EUROPEAN COMMISSION Brussels, 4.5.2016 COM(2016) 242 final Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund (application from Belgium - EGF/2015/012 BE/Hainaut Machinery)



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL 1.The rules applicable to financial contributions from the European Globalisation Adjustment Fund (EGF) are laid down in Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006 (the ‘EGF Regulation’). 2.On 17 December 2015, Belgium submitted application EGF/2015/012 BE/Hainaut Machinery for a financial contribution from the EGF, following redundancies in the economic sector classified under the NACE Revision 2 Division 28 (Manufacture of machinery and equipment n.e.c.) in the NUTS level 2 region of Hainaut (BE32) in Belgium. 3.Following its assessment of this application, the Commission has concluded, in accordance with all applicable provisions of the EGF Regulation, that the conditions for awarding a financial contribution from the EGF are met. 2.SUMMARY OF THE APPLICATION







EGF application EGF/2015/012 BE/Hainaut Machinery Member State Belgium Region(s) concerned (NUTS level 2) Hainaut (BE32) Date of submission of the application 17 December 2015 Deadline for acknowledgement of receipt of the application 31 December 2015 Deadline for request of additional information 31 December 2015 Deadline for provision of the additional information 11 February 2016 Deadline for the completion of the assessment 5 May 2016 Intervention criterion Article 4(2) of the EGF Regulation Number of enterprises concerned 3 Sector(s) of economic activity (NACE Revision 2 Division) 28 (Manufacture of machinery and equipment n.e.c) Reference period 25 December 2014 - 25 September 2015 Total number of redundancies 488 Total number of eligible targeted beneficiaries 488 Total number of targeted beneficiaries 488 Number of targeted young persons not in employment, education or training (NEETs) 300 Budget for personalised services (EUR) 2,972,669 Budget for implementing EGF (EUR) 67,400 Total budget (EUR) 3,040,069 EGF contribution (60 %) (EUR) 1,824,041 3.ASSESSMENT OF THE APPLICATION 3.1.Procedure 4.Belgium submitted application EGF/2015/012 BE/Hainaut Machinery on 17 December 2015, within 12 weeks of the date on which the intervention criteria set out in Article 4 of the EGF Regulation were met. The Commission acknowledged receipt of the application within the deadline of two weeks from the date of submission of the application and requested additional information from Belgium at the same time. Such additional information was provided within six weeks of the request. The deadline of 12 weeks of the receipt of the complete application within which the Commission should finalise its assessment of the application's compliance with the conditions for providing a financial contribution expires on 5 May 2016. 3.2.Eligibility of the application 3.2.1.Enterprises and beneficiaries concerned 5.The application relates to 488 workers made redundant in the economic sector classified under the NACE Revision 2 Division 28 (Manufacture of machinery and equipment n.e.c). The redundancies made by the enterprises are located in the NUTS level 2 region of Hainaut (BE32).

Enterprises and number of dismissals within the reference period Carwall SA 13 Caterpillar Belgium SA 169 Doosan SA 306



