Opinion of the Committee of the Regions on the Regulation of the European Parliament and of the Council establishing the European Globalisation adjustment Fund
Date: 2006-10-11
Institutions: European Committee of the Regions
Subjects: EU aid, dismissal, fund (EU), globalisation, international trade, regional and local authorities, reintegration into working life

6.3.2007

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Official Journal of the European Union

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III

(Preparatory Acts)

COMMITTEE OF THE REGIONS

66th PLENARY SESSION HELD ON 11 AND 12 OCTOBER 2006

Opinion of the Committee of the Regions on the Regulation of the European Parliament and of the
Council establishing the European Globalisation adjustment Fund

(2007/C 51/01)

THE COMMITTEE OF THE REGIONS,

Having regard to the Regulation of the European Parliament and of the Council establishing the European
Globalisation adjustment Fund COM(2006) 91 final — 2006/0033 (COD);

Having regard to the Council decision of 27 March 2006 to consult it on this subject, under Article 265
(1) of the Treaty establishing the European Community;

Having regard to the decision of its President of 22 February 2006 to instruct its Commission for
Economic and Social Policy to draw up an opinion on this subject;

Having regard to its opinion on the Communication on Restructuring and employment — Anticipating and
accompanying restructuring in order to develop employment: the role of the European Union (COM(2005) 120 final
(CdR 148/2005 fin);

Having regard to its resolutions on the Priorities of the Committee of the Regions for 2006 (CdR 275/2005
fin);

Having regard to the draft opinion adopted on 3 July 2006 (CdR 137/2006 rev. 1) Rapporteur: Irene
Oldfather, Member of the Scottish Parliament (UK/PES));

adopted the following opinion at its 66th plenary session, held on 11-12 October 2006 (meeting of
11 October):

1. Views of the Committee of the Regions

The Committee of the Regions

1.1
Believes that the essential social character of Europe's economy– a sufficient level of welfare provision
in the areas of unemployment, pensions and other social benefits and a certain degree of employment
protection — should be retained but modernised at the competent European, national or regional level in
line with the principle of subsidiarity to ensure that the European economy is competitive and in a position
to withstand future demographic pressures and meet the challenge of globalisation.

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1.2 Welcomes the proposal to establish a European Globalisation adjustment Fund (EGF), through which
the Community would show its solidarity towards workers affected by redundancies resulting from changes
in world trade patterns. Believes that assistance to individual workers in retraining for future employment
does not constitute ‘job subsidisation’, but instead reduces the burden of unemployment falling upon the
individual and state, maximises the use of an important economic resource, and fosters a better awareness
and acceptance of globalisation and labour-market flexibility. Recognises that many cases of restructuring
in the EU respond to either technological changes or changes in consumer taste that are completely unre-
lated to world trade and would not therefore be eligible for EGF assistance. The Commission proposal thus
limits the EGF's scope to cases where a link can be demonstrated between job losses and significant struc-
tural changes in global trade patterns; the CoR believes that existing instruments should be used, together
with resources from the Structural Funds, specifically to address job loses arising from intra-EU relocation;
the CoR believes that the principle of co-financing and match-funding should also be applied to the EGF, to
ensure genuine national, regional or local motivation in an application.

1.3
Considers that good anticipation, planning and appropriate investment strategies, including invest-
ment in human capital, are the appropriate long-term strategies towards meeting the challenge of globalisa-
tion, whereas the objective and financial scope of the EGF (as defined by the UK Presidency Summit of
December 2005) is limited to addressing the negative effects of structural changes in world trade patterns
through interventions a posteriori.

1.4
Stresses the overall positive effect of globalisation on growth and jobs in the Community and there-
fore underlines that a Fund mitigating the negative affects of globalisation should have adequate resources
at its disposal. The Committee of the Regions therefore suggests that the maximum annual spending should
be set at EUR 1 000 million, if this is compatible with the provisions of the financial perspective for 2007-
2013.

1.5
Stresses that local and regional authorities play an active role in responding to major redundancies.
Believes therefore that local and regional authorities should be involved in the application for the Fund.
Recognises however, that the required Member State endorsement of the application will be deemed to be
tacit recognition of the seriousness of the situation and oblige the Member State to take responsibility for
the situation. The EGF must not undermine the responsibility of Member States to find their own response
to economic restructuring.

1.6
Recognises that there is no overlap with the Structural Funds intended, possible nor desirable (given
the cumbersome and time-consuming programming and management/auditing procedures) and that the
Member States will need to prove in their applications both the absence of overlap and the complementarity
between the different financial instruments. Acknowledges that the EGF is not about the general develop-
ment of a region, but instead addresses the possibility of mass redundancies in an individual company,
whilst understanding that such events may impact more widely on regional prosperity through the knock-
on effects on suppliers which in aggregate may be major factors in regional development.

