Regulation (EC) No 1927/2006 of the European Parliament and of the Council of 20 December 2006 on establishing the European Globalisation Adjustment Fund
Date: 2006-12-20
Institutions: Council of the European Union, European Parliament
Subjects: European Globalisation Adjustment Fund, collective dismissal, economic recession, employment aid, reintegration into working life

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(Acts whose publication is obligatory)

REGULATION (EC) No 1927/2006 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 20 December 2006

on establishing the European Globalisation Adjustment Fund

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

(3)

Having regard to the Treaty establishing the European Commu-
nity, and in particular the third paragraph of Article 159,

Having regard to the proposal from the Commission,

Having regard to the Opinion of the European Economic and
Social Committee (1),

Having regard to the opinion of
Regions (2),

the Committee of

the

Acting in accordance with the procedure laid down in
Article 251 (3),

Whereas:

(1) Notwithstanding the positive effects of globalisation on
jobs and prosperity and the need to enhance
growth,
European competitiveness
through structural
further
change, globalisation may also have negative consequences
for the most vulnerable and least qualified workers in some
sectors. It is therefore opportune to establish a European
Globalisation adjustment Fund (the EGF), accessible to all
Member States,
through which the Community would
show its solidarity towards workers affected by redundan-
cies resulting from changes in world trade patterns.

(2)

It is necessary to preserve European values and to promote
the development of fair external trade. The negative effects
of globalisation should be tackled in the first instance by a
long-term, sustainable Community strategy for trade policy
aiming at high social and ecological
standards. The
assistance provided by the EGF should be dynamic and
capable of adapting to constantly changing and often
unforeseen circumstances in the market.

(1) Opinion delivered on 13 September 2006 (not yet published in the

OJ).

(2) Opinion delivered on 11 October 2006 (not yet published in the OJ).
(3) Opinion of the European Parliament of 13 December 2006 (not yet
published in the OJ) and Council Decision of 19 December 2006.

The EGF should provide specific, one-off support
to
facilitate the re-integration into employment of workers
in areas, sectors territories, or labour market regions
suffering the shock of serious economic disruption. The
EGF
example
for
through micro-credits or
setting up cooperative
projects.

should promote

entrepreneurship,

for

(4) Actions under this Regulation should be defined according
to strict
intervention criteria relating to the scale of
economic dislocation and its impact on a given sector or
geographical area, to ensure that the financial contribution
from the EGF is concentrated on workers in the most
seriously affected regions and economic sectors of
the
Community. Such dislocation is not necessarily concen-
In such exceptional
trated in a single Member State.
circumstances, Member States may therefore submit joint
requests for assistance from the EGF.

(5)

(6)

the EGF should be coherent and
The activities of
compatible with the other Community policies and comply
with its acquis, especially the interventions of the structural
funds, while making a genuine contribution to the
Community's social policies.

The Interinstitutional Agreement between the European
Parliament, the Council and the Commission of 17 May
2006 on budgetary discipline and sound financial manage-
ment (4)
is binding from
1 January 2007 and Point 28 determines the budgetary
framework of the EGF.

(Interinstitutional Agreement)

(7) A specific action funded under this Regulation should not
receive financial assistance from other Community financial
instruments. Coordination with existing or planned
modernisation and restructuring measures in the frame-
work of regional development is necessary, however, albeit
that such coordination should not result in the creation of
parallel or additional management structures for actions
funded by the EGF.

(8)

To facilitate the
this Regulation,
implementation of
expenditure should be eligible from the date on which a
Member State begins to provide personalised services to the
affected workers. Reflecting the need for a concentrated

(4) OJ C 139, 14.6.2006, p. 1.

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response aiming specifically at re-integration into employ-
ment, a deadline should be set for the use of the financial
contribution of the EGF.

Article 2

Intervention criteria

(9)

the
The Member State should remain responsible for
implementation of the financial contribution and for the
management and control of
the actions supported by
Community financing, in accordance with Council Regula-
tion (EC, Euratom) No 1605/2002 of 25 June 2002 on the
Financial Regulation applicable to the general budget of the
European Communities (1). The Member State should
justify the use made of the financial contribution received.

