Commission staff working document accompanying the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1927/2006 on establishing the European Globalisation Adjustment Fund - Impact Assessment {COM(2008) 867 final} {SEC(2008) 3056}
Date: 2008-12-16
Institutions: European Commission
Subjects: European Globalisation Adjustment Fund, dismissal, fund (EU), globalisation, impact study, reintegration into working life

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.12.2008 
SEC(2008) 3055 

COMMISSION STAFF WORKING DOCUMENT 

accompanying the 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1927/2006 on establishing the European Globalisation 
Adjustment Fund 

Impact Assessment 

{COM(2008) 867 final} 
{SEC(2008) 3056} 

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CONTENTS 

Executive summary .................................................................................................................. 5 

1. 

Procedural issues and consultation of interested parties........................................ 8 

1.1. 

Opinion of the Impact Assessment Board 

1.2. 

Organisation and timing 

1.3. 

Consultation of Member States and social partners 

1.4. 

Main results from the stakeholder consultation 

2. 

Problem definition.................................................................................................... 11 

2.1. 

Background to the EGF 

2.2. 

Current situation of the EGF 

2.3. 

Need for action 

2.4. 

Affected stakeholders 

2.5. 

Consequences of inaction 

2.6. 

Legal basis for action by the EU 

2.7. 

Data sources 

3. 

Objectives.................................................................................................................. 19 

3.1. 

General policy objectives 

3.2. 

Specific policy and operational objectives 

3.3. 

Consistency with other EU policies 

4. 

5. 

Policy Options........................................................................................................... 19 

Impact analyis........................................................................................................... 21 

5.1 

Economic and social impact 

5.1.1. 

Impact of Option 1"No change" 

5.1.2. 

Impact of Option 2 "No change plus improvements 

5.1.3. 

Impact of Option 3 "Improvements and operational changes, Variant A: Trade" 

5.1.4. 

Impact of Option 3 "Improvements and operational changes, Variant B: Markets" 

5.1.5. 

Impact of Option 4 "Improvements and operational changes responding to a serious 
disturbance in the economy caused by globalisation". 

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5.2 

6. 

The budgetary impact 

Comparing the Options ........................................................................................... 35 

6.1. 

Effectiveness 

6.2. 

Added value for the EU 

6.3. 

Budgetary constraints 

6.4. 

Comparison of Options against the objectives 

6.5. 

Conclusion  

7. 

Monitoring and Evaluation ..................................................................................... 37 

Annexes ................................................................................................................................... 35 

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COMMISSION STAFF WORKING DOCUMENT 

Report on the impact assessment of the Proposal for a Regulation of the European 
Parliament and of the Council amending Regulation (EC) No 1927/2006 on establishing 
the European Globalisation Adjustment Fund 

Lead DG: EMPL 

Other departments involved: TRADE, ENTR, REGIO, COMP, SG, SJ  

Agenda Planning or WP reference: 2008/EMPL/012 

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Executive summary 

In the light of the scale and the speed of the current economic crisis the proposal prepared by 
the present impact assessment had to be adapted. The Commission announced in its European 
Economic Recovery Plan, adopted on 26 November 2008, that it would propose to extend the 
scope of the EGF as part of Europe's crisis response and turn it into an early, more effective 
intervention instrument in line with the fundamental principles of solidarity and social justice. 
This led to the introduction in the final proposal of the extension of the scope to "a serious 
disturbance  in  the  economy  due  to  globalisation",  an  element  that  was  not  covered  by  the 
version of the impact assessment presented to the Impact Assessment Board. 

The European Globalisation Adjustment Fund (hereafter the EGF) was created in December 
2006  in  order  to  enable  the  Union  to  show  solidarity  with  and  provide  support  for  workers 
made  redundant  as  a  result  of  major  structural  changes  in  world  trade  patterns  due  to 
globalisation.  The  Fund  supports  measures  such  as  assistance  with  job-search,  training  and 
mobility  allowances  and  thus  makes  it  easier  for  the  workers  to  find  new  jobs.  With  the 
decision  to  create  the  EGF  for  an  initial  period of 7 years (2007-13)  and provide it  with an 
annual maximum budget of EUR 500 million the Union also decided to actively complement 
the efforts of the Member States at national, regional and local levels. It was assumed in the 
Impact  Assessment  of  the  original  proposal  that  the  EGF  could  support  35,000  to  50,000 
workers per year with between EUR 10,000 and EUR 20,000 each. 

The outcome of the first 18 months of EGF operations is significantly lower than that: During 
2007 and the first half of 2008 the EGF received 12 applications from 8 Member States. They 
concerned EUR 67.5 million of EGF support for 15.000 workers, giving an average of EUR 
4.500 per worker. 

There  was  and  is  broad  consensus  within  the  European  Union  on  the  need  to  address  at 
European level the negative effects of globalisation for those citizens who have lost their jobs. 
The key issue is whether the stated objective of solidarity is being met by the current EGF, i.e. 
whether  the  EGF  is  available  to  the  redundant  workers  concerned  and  whether  its  actions 
match the needs of the individuals. 

In 2007 the European Restructuring Monitor recorded 66 cases of restructuring of enterprises 
involving  more  than  1000  workers,  and  there  were  a  further  38  in  the  first  half  of  2008,  as 
compared  to  12  EGF  cases  during  2007  and  2008.  ERM  figures  cover  all  recorded  events 
regardless of their nature and some of these events quite clearly fall outside the current EGF 
definition of eligibility. However, Member States have informed the Commission departments 
that even under current rules further applications could have been made for EGF assistance, 
but  were  not  for  a  variety  of  reasons.  Evidence  gathered  from  national  administrations  and 
opinions expressed during the consultation suggest that cases might exist where redundancies 
are  stretched  over  a  longer  period,  not  allowing  the  threshold  to  be  reached  within  the 
reference period. Particularly difficult is the collection of information from the regional and 
local levels within short reference periods.  

The ERM also recorded 73 events involving between 500 and 1,000 workers and, just as for 
the larger cases, it is likely that some of these events are caused by changes in international 
trade patterns. However these trade-redundant workers can not benefit from EGF assistance 
due to its current eligibility criteria. 

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From these two considerations it can be concluded that the objective of solidarity of the EGF 
is only partially being met under the present rules and that this situation can be addressed by 
lowering the redundancy threshold for EGF applications from 1000 to 500 workers. 

Moreover  the  Commission  has  identified  the  need  to  make  the  EGF  a  more  effective  early 
intervention  instrument  and  to  fully  exploit  its  potential  as  part  of  the  crisis  response.  The 
current EGF Regulation specifies that only trade related redundancies are eligible for support. 
However  the  global  crisis  impacts  the  real  economy  and  employment  in  many  other  ways 
beyond  (international)  trade.  In  addition  to  lowering  the  threshold  for  support,  the 
Commission  is  proposing  to  include  changes  in  the  definition  of  EGF  eligibility  so  that 
redundancies occurring as a result of a serious disturbance in the economy may be included, 
and the Fund can thus directly respond to the effects of the crisis on employment. In this way 
the EGF will be able to provide support to more workers who are in fact made redundant by 
globalisation but who could not be assisted so far. 

On the issue of whether EGF actions match the needs of individual workers, analysis of the 
EGF  cases,  the  FAQs  to  the  Commission  departments  and  input  from  the  Member  States' 
experts  and  other  stakeholders  indicate  that  the  combination  of  requirements  (especially 
implementing  a  coordinated  package  of  personalised  services  within  a  12  month  period)  is 
detrimental to the quality of the actions and does not leave sufficient time for the measures to 
be  effective  in  re-integrating  particularly  the  most  vulnerable  workers  into  new  jobs.  It  is 
therefore proposed to extend the implementation period to 24 months. 

Besides, in order to make the EGF co-funding more attractive to Member States it is proposed 
to  increase  the  common  intervention  rate  to  75  %  to  bring  it  into  line  with  the  Structural 
Funds. 

These proposals fully respect the fundamental nature of the EGF, while turning it into a more 
efficient crisis response instrument. 

Since  the  first  annual  report  on  the  EGF  was  adopted  on  2  July  2008  the  Commission  has 
consulted the Member States twice: first by way of a questionnaire related to EGF operations 
and  management  and  including  the  issues  identified  in  the  annual  report  and  secondly  at  a 
conference of Member State representatives and stakeholders at the beginning of September 
2008. This has allowed the Commission to assemble a maximum of information and views in 
the  available  time  and  discuss  and  exchange  ideas  on  the  EGF  Regulation  and  its 
implementation. 

Based  on  the  information  thus  available  the  Commission  departments  have  examined  4 
Options:  first  to  continue  with  no  changes;  second  to  introduce  a  number  of  operational 
improvements which can be undertaken without changes to the EGF Regulation; and third to 
introduce  specific  amendments  to  the  Regulation.  The  third  Option  has  two  variants  as 
concerns eligibility: one where trade continues to be the only criterion and one where trade is 
supplemented  with  market  changes  as  described  above.  The  fourth  Option  proposes  an 
expansion beyond market changes to enable the EGF to react rapidly to redundancies brought 
about  by  disruption  of  the  economy  caused  by  globalisation.  The  4  Options  have  been 
analysed and assessed in light of the overall objective laid  down in  the EGF  Regulation, of 
providing support to workers made redundant due to globalisation, ensuring that the solidarity 
objective  of  the  EGF  is  met  and  that  the  EGF  provisions  adequately  take  into  account  the 
economic, social and territorial characteristics of all Member States.  