Total no. of enterprises: 3



Total no. of dismissals: 488 Total no. of self-employed persons whose activity has ceased: 0 Total no. of eligible workers and self-employed persons: 488 3.2.2.Intervention criteria 6.Belgium submitted the application under the intervention criteria of Article 4(2) derogating from the criteria of Article 4(1) (b) of the EGF Regulation, which requires at least 500 workers being made redundant over a reference period of nine months in enterprises operating in the same economic sector defined at NACE Revision 2 Division and located in one region or two contiguous regions defined at NUTS 2 level in a Member State. There were 488 redundancies in the NUTS 2 region of Hainaut (B32). 7.The reference period of nine months for the application runs from 25 December 2014 to 25 September 2015. 3.2.3.Calculation of redundancies and of cessation of activity 8.The redundancies during the reference period have been calculated as follows: –44 from the date on which the employer, in accordance with Article 3(1) of Council Directive 98/59/EC, notified the competent public authority in writing of the projected collective redundancies. Belgium confirmed prior to the date of the completion of the assessment by the Commission that these 44 redundancies have actually been effected, –438 from the date of the employer's individual notice to lay off or to terminate the contract of employment of the worker, –6 from the date of the de facto termination of the contract of employment or its expiry, 3.2.4.Eligible beneficiaries 9.The total number of eligible beneficiaries is 488. 3.2.5.Link between the redundancies and major structural changes in world trade patterns due to globalisation 10.In order to establish the link between the redundancies and major structural changes in world trade patterns due to globalisation, Belgium argues that Union trade in construction machinery has undergone serious disruptions in recent years. This has had a negative impact on the profitability in Europe of the three enterprises, which are all specialised in production of components and/or assemblage of machines used in the construction sector. The sector concerned by the proposal is characterised by having production units close to the market. Therefore, the three enterprises mainly produce for the European market. Due to declining public and private investments in infrastructure, the demand for the products produced by the three enterprises has decreased accordingly. The production of construction engines in Europe has dropped from 212 028 units in 2007 to 116 461 units in 2014, constituting a production decline of 45.1 %. The consequence has been a dramatic loss of market share for European producers. Simultaneously, steel prices in Europe have increased significantly. Declining economies of scale and increasing unit costs have led to a loss of competitiveness for the European plants. This decline in competitiveness has led to the delocalisation to third countries of substantial production capacity (in particular Asian plants have benefitted from this development). 11.To date, the Manufacture of machinery and equipment n.e.c sector has been the subject of 14 EGF applications, eight of which based on trade related globalisation and six on the global financial and economic crisis. 3.2.6.Events giving rise to the redundancies and cessation of activity 12.The primary event giving rise to these redundancies is the announcement by Caterpillar Belgium S.A. on 23 February 2013 to enter into a collective redundancy procedure at its production plant located in Gosselies. The majority of the 1399 workers concerned were the subjects of a first EGF application involving redundancies at the enterprise. The current proposal includes the remaining 169 workers at the site. Carwall S.A., a principal supplier of cabs for Caterpillar Belgium S.A., witnessed a falling demand for its products, mainly due to fewer orders coming from Caterpillar, and was forced to scale down production accordingly. The third enterprise concerned by this proposal, Doosan S.A., produces excavators. Falling demand for its products in Europe led to the decision to close a production plant located in Frameries and supply the European market from its production sites in South Korea. 3.2.7.Expected impact of the redundancies as regards the local, regional or national economy and employment 13.The impact of the redundancies on the local and regional economy and employment is expected to be significant. Hainaut is facing a difficult labour market situation with an employment rate of 52,7 % (9,2 percentage points lower than the national average) and an unemployment rate of 14,5 % (5,9 percentage points higher than the national average). The manufacturing industries in particular have suffered in the Hainaut region, with a drop in employment within the sector of 15,3 % between 2007 and 2012 in the Charleroi area alone. This situation is rendered even more difficult by the fact that the whole manufacturing sector has been downscaling production in Wallonia, with 1 236 job losses in 2013 and 1 878 job losses in 2014. The Public Employment Service in the area has also recorded a significant drop in job offers of 13 % since 2012. The labour market in the Hainaut region is furthermore characterised by a high proportion of underqualified labour (a bit more than half the job seekers in Hainaut lack upper secondary qualifications). The downscaling of production within the whole manufacturing sector will make it difficult for the target group of this application to find similar employment and upskilling efforts will definitely be needed. 3.2.8.Explanation of the exceptional circumstances underlying the admissibility of the application 14.Belgium argues that, despite the fact that fewer than 500 redundancies occurred within the nine-month reference period, this application should nevertheless be assimilated to an application under Article 4(1)(b) of the EGF Regulation due to exceptional circumstances having a serious impact on employment and the local, regional or national economy. Other workers from one of the enterprises concerned by this application, namely Caterpillar Belgium S.A., were the targets of an earlier application (EGF/2014/011 BE/Caterpillar), which is currently being implemented. The current application is considered a follow up application to the first application linked to mass redundancies at Caterpillar Belgium S.A, since it is part of the same collective redundancy procedure. The three enterprises concerned by this application are important players within the region in the field of manufacture of construction engines, providing 72 % of the jobs within this area. Moreover, 12,3 % of the labour force in the region concerned work in manufacturing, which has seen a decline in employment by 8 percentage points since 2007. The exceptional circumstances surrounding this case have been reinforced by reference to the unfavorable labour market situation in the region, demonstrated by its lower than average employment rates, high proportion of unqualified labour and high levels of long-term unemployment, which stands at 39,0 % of overall unemployment in Hainaut Region.

