected in the access to the measures and their implementation.

Description of the territory concerned and its authorities and stakeholders

17. The redundancies at Carsid primarily affect the arrondissement of Charleroi in the province of Hainaut, in the Walloon Region, in southern Belgium. The area of Charleroi (southern Hainaut) is a former coal-mining and steelmaking area in which employment is strongly dependant on traditional heavy industry. In 2012, the unemployment rate in the area of Charleroi (arrondissement) was 21.6 %, compared to 15.8 % on average in the Walloon Region and 11.2 % at national level. The employment rate (50.6 %) was significantly below the regional and national averages (respectively 69.0 % and 61.3 %)[14]. In 2012, around 42 % of jobseekers registered at the Charleroi regional directorate (FOREM) had been unemployed for more than two years and 58 % did not have higher secondary education[15].

18. The measures are implemented by FOREM (the public employment and training service of the Walloon Region) through a Redeployment Unit (cellule de reconversion) specifically set up as part of the legal obligations for the collective redundancies procedure[16]. The Redeployment Unit for Carsid is managed by a committee which brings together representatives from the Walloon public services in charge of employment, training, and economic affairs, FOREM, trade unions, and sector-based vocational training organisations.

19. Besides FOREM, the other organisations involved in the general coordination and implementation of the measures therefore include:

– the Walloon Government (Minister-President of the Walloon Region in charge of Structural Funds coordination, Minister for Employment and Training, Minister for the Economy);

– trade unions (FGTB, CSC);

– the sectoral vocational and technological training centres active in the Walloon region (centres de compétences)[17];

– the European Social Fund (ESF) Agency of the French Community of Belgium.

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

20. The redundancies at Carsid are expected to significantly worsen unemployment in the Charleroi area (southern Hainaut). As indicated above, the Charleroi area is characterised by a high level of unemployment, with a high proportion of long-term unemployment and low qualification levels and skills levels. The economic crisis has had a stronger impact in the Charleroi area than in the rest of Wallonia. The sectoral structure of employment in the Charleroi area partly explains this trend as the manufacturing industry plays a stronger role than in the rest of Wallonia. Overall, the manufacturing sector accounts for a high number of jobs (19 500) and appears as a specialisation of southern Hainaut. The number of jobs in the manufacturing sector in southern Hainaut has however declined sharply in recent years (− 15.3 % between 2007 and 2012), particularly in sectors where companies often employ a large number of workers, e.g. the manufacture of machinery and equipment (e.g. Caterpillar): − 970 jobs (− 18.6 %), metallurgy (e.g. Carsid, Industeel, Aperam, Thy-Marcinelle): − 110 jobs (− 30.6 %), the manufacture of fabricated metal products (e.g. Cofely Fabricom): − 399 jobs (− 12.3 %) and the manufacture of other transport equipment (e.g. Sonaca, SABCA): − 160 jobs (− 5.5 %). The ability of local companies active in these sectors to take on the number of workers made redundant by Carsid is very limited. Given the decline in employment in manufacturing also in the neighbouring areas of Namur and Centre, it is likely that these workers will have to retrain to find jobs in other occupations and other sectors.

Personalised services to be funded and breakdown of estimated costs

21. Only some of the measures which form part of the actions implemented by the Belgian authorities to support the workers made redundant by Carsid will be cofinanced by the EGF. Measures that are mandatory under collective redundancies procedures in Belgium and which are carried out as part of the standard activities of the Redeployment Unit (e.g. outplacement support, training, job-search assistance and careers advice, etc.)[18] are therefore not included in this EGF application. The overall set of measures (mandatory measures and EGF measures) is managed by FOREM.