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The analysis of the social and economic impacts has led to the conclusion that the Option 1 
"No change" would not make it possible to address the shortcomings in the implementation of 
the  current  EGF  Regulation.  The  Option  2  "No  change  plus  improvements"  would  simplify 
procedures and application and information requirements, provide clarification on eligibility 
rules,  increase  visibility  of  the  EGF  through  the  use  of  existing  networks  and  promote 
exchange of experience and good practice. It would not address the main obstacles that make 
the  EGF  less  effective  as  a  financing  instrument  than  had  been  intended  by  the  legislator. 
Option  3,  Variant  A  "Trade"  would  allow  a  larger  number  of  redundant  workers  to  benefit 
from the EGF and to benefit for a longer period. Whilst this Option would make it possible to 
address  most  of  the  problems  identified,  it  would  not  allow  for  equal  treatment  of  workers 
made redundant as a result of major changes in world markets. Option 3, variant "Markets" 
would extend the benefits to a wider field and encompass also the workers affected by events 
which  fall  under  a  more  comprehensive  concept  of  globalisation.  Option  4  would  further 
extend the scope to a wider range of redundancies caused by globalisation while offering all 
the other advantages of Option "3 Markets". Therefore, Option 4 is considered to better fulfil 
the  objective  of  solidarity  in  as  much  as  it  makes  support  available  to  more  redundant 
workers. 

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1. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

1.1. 

Opinion of the Impact Assessment Board 

In the light of the scale and the speed of the current economic crisis the proposal prepared 
by  the  present  impact  assessment  had  to  be  adapted.  The  Commission  announced  in  its 
European Economic Recovery Plan, adopted on 26 November 2008, that it would propose to 
extend  the  scope  of  the  EGF  as  part  of  Europe's  crisis  response  and  turn  it  into  an  early, 
more  effective  intervention  instrument  in  line  with  the  fundamental  principles  of  solidarity 
and social justice. This led to the introduction in the final proposal of the extension of the 
scope to "a serious disturbance in the economy due to globalisation", an element that 
was  not  covered  by  the  version  of  the  impact  assessment  that  was  presented  to  the 
Impact Assessment Board. 

The  Draft  Impact  Assessment  report  on  the  EGF  was  examined  by  the  Impact 
assessment Board at its meeting of 24 September 2008. In its opinion issued on 29 
September 2008 the Board stated that it would like to examine and issue an opinion 
on a revised IA report. 

The  Board  made  a  number  of  recommendations  for  improvements  of  the  draft  IA 
report. 

The  first  recommendation  concerned  the  improvement  of  the  problem  definition. 
This has been addressed systematically in Section 2, point 2.3, of the revised report, 
including specific references to the needs arising from the global financial crisis. It 
describes  for  each  of  the  proposed  changes:  eligibility  threshold,  duration  of 
implementation,  intervention  rate,  globalisation  event,  technical  assistance  and 
introduction of definitions in the EGF Regulation the main deterrents related to the 
efficiency  of  implementation  of  the  current  EGF  Regulation.  Concrete  examples 
based  on  information  received  during  the  consultation  period  from  the  member 
States,  are  provided  to  illustrate  the  problems  related  to  implementation.  Given  the 
lack of adequate data on potentially eligible cases, in particular whether these cases 
could meet the strict intervention criteria, it is not possible to provide an analysis of 
cases  where  Member  States  have  not  applied  for  EGF  support,  as  requested  by  the 
Board. The description of the impact of a base line scenario that takes into account 
the  economic  outlook  of  the  macro-economic  environment  is  referred  to  under  2.5 
and further addressed in 5.1.1. and 5.2. 

Secondly  the  Board  recommended  that  the  report  should  further  develop  the 
description  of  the  proposed  changes  to  the  EGF  Regulation  and  substantiate  the 
choice  of  the  specific  parameters.  The  proposed  changes  are  described  in  detail  in 
Section  5  under  point  5.1.3.  of  the  revised  report,  where  the  choice  of  specific 
parameters is also further substantiated. The same sub section contains the position 
of the Member States on the proposed changes to each of the specific parameters. For 
further information the detailed position of the individual Member States' experts on 
the issues addressed in the questionnaire – which also covers the questions addressed 
by the proposed changes to the Regulation – has been added as Annex 2 to the report. 
Finally it is noted that the proposed extension of the duration of the implementation 
period from 12 to 24 months is fully in line with the European Employment Strategy 
which suggests that every person becoming unemployed must be offered a new start 

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within 12 months; extending the period does not limit the possibility of intervening 
early  but  offers  the  opportunity  to  intervene  for  a  longer  period  of  time  and  thus 
helps increasing the rate of re-integration of the redundant workers. 

The third recommendation concerned the need to provide a more explicit definition 
of the eligibility criteria under Option 3.B "Markets". This is addressed in Section 5 
under point 5.1.4. of the revised report which covers the considerations related to the 
crisis  response  function  of  the  EGF  and  where  the  role  of  the  Member  States  in 
preparing and justifying the applications is reiterated. It is explained which evidence 
would be required from Member States for the purpose of providing an analysis of 
the link between the major structural changes in world markets and the redundancies 
covered in their application.  

An  administrative  recommendation  concerned  the  explanation  of  why  no  inter-
service group was set up for the IA. This explanation is provided in Section 1 under 
point 1.1. 

The  Board  issued  a  second  opinion  on  6  October  2008  on  the  revised  Impact 
Assessment  in  which  the  Board  recognised  that  many  of  its  recommendations  had 
been taken on board and made further recommendations. 

A  general  recommendation  concerned  strengthening 
the  arguments  for  an 
amendment to the EGF Regulation at the present time. The issue of the timing of the 
proposal  has  been  clarified  in  the  problem  definition,  with  a  clear  reference  to  the 
economic  crisis  and  the  European  Economic  Recovery  Plan,  which  includes  an 
amended  EGF  among  the  proposed  measures  to  face  the  crisis.  To  this  end  it  is 
proposed to widen the scope of the EGF even further than envisaged in the "markets" 
Option,  namely  to  cover  redundancies  resulting  from  a  serious  disturbance  in  the 
economy  due  to  globalisation  and  include  this  as  a  fourth  Option.  By  enabling  the 
EGF to respond to more cases of globalisation induced redundancies it should reach 
more  workers  affected  by  the  economic  crisis  than  the  present  Regulation  permits, 
and therefore be distributed more fairly – which also in part responds to the second 
recommendation below. 

The  first  recommendation  concerns  the  analysis  of  the  Member  States'  willingness 
and ability to use the EGF support and recommends that eligible cases not presented 
for  EGF  co-financing,  be  examined.  The  Commission  services  are  aware  of  4  or  5 
such  cases.  However  in  every  case  the  Member  State  concerned  was  either  still 
gathering information about the circumstances and was therefore not in a position to 
establish clearly if the case would indeed be eligible; or the case concerned too few 
workers  for  even  an  application  under  Art.  2(c),  despite  the  other  conditions  for 
applying  to  the  EGF  having  been  met.  The  proposal  to  lower  the  threshold  should 
help on this respect. 

The  second  recommendation  concerned  clarification  as  to  how  the  proposed  open-
ended eligibility criteria can be implemented fairly and appropriately. The use of the 
EGF  has  always  been  subject  to  an  assessment  by  the  Commission  based  on  the 
merits of each specific case. This is already being done under the criteria of "major 
structural changes in world trade patterns", "substantial increase in imports" or "rapid 
decline  of  EU  market  shares".  The  new  proposal  will  not  remove  the  element  of 
assessment, nor will it make it more difficult for the Commission to decide. It should 

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be recalled that the EGF does not pursue an objective of equal distribution of funds 
among Member States or regions. 

The third recommendation asked for an assessment of the likely increase in demand 
for the EGF that will result from the economic slowdown and assess EU value added. 
As it was already stated in the IA the take-up of EGF funding depends critically on 
the  propensity  of  Member  States  to  apply  for  assistance.  This  continues  to  be  the 
case,  because  the  principle  of  a  demand  driven  Fund  remains  unchanged.  The 
number of potential cases depends in turn on the depth and length of the economic 
crisis and on how Member States' economies cope with it. It is not possible to make 
quantitative  estimates  with  any  degree  of  confidence.  In  contrast,  however,  the 
amended EGF will serve to underline the Union's solidarity with redundant workers 
who  have  lost  their  jobs  through  no  fault  of  their  own,  but  due  to  the  world-
embracing economic downturn.  

1.2. 

Organisation and timing 

Article  16  of  Regulation  (EC)  No  1927/20061  on  establishing  the  European 
Globalisation Adjustment Fund ("the EGF Regulation") stipulates that each year the 
Commission must present to the European Parliament and the Council a quantitative 
and qualitative report on the activities of the EGF in the previous year. Article 20 of 
the  EGF  Regulation  also  provides  that  the  Commission  may  submit  a  proposal  to 
review the Regulation on the basis of its first annual report. 

The Commission adopted its report on the first year of operation of the EGF2 on 2 
July  2008.  In  that  report  the  Commission  indicated  that  it  would  examine  ways  to 
improve the performance of the Fund and outlined a number of issues to be looked 
into,  including  expanding  the  Fund  to  cover  changes  in  international  markets,  the 
intervention  thresholds  and  the  length  of  implementation  periods  (see  Annex  1  for 
the full report). 

As this proposal concerns a revision of existing legislation, the problem at issue and 
the objectives pursued by the EGF in its current form have already been defined in 
the  impact  assessment3  accompanying  the  original  legislative  proposal.  Therefore, 
the present impact assessment looks only into the specific problems to be addressed 
by the proposed amendments. 

The  proposed  amendments  to  the  EGF  Regulation  are  partially  of  a  cross-cutting 
nature, and DG EMPL has consulted the other departments concerned on an ad hoc 
basis  during  the  period  of  preparation.  This  working  method  was  considered 
necessary  to  meet  the  tight  deadlines  for  making  progress  within  the  current 
Parliament. 

1.3. 

Consultation of Member States and social partners 

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3 

OJ L 406, 30.12.2006, p.1, Regulation as corrected in OJ L 48, 22.02.2008, p. 82 
Communication from the Commission to the European Parliament and the Council on Solidarity in the 
face of change: The European Globalisation Fund: 2007 Review and Prospects, COM(2008)421 final of 
2.7.2008 
Sec(2006)274 accompanying COM(2006)91 final 

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Since the first annual report on the EGF was adopted on 2 July 2008 the Commission 
departments  have  consulted  the  Member  States'  experts  and  social  partners  twice: 
first  by  way  of  a  questionnaire  relating  to  EGF  operations  and  management  and 
including  the  issues  identified  in  the  annual  report  and secondly  at  a  conference  of 
Member  State  representatives  and  social  partners  at  the  beginning  of  September 
2008.  

