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[1] (the 'EGF Regulation').

2. The Belgian authorities submitted application EGF/2014/012 BE/ArcelorMittal for a financial contribution from the EGF, following redundancies in ArcelorMittal Liège S.A. 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.

SUMMARY OF THE APPLICATION

EGF application: || EGF/2014/012 BE/ArcelorMittal

Member State: || Belgium

Region(s) concerned (NUTS level 2): || Prov. Liège (BE 33).

Date of submission of the application: || 22.7.2014

Date of acknowledgement of receipt of the application: || 4.8.2014

Date of request for additional information: || 24.7.2014

Deadline of provision of the additional information: || 16.9.2014

Deadline for the completion of the assessment: || 9.12.2014

Intervention criterion: || Article 4(1)(a) of the EGF Regulation

Primary enterprise: || ArcelorMittal Liège S.A.

Sector(s) of economic activity (NACE Rev. 2 division)[2]: || Division 24 (‘Manufacture of basic metals’)

Number of subsidiaries, suppliers and downstream producers: || None

Reference period (four months): || 1 January 2014 – 1 May 2014

Number of redundancies or cessations of activity during the reference period (a): || 752

Number of redundancies or cessations of activity before or after the reference period (b): || 533

Total number of redundancies (a + b): || 1 285

Total estimated number of targeted beneficiaries: || 910

Budget for personalised services (EUR) || 2 575 900

Budget for implementing EGF[3] (EUR) || 76 578

Total budget (EUR) || 2 652 478

EGF contribution (60 %) (EUR) || 1 591 486

ASSESSMENT OF THE APPLICATION

Procedure

4. The Belgian authorities submitted application EGF/2014/012 BE/ArcelorMittal on 22 July 2014, within 12 weeks of the date on which the intervention criteria set out below were met. The Commission sent an initial set of questions to the Belgian Authorities on 24 July 2014 and acknowledged receipt of the application within two weeks of the date of submission of the application, on 4 August 2014. Additional information was provided by the Member State within six weeks of the date of the acknowledgement. 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 9 December 2014.

Eligibility of the application

Enterprise and beneficiaries concerned

5. The application relates to 1 285 workers made redundant in ArcelorMittal Liège S.A. This enterprise operated in the economic sector classified under NACE Division 24 (‘Manufacture of basic metals’). The redundancies made by the enterprise concerned are located in the NUTS[4] level 2 region of Liège (BE33).

Intervention criteria

6. The Belgian authorities submitted the application under the intervention criterion of Article 4(1)(a) of the EGF Regulation, which requires at least 500 workers being made redundant or self-employed persons' activity ceasing, over a reference period of four months in an enterprise in a Member State, including workers made redundant in its suppliers and downstream producers.

7. The reference period of four months runs from 1 January 2014 to 1 May 2014.

8. The application relates to 752 workers made redundant[5] in the enterprise during the reference period of four months.

Calculation of redundancies and of cessation of activity

9. 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.

Eligible beneficiaries

10. In addition to the workers already referred to, the eligible beneficiaries include 533 workers made redundant before or after the reference period of four months. These workers were all made redundant after the general announcement of the projected redundancies on 14 October 2011. A clear causal link can be established with the event which triggered the redundancies during the reference period, as all the redundancies relate to the same downsizing process initiated in October 2011.

11. The total number of eligible beneficiaries is therefore 1 285.

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

12. In order to establish the link between the redundancies and major structural changes in world trade patterns due to globalisation, Belgium argues that the sector of the production of steel, in which ArcelorMittal Liège S.A operated, has undergone serious economic disruption, in particular a rapid decline of the EU’s market share.

13. Between 2007 and 2013, the production of crude steel in the EU-27 decreased from 210.1 million tonnes to 166.2 million tonnes[6] (− 20.9 %; − 3.8 % annual growth rate[7]), whereas, at worldwide level, production increased from 1 348.1 million tonnes to 1 649.3 million tonnes (+ 22.3 %; + 3.4 % annual growth rate). As a consequence and according to data referred to by the Belgian authorities, in the period 2007-2013, the EU’s share of steel production continuously decreased (from 16 % of global steel production in 2007 to 10 % in 2013). The decline in production has been more significant in Europe than in the United States and Russia. On the contrary, there is a very sharp increase in the share for Asia, going from 56 % to 67 % during the same period.

14. The effects of these changes in trade patterns have been worsened by other factors, such as a decrease in demand for 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 competitiveness 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[8]. 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 %).

15. 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].

Events giving rise to the redundancies and cessation of activity

16. The events giving rise to the redundancies and cessations of activity are related to the announcement of substantial restructuring by ArcelorMittal Group within the European Union in 2008. This decision was taken in light of the overcapacity which the enterprise possessed in Europe in comparison with market development trends. The Group decided on the permanent closure of 10 blast furnaces of the 25 that it had in Europe and the closure of several production units. Over 5 years almost 33 000 jobs have been lost, some 25 % of the total labour force.