22. The personalised services provided to the redundant workers as part of the actions to be cofinanced by the EGF consist of the following measures (grouped by category)[19]:

(1) Individual job-search assistance, case management and general information services:

– Redeployment (support / guidance / integration): This set of services builds upon the standard activities carried out by the Redeployment Unit. The services will be provided by a team of FOREM staff (project manager, specialised advisers) in partnership with former workers’ representatives who act as ‘social attendants’ (accompagnateurs sociaux) to encourage workers to take part in the measures and to help them with administrative procedures. To facilitate contacts between the workers, the services are provided jointly to all the redundant workers at dedicated premises. The services cover three types of activity: (i) collective information on job-search techniques (writing a CV and application letter, using web resources, etc.), explanations on labour regulations (outplacement, unemployment, employment contract, pension), awareness-raising on discrimination, presentation of occupations and sectors with potential, etc.; (ii) individual interviews with a FOREM adviser (skills audit, career pathway, guidance on training, etc.); (iii) free and open access to job-search tools (IT equipment with an internet connection, telephone, specialised documentation, etc.). This measure will concern all 752 targeted workers, for a maximum duration of 24 months. FOREM will also carry out specific activities to facilitate job-search and to overcome difficulties in the redeployment process. This includes meetings between the redundant workers and potential employers (job matching), company visits, meetings with recruiters to prepare for job interviews, and exchanges of experience with other workers who have already retrained or have found a job after a collective redundancy.

(2) Training and retraining:

– Integrated training: Different types of vocational training courses could be provided to potentially all 752 targeted workers (depending on the type of course) either by FOREM or by the centres de competences or IFAPME[20] . As an initial step, FOREM staff will help each participant to define their work-related goals and guide them towards one of three types of training module. Workers who could retrain for an occupation similar to the one they held in Carsid could either follow a specific or specialisation module (40 hours) to adapt their competences and bring them up to date (e.g. lift truck operator, specific welding process, IT skills), or a supplementary course leading to new qualifications (320 hours), which would enable the workers to apply for jobs in a new occupation in the industrial sector. For retraining into an entirely different sector of activity, workers could follow an occupational training course (on average 960 hours) to acquire the competences required for this occupation. At the end of each training module, the new skills can be assessed and documented. Depending on the type of training and the field of competences, participants will be awarded either a formal certification of skills (i.e. a certificate of competence), a certificate of attendance (for competences or occupations for which no formal certification exists) or a validation of skills (for skills and competences acquired outside formal training courses). The formal certification of skills is verified through assessment tests which lead to the award of a ‘Certificate of Skills Acquired through Training’ (Certificat des Compétences Acquises en Formation – CECAF). The validation of skills is verified through assessment tests which lead to the award of skills credentials (titres de compétences).

– Transfer of experience: Experienced workers can enhance their skills and know-how by becoming teachers or trainers in technical education. A specific awareness-raising and pre-training module will be developed by FOREM and the federations of the various branches of technical education to encourage certain workers to train to become vocational teachers. The module will include the provision of specific information, technical support, meetings with practitioners and site visits. The module will last for eight weeks and will target around 10 workers.

23. These measures constitute active labour market measures within the eligible actions defined by Article 3 of the EGF Regulation.

24. The total costs of the measures are estimated at EUR 1 823 869, which includes EUR 1 760 869 for personalised services and EUR 63 000 for implementing the EGF (3.5 % of total costs). The total financial contribution requested from the EGF is EUR 911 934 (50 % of total costs).

Measures || Estimated number of targeted workers || Estimated cost per targeted worker (EUR)* || Total costs (EGF and national cofinancing) (EUR)*

Personalised services: || || ||

(1) Individual job-search assistance, case management, and general information services: || || ||

– Redeployment (support / guidance / integration) || 752 || 1 803 || 1 355 569

(2) Training and retraining: || || ||

– Integrated training || 752 || 535 || 402 300

– Transfer of experience || 10 || 300 || 3 000

Subtotal: || – || – || 1 760 869

Expenditure for implementing the EGF: || || ||

1. Preparatory activities || – || – || 0

2. Management || – || – || 19 200

3. Information and publicity || – || – || 43 800

4. Control activities || – || – || 0

Subtotal: || – || – || 63 000

Total costs: || – || – || 1 823 869

EGF contribution (50 % of total costs) || – || – || 911 934

* Rounded figures.

25. The Belgian authorities have confirmed that the measures are complementary with actions funded by the Structural Funds and that appropriate mechanisms are in place to prevent double financing.