3.3.Targeted beneficiaries and proposed actions 3.3.1.Targeted beneficiaries 15.The estimated number of redundant workers expected to participate in the measures is 488. The breakdown of these by sex, citizenship and age group is as follows: Category Number of targeted beneficiaries Sex: Men: 460 (94.3 %) Women: 28 (5.7 %) Citizenship: EU citizens: 485 (99.4 %) non-EU citizens: 3 (0.6 %) Age group: 15-24 years: 29 (5.9 %) 25-29 years: 33 (6.8 %) 30-54 years: 251 (51.4 %) 55-64 years: 175 (35.9 %) over 64 years: 0 (0.0 %) 16.Additionally, Belgium will provide personalised services co-financed by the EGF to up to 300 young people from the Hainaut Region not in employment, education or training (NEETs) under the age of 25 on the date of submission of the application, given that 488 of the redundancies referred to in paragraph 15 occur in the NUTS level 2 Region of Hainaut (B32), which is eligible under the Youth Employment Initiative. 17.The total estimated number of targeted beneficiaries expected to participate in the measures, including NEETs, is therefore 788. 3.3.2.Eligibility of the proposed actions 18.The personalised services to be provided to redundant workers and NEETs consist of the following actions: –Support/Guidance/Integration: This set of services builds upon the standard activities carried out by the Redeployment Units. The services will be provided by a team of specialised FOREM staff in partnership with organisations representing former workers to encourage participants 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.), (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.). –Facilitating job-search: FOREM will carry out specific activities to help workers in their 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. –Integrated Training: A range of specific training courses will be provided either by FOREM or by the Centres de competences or IFAPME. As an initial step, FOREM staff will help each participant to define their work-related goals and guide them towards one of the training modules on offer. 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). –Support for enterprise creation: Workers who are considering setting up their own businesses will receive guidance and support throughout the process. This support includes two main activities: (i) collective information sessions to raise awareness on business creation opportunities, provide information on legal aspects and measures to support business creation; (ii) individual interviews with interested workers to review their plans and put them in contact with business support organisations and service providers. –Support for collective projects: Workers who might be considering setting up a ‘social enterprise’ together as a group will receive guidance and support from a specialised consultancy and from the Redeployment Unit. This support includes information and awareness-raising sessions on business creation and basic management skills, as well as advice on setting up the undertaking (e.g. drawing up a business plan, drafting legal statutes, marketing, etc.). A support committee, which brings together representatives from the employer organisations, trade unions and FOREM, assesses the application and decides whether to award a grant. Each worker involved in the project may receive a grant of EUR 5 000 (funds being pooled together for all workers taking part). The grants can be used to cover the purchase of equipment, merchandise, publicity, consultancy, training, etc. The consultancy will administer the grants and report to FOREM on the use of expenditure (invoices and supporting documentation). –Allowances: Job-search and training allowances will also be made available to participants. The personalised services which are to be provided to NEETs are based on a similar approach as described above and consist of the following actions: –Mobilisation and Guidance: A detailed profiling will allow the youth either to embark directly on further education/training or to follow a special induction session designed to promote self-confidence and explore interests. –Training: A range of specific training courses will be provided either by FOREM or by the Centres de competences or IFAPME. –Personalised upskilling: A personalised upskilling pathway will be designed for each NEET participating in this measure. –Allowances: Job-search, training and mobility allowances will also be offered to participants. 19.The proposed actions, here described, constitute active labour market measures within the eligible actions set out in Article 7 of the EGF Regulation. These actions do not substitute passive social protection measures.