The  questionnaire  asked  the  Member  States  and  the  stakeholders  to  provide  their 
views  on  the  usefulness  of  including  factors  of  globalisation  other  than  changes  in 
international  trade;  on  the  number  and  nature  of  redundancy  cases  involving  more 
than 1000 workers as well as cases involving between 500 and 1000 workers; on the 
appropriateness of the time periods established in the Regulation (reference periods 
and implementation periods); and on a number of issues relating to administration of 
the  EGF  at  EU  and  national  levels.  Replies  were  received  from  22  Member  States 
and a few social partner organisations. 

A second consultation of the Member States’ experts and social partners took place 
at  a  conference  held  in  Brussels  on  4  September  2008.  The  conference  agenda 
covered the issues identified in the annual report as highlighted in the responses to 
the  questionnaire,  summarized  for  ease  of  reference  in  an  issues  paper  which  was 
sent to all participants prior to the meeting.  

1.4. 

Main results from the stakeholder consultation 

The Commission departments particularly wanted to know the views of the Member 
States and other stakeholders on the core issues identified in its annual report and to 
receive  additional  information  and  data  if  possible.  These  views  are  addressed  in 
detail  in  the  assessment  of  the  Options  in  Section  5.  An  overview  table  is  given  in 
Annex 2. It should be noted that the views of the Member States reflect the experts' 
opinion and not necessarily the formal position of the Member States. 

The information received was considered sufficient in terms of representation of the 
different  interests.  Given  the  limited  scope  of  the  proposed  amendments  further 
public consultation was not considered necessary. 

2. 

PROBLEM DEFINITION 

2.1. 

Background to the EGF 

There is an urgent need for action to protect Europe's citizens from the worst effects 
of  the  global  financial  crisis  and  ensure  rapid  re-integration  into  employment  of 
workers who have been made redundant, and thus to avoid long term unemployment.  

The  EGF  was  established  as  a  community  instrument  to  help  workers  made 
redundant  due  to  major  changes  in  world  trade  patterns.  Member  States  may  apply 
for EGF support if 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. 

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However  the  global  economic  crisis  has  repercussions  for  employment  far  beyond 
what can be attributed to changes in world trade, and under the current rules of the 
Regulation the EGF is not in a position to address these issues. 

The  EGF  contributes  to  funding  active  labour  market  measures  designed  to  re-
integrate redundant workers into the labour market. The EGF has been set up for the 
period  1  January  2007  to  31  December  2013,  to  coincide  with  the  duration  of  the 
financial  framework.  It  has  a  maximum  annual  reserve  of  EUR  500  million.  The 
contribution  of  the  EGF  may  not  exceed  50  %  of  the  total  estimated  costs  of  the 
proposed intervention. The duration of EGF support, which may start as soon as the 
Member State begins to implement measures for the redundant workers concerned, is 
set to finish at the latest 12 months after the date of submission of an application. 

EGF support is granted to the Member State on the basis of an individual financing 
decision  taken  by  the  Commission  following  a  decision  by  the  EU  Budgetary 
Authority to mobilise the EGF. For reasons of efficiency, proposals to mobilise the 
EGF are presented in batches covering two or more separate applications. 

Member  States  can  apply  for  EGF  support  under  one  of  the  following  eligibility 
criteria of Article 2 of the current Regulation: 

(a) 

(b) 

(c) 

at  least  1,000  redundancies  over  a  period  of  4  months  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, or 

in small labour markets or in exceptional circumstances, duly substantiated by 
the  Member  State(s)  concerned,  even  if  the  conditions  under  a)  and  b)  above 
are not entirely met, when redundancies have a serious impact on employment 
and the local economy. 

2.2. 

Current situation of the EGF 

The  outcome  of  the  first  18  months  of  EGF  operations  can  be  summarized  as 
follows: During 2007 and the first half of 2008 the EGF received 12 applications for 
support  from  8  Member  States.  They  concerned  EUR  67.5  million  of  EGF  support 
for 15,000 workers, giving an average of about EUR 4,500 per worker.  

A total of 6 decisions have been taken, resulting in payments of EUR 18.6 million in 
2007 (or 3.7 % of EUR 500 million) and EUR 3.1 million in 2008.  

A detailed case by case presentation of the Fund's activities so far is available at the 
EGF  web  site4.  More  information  can  also  be  found  in  the  first  annual  report  in 
Annex 1.  

The twelve applications received so far have come from eight Member States: Italy 
(4),  France  (2),  Germany,  Finland,  Malta,  Portugal,  Spain  and  Lithuania  (1  each). 

4 

http://ec.europa.eu/employment_social/egf/index_en.html 

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The  other  nineteen  Member  States  have  not  yet  raised  any  cases  with  the 
Commission  for  potential  presentation  to  the  EGF.  No  applications  have  led  to  a 
negative decision. 

These results fall significantly short of the assumptions made for EGF support in the 
Impact  Assessment  for  the  original  proposal5  where  is  was  assumed  that  the  EGF 
could support 35,000 to 50,000 workers per year. 

2.3. 

Need for action 

In  the  light  of  the  situation  described  above  and  in  particular  the  need  to  provide 
support  for  workers  made  redundant  through  the  economic  impact  of  globalisation 
the  central  question  is  therefore  whether  the  stated  objective  of  solidarity  is  being 
met  with  the  current  EGF,  i.e.  is  the  EGF  available  to  the  redundant  workers 
concerned and do the actions match the needs of individuals? 

This  question  has  to  be  examined  within  the  scope  as  limited  by  Article  20  of  the 
EGF  Regulation,  which  provides  for  review  of  the  EGF  on  the  basis  of  its  first 
annual report with the two-fold aim (1) to ensure that the solidarity objective of the 
EGF  is  met  and  (2)  that  its  provisions  adequately  take  into  account  the  economic, 
social  and  territorial  characteristics  of  all  Member  States.  Achievement  of  the 
solidarity  objective  implies  reaching  and  re-integrating  into  the  labour  market  a 
larger  number  of  redundant  workers  than  is  the  case  under  the  current  EGF 
Regulation.  

At this stage it is not the intention to evaluate the effectiveness and sustainability of 
the results obtained by the EGF. To that effect a mid-term evaluation will be carried 
out  in  accordance  with  Article  17  of  the  EGF  Regulation  by  31  December  2011. 
Indeed,  as  the  first  final  reports  from  Member  States  on  the  implementation  of 
specific EGF interventions were only delivered in September 2008, consideration of 
actual outcomes has not been possible. 

The  proposed  amendments  aim  at  improving  in  the  short  term  the  implementation 
and performance of the EGF in relation to the above objectives. 

Some improvements could be achieved by addressing the shortcomings related to the 
implementation  of  the  current  eligibility  criteria.  These  relate  to  the  complicated 
procedures and information requirements, the lack of interest of existing networks to 
promote the EGF, the lack of clarity as regards the eligibility of the services sector, 
of  transnational  mobility  allowances  and  micro-credits  and  the  absence  of  trade 
related reference material for the preparation of applications, the absence of adequate 
support  enabling  systematic  exchange  of  experience  and  good  practice  as  well  as  a 
lack of visibility of the EGF. These problems can be solved to a large extent without 
amending the Regulation. 

However, more far-reaching improvements would need to address the inadequacy of 
the  current  eligibility  criteria  with  a  view  to  meeting  the  solidarity  objective.  Four 
main causes can be identified for the under-performance of the Fund with respect to 
its  solidarity objective:  the eligibility threshold,  the globalisation event creating the 

5 

SEC(2006)274, op.cit., p. 15 

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eligibility,  the  duration  of  the  implementation  and  the  intervention  rate.  These  are 
analysed below. 

Eligibility threshold 

In  2007  the  European  Restructuring  Monitor  (ERM)  recorded  66  cases  of 
restructuring of enterprises involving more than 1000 workers, and a further 38 in the 
first  half  of  2008  as  compared  to  12  cases  notified  to  the  EGF  in  2007  and  2008. 
ERM figures cover all recorded events regardless of their nature and some of these 
events fall completely outside the current EGF definition of eligibility. 

Member States have informed the Commission departments that, even under current 
rules, further applications  might  have  been made for EGF assistance,  but were not, 
for a variety of reasons, including lack of relevant data, e.g. due to difficulties with 
disaggregation  of  regional  and  sectoral  redundancy  statistics.  This  is  particularly 
relevant  for  redundancies  in  sectoral  cases  in  a  single  or  two  contiguous  regions 
involving a large number of SME's (Article 2(b) cases). 

Evidence gathered from national administrations and opinions expressed during the 
consultation process suggest that cases might exist where redundancies are stretched 
over  a  longer  period,  not  allowing  the  threshold  to  be  reached  within  the  reference 
period. 

The ERM also recorded more than 73 events in the same period involving between 
500  and  1,000  workers,  and  some  of  these  events  would  be  caused  by  changes  in 
international trade patterns. However these trade-redundant workers can not benefit 
from EGF assistance due to the current threshold of 1,000 redundancies. 