17. According to the Belgian Authorities, the decrease in demand for steel, a relative increase of production costs (raw materials, energy, environmental constraints, etc.) and the drop in steel prices (almost 17 % for steel coil) led the producer to reduce output in 2011 and to decide on the closure of the Liège blast furnace leading eventually to the redundancy of all 1 285 workers.

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

18. The metalworking sector in Liege decreased in recent years, from 6 193 jobs in 40 enterprises in 2007 to 4 187 jobs in 35 enterprises in 2012, a reduction by 32 % of employment in the sector. The impact of the downsizing of ArcelorMittal is all the more important as the share of ArcelorMittal in local employment within the metal sector is 78.9 % and 14.3 % of employment in the manufacturing sector.

19. The financial crises of 2008-2009 and 2011 are still apparent in the Walloon economy and the downsizing of ArcelorMittal will lead to further job losses in the region. In Liege, 54 440 jobseekers were registered in May 2014, i.e. a rate of unemployment of 19.48 %. These persons often lack qualifications (49.9 % do not have upper secondary education) and 40.4 % have had a period of inactivity of more than two years. The activity rate in Liège is among the lowest in the Walloon region with 53.4 % (56.7 % in the Walloon Region)[12].

Targeted beneficiaries and proposed actions

Targeted beneficiaries

20. The estimated number of targeted workers expected to participate in the measures is 910. The breakdown of these workers by sex, citizenship and age group is as follows:

Category || Number of targeted beneficiaries

Sex: || Men: || 871 || (96 %)

|| Women: || 39 || (4 %)

Citizenship: || EU citizens: || 910 || (100 %)

|| non-EU citizens: || 0 || (0 %)

Age group: || 15-24 years: || 25 || (3 %)

|| 25-29 years: || 37 || (4 %)

|| 30-54 years: || 803 || (88 %)

|| 55-64 years: || 45 || (5 %)

|| over 64 years: || 0 || (0 %)

Eligibility of the proposed actions

21. Only some of the measures which form part of the actions implemented by the Belgian authorities to support the workers made redundant by ArcelorMittal will be co-financed by the EGF. Measures that are mandatory under collective redundancy procedures in Belgium and which are carried out as part of the standard activities of the Redeployment Unit (e.g. outplacement support, basic training, job-search assistance and careers advice, etc.) are therefore not included in this EGF application.

22. The personalised services to be provided to redundant workers consist of the following actions:

– Redeployment:

Support / guidance / integration. This set of services builds upon the standard activities carried out by the Redeployment Unit[13]. 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 activities: (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 910 targeted workers, for a maximum duration of 24 months.

Facilitating job-search. 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.

– Training and retraining:

Integrated training: Various types of vocational training courses could be provided (depending on the type of course) either by FOREM or by the centres de competences or IFAPME[14]. 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 ArcelorMittal could either follow a specific or specialisation module (40 hours) to adapt their competences and bring them up to date, 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.

– Promotion of entrepreneurship:

Support for enterprise creation: Workers who are considering setting up their own business will receive guidance and support from a Business Creation Adviser from FOREM. 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 project and put them in contact with business support organisations and service providers. The Adviser will work closely with the Redeployment Units to assist workers with their business projects. Around 50 workers are expected to attend the information sessions and around 20 would take part in the interviews and follow-up activities.

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 (selected through a call for tenders) 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 company (e.g. drawing up a business plan, drafting legal statutes, marketing, etc.). Grants may be awarded to help cover the start-up costs of such business projects. The workers must submit an application which describes the project (e.g. workers’ skills and experience, feasibility study, financial analysis, market potential, growth prospects, socioeconomic benefits, etc.). The Redeployment Unit’s Support Committee, which brings together representatives from the employer, trade unions and FOREM, assesses the application and decides to award a grant or not. Each worker involved in the project may receive a grant of EUR 5 000 (with funds being pooled together among all workers taking part). The grants can be used to cover the purchase of equipment, merchandises, publicity, consultancy, training, etc. The consultancy will administer the grants and report to FOREM on the use of expenditure (invoices and supporting documentation). It is expected that around 100 workers will take part in this measure, with five support grants being awarded to the workers.

23. 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.

24. 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 any such actions.

Estimated budget

25. The estimated total costs are EUR 2 652 478 comprising expenditure for personalised services of EUR 2 575 900 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 76 578.

26. The total financial contribution requested from the EGF is EUR 1 591 486 (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: (Orientation professionnelle) - support / guidance / integration (Reconversion/Insertion) - Facilitating job-search (Dynamisation de la recherche d’emploi) || 910 150 || 2 054 300 || 1 869 000 45 000

Training and retraining: (Formations) - Integrated training (Formations intégrées) - Transfer of experience (Transmission d'expérience) || 300 10 || 1 713 300 || 513 900 3 000

Promotion of entrepreneurship: (Aide à la creation d'emploi) -Support for enterprise creation (Autocreation d'emploi individuelle) -Support for collective projects: (Soutien à l'emergence de projets colletifs) || 50 100 || 900 1 000 || 45 000 100 000

Sub-total (a): || – || 2 575 900

(100.0 %)

Allowances and incentives (Actions under Article 7(1)(b) of the EGF Regulation)

|| Sub-total(b): || – || 0

|| (0.00 %)

Actions under Article 7(4) of the EGF Regulation

1. Preparatory activities, management, control and reporting || – || 32 778

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

Sub-total (c): || – || 76 578

(2.9 %)

Total costs (a + b + c): || – || 2 652 478

EGF contribution (60 % of total costs) || – || 1 591 486

(*) Totals do not tally due to roundings.