(10) The European Monitoring Centre on Change, based in
Dublin, may assist
the European Commission and the
Member State concerned with qualitative and quantitative
analyses in order to help in the evaluation of an application
for EGF funds.

(11) Since the objectives of the action to be taken cannot be
sufficiently achieved by the Member States and can
therefore, by reason of their scale and effects, be better
achieved at Community level, the Community may adopt
measures, in accordance with the principles of subsidiarity
as set out in Article 5 of the Treaty. In accordance with the
principle of proportionality, as set out in that Article, this
Regulation does not go beyond what is necessary in order
to achieve those objectives.

(12) As the period of implementation of the EGF is linked to the
duration of the financial framework from 1 January 2007
to 31 December 2013, support should be available to
workers
from
1 January 2007,

affected by trade-related redundancies

HAVE ADOPTED THIS REGULATION:

Article 1

Subject-matter and scope

1. With the aim of stimulating economic growth and creating
more jobs in the European Union, this Regulation establishes the
EGF, to enable the Community to provide support for workers
made redundant as a result of major structural changes in world
trade patterns due to globalisation where these redundancies
have a significant adverse impact on the regional or local
economy.

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 substantial increase of imports
into the EU, or a rapid decline of the EU market share in a given
sector or a delocalisation to third countries, which results in:

(a)

(b)

(c)

at least 1 000 redundancies over a period of 4 months in an
enterprise in a Member State,
including workers made
redundant in its suppliers or downstream producers, or

at least 1 000 redundancies, over a period of 9 months,
particularly in small or medium-sized enterprises,
in a
NACE 2 sector in one region or two contiguous regions at
NUTS II level.

small labour markets or in exceptional circumstances, duly
substantiated by the Member State(s) concerned, an
application for a contribution from the EGF may be
considered admissible even if the conditions laid down in
subparagraphs (a) and (b) are not entirely met, when
redundancies have a serious impact on employment and the
local economy. The aggregated amount of contributions for
exceptional circumstances may not exceed 15 % of the EGF
each year.

Article 3

Eligible actions

A financial contribution under this Regulation may be made for
active labour market measures that form part of a coordinated
package of personalised services designed to re-integrate
redundant workers into the labour market, including:

(a)

job-search assistance, occupational guidance, tailor-made
training and re-training including ICT skills and certification
of acquired experience, outplacement
and
entrepreneurship promotion or aid for self-employment;

assistance

(b)

special time-limited measures, such as job-search allowan-
ces, mobility allowances or allowances
to individuals
participating in lifelong learning and training activities; and

Its period of application shall be linked to the Financial
Framework, from January 2007 to December 2013.

(c) measures to stimulate in particular disadvantaged or older
workers, to remain in or return to the labour market.

2. This Regulation lays down rules regarding the operation of
the EGF in order to facilitate re-integration into employment of
workers affected by trade-related redundancies.

(1) OJ L 248, 16.9.2002, p. 1.

The EGF shall not finance passive social protection measures.

On the initiative of the Member State, the EGF may finance the
and
preparatory, management,
control activities for its implementation.

information and publicity,

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Article 4

Type of financial contribution

The Commission shall award a financial contribution in the form
of a single instalment, which shall be implemented within the
framework of shared management between the Member States
and the Commission, in accordance with Article 53(1)(b), (5) and
(6) of Regulation (EC, Euratom) No 1605/2002.

Article 5

Applications

1. The Member State shall
submit an application for a
contribution from EGF to the Commission within a period of
10 weeks from the date on which the conditions set out in
Article 2 for mobilising the EGF are met. The application may be
supplemented subsequently by the Member State(s).

2. The application shall contain the following information:

4. The Member State(s) concerned shall also provide statistical
and other information, at the most appropriate territorial level,
which the Commission requires to assess the fulfilment of the
intervention criteria.

5. On the basis of the information referred to in paragraph 2
and any additional information submitted by the Member State
(s) concerned, the Commission shall assess, in consultation with
the Member State, whether the conditions for making a financial
contribution under this Regulation are met.