The  experience  gained  by  the  EGF  so  far  demonstrates  that,  in  practice,  many 
redundancy events tend to be long-drawn out. Even in cases of company closure, the 
actual  process  of  laying  off  the  workers  may  be  slow,  with  more  senior  workers 
benefitting  from  a  longer  period  of  notice  before  their  final  redundancy.  This  has 
made it difficult (as Finland informed the Commission departments in respect of its 
Perlos  application)  to  count  over  1,000  redundancies  within  the  tight  reference 
period, even though the event clearly affected more than 1,000 workers. The problem 
is further exacerbated by the legal impossibility under the current EGF Regulation to 
include  workers  made  redundant  before  the  start  of  the  reference  period  in  the 
package of measures. Two possible solutions to thes problems have been considered: 
(i) extending the reference period to greater than four months (in Article 2(a) cases) 
or  nine  months  (in  Article  2(b)  cases),  or  (ii)  reducing  the  number  of  actual 
redundancies  that  must  occur  within  the  reference  period  in  combination  with  the 
inclusion  of  workers  made  redundant  before  the  start  of  the  reference  period  .  In 
order  to  avoid  extending  the  reference  periods  ,  and  thus  extending  the  whole 
application and decisional process to unacceptable lengths, a reduction of the trigger 
number  of  redundancies  in  combination  with  the  inclusion  of  the  redundancies 
occurring before the start of the reference period is considered the best solution. The 
effect of such a reduction will be two-fold: it will make it easier for Member States 
to  make  an  application  in  cases  of  drawn-out  redundancies,  it  will  ensure  equal 
treatment between workers dismissed before and after the reference period and it will 
allow smaller redundancy events to be eligible. This latter effect clearly extends the 

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coverage  of  the  EGF  to  events  which  although  of  a  smaller  size  can  be  locally  or 
regionally catastrophic. 

It is proposed to reduce the trigger number of redundancies to 500. A reduction to, 
for example, 800 would not significantly increase coverage. On the other hand, the 
Commission considers that a figure below 500 would not represent a European-level 
shock and unit  cost of preparing, negotiating  and  managing  too small interventions 
may be disproportionate. 

Duration of the implementation 

Commission analysis of the EGF cases that have been received, the FAQs to the EGF 
internet site  and input from the Member States and other stakeholders indicate that 
the  requirement  that  a  coordinated  package  of  personalised  services  to  be 
implemented  within  a  12  month  period  can  be  detrimental  to  the  quality  of  the 
actions  and  does  not  leave  sufficient  time  for  the  measures  to  be  effective  in  re-
integrating workers who are hard to place into new jobs. If more time was available 
to  conceive,  develop  and  implement  the  individual  measures  higher  rates  of  re-
integration  could  be  achieved.  Experience  in  the  largest  EGF  intervention  so  far 
(Germany, BenQ) demonstrates that after one year of intensive support, over 40% of 
the  assisted  workers  had  still  not  found  a  replacement  job.  This  figure  was  also 
observed  in  the  French  Peugeot  EGF  case,  where  41%  of  workers  were  still 
unemployed  at  the  end  of  their  EGF  assistance.  In  the  French  Renault  case  the 
outcome was better but around a quarter of the workers who had benefitted from the 
assistance  were  still  without  a  durable  outcome.  It  should  be  underlined  that  these 
remaining workers who have normally a consistent job history have good chances to 
be placed if they receive substantial support.  

The Commission departments share the opinion of the Member States that a longer 
period of implementation of the EGF-funded activities would allow a greater number 
of  affected  workers  to  return  to  employment.  In  particular,  given  that  those 
remaining  unemployed  after  one  year  are  likely  to  be  in  an  increasing  difficult 
situation on the labour market, an extension of the period of implementation would 
allow a better achievement of the solidarity objective of the Fund. 

A  longer  intervention  period  would  also  allow  Member  States  to  elaborate  better 
targeted  packages  of  measures  and  to  carry  out  the  necessary  administrative  and 
financial steps to set them up. 

Intervention rate 

The  EGF  Regulation  in  its  Article  20  provides  that  the  review  of  the  Fund  must 
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.  In  this  regard  the  Commission  departments  consider  that  the 
application of a single intervention rate has had the inadvertent effect of discouraging 
applications  from  the  less  advantaged  regions  of  the  EU,  which  enjoy  a  higher 
intervention  rate  from  the  Structural  Funds  than  granted  under  the  EGF.  Such  less 
advantaged regions may be discouraged from applying to the EGF because the cost 
to the national exchequer is higher than other, admittedly less focussed, instruments 
such  as  the  ESF.  The  Commission  departments  considered  the  Option  of  applying 

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different rates to different regions, as in the Structural Funds, but considers that for 
reasons both of efficiency, simplicity and solidarity, it would be preferable to use a 
single intervention rate, but that this rate should be increased. 

Globalisation event 

Among  the  ERM  cases  mentioned  above,  there  are  some  which  are  related  to 
changes in world market conditions, but where it is difficult to establish a link with 
changes  in  trade  patterns,  as  required  under  the  current  Regulation.  However, 
"globalisation"  has  many  other  facets  than  (international)  trade,  such  as  changes  in 
production and product technology, changes in the organisation of production (such 
as  company  outsourcing)  and  the  access  to,  and  price  of,  raw  materials  and  other 
inputs  and  the  speed  with  which  this  happens.  Such  cases  are  not  covered  by  the 
existing Regulation, but should become eligible through the broadening of the scope 
of the Fund. 

Furthermore  the  financial  crisis  has  made  evident  that  major  redundancies  can  be 
brought  about  by  problems  in  the  banking  and  financial  sectors  on  a  global  scale 
which negatively impacts the real economy in the EU and the Member States. There 
is a need to adapt the Regulation to enable the EGF to be responsive to the broadest 
possible range of globalisation events. 

Two additional problems experienced by the EGF in its first year of implementation 
related to: 

Technical Assistance 

The lack of guidance, expert advice, peer learning and mutual exchanges led to some 
cases of inadequate applications which required considerable efforts to improve, and 
which  slowed  down  the  decisional  process.  The  Commission  departments  regretted 
these  delays,  but  found  themselves  unable  to  address  them  adequately  due  to  the 
inflexibility of the Technical assistance arrangements for the Fund. 

Introduction of definitions in the EGF Regulation 

The  difficulties  faced  by  the  Member  States  in  interpreting  certain  elements  of  the 
EGF regulation, which led to some confusion, and risked creating greater problems 
of a legal or audit nature in the future.  

Conclusion 

The  consultation  has  shown  support  for  strengthening  the  performance  of  the  EGF 
with a view to better meeting the solidarity objective as intended by the legislators. 

It can be expected that, if no action is taken, the EGF will only reach and re-integrate 
into  the  labour  market  a  small  share  of  the  redundant  workers  for  whom  it  was 
created.  However  it  would  leave  out  a  significant  number  of  workers  who  are 
considered victims of globalisation by the wider public.  

2.4. 

Affected stakeholders 

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The  most  affected  stakeholders  are  the  workers  who  become  redundant  as  a 
consequence of structural changes in world trade patterns and other types of changes 
in  world  markets  and  who,  depending  on  the  Option  chosen,  may  or  may  not  be 
eligible for support from the EGF. 

Article 1 of the EGF Regulation recognises that various stakeholders are also to be 
found  in  the  regional  or  local  economy  surrounding  each  potential  or  actual  EGF 
case.  

The  national  authorities  in  the  Member  States  are  responsible  for  submitting 
applications for EGF support, and thus will also be directly affected by any changes 
in the Regulation. 

2.5. 

Consequences of inaction 

The consequences of not taking action are addressed as policy Option 1 "No change" 
below  under  sections  4  to  6.  This  would  mean  leaving  the  EGF  Regulation 
unchanged and leaving the identified problems identified un-addressed. However, as 
the economic prospects for the future are less favourable than those observed in 2007 
and the first half of 2008, the baseline scenario is likely to lead to more redundancies 
caused  by  developments  in  the  world  economy.  It  is  therefore  likely  that,  even 
without the proposed modification of the Regulation, more redundant workers would 
have  to  be  assisted  by  the  EGF.  The  number  of  workers  affected  by  globalisation 
who  could  not  be  supported  due  to  shortcomings  in  the  Regulation  would  also 
increase. 

2.6. 

Legal basis for action by the EU 

The proposal seeks to modify the existing EGF Regulation, which is based on Article 
159 3rd Paragraph of the Treaty. Changes to this Regulation can only be initiated by 
a proposal from the Commission. In addition, the possibility of a rapid amendment to 
the original EGF legislation has been provided for by the legislator: Article 20 of the 
EGF Regulation lays down that the Commission may submit a Proposal, on the basis 
of the first annual report, for the European Parliament and the Council to review the 
EGF Regulation.  

The Proposal does not affect the fundamental rights of citizens as laid  down  in  the 
EU Charter of Fundamental Rights. 

2.7. 

Data sources 

The  consultation  has  shown  that  Member  States  do  not  systematically  collect 
statistical  data  on  mass  redundancies  by  company,  region  or  sector.  In  most 
instances,  scattered  data  are  available  on  announced  redundancies  in  individual 
enterprises in application of Council Directive 98/59/EC6 on collective redundancies. 
However, there is often a significant difference between the number of redundancies 
announced prior to the negotiations with the workers' representatives and the number 
of actual redundancies resulting from these negotiations. 

6 

OJ L 225, 12.8.98, p. 16 

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17 

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For  the  purposes  of  providing  quantitative  estimates  in  this  Impact  Assessment  the 
Commission  departments  have  used  the  information  on  company  restructuring  and 
redundancies  available  at  the  European  Monitoring  Centre  for  Change  (EMCC)  at 
the European Foundation for the Improvement of Living and Working Conditions as 
well as the data collected during the first year of implementing the EGF. 

The ERM, located within the EMCC, collects and presents cases of restructuring that 
affect at least one EU Member States and: 

•  entail an announced or actual reduction of at least 100 jobs; or 

•  involve  sites  employing  more  than  250  people  and  affecting  at  least  10%  of 

workforce; or 

•  create at least 100 jobs. 

The  information  concerning  restructuring  cases  is  extracted  from  leading  European 
daily newspapers and the business press, and cross-checked and completed with the 
help of other sources, such as company web sites and trade union web sites. 

The ERM database recorded 573 events in 2007 and 282 in the first half of 2008. To 
date  a  total  of  7,850  events  have  been  registered,  which  make  the  ERM  the  most 
complete source of information on restructuring across the European Union.  