Period of eligibility of expenditure

27. The Belgian authorities started providing personalised services to the targeted beneficiaries on 1 January 2014. The expenditure on the actions referred to in point 22 will therefore be eligible for a financial contribution from the EGF from 1 January 2014 to 22 July 2016.

28. The Belgian authorities started incurring administrative expenditure to implement the EGF on 1 January 2014. The expenditure for preparatory, management, information and publicity, control and reporting activities will therefore be eligible for a financial contribution from the EGF from 1 January 2014 to 22 January 2017.

Complementarity with actions funded by national or Union funds

29. The sources of national pre-financing or co-funding are as follows: The actions implemented will be pre-financed by the FOREM. The Redeployment Units, the training by FOREM and its partners are co-financed by the Walloon Region.

30. The Belgian authorities have confirmed that the measures described above receiving a financial contribution from the EGF will not also receive financial contribution from other Union financial instruments.

31. Financial support from the ESF was in the past awarded to a project (EnTrain – En Transition-Reconversion-Accompagnement) which aimed to develop pedagogical methods for Redeployment Units in general. The findings of this project are likely to prove useful in the implementation of the planned measures.

Procedures for consulting the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities

32. The Belgian authorities report that the co-ordinated package of personalised services has been drawn up in consultation with the targeted beneficiaries and the social partners. The measures are the result of many discussions and preparatory meetings held between February 2014 and June 2014 among the various social partners involved.

33. The Redeployment Unit (cellule de reconversion) was specifically set up as part of the legal obligations linked to the collective redundancies procedure. The Redeployment Unit is managed by a committee which brings together representatives from the Walloon public services in charge of employment and training, FOREM, trade unions, and sector-based vocational training organisations.

Management and control systems

34. The application contains a description of the management and control system 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.

Commitments provided by the Member State concerned

35. The Belgian authorities have 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[15];

– 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.

BUDGETARY IMPLICATION

Budgetary proposal

36. 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[16].

37. 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 1 591 486 representing 60 % of the total costs of the proposed actions, in order to provide a financial contribution for the application.

38. 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[17].

Related acts

39. 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 1 591 486.

40. 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, 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/2014/012 BE/ArcelorMittal)

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[18], 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[19], and in particular point 13 thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1) The European Globalisation Adjustment Fund (EGF) was established to provide support for workers made redundant and self-employed persons whose activity has ceased as a result of major structural changes in world trade patterns due to globalisation, as a result of a continuation of the global financial and economic crisis addressed in Regulation (EC) No 546/2009[20], or as a result of a new global financial and economic crisis 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.

(3) Belgium submitted an application to mobilise the EGF, in respect of redundancies[21] in ArcelorMittal Liège S.A. in Belgium on 22 July 2014 and supplemented it by additional information as provided by Article 8.3 of Regulation (EU) No 1309/2013. This application complies with the requirements for determining a financial contribution from the EGF as laid down in Article 13 of Regulation (EU) No 1309/2013.

(4) The EGF should, therefore, be mobilised in order to provide a financial contribution of an amount of EUR 1 591 486 for the application submitted by Belgium,

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the European Union for the financial year 2015, the EGF shall be mobilised to provide the sum of EUR 1 591 486 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 347, 20.12.2013, p. 855.

[2] Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1).

[3] In accordance with the fourth paragraph of Article 7 of Regulation (EU) No 1309/2013.

[4] Commission Regulation (EU) No 1046/2012 of 8 November 2012 implementing Regulation (EC) No 1059/2003 of the European Parliament and of the Council on the establishment of a common classification of territorial units for statistics (NUTS) as regards the transmission of the time series for the new regional breakdown (OJ L 310, 9.11.2012, p. 34).

[5] Within the meaning of Article 3(a) of the EGF Regulation.

[6] Source: World Steel Association, Steel Statistical Yearbook 2014.

[7] Compound annual growth rate.

[8] 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.

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

[10] Cases EGF/2009/022 BG/Kremikovtsi (application rejected by the Commission), EGF/2012/010 RO/Mechel (COM(2014) 255 final of 7.5.2014), EGF/2013/007 BE/Hainaut steel (Duferco-NLMK) (COM(2014)..), EGF/2013/002 BE/Carsid (COM(2014)...).

[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] Source: FOREM

[13] The Redeployment Unit (cellule de reconversion) specifically set up as part of the legal obligations for the collective redundancies procedure

[14] 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.

[15] 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.

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

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

[18] OJ L 347, 20.12.2013, p. 855.

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

[20] OJ L 167, 29.6.2009, p.26.

[21] Within the meaning of Article 3(a) of the EGF Regulation.