Article 6

Complementarity, compliance and coordination

1. Assistance from the EGF shall not replace actions which are
the responsibility of companies by virtue of national
law or
collective agreements.

2. Assistance from the EGF shall complement actions of the
Member States at national, regional and local level, including
those co-financed by the structural funds.

a reasoned analysis of
the link between the planned
redundancies and major structural changes in world trade
patterns and a demonstration of the number of redundan-
cies and an explanation of the unforeseen nature of those
redundancies;

3. Assistance from the EGF shall provide solidarity and support
for individual workers made redundant as a result of structural
changes in world trade patterns. The EGF shall not finance the
restructuring of companies or sectors.

the identification of the dismissing enterprises (national or
multi-national), suppliers or downstream producers, sec-
tors, and the categories of workers to be targeted;

4.
the
In accordance with their respective responsibilities,
Commission and the Member States shall ensure the coordina-
tion of the assistance from Community Funds.

a description of the territory concerned and its authorities
and other stakeholders, and the expected impact of the
redundancies as regards local, regional or national employ-
ment;

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

the coordinated package of personalised services to be
funded and a breakdown of its estimated cost, including its
complementarity with actions financed by the Structural
Funds as well as information on actions that are mandatory
by virtue of national
to collective
agreements;

law or pursuant

the date(s) on which personalised services to the affected
workers were started or are planned to be started;

the procedures followed for consulting the social partners;
and

the authority responsible for management and financial
control in accordance with Article 18.

the region,

3. Having regard to the actions implemented by the Member
the social partners and the enterprises
State,
concerned by virtue of national law or collective agreements,
and paying particular attention to actions funded by the
European Social Fund (the ESF), the information provided under
paragraph 2 shall include a summary description of the actions
taken and planned by the national authority and enterprises
concerned, including an estimate of their cost.

Article 7

Equality between women and men and non-discrimination

The Commission and the Member States shall ensure that
equality between men and women and the integration of the
gender perspective is promoted during the various stages of
implementation of the EGF. The Commission and the Member
States shall take appropriate steps to prevent any discrimination
based on sex, racial or ethnic origin, religion or belief, disability,
age or sexual orientation during the various stages of
the
implementation of and, in particular, in access to, the EGF.

Article 8

Technical assistance at the initiative of the Commission

1. At the initiative of the Commission, subject to a ceiling of
0,35 % of the financial resources available for that year, the EGF
may be used to finance monitoring, information, administrative
and technical support, audit, control and evaluation activities
necessary to implement this Regulation.

2.
Such tasks shall be executed in accordance with Regulation
(EC, Euratom) No 1605/2002, as well as the implementing rules
applicable to this form of implementation of the budget.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

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Article 9

Information and publicity

1. The Member State shall provide information on and
publicise the funded actions. The information shall be addressed
to the workers concerned, local and regional authorities, social
partners, the media and the wider public. It shall highlight the
role of the Community and ensure that the contribution from
the EGF is visible.

2. The Commission shall set up an Internet site, available in all
Community languages,
to provide information on the EGF,
guidance on the submission of applications, as well as updated
information on accepted and refused applications, highlighting
the role of the budgetary authority.

Article 10

Determination of financial contribution

3. 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 appropriations
corresponding to the amount determined in accordance with
Article 10 and a request for the transfer of the amount to the
EGF budget line. Proposals may be grouped into batches.

Transfers concerning the EGF shall be carried out pursuant to
Article 24(4) of Regulation (EC, Euratom) No 1605/2002.

4. A proposal pursuant
following:

to paragraph 3 shall

include the

(a)

the assessment carried out in accordance with Article 5(5),
together with a summary of the information on which that
assessment is based;

(b)

evidence that the criteria laid down in Articles 2 and 6 are
met; and

the number of workers to be supported,

1. The Commission shall, on the basis of
the assessment
carried out in accordance with Article 5(5), particularly taking
the
into account
proposed actions and the estimated costs, evaluate and propose
determine as quickly as possible the amount of
financial
contribution, if any, that may be made within the limits of the
resources available.