However, although the ERM provides data as accurately as possible, its reliability is 
affected by the nature of the data sampling technique:  

•  possible over-representation of big firms and large workforce reductions, as these 
are  more  likely  to  be  reported  in  the  media;  as  firm  size  is  correlated  with  a 
number  of  important  factors,  such  as  economic  sector,  size  bias  may  lead,  for 
instance, to a higher reporting rate for manufacturing compared to services;  

•  regional bias, which is likely to occur when media coverage is not evenly spread 

throughout the country; 

•  country  size  bias,  which  may  exist  because  restructuring  events  involving  100 
employees occur less and are more media relevant in small Member States than in 
large Member States, with consequences for reporting frequency; 

•  type  of  restructuring  bias,  which  may  occur  if  public  and  media  focus  is  more 

concentrated on certain types of restructuring (e.g. company closure); 

•  possible  over-estimation  of  the  number  of  redundancies,  as  it  is  based  on  the 
announced  redundancies  as  reported  in  the  media  at  a  very  early  stage  of  the 
collective redundancy process. 

Furthermore  it  is  not  possible  to  identify  just  the  "EGF"  type  events  among  all  the 
events  recorded.  The  ERM  data  therefore reflects  a  number  of  event  which  are  not 
potentially relevant to the EGF. 

A  comparison  of  ERM  data  with  the  number  of  redundancies  notified  to  the 
Commission  in  the  cases  analysed  so  far  in  the  EGF  context  shows  a  significant 

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degree of correspondence between these sources, albeit that the ERM figures tend to 
overestimate the number of actual redundancies. 

Further data on this aspect of collective redundancies is available from the report by 
GHK  "Verification  of  Collective  Redundancy  Notification  and  European 
Restructuring  Monitor  Data"7.  This  document  consists  of  a  comparison  of  data 
recorded by the ERM and those reported to national authorities in compliance with 
Council  Directive  98/59/EC,  which  lay  down  that  the  employers  notify  the 
competent public authority of any projected collective redundancies.  

Another source of information is the annual report of the EGF, containing a detailed 
overview  of  applications  handled  so  far,  as  well  as  specific  information  on 
redundancy events. The Commission departments have moreover drawn on the EGF 
web  site,  particularly  the  Frequently  Asked  Questions,  as  these  point  to  the  issues 
most  in  need  of  attention.  Finally,  the  Commission  departments  have  taken  full 
account of the answers given by the Member States' experts and stakeholders during 
the  consultation.  Information  from  the  final  reports  on  the  French  EGF  cases, 
received on the 24th of September 2008, was also taken into account. 

3. 

OBJECTIVES 

3.1. 

General policy objectives 

The general policy objective is to provide the Union with an efficient instrument to 
respond  flexibly  and  confidently  to  serious  economic  disruption  brought  about  by 
globalisation.  There  is  broad  consensus  in  the  EU  that  openness  to  trade  in  global 
markets  and  international  investment  increases  the  ability  of  the  EU  to  provide 
growth  and  prosperity  to  its  citizens.  However,  it  is  also  generally  recognised  that 
globalisation  may  have  negative  consequences,  particularly  for  the  most  vulnerable 
and least qualified workers in some sectors, and that these should be addressed8. 

The EGF is concrete proof of Community solidarity with the workers thus affected. 

3.2. 

Specific policy and operational objectives 

The  policy  objective  pursued  with  this  proposal  is  to  make  the  EGF  a  better 
performing and more flexible instrument by extending the coverage of the Fund and 
redundant  by 
enhancing 
globalisation into the labour market. 

re-integrating  workers  made 

its  effectiveness 

in 

The operational objectives are to: 

(1) 

Adapt the eligibility criteria to better reflect labour market characteristics 

(2) 

Increase the effectiveness of reintegration measures 

(3)  Make co-funding from the EGF more attractive to Member States 

7 
8 

Project No 0298/Contract No 06-3030-47, 26.4.2007 
See  i.a.  COM(2006)567  final  of  4.10.2006,  Communication  from  the  Commission  on  Global  Europe 
competing in the world. A contribution to the EU's growth and jobs strategy. 

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(4) 

Ensure  equivalent  treatment  of  all  workers  affected  by  developments  in 
global markets 

(5) 

Improve the quality of applications and measures 

(6) 

Provide  legal  certainty  about  undefined  key  elements  in  the  current  EGF 
Regulation. 

3.3. 

Consistency with other EU policies 

Community  support  for  workers  who  become  redundant  as  a  consequence  of 
increased  competition  in  global  markets  clearly  underpins  the  objectives  of  the 
Lisbon strategy on growth and job creation. It is fully consistent with the overarching 
objectives of the European Employment Strategy of achieving full employment and 
reducing unemployment and inactivity, improving quality and productivity at work, 
improving the attractiveness of jobs and strengthening social and territorial cohesion. 
EGF  assistance  complements  actions  co-financed  by  the  Structural  Funds,  in 
particular the European Social Fund. 

The EGF underpins the Integrated Guidelines of the European Employment Strategy, 
in particular Guidelines 20, 21 and 24. These guidelines concern the need to pursue 
integrated  flexicurity  policies  and  improved  matching  of  labour  market  needs 
through  removing  obstacles  to  mobility  for  workers  across  Europe,  as  well  as 
through  the  better  anticipation  of  skill  needs,  labour  market  shortages  and 
bottlenecks.  They  promote  flexibility  through  the  better  anticipation  and  positive 
management  of  change,  notably  linked  to  trade  opening,  so  as  to  minimise  social 
costs and facilitate adaptation, and offer support for transitions in occupational status, 
including  training,  self-employment,  business  creation  and  geographical  mobility. 
They  also  support  best  use  of  education  and  training  systems  in  response  to  new 
competence  requirements  by  responding 
to  new  occupational  needs,  key 
competences  and  future  skill  requirements  by  improving  the  definition  and 
transparency of qualifications, their effective recognition and the validation of non-
formal and informal learning. 

The  Annual  Report on  the operations  of the EGF is  a  key element in the  Renewed 
Social Agenda9 recently adopted by the Commission, as this Fund enables the Union 
to show its solidarity with those who are negatively affected by globalisation. In this 
report, the Commission announced its intention to take appropriate initiatives on the 
EGF before issuing its next annual report, which is due in 2009.  

4. 

POLICY OPTIONS 

This section will explain the Options which are available to achieve the objectives. 
As  stated  under  2.3  these  Options  remain  within  the  scope  of  the  review  clause  in 
Article 20 of the EGF Regulation that points to the need "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". It does not call 
for a proposal for a new or re-defined EGF that would change the fundamental nature 

9 

COM(2008) 412 final of 02.07.2008 

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of  the  Fund,  i.e.  timely  support  for  workers  who  lose  their  jobs  as  a  result  of 
globalisation. 

While a more fundamental examination may be undertaken at a later stage, at present 
it  is  appropriate  only  to  concentrate  on  the  immediate  needs  in  respect  of  the  EGF 
Regulation itself. 

The  Commission  departments  have  therefore  focused  their  analysis  of  the  policy 
Options on the three examined below. At this stage more radical changes to the EGF 
Regulation are not pursued, such as amending the Inter Institutional Agreement and 
incorporating  the  EGF  under  the  current  Financial  Framework;  merging  the  EGF 
with  the  ESF  (ESF  multi-annual  operational  programmes  cannot  easily  respond  to 
abrupt  changes  in  world  trade  patterns);  or  changing  the  EGF  into  a  funding 
mechanism for the restructuring of enterprises (which would change the focus of the 
instrument from the workers to the enterprise). Such Options cannot be justified on 
the  basis  of  the  review  called  for  by  Article  20  of  the  Regulation  and  do  not, 
therefore, fall within its scope. 

Nor  was  the  Option  considered  of  discontinuing  the  EGF  altogether.  This  would 
remove the only Community instrument specifically addressing the needs of workers 
made redundant because of globalisation, and it would be politically unacceptable. 

Some  shortcomings  related  to  the  implementation  of  the  current  eligibility  criteria 
can  be  remedied  without  changing  the  Regulation:  the  Commission  departments 
will,  in  co-operation  with  the  Member  States  review  the  application  forms  and  the 
information  needed  with  a  view  to  simplification;  provide  support  for  exchange  of 
experience  amongst  Member  States  and  make  full  use  of  the  existing  networks  to 
improve  the  visibility  of  the  EGF.  More  can  also  be  done  to  draw  attention  to 
activities which have not so far been proposed, e.g. EGF use for the services sector, 
for  mobility  allowances  (including  intra-EU  mobility)  and  micro-credits,  and  to 
ensure availability of reference material useful for preparing applications.  

In  the  first  annual  report  the  Commission  identified  some  issues  which  are 
particularly important for addressing the inadequacy of the current eligibility criteria. 
In the consultation these were agreed with, and so the Commission departments are 
proposing an adaptation of the EGF Regulation in the following ways: 

Firstly, by ensuring that the EGF can assist in all cases where an important number 
of workers lose their jobs due to globalisation. The proposal is to lower the number 
needed for an application from 1000 to 500 redundancies. It is also proposed, for 
reasons of equal treatment, to include workers made redundant before the reference 
period  in  the  individualised  measures,  if  their  jobs  were  functionally  linked  to  the 
same globalisation-induced event 

Secondly,  by  making  sure  that  the  time  available  to  prepare  and  implement  the 
individual measures is adequate to ensure that re-integration into the labour market 
can actually be achieved. It is also proposed to increase the period of EGF assistance 
from 12 to 24 months from the date of application. 

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Thirdly, in order to make the EGF co-funding more attractive to Member States it is 
proposed  to  increase  the  common  intervention  rate  to  bring  into  line  with  the 
Structural Funds. 

Fourthly, by extending eligibility to workers who have been made redundant due to 
globalisation  effects  other  than  trade.  These  could  be  effects  related  to  changing 
market  conditions  such  as  major  innovations  in  global  production  and  product 
technology,  changes  in  organisation  of  production,  access  to  and  price  of  raw 
materials and other inputs, or to a more general disturbance of the economy brought 
about by globalisation.  

