EUROPEAN COMMISSION Brussels, 28.11.2017 COM(2017) 686 final Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund following an

application from Spain – EGF/2017/006 ES/Galicia apparel



EXPLANATORY MEMORANDUM 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 19 July 2017, Spain submitted an application EGF/2017/006 ES/Galicia apparel for a financial contribution from the EGF, following redundancies in the economic sector classified under the NACE Revision 2 Division 14 (Manufacture of wearing apparel) in the NUTS level 2 region of Galicia (ES11) in Spain. 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. SUMMARY OF THE APPLICATION EGF application EGF/2017/006 ES/Galicia apparel Member State Spain Region(s) concerned (NUTS level 2) Galicia (ES11) Date of submission of the application 19 July 2017 Date of acknowledgement of receipt of the application 19 July 2017 Date of request for additional information 2 August 2017 Deadline for provision of the additional information 13 September 2017 Deadline for the completion of the assessment 6 December 2017 Intervention criterion Article 4(2) of the EGF Regulation derogating from the criteria of Article 4(1)(b)



Number of enterprises concerned 5 Sector(s) of economic activity (NACE Revision 2 Division) Division 14

(Manufacture of wearing apparel) Reference period (nine months): 30 July 2016 – 30 April 2017 Total number of redundancies 303 Total number of eligible beneficiaries 303 Total number of targeted beneficiaries 303 Budget for personalised services (EUR) 1 140 000 Budget for implementing EGF (EUR) 60 000 Total budget (EUR) 1 200 000 EGF contribution (60 %) (EUR) 720 000 ASSESSMENT OF THE APPLICATION Procedure 4.Spain submitted application EGF/2017/006 ES/Galicia apparel within 12 weeks of the date on which the intervention criteria set out in Article 4 of the EGF Regulation were met, on 19 July 2017. The Commission acknowledged receipt of the application the same day, and requested additional information from Spain on 2 August 2017. 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 6 December 2017. Eligibility of the application Enterprises and beneficiaries concerned 5.The application relates to 303 workers made redundant in the economic sector classified under the NACE Revision 2 Division 14 (Manufacture of wearing apparel). The redundancies are located in the NUTS level 2 region of Galicia (ES11). Enterprises and number of dismissals within the reference period Caramelo S.A. 97 Shivshi S.L. 41 Confecciones Deus S.L. 20 Viriato 106 Deus Creaciones S.L. 39



Total no. of enterprises: 5 Total no. of dismissals: 303 Total no. of self-employed persons whose activity has ceased: 0 Total no. of eligible workers and self-employed persons: 303 Intervention criteria 6.Spain 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 303 redundancies in the NUTS level 2 region of Galicia (ES11). 7.The reference period of nine months for the application runs from 30 July 2016 to 30 April 2017. Calculation of redundancies and of cessation of activity 8.All the redundancies during the reference period have been calculated as from the date of the de facto termination of the contract of employment or its expiry.

Eligible beneficiaries 9.The total number of eligible beneficiaries is 303. 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, Spain argues that the liberalisation of trade in textiles and clothing — following the expiry of the World Trade Organisation Multifibre Arrangement at the end of 2004 — has led to radical changes in the structure of world trade. According to EUROSTAT-Comext figures, in 2016 imports of clothing into the EU-28 increased by 37,9 % compared to 2008 and by 83,2 % compared to 2004. EU28 clothing imports and exports (million euro) 2004 2005 2006 2007 2008 2009 2010 IMPORTS 49 674,5 54 379,5 61 409,9 64 479,0 65 990,0 63 735,6 71 169,7 EXPORTS 14 929,5 15 684,1 17 095,7 18 368,8 19 159,5 16 218,6 17 346,2 2011 2012 2013 2014 2015 2016 IMPORTS 77 866,3 75 008,4 74 830,4 82 016,8 90 256,8 91 002,5 EXPORTS 20 555,7 22 857,5 23 888,9 24 990,4 25 944,7 26 149,1 Source: Eurostat-Comext 11.The main supplier is China with an increase of 245 % of its imports into the EU-28 in 2016 compared to 2004 (from EUR 13 billion to EUR 31,8), followed by Bangladesh whose imports into the EU increased fourfold (from EUR 3,8 billion to EUR 15,3). 12.Over the same period, EU28 exports grew as well, although at a lesser extent. Clothing exports increased by 28,3 % in 2016 compared to 2008 and by 75,1 % compared to 2004. This resulting in an increasing negative EU trade balance in clothing.