Date on which the personalised services to the targeted workers were started or are planned to start

26. The Belgian authorities started to provide the personalised services to the targeted workers on 1 October 2012. Expenditure on these measures is therefore eligible for a financial contribution from the EGF from that date.

Procedures for consulting the social partners

27. The measures are the result of many discussions and preparatory meetings held between August 2012 and January 2013 among the various social partners involved. As mentioned above, the trade unions are directly involved in the management of the Redeployment Unit and in the implementation of certain measures.

28. The Belgian authorities have 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. Under Belgian federal legislation[21], companies that carry out collective redundancies must provide outplacement services to the redundant workers. The duration of the outplacement services must be of at least 30 hours over three months for workers under the age of 45 and of at least 60 hours over six months for workers aged 45 and above. All non-temporary workers must take part in such outplacement services, except in the case of specific derogations. Under Walloon legislation[22], workers’ representative organisations can ask FOREM to set up a Redeployment Unit to provide support to the redundant workers. The decision by FOREM to set up a Redeployment Unit is discretionary and it is not mandatory for employers or for workers to take part in the measures carried out by a Redeployment Unit. However, the services provided by Redeployment Units can be considered as fulfilling the legal obligations regarding outplacement services.

30. The Belgian authorities have confirmed that:

– the financial contribution from the EGF will not replace measures which are the responsibility of enterprises by virtue of national law or collective agreements[23];

– the measures provide support for individual workers and are not used for restructuring enterprises or sectors;

– the measures will not receive financial support from other Union funds or financial instruments[24].

Management and control systems

31. The application contains a detailed description of the management and control systems which specifies the responsibilities of the bodies involved. A steering committee composed of all the organisations involved in the implementation of the EGF measures ensures overall follow-up and coordination. The financial contribution from the EGF will be managed and controlled by the same bodies as for the ESF. One entity within the ESF Agency of the Wallonia-Brussels Federation (formerly the French Community of Belgium) will act as managing authority and another separate entity within the ESF Agency will act as paying authority. The Secretariat-General of the Wallonia-Brussels Federation will act as certifying authority and FOREM will act as intermediary body.

Financing

32. Article 12 of Council Regulation (EU, Euratom) No 1311/2013 laying down the multiannual financial framework for the years 2014-2020[25] allows for the mobilisation of the EGF within the annual ceiling of EUR 150 million (2011 prices) over and above the relevant headings of the financial framework.

33. Considering the maximum possible amount of a financial contribution from the EGF and the scope for reallocating appropriations, the Commission proposes to mobilise the EGF for the total amount of the requested contribution (EUR 911 934), which represents 50 % of the total costs of the proposed measures.

34. The proposed decision to mobilise the EGF will be taken jointly by the European Parliament and the Council, as laid down in point 13 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management[26].

35. The Commission presents separately a transfer request in order to enter in the 2014 budget specific commitment appropriations, as required under point 13 of the Interinstitutional Agreement of 2 December 2013.

Source of payment appropriations

36. Appropriations allocated to the EGF budget line in the 2014 budget will be used to cover the amount of EUR 911 934.

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 13 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management (application EGF/2013/002 BE/Carsid from Belgium)

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 Regulation (EC) No 1927/2006 of the European Parliament and of the Council of 20 December 2006 establishing the European Globalisation Adjustment Fund[27], and in particular Article 12(3) thereof,

Having regard to the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management[28], and in particular point 13 thereof,

Having regard to the proposal from the European Commission[29],

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 EGF shall not exceed a maximum annual amount of EUR 150 million (2011 prices), as laid down in Article 12 of Council Regulation (EU, Euratom) No 1311/2013 laying down the multiannual financial framework for the years 2014-2020[30].

(3) Belgium submitted an application to mobilise the EGF, in respect of redundancies in the enterprise Carsid SA, on 2 April 2013 and supplemented it by additional information up to 4 July 2014. 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 911 934.

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

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the European Union for the financial year 2014, the European Globalisation Adjustment Fund (EGF) shall be mobilised to provide the sum of EUR 911 934 in commitment and payment appropriations.