(c)

the reasons justifying the amounts proposed.

5. At the same time as it presents its proposal, the Commission
shall initiate a trilogue procedure, possibly in simplified form, to
seek the agreement of both arms of the budgetary authority on
the need to use the EGF and the amount required.

The amount may not exceed 50 % of the total of the estimated
costs referred to in Article 5(2)(d).

6. On 1 September each year, at least one quarter of the annual
maximum amount of the EGF shall remain available in order to
cover needs arising until the end of the year.

the assessment carried out

in
2. Where, on the basis of
accordance with Article 5(5), the Commission has concluded
that
the conditions for a financial contribution under this
Regulation are met, it shall immediately initiate the procedure set
out in Article 12.

the assessment carried out

3. Where, on the basis of
in
accordance with Article 5(5), the Commission has concluded
the conditions for a financial contribution under this
that
it shall notify the Member State
Regulation are not met,
concerned as soon as possible.

Article 11

Eligibility of expenditure

Expenditure shall be eligible for a contribution from the EGF
from the date(s) on which the Member State concerned starts to
provide personalised services to the affected workers, as set out
in Article 5(2)(e).

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

Article 13

Payment and use of the financial contribution

Following adoption of

the decision in accordance with
1.
Article 12(3), the Commission shall pay the financial contribu-
tion to the Member State(s) concerned in a single instalment, in
principle within 15 days.

2. The Member State shall use the financial contribution, as
well as any interest earned thereon, within 12 months of the
application pursuant to Article 5.

Article 14

Use of the Euro

Article 12

Budget procedure

Applications, decisions on financial contributions and reports
under this Regulation, as well as any other related documents,
shall express all amounts in Euro.

1. The arrangements for
the EGF shall comply with the
provisions of Point 28 of the Interinstitutional Agreement and
any revisions of that Point.

Article 15

Final report and closure

2. Appropriations concerning the EGF shall be entered in the
general budget of the European Union as a provision through the
normal budgetary procedure as soon as the Commission has
identified sufficient margins and/or cancelled commitments.

1. No later than six months after the expiry of the period
specified in Article 13(2), the Member State concerned shall
present a report to the Commission on the execution of the

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including information on the type of
financial contribution,
actions and main outcomes, together with a statement justifying
the expenditure and indicating, whenever appropriate,
the
complementarity of actions with those funded by the ESF.

ensure that Community funds are being used efficiently and
correctly,
in accordance with the principles of sound
financial management;

2. No later than six months after the Commission has received
all the information required under paragraph 1, it shall wind up
the financial contribution from the EGF.

(b)

verifying that the financed actions have been properly
carried out;

Article 16

Annual report

For the first time in 2008 and before 1 July of each year, the
1.
Commission shall present to the European Parliament and to the
Council a quantitative and qualitative report on the activities
under this Regulation in the previous year. The report shall focus
mainly on the results achieved by the EGF and shall in particular
contain information relating to applications submitted, Decisions
adopted, actions funded including their complementarity with
actions funded by the structural funds, notably the ESF, and the
winding-up of
shall also
financial contribution made.
document those requests that have been refused owing to a
lack of sufficient appropriations or to non-eligibility.

It

2. The report will be transmitted,
for information, to the
European Economic and Social Committee, the Committee of
the Regions and the social partners.

Article 17

Evaluation

(c)

ensuring that expenditure funded are based on verifiable
supporting documents, are correct and regular; and

(d)

preventing, detecting and correcting irregularities as defined
in Article 70 of Council Regulation (EC) No 1083/2006 of
11 July 2006 laying down general provisions on the
European Regional Development Fund, the European Social
Fund and the Cohesion Fund and repealing Regulation (EC)
No 1260/1999 (1) and recovering amounts unduly paid
together with interest on late payments in accordance with
the same Article. They shall notify these to the Commission
in due time and keep the Commission informed of the
progress of administrative and legal proceedings.