Recognises that unlike the Structural Funds, there will be no ‘fair share’ distribution of EGF expendi-
1.7
ture based on relative development levels, but instead there will be a concentration where redundancies actu-
ally occur.

1.8
Recognises that whereas the ultimate beneficiary is the individual worker, the implementation of
EGF actions (e.g. the setting-up of counselling services) will not be contracted through the individual worker
but through the local/regional/national authorities or enterprises.

1.9
Recalls the statement of the Commission that the EGF ‘must be an instrument which can intervene
rapidly and non-bureaucratically’. Regrets therefore, that the proposed decision-taking procedures which
require that each EGF intervention be approved individually and in batches by the EU budgetary authority
(Council and Parliament) militate against the speedy reaction that is both morally and actually necessary.

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2. Recommendations of the Committee of the Regions

Recommendation 1

Recital 5

Text proposed by the Commission

CoR Amendment

(5) An action funded under this regulation should not
receive financial assistance from other Community
financial instruments.

(5) An action funded under this regulation should not may
receive complementary financial assistance from other
Community financial instruments.

Reason

— The EU Structural Funds provide co-financing for national mechanisms, which enable the Member States
to take action in the event of mass redundancies. However, these mechanisms do not necessarily take
the form of short or medium term actions. Accordingly, there should be a possibility for measures
financed under the EGF to complement assistance from other Community financial instruments in the
short term.

— Moreover, the 5th recital in the original text seems to be at odds with Article 5 (2)(d), which states that
applications for EGF financing ‘shall contain the following information: d) The specific actions to be funded and
a breakdown of their estimated cost, including their complementarity with actions funded by the Structural Funds’.

Recommendation 2

Recital 6

Text proposed by the Commission

CoR Amendment

(6) Community aid should only be given upon application
of the affected Member State. The Commission should
ensure equal treatment of the requests submitted by the
Member States.

(6) Community aid should only be given upon application
of the affected Member State, acting in consultation
with affected local and/or regional authorities according
the
to the internal constitutional arrangements of
Member State concerned. The Commission should
ensure equal treatment of the requests submitted by the
Member States, but the overall geographical distribution
of expenditure by the Fund shall not be a considera-
tion.

Reason

This amendment underlines that that local and regional authorities as well as Member States play an active
role in mitigating the negative effects of globalisation. As the regulation measures the impact on regions to
determine whether the EGF should be applicable the local and regional authorities should involved in the
application for the EGF, in conformity with the principle of subsidiarity.

Aid should be given according to need as determined by the eligibility criteria. The Commission should
resist any pressure from Member States for a ‘fair share’.

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Recommendation 3

Article 2

Intervention criteria

Text proposed by the Commission

CoR Amendment

A financial contribution from the EGF shall be provided
where major structural changes in world trade patterns lead
to a serious economic disruption, notably a massive
increase of imports into the EU, or a progressive decline of
the EU market share in a given sector or a delocalisation to
third countries, which results in:

A financial contribution from the EGF shall be provided
where major structural changes in world trade patterns lead
to a serious economic disruption, notably a massive
increase of imports into the EU, or a progressive decline of
the EU market share in a given sector or a delocalisation to
third countries, which results in:

(a) at least 1 000 redundancies in an enterprise, including
workers made redundant in its suppliers or downstream
producers, in a region where unemployment, measured
at NUTS III level,
is higher than the EU or national
average,
or

(a) at

least 1 000 500 redundancies in an enterprise,
including workers made redundant in its suppliers or
downstream producers,
in a region where unemploy-
ment, measured at NUTS III level, is higher than the EU
or national average,
or

(b) at

least 1 000 redundancies, over a period of 6
months,
in a sector,
measured at NACE 2 level, which represents at least 1%
of regional employment measured at NUTS II level.

in one or more enterprises

(b) at least 1 000 500 redundancies, over a period of 6 12
months,
in a sector,
in one or more enterprises
measured at NACE 2 level, which represents at least 1%
of regional employment or where regional employment
measured at NUTS II level has fallen by at least 10 %
over the same period.

(c) where the quantitative criteria referred to in points (a)
and (b) are not met, the Commission may in excep-
tional and duly justified circumstances, consider that a
Member State can request the intervention of the EGF.

Reason

The criteria should be changed, in order to make the application of the fund more flexible. It is also impor-
tant that the Regulation should also include a safeguard clause of a political criterion to consider the elig-
ibility of applicants for the fund.