Fifthly,  the  Commission  is  proposing  to  use  technical  assistance  for  preparation, 
the 
monitoring, 
implementation of the EGF, administrative and technical support, audit, control and 
evaluation activities necessary to implement the Regulation. 

information,  creation  of  a  knowledge  base 

relevant 

to 

Sixthly, the Commission is taking the opportunity offered by this proposed revision 
of the Regulation to add clarity concerning certain key definitions where these have 
caused uncertainty to applicants Member States. 

The  consultation  has  shown  that  a  majority  of  Member  States  support  these 
envisaged changes as set out in chapter 5 and annex 2. 

It is clear that the use of the EGF to create jobs, training and opportunities for those 
European  workers  who  are  made  redundant  as  a  consequence  of  globalisation,  and 
thus also the solidarity demonstrated by the Fund, can be increased within the current 
budgetary  reserve  of  EUR  500  million.  There  is  therefore  no  need  to  propose  any 
change in this respect at present.  

In the European Economic Recovery Plan the Commission has indicated that it will 
review the budgetary means available for the Fund in the light of the implementation 
of the revised Regulation. 

5. 

IMPACT ANALYSIS  

Following the preliminary screening the following Options have been examined: 

– 

– 

– 

– 

Option 1: "No change" 

 Option 2: "No change plus improvements" 

 Option 3: "Improvements and operational changes"  

– 

– 

Variant A: Trade 

Variant B: Markets 

Option  4:  "Improvements  and  operational  changes  responding  to  a  serious 
disturbance in the economy caused by globalisation". 

EN 

22 

   EN 

 
Each Option will be assessed as to its social and economic impact. An assessment of 
the budgetary impact will be carried out.  

As a financial instrument aimed at mitigating the negative effects of globalisation on 
the workers concerned, the EGF has no direct environmental impact. Therefore, the 
environmental impact is not assessed. 

5.1. 

Economic and social impact 

5.1.1 

Impact of Option 1 "No change" 

Under  this  Option,  the  EGF  Regulation  would  continue  to  apply  unchanged.  The 
advantages  of  this  Option  relate  to  continuity,  both  in  terms  of  the  legislative 
framework  for  preparing,  assessing  and  deciding  EGF  funding,  and  in  terms  of  the 
practical  aspects  of  implementation  of  EGF  funded  actions.  The  national  and  other 
authorities with EGF related responsibilities have by now become acquainted with – 
and understand how to use – EGF funding. The European Institutions have also by 
now established working procedures for most aspects of EGF management. Finally 
in the absence of any final reports and therefore documented concrete experience it 
would be premature to change the basic provisions of the Regulation. 

The  normal  evolution  of  the  Fund,  from  start-up  to  established  instrument,  may  be 
expected to bring some improvements in its performance. The year 2007 was not a 
typical  year  for  the  Fund,  as  it  only  started  its  operations  in  January.  The  Member 
States had no previous experience to draw on and in some cases had to adjust their 
own internal procedures. Furthermore there was no carry-over of applications in the 
adOption  pipeline  from  the  previous  year.  Both  2007  and  2008  (Q1  and  Q2)  were 
particular in that there was an exceptionally low number of mass redundancy events. 
The number of cases with more than 1,000 redundancies in this period was only half 
of  the  average  over  the  last  six  years  in  EU15.  If  the  economic  situation  were  the 
same as over the last six years, one would expect the number of EGF eligible events 
to double in 2009 and beyond. In addition, the economic prospects for the future are 
less favourable than those observed since 2002. Even without any additional action at 
EU level this is likely to lead to even more redundancies. 

Views of Member States: A small number of Member States consider that the current 
EGF Regulation does not need to be modified at this stage. 

Overview table – Option 1: "No change" 

Objective 
achieved/problem 
addressed 

to 

be 
be 

to 

Rating  of 
baseline scenario 

impact  against 

Comments 

Adapt  the  eligibility  criteria 
to better reflect labour market 
characteristics 

0 

apply 

Existing  thresholds  continue 
and  workers 
to 
dismissed 
the 
before 
reference  period  are  not 
eligible 

Increase  the  effectiveness  of  0 

Current  intervention  period 

EN 

23 

   EN 

 
reintegration measures 

continues to apply 

Make  co-funding  from  the 
EGF  more 
to 
Member States 

attractive 

Ensure  equivalent  treatment 
of  all  workers  affected  by 
developments 
global 
markets 

in 

0 

0 

the 
Improve 
applications and measures 

quality 

of 

0 

Provide  legal  certainty  about 
undefined key elements in the 
current EGF Regulation. 

0 

incentive  for  Member 
No 
States 
to  apply  for  EGF 
support  in  respect  of  less 
advantaged regions 

Only 
redundancies are eligible 

trade 

related 

limited 

to 
Very 
technical  assistance  for  the 
Commission  

access 

Commission  guidelines  and 
FAQ 
provide 
sufficient legal certainty 

cannot 

5.1.2 

Impact of Option 2: "No change plus improvements" 

Without  any  changes  to  the  Regulation  improvements  could  be  achieved  in  the 
following ways as the Commission indicated in the EGF Annual Report for 2007: 

•  simplify  procedures  to  respond  quickly  and  clearly  to  Member  States  on  the 
eligibility  of  their  applications.  The  Commission  will  disseminate  detailed 
information  on  the  previous  cases,  successful  or  unsuccessful,  in  order  to  help 
Member States assess  the criteria  used by  the EU Institutions in coming to their 
decisions.  The  Commission will  examine ways  of  accelerating  the  processing  of 
applications, streamlining its internal procedures while maintaining a high quality 
of analysis; 

•  review the application form and the information requirements for applications in 

order to reduce the administrative burden; 

•  make  use  of  existing  networks  to  promote  interest  in  the  EGF  among  potential 

stakeholders at national, regional and local levels and in civil society; 

•  clarify  eligibility  of  the  EGF  in  the  services  sector,  for  mobility  allowances, 
(including  intra-EU  mobility)  and  micro-credits,  and  to  ensure  availability  of 
reference material useful for preparing applications; 

•  promote exchange of experience and good practice, including the methodologies 
extensively  tested  through  the  ESF,  and  in  particular  the  EQUAL  Community 
Initiative. This could reduce delays arising in the Member States while they devise 
adequate measures for a large-scale redundancy crisis; 

•  intensify  awareness-raising  activities  in  order  to  achieve  greater  visibility  of  the 
Fund, and to reinforce the message that it applies to all economic sectors, and to 
all structural changes in world trade patterns.  

EN 

24 

   EN 

 
There  are,  however,  a  number  of  drawbacks  with  this  Option:  Member  States  face 
difficulties in putting together applications because the EGF intervention criteria are 
more difficult to meet than originally thought (1000 redundancies in a 4- or 9-month 
period,  links  with  changes  in  world  trade  and  no  resources  for  Commission 
departments  Technical  Assistance).  Furthermore,  the  short  funding  period  makes  it 
difficult  to  provide  actions  which  meet  the  needs  of  the  workers  concerned.  These 
obstacles combine to make the EGF less effective as a financing instrument than had 
been intended by the legislator. 

Views  of  Member  States  and  social  partners:  The  Commission  departments  asked 
whether  such  actions  such  as  micro  credits  and  mobility  allowances  should  be 
actively  promoted  under  the  EGF  as  they  have  already  been  tested  under  ESF 
operations.  Several  Member  States  are  in  favour  of  using  EGF  funds  for  micro-
credits as part of a broader package of measures. There are practical problems related 
to  the  use  of  micro-credits  within  the  short  implementation  period  of  one  year.  No 
Member State opposed the use of micro-credits in the context of the EGF as a matter 
of principle.  

On  intra-Community  mobility  allowances  several  Member  States  replied  that  such 
measures  can  be  seen  as  a  normal  part  of  the  EGF  and  that  they  contribute  to 
European  integration.  In  the  same  way  as  for  micro-credits,  the  use  of  such 
allowances is at the discretion of the Member State. 

Member States raised several problems related to the practical administration of EGF 
funding.  The  delays  between  redundancies,  submission  of  an  application  and 
payment  of  funds  were  mentioned  by  several  Member  States  as  serious  and 
unacceptable  problems.  These  delays  cause  uncertainties  and  resultant  problems, 
such  as  the  need  to  advance  national  funding  and  the  difficulties  to  undertake  the 
necessary  public  procurement  before  an  EGF  application  has  been  formally 
approved. 

Several  Member  States  mention  the  fact  that  the  management  and  control 
requirements  for  the  EGF  and  the  ESF  are  different,  and  that  new  procedures  and 
structures were needed at national level.  

Overview table – Option 2: "No change plus improvements" 

Objective 
achieved/problem 
addressed 

to 

be 
be 

to 

Rating  of 
baseline scenario 

impact  against 

Comments 

Adapt  the  eligibility  criteria 
to better reflect labour market 
characteristics 

0 

Increase  the  effectiveness  of 
reintegration measures 

0 

apply 

Existing  thresholds  continue 
and  workers 
to 
dismissed 
the 
before 
reference  period  are  not 
eligible 

Current  intervention  period 
continues to apply 

Make  co-funding  from  the  0 

No 

incentive  for  Member 

EN 

25 

   EN 

 
EGF  more 
Member States 

attractive 

to 

Ensure  equivalent  treatment 
of  all  workers  affected  by 
developments 
global 
markets 

in 

0 

Improve 
the 
applications and measures 

quality 

of 

+  

Provide  legal  certainty  about 
undefined key elements in the 
current EGF Regulation. 

0 

States 
to  apply  for  EGF 
support  in  respect  of  less 
advantaged regions 

Only 
redundancies are eligible 

trade 

related 

Promotion  of  exchange  of 
experience and good practice, 
intensify  awareness  of  EGF 
limited  budget, 
within  a 
highlighting  not  explicitly 
mentioned  measures 
and 
sectors 

Commission  guidelines  and 
FAQ 
provide 
sufficient legal certainty 

cannot 

5.1.3 

Impact of Option 3 " Improvements and operational changes, variant A: Trade" 

In  Option  3  'variant  A:  Trade'  the  eligibility  criterion  continues  to  be  changes  in 
world trade patterns. 