2. The Member State shall make the financial corrections
required where an irregularity is ascertained. The corrections
made by the Member State shall consist in cancelling all or part
of the Community contribution. The Member State shall recover
any amount lost as a result of an irregularity detected, repay it to
the Commission and, where the amount is not repaid in the time
allowed by the Member State concerned, default interest shall be
due.

1. The Commission shall carry out at its own initiative and in
close cooperation with the Member States:

(a)

(b)

a mid-term evaluation of the effectiveness and sustainability
of results obtained by 31 December 2011; and

an ex-post evaluation by 31 December 2014, with the
assistance of external experts, to measure the impact of the
EGF and its added value.

3. The Commission, in its responsibility for the implementa-
tion of the general budget of the European Communities, shall
take every step necessary to verify that the actions financed are
carried out in accordance with the principles of sound and
efficient financial management, in compliance with the provi-
sions of Regulation (EC, Euratom) No 1605/2002. It is the
responsibility of each Member State to ensure that
it has
smoothly functioning management and control systems; the
Commission shall satisfy itself that such systems are in place.

for
2. The results of
information,
the
European Economic and Social Committee, the Committee of
the Regions and to the social partners.

the evaluation will be transmitted,
the Council,

to the European Parliament,

Article 18

Management and financial control

1. Without prejudice to the Commission's responsibility for
implementing the general budget of the European Communities,
the Member States shall take responsibility in the first instance
for the management of actions supported by the EGF and the
financial control of the actions. To that end, the measures they
take shall include:

To that end, without prejudice to the powers of the Court of
Auditors or the checks carried out by the Member State in
accordance with national laws, regulations and administrative
provisions, Commission officials or servants may carry out on-
the-spot checks,
including sample checks, on the actions
financed by the Fund with a minimum of one working day's
notice. The Commission shall give notice to the Member State
concerned with a view to obtaining all the assistance necessary.
Officials or servants of the Member State concerned may take
part in such checks.

shall

supporting
4. The Member State
documents regarding expenditure incurred are kept available
for the Commission and the Court of Auditors for a period of
three years following the winding-up of the financial contribu-
tion received from the EGF.

ensure

that

all

(a)

verifying that management and control arrangements have
been set up and are being implemented in such a way as to

(1) OJ L 210, 31.7.2006, p. 25.

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Article 19

Reimbursement of financial contribution

1.
In cases where the amount of the actual cost of an action is
less than the estimated amount quoted pursuant to Article 12,
the Commission shall require the Member State to reimburse a
corresponding amount of the financial contribution received.

2. Where the Member State has failed to comply with the
obligations stated in the decision on a financial contribution, the
Commission shall take the necessary steps to require the Member
State to reimburse all or part of
the financial contribution
received.

3.
Prior to the adoption of a decision under paragraphs 1 or 2,
the Commission shall conduct a suitable examination of the case
and shall, in particular, allow the Member State a specified period
of time in which to submit its comments.

4.
If, after completing the necessary verifications, the Commis-
sion concludes that the Member State is not complying with its
obligations under Article 18(1), it shall, if no agreement has been
reached and the Member State has not made the corrections in a
period set by the Commission, and taking account of any
comments made by the Member State, decide within three
months from the end of the period referred above to make the
financial corrections required by cancelling all or part of the

contribution of the EGF to the action in question. Any amount
lost as a result of an irregularity detected shall be recovered and,
where the amount is not repaid in the time allowed by the
Member State concerned, default interest shall be due.

Article 20

Review clause

On the basis of the first annual report provided for in Article 16,
the European Parliament and the Council may review this
Regulation, on the basis of a proposal by the Commission, to
ensure that the solidarity objective of the EGF is met and that its
provisions adequately take into account the economic, social and
territorial characteristics of all Member States.

The European Parliament and the Council shall
review this Regulation by 31 December 2013.

in any case

Article 21

Entry into force

This Regulation shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Union.

It shall apply from 1 January 2007.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 20 December 2006.

For the European Parliament,
The President
J. BORREL FONTELLES

For the Council,
The President
J. KORKEAOJA