Recommendation 4

Article 5, paragraph 1

Applications

Text proposed by the Commission

CoR Amendment

The Member State shall submit an application for a

1.
contribution from EGF to the Commission

…

Reason

1.
The Member State, in consultation with relevant local
and/or regional authorities and the social partners, shall
submit an application for a contribution from EGF to the
Commission

…

Local and regional authorities and their communities will be affected by the consequences of relocation and
closure, and should be involved in the design of remedial strategies. Therefore they should be involved in
the application process, not least in order to ensure complementarity between actions taken at local,
regional, national and European levels.

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Recommendation 5

Article 5, paragraph 6

Applications

Text proposed by the Commission

CoR Amendment

The Commission shall ensure equal

5.
applications presented by Member States.

treatment of

The Commission shall ensure equal

5.
treatment of
applications presented by Member States, but the overall
geographical distribution of expenditure by the Fund shall
not be a consideration.

Reason

Aid should be given according to need as determined by the eligibility criteria. The Commission should
resist any pressure from Member States for a ‘fair share’.

Recommendation 6

Article 6

Complementarity, compliance and co-ordination

Text proposed by the Commission

CoR Amendment

The Member State shall ensure that

5.
the specific
actions receiving a contribution under the EGF shall not
also receive assistance from other Community financial
instruments.

The Member State shall ensure that

5.
the specific
actions receiving a contribution under the EGF shall not
may also receive assistance from other Community finan-
cial instruments.

Reason

Article 15(1) of the Commission text explicitly refers to the possibility of ‘complementarity’ with the Com-
munity financial instruments (i.e. the Structural Funds and the ESF) that can be used in the event of large-
scale redundancies.

Recommendation 7

Article 12

Budget procedure

Text proposed by the Commission

CoR Amendment

1. Where the Commission has concluded that a financial
contribution should be made from the EGF, it shall submit
to the budgetary authority a proposal to authorise appro-
priations corresponding to the amount determined in
accordance with Article 10.

1. Where the Commission has concluded that a financial
contribution should be made from the EGF, it shall submit
to the budgetary authority a proposal to authorise appro-
priations corresponding to the amount determined in
accordance with Article 10.

…

…

The Commission shall submit proposals in batches to

2.
the budgetary authority.

The Commission shall submit proposals in batches to

2.
inform the budgetary authority.

…

…

Once the appropriations are made available by the
3.
budgetary authority, the Commission shall adopt a decision
on the financial contribution.

Once the appropriations are made available by the
3.
budgetary authority, tThe Commission shall adopt a deci-
sion on the financial contribution.

Reason

The need to seek approval from both Parliament and Council for every application will introduce delays in a
process that is meant to provide immediate, short-term support; the intention to hold applications back
until they can be submitted in batches will compound the delay. The Commission should have delegated
authority to take decisions itself, keeping the budgetary authority informed on how it is disbursing the
Fund.

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Recommendation 8

Article 16, paragraph 2

Annual Report

Text proposed by the Commission

CoR Amendment

The report shall be submitted, for information, to the

2.
social partners.

The report shall be submitted, for information, to the
and Social
the European Economic

2.
social partners,
Committee and to the Committee of the Regions.

Reason

The performance of the Fund, which is of direct relevance to local and regional authorities, is consequently
of interest to the CoR. It is important to maintain broad-based consultation and transparency in relation to
the European institutions and social partners which will contribute to the success of the project.

Recommendation 9

Article 17, paragraph 2

Evaluation

Text proposed by the Commission

CoR Amendment

The results of the evaluation will be transmitted, for
2.
information, to the budgetary authority and to the social
partners.

The results of the evaluation will be transmitted, for
2.
information, to the budgetary authority European Parlia-
ment,
the European Economic and Social
Committee, the Committee of the Regions and to the social
partners.

the Council,

Reason

The performance of the Fund, which is of direct relevance to local and regional authorities, is consequently
of interest to the CoR. It is important to maintain broad-based consultation and transparency in relation to
the European institutions and social partners which will contribute to the success of the project.

Recommendation 10

Budget

The amount of expenditure from the Fund shall be up to EUR 500 1 000 million in current prices, if this is
compatible with the provisions of the financial perspective for 2007-2013.

Reason

The amount foreseen for the budget is unlikely to be sufficient, given estimates of the number of workers
affected annually by relocations attributable to changes in world trade patterns; a doubling on the maximum
limit on expenditure would appear justifiable, and is easily within the limit of usual underspends on the
Community budget.

Brussels, 11 October 2006

The President

of the Committee of the Regions

Michel DELEBARRE