In this Option it is proposed to amend the EGF Regulation in the following ways to 
respond directly to the problems identified: 

1. 

Trigger number of redundancies 

Reduction  of  the  trigger  number  of  redundancies  from  1000  to  500  workers.  This 
reduction will increase the number of potential EGF events, both in terms of Article 
2(a)  cases  (redundancies  in  a  main  enterprise  and  its  suppliers  and  downstream 
producers) as well as in Article 2(b) cases (redundancies in a sector in a region). The 
reference periods (4 and 9 months respectively) would remain unchanged. 

To  illustrate  the  effects  of  this  change,  the  table  below  gives  the  ERM  figures 
(number  of  events  and  number  of  workers  involved)  for  2007  and  the  first  half  of 
2008: 

ERM restructuring data 

2007 

Restructuring events : 

- over 1000 redundancies 

- over 500 redundancies 

573

66

139

2008 
(1st half) 

282

38

67

EN 

26 

   EN 

 
 
No. of workers made 
redundant in these 
restructuring events : 

- of whom, in cases of > 1000 
redundancies 

- of whom, in cases of > 500 
redundancies 

399,305

227,322

264,846

166,150

314,347

184,695

The table shows that reducing the trigger from 1000 to 500 workers could double the 
number  of  potential  EGF  events  and  increase  the  coverage  of  redundant  workers 
from 68 % to almost 80 %. Potentially, therefore, this amendment to the Regulation 
could lead to a significant increase in the number of EGF applications and to more 
workers being assisted to re-integrate into employment.  

Views  of  the  Member  States  and  social  partners:  More  than  a  half  of  the  Member 
States  are  in  favour  of  lowering  the  threshold  to  increase  the  number  of  mass 
redundancy events eligible. 

2. 

Redundancies occurring before the start of the reference period 

This amendment  would  concern  Article 2(a) cases where provision  would be made 
for the inclusion of  redundancies  occurring before the start of the reference period, 
provided  that  they  are  clearly  linked  to  the  same  restructuring  event,  and  provided 
that the trigger number of redundancies is reached within the reference period. The 
effect of this amendment is likely to be very limited in terms of numbers but highly 
significant in terms of equal treatment of the workers concerned. Under the current 
Regulation,  it  is  only  possible  to  include  workers  made  redundant  within  and  after 
the  reference  period;  this  unequal  treatment  poses  an  inequity  and  discrimination 
problem and should be corrected. 

Article 2(b) (sector cases in a region / two contiguous regions) is not concerned by 
this change. 

Views  of  the  Member  States  and  social  partners:  According  to  Article  2(a)  of  the 
current Regulation, the eligibility threshold of 1,000 workers must be attained within 
a  4-month  reference  period.  A  large  majority  of  Member  States  are  in  favour  of 
including  workers  made  redundant  before  this  period  so  that  they  may  be  included 
for  the  purposes  of  EGF  support  measures,  provided  that  a  clear  link  can  be 
established with the globalisation event. 

3.  Duration of implementation 

The  time  period  allowed  for  implementation  is  extended  from  12  to  24  months,  as 
experience has shown that 12 months are not sufficient in many cases to bring most 
of the affected workers back into jobs. A longer period will make it possible to better 
match the training of the redundant workers to the skill needs and to labour market 
requirement,  to  assure  longer  time  for  the  sound  preparation  and,  if  necessary, 
adaptation of the re-integration package and to  help improve the  gender balance of 
the action. 

EN 

27 

   EN 

 
View  of  the  Member  States  and  social  partners:  Most  Member  States  favour  an 
extension to 18 or 24 months, while some Member States find the 12-month period 
appropriate. 

4. 

Technical assistance (TA) budget 

The  change  seeks  to  clarify  that  the  0.35%  for  technical  assistance  mentioned  in 
Article  8  of  the  current  Regulation,  applies  to  the  maximum  reserve  of  EUR  500 
million  available  per  annum,  and  not  to  the  amounts  actually  committed  for 
individual cases. 

When presenting the annual EGF report each year, the Commission will also present 
its  ideas  for  its  activities  to  be  funded  under  TA  the  following  year.  It  will  put 
forward  a  proposal  for  its  planned  activities,  so  as  to  ensure  that  the  necessary 
amount  is  available  at  the  start  of  the  budgetary  year,  allowing  the  relevant 
commitments to be made at the start the year. It is proposed to broaden the scope of 
TA  to  include  preparation  (e.g.  on-site  visits  during  the  pre-application  phase)  and 
awareness-raising. 

Follow-up requests from the Commission for further amounts up to the ceiling (EUR 
1.75 million) may be made subsequently if needed.  

Views of the Member States and social partners: There is a high degree of consensus 
amongst  Member  States  that  TA  should  be  available  for  forward-looking  activities 
such  as  sector  or  horizontal  analyses  and  studies  of  the  effects  of  globalisation, 
because  they  may  contribute  to  the  preparation  of  more  solid  applications,  lead  to 
better understanding of the drivers of globalisation and to a better exchange of good 
practices amongst Member States. 

Some  Member  States,  while  agreeing  that  forward  looking  activities  should  be 
pursued, do not consider the EGF to be the appropriate instrument for that purpose. 

5.  Definition of the "use" of the Fund 

Confirming  the  current  implementation  practice  of  the  Fund,  the  Commission  will 
specify that the Member State shall carry out all eligible actions included in the co-
ordinated  package  of  personalised  services  within  the  revised  period  of  24  months 
following the date of application. 

6. 

Standard intervention rate 

The standard intervention rate is set to 50 % in the current Regulation. It is proposed 
to  increase  the  EGF  intervention  rate  to  75%,  which  is  more  in  line  with  ESF 
intervention  rates.  This  increase  maintains  the  simplicity  of  the  single  intervention 
rate. 

Views of the Member States and the social partners: The current intervention rate is 
up to 50 %. Most Member States indicated in their responses that they would prefer 
an increase of the rate up to 75 or 85%, or matching the rate to the ESF co-financing 
rates. One Member State favours a rate of 100 % in order to facilitate innovation, for 
which national co-funding might not be available; one Member State prefers a rate of 
25% and some would keep the 50% rate. 

EN 

28 

   EN 

 
During  the  stakeholder  conference  this  question  was  discussed  in  some  detail,  and 
two  important  points  were  made:  (i)  there  should  be  a  single  rate  for  reasons  of 
simplicity; (ii) that the intervention rate should be raised above the current 50 %. 

Conclusion 

Option  3  'variant  A:  Trade'  would  allow  a  greater  number  of  redundant  workers  to 
benefit from the Fund, and to benefit for a longer period. The impact would therefore 
be considerable in terms of solidarity and social inclusion. The longer period for the 
use of the funding would ensure that a higher percentage of workers would re-enter 
employment,  and  that  their  training  could  be  better  focused  on  the  emerging  jobs 
market.  The  employment  impact  of  this  would  be  considerable.  Whilst  this  Option 
would make it possible to address most of the problems identified, it would not make 
it possible to ensure equal treatment for workers made redundant as a result of major 
changes  in  world  markets,  such  as  changes  in  production  and  product  technology, 
changes  in  the  organisation  of  production  (such  as  company  outsourcing)  and  the 
access to, and price of raw materials and other inputs. 

EN 

29 

   EN 

 
Overview  table  –  Option  3:  "Improvements  and  operational  changes  –  Variant  A: 
Trade" 

Objective 
achieved/problem 
addressed 

to 

be 
be 

to 

Rating  of 
baseline scenario 

impact  against 

Comments 

Adapt  the  eligibility  criteria 
to better reflect labour market 
characteristics 

+ 

Increase  the  effectiveness  of 
reintegration measures 

++ 

Make  co-funding  from  the 
EGF  more 
to 
Member States 

attractive 

++ 

Ensure  equivalent  treatment 
of  all  workers  affected  by 
developments 
global 
markets 

in 

0 

Improve 
the 
applications and measures 

quality 

of 

++ 

Provide  legal  certainty  about 
undefined key elements in the 
current EGF Regulation. 

+ 

will 
threshold 
Lower 
contribute 
increased 
to 
coverage  and  discriminatory 
workers 
of 
treatment 
dismissed 
the 
before 
reference  period  will  be 
eliminated 

Longer 
will  contribute 
placement rates 

intervention  period 
to  higher 

Higher  intervention  rate  will 
increase  recourse  to  the  EGF 
advantaged 
amongst 
regions 

less 

Only 
redundancies are eligible 

trade 

related 

Promotion  of  exchange  of 
experience and good practice, 
intensify  awareness  of  EGF 
with  more  certainty  about 
financial 
availability 
of 
means, 
not 
highlighting 
mentioned 
explicitly 
measures and sectors 

Inclusion  of 
the  missing 
definitions  in  the  legal  body 
of the Regulation 

5.1.4. 

Impact of Option 3 " Improvements and operational changes, variant B: Markets". 

Option  3  'variant  B:  Markets'  is  identical  to  Option  3  'variant  A:  Trade'  with  one 
difference:  eligibility  is  expanded  from  major  changes  in  world  trade  patterns  to 
include  also  major  changes  in  world  markets,  such  as  changes  in  production  and 
product  technology,  changes  in  the  organisation  of  production  (such  as  company 

EN 

30 

   EN 

 
 
outsourcing) and the access to, and price of, raw materials and other inputs and the 
speed with which this happens. 

The EGF would continue to be targeted to helping redundant workers who lost their 
jobs due to changes in trade, but the scope of the Fund would expand to encompass 
also  those  affected  by  events  which  fall  under  a  more  comprehensive  concept  of 
globalisation. Such changes may lead to new world trade patterns in time and would 
constitute an element of pro-activeness in the EGF. It would furthermore correspond 
much better to the public concept of globalisation, which to most Europeans is much 
more than just a matter of trade statistics. 

In  the  Communication  on  the  EGF  Annual  Report,  adopted  on  2  July  2008,  the 
Commission indicated that it would examine this issue.  