EU28 trade balance in clothing Source: Eurostat-Comext 13.To date, the Manufacture of wearing apparel sector has been the subject of five EGF applications, three of which based on trade related globalisation and two on the global financial and economic crisis. This is the second application concerning redundant workers in SME's operating in the clothing sector in Galicia. Events giving rise to the redundancies and cessation of activity 14.The increase of imports into the EU put a downward pressure on prices which had a negative effect on the financial position of enterprises in the textiles sector in the EU and triggered a general trend in the textiles and clothing industry to off-shore production to lower cost countries outside the EU, such as Morocco, Tunisia, China and various Asian countries. In Galicia, this has resulted in a constant decrease in the number of clothing companies (-26 % over the period 2010-2016) and thus in redundancies.



Clothing enterprises (NACE 14) in Galicia Source: Instituto Gallego de Estadística (IGE).

Explanation of the exceptional circumstances underlying the admissibility of the application and expected impact of the redundancies as regards the local economy and employment. 15.Spain 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. 16.The population in Galicia concentrates mainly on the major economic poles of the region, the coastal zones between Ferrol and A Coruña (Northwest) and between Villagarcía, Pontevedra and Vigo (Southwest); whilst the inland territories face depopulation issues and lack of jobs. In 2016, there were 13 375 people less living in Galicia than in 2000, and yet there were 1 260 empty i.e. abandoned sites (towns or other population units) more than in 2000, as people move and concentrate near the economic poles. In addition, since 2010, demographic evolution in Galicia has been negative (with an annual decrease of around 2,3%) as a consequence of the emigration of young people and the rising number of deaths in relation to births. 17.The territory affected by the redundancies is Ordes/Órdenes, an inland territory where the clothing enterprises (most of them SMEs and cooperatives) are the economic driver. Ordes/Órdenes' geographical location 18.Highly dependent of the clothing industry, Ordes has been suffering from the decline in the number of clothing enterprises resulting from end of activities or production off-shore, which has been following the increase in imports of wearing apparel into the EU. Over the period 2008-2014 the number of enterprises of more than 6 workers has declined by 40 %. Along with the decline in the number of clothing enterprises the GDP per capita of Ordes has been decreasing from EUR 17 057 in 2010 to EUR 15 883 in 2014. Unemployment in the manufacturing sector in Ordes increased by 40 % over the period December 2016 - April 2017, when a majority of the redundancies -object of this application- occurred. 19.The redundancies are expected to put an enormous strain on the territory. The impact of the layoffs is linked to the difficulties of redeployment, due to the scarcity of jobs, since the territory is away from the major industrial centers; to the low educational background of the dismissed workers; to their vocational skills developed in a sector now in decline; and to the high number of job seekers. The unemployed in the manufacturing industry account for 34,6 % (43,7 % if we refer to female unemployment) of the total unemployed in Ordes. Targeted beneficiaries and proposed actions Targeted beneficiaries 20.All 303 redundant workers are expected to participate in the measures. The breakdown of these workers by sex, citizenship and age group is as follows: Category Number of

targeted beneficiaries Sex: Men: 50 (16,50 %) Women: 253 (83,50 %) Citizenship: EU citizens: 298 (98,35 %) non-EU citizens: 5 (1,65 %) Age group: 15-24 years: 2 (0,66 %) 25-29 years: 13 (4,29 %) 30-54 years: 217 (71,62 %) 55-64 years: 71 (23,43 %) over 64 years: 0 (00,0 %) Eligibility of the proposed actions 21.The personalised services to be provided to redundant workers consist of the following actions: –Welcome sessions and preparatory workshops: The welcome sessions is the first measure to be offered to all targeted beneficiaries and includes general information on available counselling and training programmes; and on allowances and incentives. This also includes the profiling of the participant workers. At preparatory workshops, more in-depth information will be provided on redeployment, sectors which require licensing or certificates of professional competence, certification of competencies and soft skills acquired in work situations; and how to complete compulsory education. –Occupational guidance towards dependent employment or self-employment will be provided throughout the implementation period. –Training. This will include training on key competencies, horizontal competencies, vocational training such as training to higher-value-added occupations within the clothing sector (unlike production other areas such as design, distribution, brand management or logistics have not been off-shored), geriatric care and social and health care for dependents, warehousing, monitor in leisure and recreation, as well as preparation for tests towards recognition of skills acquired through work experience/recognition of prior learning and training towards entrepreneurship. –Intensive job-search assistance, including active research of the local and regional employment opportunities (also for self-employed persons) and job-matching. –Tutoring after reintegration into work. The workers reintegrated into employment will be guided during the first months to prevent possible problems arising in their new jobs. –Incentives. There will be a variety of incentives. (1) Participation incentive. The workers who take part in the measures and follow the agreed pathway to reintegration will receive up to EUR 400 (one pay-off or into instalments). (2) Contribution to commuting expenses. EUR 3 per day when commuting within the same town and EUR 0,19/kilometre for inter-towns commuting. (3) Contribution to the expenses for carers of dependent persons. Workers with caring responsibilities (children, elderly or disabled persons) will receive EUR 15 per day of participation in the measures. This aims to cover the additional costs faced by the participants with caring responsibilities in order to avail themselves of training or other measures. (4) Income compensation. Those reintegrating into employment as self-employed persons will receive an income compensation of EUR 200 monthly, over a six months period.