20.The Belgian authorities have provided the required information on actions that are mandatory for the enterprises concerned by virtue of national law or pursuant to collective agreements. They have confirmed that a financial contribution from the EGF will not replace such actions. 3.3.3.Estimated budget 21.The estimated total costs are EUR 3,040,069, comprising expenditure for personalised services of EUR 2,972,669 and expenditure for preparation, management, information and publicity, control and reporting activities of EUR 67,400. 22.The total financial contribution requested from the EGF is EUR 1,824,041 (60 % of total costs). Actions Estimated number of participants Estimated cost per participant (EUR) Estimated total costs(EUR) Personalised services (Actions under Article 7(1)(a) and (c) of the EGF Regulation) Redeployment (Reconversion): Support/Guidance/Integration (Accompagnement/Orientation/Insertion) 488 2,849 1,390,089 Facilitating job-search (Dynamisation de la recherche d'emploi) 200 163 32,500 Training (Formation) Integrated training (Formations intégrées) 200 594 118,850 Promotion of entrepreneurship (Aide à la creation d'emploi) Support for enterprise creation (Autocreation d'emploi individuelle) 300 117 35,000 Awareness raising collective projects (Sensibilisation aux projets collectifs) 300 160 47,868 Grants for collective projects (Bourses de création de projets collectifs) 10 5,000 50,000 NEETS: Mobilisation and Guidance (Mobilisation/accompagnement) 300 3,350 1,004,896 NEETS: Integrated training (Formations intégrées) 100 850 85,000 NEETS: Personalised upskilling (Remédiation et mise à niveau) 50 1,300 65,000 Sub-total (a): Percentage of the package of personalised services: – 2,829,203 (95.17 %) Allowances and incentives (Actions under Article 7(1)(b) of the EGF Regulation) Job-search allowance (Allocations de recherche d'emploi) 488 153 74,844 Training allowance (Allocations de formation) 200 62 12,372 NEETS: Job-search allowance (allocations recherche d'emploi) 150 125 18,750 NEETS: Mobility Allowance (allocations de mobilité) 150 125 18,750 NEETS: Training allowance (allocations de formation) 100 125 12,500 Personalised upskilling allowance (Allocations remédiation) 50 125 6,250 Sub-total (b): Percentage of the package of personalised services: – 143,466 (4.83 %) Actions under Article 7(4) of the EGF Regulation 1. Preparation activities – 1,500 2. Management – 8,000 3. Information and publicity – 45,000 4. Control and reporting – 12,900 Sub-total (c): Percentage of the total costs: – 67,400 (2.22 %) Total costs (a + b + c): – 3,040,069 EGF contribution (60 % of total costs) – 1,824,041 23.The costs of the actions identified in the table above as actions under Article 7(1)(b) of the EGF Regulation do not exceed 35 % of the total costs for the coordinated package of personalised services. Belgium confirmed that these actions are conditional on the active participation of the targeted beneficiaries in job-search or training activities. 24.Belgium confirmed that the costs of investments for self-employment, business start-ups and employee take-overs will not exceed EUR 15 000 per beneficiary. 3.3.4.Period of eligibility of expenditure 25.Belgium started providing the personalised services to the targeted beneficiaries on 1 January 2015. The expenditure on the actions referred to in paragraph 22 shall therefore be eligible for a financial contribution from the EGF from 1 January 2015 to 17 December 2017, with the exception of expenditure on education or training courses the duration of which is two years or more, which will be eligible until 17 June 2018. 26.Belgium started incurring the administrative expenditure to implement the EGF on 1 January 2015. The expenditure for preparation, management, information and publicity, control and reporting activities shall therefore be eligible for a financial contribution from the EGF from 1 January 2015 to 17 June 2018. 3.3.5.Complementarity with actions funded by national or Union funds 27.The sources of national pre-financing or co-funding are the Walloon Public Employment Service (FOREM) and the Region of Wallonia. 28.Belgium has confirmed that the measures described above receiving a financial contribution from the EGF will not also receive financial contributions from other Union financial instruments. 3.3.6.Procedures for consulting the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities 29.Belgium has indicated that the co-ordinated package of personalised services has been drawn up in consultation with all stakeholders including social partners, enterprises and the public employment services. Through a Monitoring Committee, those stakeholders will closely follow the implementation of the proposed measures. 3.4.Management and control systems 30.The application contains a description of the management and control system which specifies the responsibilities of the bodies involved. Belgium has notified the Commission that the financial contribution will be managed and controlled by the same bodies which are responsible for the European Social Fund (ESF). 3.5.Commitments provided by the Member State concerned 31.Belgium has provided all necessary assurances regarding the following: –the principles of equality of treatment and non-discrimination will be respected in the access to the proposed actions and their implementation,

–the requirements laid down in national and EU legislation concerning collective redundancies have been complied with, –the dismissing enterprises, which have continued their activities after the lay-offs, have complied with their legal obligations governing the redundancies and provided for their workers accordingly, –the proposed actions will not receive financial support from other Union funds or financial instruments and any double financing will be prevented, –the proposed actions will be complementary with actions funded by the Structural Funds, –the financial contribution from the EGF will comply with the procedural and material Union rules on State aid. 4.BUDGETARY IMPLICATION 4.1.Budgetary Proposal 32.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 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020. 33.Having examined the application in respect of the conditions set out in Article 13(1) of the EGF Regulation, and having taken into account the number of targeted beneficiaries, the proposed actions and the estimated costs, the Commission proposes to mobilise the EGF for the amount of EUR 1 824 041, representing 60 % of the total costs of the proposed actions, in order to provide a financial contribution for the application. 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. 4.2.Related acts 35.At the same time as it presents this proposal for a decision to mobilise the EGF, the Commission will present to the European Parliament and to the Council a proposal for a transfer to the relevant budgetary line for the amount of EUR 1 824 041. 36.At the same time as it adopts this proposal for a decision to mobilise the EGF, the Commission will adopt a decision on a financial contribution, by means of an implementing act, which will enter into force on the date at which the European Parliament and the Council adopt the proposed decision to mobilise the EGF. Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund (application from Belgium - EGF/2015/012 BE/Hainaut Machinery) 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 (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006, and in particular Article 15(4) 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, and in particular point 13 thereof,