Article 2

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

Done at Brussels,

For the European Parliament For the Council

The President The President

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

[2] Carsid produced steel slabs intended for further processing by plants belonging to the Duferco group in Belgium (mainly for the production of hot-rolled products and cold-rolled products used in the construction, transport equipment and automotive sectors). Between 2006 and 2011 Carsid was part of a joint venture between Duferco and NLMK. This application is therefore linked with application EGF/2013/007 BE/Hainaut steel (Duferco-NLMK).

[3] This application replaces application EGF/2012/009 BE/Carsid which was withdrawn by the Belgian authorities.

[4] Source: World Steel Association, Steel Statistical Yearbook 2012.

[5] Compound annual growth rate.

[6] This statistical category includes ingots, billets, blooms and slabs.

[7] cf. Communication from the Commission to the Parliament, the Council, the European Economic and Social Committee and the Committee of Regions – Action Plan for a competitive and sustainable steel industry in Europe (COM(2013) 407.

[8] Source: Eurostat (online data code: lfsa_egan22d). Data on employment by sector is not available at a more disaggregated level than NACE Rev. 2 division level.

[9] See EGF database, available at http://ec.europa.eu/social/main.jsp?catId=582.

[10] See draft Commission proposals on cases EGF/2009/022 BG/Kremikovtsi (application rejected by the Commission), EGF/2012/010 RO/ Mechel (Decision COM(2014) 255 final of 7.5.2014), EGF/2013/007 BE Hainaut steel (Duferco-NLMK) (application presented to the Commission on 27 September 2013).

[11] Case EGF/2010/007 AT/Steiermark / Niederösterreich. Decision 2011/652/EU of 27 September 2011 (OJ L 263, 7.10.2011, p. 9).

[12] The other 187 workers either refused to register to benefit from the redeployment measures or decided to request an exemption (being over 58 years old or having more than 38 years of seniority).

[13] Relevant major groups of the international standard classification of occupations (ISCO-08).

[14] Source: Steunpunt WSE.

[15] Source: FOREM.

[16] See paragraph 29.

[17] The centres de compétences carry out training activities, forward studies and awareness-raising activities on specific occupations or sectors. The centres de compétences are set up in partnership by the Walloon Region, FOREM, the social partners from the sectors concerned, research centres, and universities.

[18] See paragraph 29.

[19] In their submission of 4 July 2014, the Belgian authorities significantly amended the set of measures so as to correspond to the actual status of implementation of the measures. Several measures which were initially planned are now not included in the application.

[20] IFAPME (Institut wallon de Formation en Alternance et des indépendants et Petites et Moyennes Entreprises) is a public training institute that provides work-linked dual training in the form of apprenticeships and specific courses for SME managers.

[21] Arrêté royal relatif à la gestion active des restructurations du 9 mars 2006 (Belgisch Staatsblad / Moniteur Belge, 31.3.2006, éd. 2, p. 18309).

[22] Décret de la Région wallonne relatif au plan d’accompagnement des reconversions du 29 janvier 2004 (Belgisch Staatsblad / Moniteur Belge, 10.3.2004, p. 13547).

[23] The financial contribution from the EGF will enable the Belgian authorities to extend the provision of outplacement services beyond the mandatory periods and to carry out additional measures. For calculating the costs allocated to the EGF, the Belgian authorities will take into account the measures carried out during the legal obligation period (this only relates to the measure ‘Redeployment (support / guidance / integration)’. The number of hours of outplacement services carried out during the mandatory period will be deducted from the total number of hours of outplacement services that each targeted beneficiary will have befitted from.

[24] Financial support from the ESF was awarded under Axis 2.2 of the Convergence Operational Programme for 2008-2013 to a project (EnTrain – En Transition-Reconversion-Accompagnement) which aimed to develop pedagogical methods for Redeployment Units in general.

[25] OJ L 347, 20.12.2013, p. 884.

[26] OJ C 373, 20.12.2013, p. 1.

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

[28] OJ C 373, 20.12.2013, p. 1.

[29] OJ C […], […], p. […].

[30] OJ L 347, 20.12.2013, p. 884.