22.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. 23.Spain has provided the required information on actions that are mandatory for the enterprise 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. Estimated budget 24.The estimated total costs are EUR 1 200 000, comprising expenditure for personalised services of EUR 1 140 000 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 60 000. 25.The total financial contribution requested from the EGF is EUR 720 000 (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) Welcome sessions and preparatory workshops

(Acogida y medidas de sensibilización) 303 187 56 628 Occupational guidance

(Programa de orientación) 212 583 123 598 Training

(Programa de formación) 212 2 514 533 030 Intensive job-search assistance

(Apoyo a la recolocación) 100 1 978 197 836 Tutoring after reintegration into work

(Seguimiento en el empleo) 95 224 21 308 Sub-total (a): Percentage of the package of personalised services – 932 400 (81,79 %) Allowances and incentives (Actions under Article 7(1)(b) of the EGF Regulation) Incentives

(Programa de incentivos) 212 979 207 600 Sub-total (b): Percentage of the package of personalised services: – 207 600 (18,21 %) Actions under Article 7(4) of the EGF Regulation 1. Preparatory activities – 0 2. Management – 48 000 3. Information and publicity – 3 000 4. Control and reporting – 9 000 Sub-total (c): Percentage of the total costs : – 60 000 (5,00 %) Total costs (a + b + c): – 1 200 000 EGF contribution (60 % of total costs) – 720 000 26.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. Spain confirmed that these actions are conditional on the active participation of the targeted beneficiaries in job-search or training activities. Period of eligibility of expenditure 27.Spain started providing the personalised services to the targeted beneficiaries on 4 September 2017. The expenditure on the actions will therefore be eligible for a financial contribution from the EGF from 4 September 2017 to 4 September 2019. 28.Spain started incurring the administrative expenditure to implement the EGF on 21 August 2017. The expenditure for preparatory, management, information and publicity, control and reporting activities shall therefore be eligible for a financial contribution from the EGF from 21 August 2017 to 4 March 2020. Complementarity with actions funded by national or Union funds 29.The source of national pre-financing or co-funding are funds of the autonomous region Galicia. 30.Spain 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. Procedures for consulting the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities 31.Spain has indicated that the co-ordinated package of personalised services has been drawn up in consultation with the social partners. On a first meeting held on 28 September 2017, they were informed about the application submitted for EGF co-funding in support of workers made redundant in the wearing apparel sector in Galicia. On the occasion, they were also invited to participate in round tables where the measures to be provided were discussed. The round tables took place on various dates in October. Since the social partners had actively participated in the previous cases submitted by the Galician authorities, as implementing bodies, they are knowledgeable about the added value of the EGF co-funded measures and they committed to the case. Management and control systems 32.The application contains a description of the management and control system which specifies the responsibilities of the bodies involved. Spain has notified the Commission that the financial contribution will be managed and controlled by the same bodies that manage and control the ESF. The Xunta de Galicia will be the intermediate body for the managing authority. Commitments provided by the Member State concerned 33.Spain 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 aids. BUDGETARY IMPLICATION Budgetary proposal 34.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. 35.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 720 000, representing 60 % of the total costs of the proposed actions, in order to provide a financial contribution for the application. 36.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. Related acts 37.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 720 000. 38.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 following an

application from Spain – EGF/2017/006 ES/Galicia apparel 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,