WRITTEN QUESTION P-1680/02

by Benedetto Della Vedova (NI) to the Commission

(6 June 2002)

Subject: Compatibility of the special wages guarantee fund (CIGS) with Community law on State aids for companies and employment

The special wages guarantee fund (CIGS) is officially intended to guarantee the wages of workers on permanent contracts at specific types of companies, at times when production is shut down or cut back as a result of reorganisation, restructuring, conversion, financial difficulties or bankruptcy.

Between January 1997 and February 2002 a total of approximately EUR 120 billion (calculated year-by-year on the basis of currency appreciation statistics supplied by Italy's national statistical institute, ISTAT), representing 6 372 929 914 man-hours has been paid out by the CIGS.

CIGS funding is granted on the basis of discretionary administrative decisions, which goes against the Commission guidelines which provide for the automatic granting of such aid.

Only workers from specific types of companies are eligible for CIGS funding, while the Commission guidelines provide for universal access to this type of measure.

The statistics and studies supplied by ISTAT and the CNR show that CIGS use bears little relation to economic trends and benefits large companies only, despite the fact that small companies are also obliged to contribute to it, which means that the latter are placed at a severe competitive disadvantage with respect to the former.

The amount referred to in paragraph 2 above is clearly large enough to have an effect on trade between the EU Member States and to distort or threaten to distort competition, given that, in the cases referred to in paragraph 1, the CIGS enables beneficiary companies to offload their labour costs.

The Italian Government recently stated its intention to pour an additional EUR 5 billion into schemes to cushion the impact of unemployment, the foremost among which has traditionally been the CIGS.

Given the above, does the Commission consider the CIGS to be compatible with Article 87 of the Treaty?

Answer given by Mr Monti on behalf of the Commission

(5 July 2002)

Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer(1) aims to provide a minimum degree of protection for employees in the event of the insolvency of their employer. To this end, it obliges the Member States to establish a body which guarantees payment of the outstanding claims of the employees concerned.

The CIG (Cassa integrazione guadagni) fulfils this function in Italy, although its operation goes beyond that required by the Directive.

The Commission has not taken a view on the compatibility with Article 87 of the EC Treaty of the CIGS, which is the special wage compensation fund of the CIG. The CIGS has not been notified under Article 88(3) of the EC Treaty. However, the Commission has studied the area of compatibility with competition rules of short-time work and temporary layoff schemes in Member States, in particular through research commissioned in 1996.

Measures to assist individuals the purpose or effect of which is not to favour certain undertakings or the production of certain goods do not constitute State aid within the meaning of Article 87(1) of the EC Treaty. Where, however, measures benefit enterprises selectively, whether through discretionary granting, or by applying only to certain sectors, only in certain geographical regions or only to firms of a certain size, state aid may be involved. The compatibility of any such aid would need to be assessed against paragraphs 2 and 3 of Article 87 of the EC Treaty.

(1) OJ L 283, 28.10.1980, Directive as last amended by the 1994 Act of Accession.