This extension has several consequences: 

Firstly,  on  world  markets  where  EU  enterprises  sell  goods  and  services, 
technological  change  may  lead  to  a  dramatic  decline  in  EU  sales  –  and  to 
redundancies  –  even  if  EU  market  shares  remain  stable.  Take  the  example  of  the 
introduction  of  digital  photography:  within  a  few  years,  the  consumer  markets  for 
emulsifier  films  (and  much  of  the  photo  paper  demand)  have  disappeared.  The 
market decline was felt by all major operators in Europe and elsewhere, and although 
the  European  market  share  did  not  fall,  employment  in  the  industry  did.  Similar 
effects may be identified in markets for consumer electronics; or for mobile phones 
following  the  integration  of  phone,  camera,  GPS,  TV  and  net  access  into  one 
application. The proposed change to "markets" will make it possible to provide EGF 
support in such cases. 

Secondly, changes in trade in raw materials, energy, commodities or other inputs for 
EU  enterprises  are  largely  outside  the  focus  of  the  existing  EGF  Regulation,  and 
redundancies  caused  in  Europe  because  of  rapidly  increasing  prices  or  diminishing 
supplies of input cannot easily be covered. With the amendment to include "markets" 
in  the  intervention  criteria  these  situations  would  become  potentially  eligible  EGF 
events  of  globalisation.  It  should  also  be  noted  that  Member  States  could  present 
EGF  applications  based  on  their  specific  knowledge  of  the  relevant  market  rather 
than relying on trade statistics which may not (yet) be available or able in all cases to 
give the correct picture because of small trading volumes. 

Thirdly, globalisation also concerns the way in which enterprises organise their work 
and  how  that  organisation  changes  over  time,  again  more  rapidly  than  before. 
Company outsourcing of specific functions, not only to low income areas, but also to 
provide 24/24 services e.g. through call centres located around the globe, the use of 
tele-working  over  long  distances,  and  the  breaking  up  of  operations  into  profit 
centres are also results of globalisation, which are not picked up by trade statistics in 
the short run. The EGF should be available to offer support in such cases.  

It would in every case be up to the Member State to provide an analysis of the link 
between the major structural changes in world markets and the redundancies covered 
by an application. The supporting data can be trade statistics as now, but also market 
information  data  from  business  organisations,  market  observers,  analysts  and 
professional organisations. The applications will continue to be assessed on a case-

EN 

31 

   EN 

 
by-case basis by the Commission and the appropriate proposals made for financing 
to the Budgetary Authority. 

This  Option  extends  the  benefits  into  a  wider  field,  and  thus  both  social  and 
employment  impacts  would  be  expected  to  increase  proportionately.  However  it  is 
not at present possible to give any quantitative forecast based on analysis of existing 
data. The numbers of recorded restructuring events in 2007-2008 (1st half) (see point 
5.1.3) clearly leave room for some events related to market changes, whatever trigger 
number of redundancies is considered. 

Views  of  the  Member  States  and  social  partners:  Several  Member  States  would 
welcome  broadening  the  EGF  eligibility  criteria  to  cover  a  wider  range  of  changes 
(going beyond, but also including changes in trade); in this way the EGF would be 
better  in  line  with  a  concept  of  "globalisation"  that  acknowledges  its  multi-faceted 
character. Others preferred to remain with the current trade related criterion, quoting 
in particular data availability as an important issue.  

Overview  table  –  Option  3:  "Improvements  and  operational  changes  –  Variant  B: 
Markets" 

Objective 
achieved/problem 
addressed 

to 

be 
be 

to 

Rating  of 
baseline scenario 

impact  against 

Comments 

Adapt  the  eligibility  criteria 
to better reflect labour market 
characteristics 

+ 

Increase  the  effectiveness  of 
reintegration measures 

++ 

Make  co-funding  from  the 
EGF  more 
to 
Member States 

attractive 

++ 

Ensure  equivalent  treatment 
of  all  workers  affected  by 
developments 
global 
markets 

in 

+ 

Improve 
the 
applications and measures 

quality 

of 

++ 

will 
threshold 
Lower 
contribute 
increased 
to 
coverage  and  discriminatory 
workers 
of 
treatment 
dismissed 
the 
before 
reference  period  will  be 
eliminated 

Longer 
will  contribute 
placement rates 

intervention  period 
to  higher 

Higher  intervention  rate  will 
increase  recourse  to  the  EGF 
advantaged 
amongst 
regions 

less 

by 
Redundancies 
other  aspects  of  globalisation 
become eligible 

caused 

Promotion  of  exchange  of 
experience and good practice, 
intensify  awareness  of  EGF 
with  more  certainty  about 

EN 

32 

   EN 

 
 
of 
highlighting 

availability 
means, 
explicitly 
measures and sectors 

financial 
not 
mentioned 

Provide  legal  certainty  about 
undefined key elements in the 
current EGF Regulation. 

+ 

Inclusion  of 
the  missing 
definitions  in  the  legal  body 
of the Regulation 

5.1.5. 

Impact of Option 4 "Improvements and operational changes responding to a serious 
disturbance in the economy caused by globalisation". 

This Option is identical to Option 3.B Markets but expands the scope of the EGF even further 
to cover workers made redundant as a result of a serious disturbance in the economy due to 
globalisation.  It  responds  directly  to  the  need  identified  by  the  Commission  to  support 
redundant workers in the face of the crisis. It also has all the characteristics described in detail 
above;  in  addition  this  Option  enables  the  EGF  to  respond  to  redundancies  which  are  not 
directly attributable to specific events in trading patterns or market developments, or to any 
specific sectors of the economy. In this way Option 4 is more in line with the provision of the 
Regulation which establishes in Article 20 that the present review should ensure that the EGF 
provisions adequately take into account the economic and social characteristics of all Member 
States. 

Overview table – Option 4: " Improvements and operational changes responding to a serious 
disturbance in the economy caused by globalisation". 

Objective 
achieved/problem 
addressed 

to 

be 
be 

to 

Rating  of 
baseline scenario 

impact  against 

Comments 

Adapt  the  eligibility  criteria 
to better reflect labour market 
characteristics 

+ 

Increase  the  effectiveness  of 
reintegration measures 

++ 

Make  co-funding  from  the 
EGF  more 
to 
Member States 

attractive 

++ 

will 
threshold 
Lower 
increased 
to 
contribute 
coverage, 
the 
to 
and 
elimination  of  discriminatory 
workers 
of 
treatment 
dismissed 
the 
before 
reference period 

Longer 
will  contribute 
placement rates 

intervention  period 
to  higher 

Higher  intervention  rate  will 
increase  recourse  to  the  EGF 
in less advantaged regions 

Ensure  equivalent  treatment 
of  all  workers  affected  by 
global 
developments 

in 

++ 

Redundancies  caused  by  any 
external  disturbance  become 
eligible  regardless  of  sector 

EN 

33 

   EN 

 
 
markets 

Improve 
the 
applications and measures 

quality 

of 

++ 

Provide  legal  certainty  about 
undefined key elements in the 
current EGF Regulation. 

+ 

5.2 

The budgetary impact 

or trade indicators 

Promotion  of  exchange  of 
experience and good practice, 
intensify  awareness  of  EGF 
with  more  certainty  about 
financial 
availability 
of 
means, 
not 
highlighting 
mentioned 
explicitly 
measures and sectors 

Inclusion  of 
the  missing 
definitions  in  the  legal  body 
of the Regulation 

Options 1 and 2 are unlikely to lead to any structural increases in the EGF budget 
deployed.  

However, for these two Options the budget use will depend critically on the number 
of  future  restructuring  cases  and  the  propensity  of  Member  States  to  apply  for 
assistance.  As  mentioned  before,  the  years  of  activity  of  the  EGF  (2007  and  2008) 
were  exceptional  in  that  only  very  few  cases  of  mass  redundancies  occurred  (see 
table in annex 3). As pointed out in 5.1.1, in a normal year one would expect an 80% 
increase of the number of cases as in these two years, which will be reflected in the 
likely call on the budget.  

The  ERM  data  would  indicate  that  by  lowering  the  threshold  from  1000 
redundancies to 500 would increase the number of potential cases by a factor of 2, 
i.e. bring twice the number of cases into eligibility as would be the case without the 
change. As can be seen from the table in chapter 5.1.3, a corresponding increase in 
the potential number of workers covered can be estimated at about 20 %. 

Statistics  made  available  by  the  French  authorities  in  their  final  report  on  the  PSA 
case  show  that  41%  of  supported  workers  did  not  find  any  placement  within  the 
current 12-month intervention period and we can assume that this proportion would 
have  progressively  decreased  over 
the  proposed  12  additional  months  of 
implementation.  Therefore,  extending  the  maximum  intervention  period  from  12  to 
24  months  to  provide  longer  support  for  workers  who  cannot  be  placed  within  the 
present  intervention  period  is  likely  to  increase  the  budget  requested  for  a  typical 
intervention by 25%. 

Implementing  a  higher  funding  rate  from  50%  to  75%  would  lead  to  another  50% 
increase of the annual amount spent to support workers. 

Extending the criterion to include market changes could add a potential extra number 
of cases of about 30 % over and above the "Trade" Option. 

Starting from the current annual level of about EUR 35 million in applications and 
taking  into  account  that  2007  and  2008  are  years  with  exceptionally  low  mass 

EN 

34 

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redundancy events, in Option 3 'variant A: Trade', the lowering of the threshold from 
1000 to 500 redundancies, coupled with the extension of the implementation period 
and the raising of the intervention rate, could potentially increase this volume to an 
estimated amount of EUR 141 million. 

The  widening  of  eligibility  under  Option  3  'variant  B:  Market'  could  increase  this 
estimate to a figure around EUR 183 million. 

The widening of eligibility under Option 4 has not been separately estimated; it is at 
least  as  important  as  the  previous  Option  (because  it  covers  all  the  same  potential 
redundancies  and  more).  The  budgetary  maximum  of  EUR  500  million  will  be 
respected. 

These figures indicate that the EGF would still be able to face the increased demands 
resulting from prolonged adverse economic conditions for European industry. 

Overview table of budgetary impact 

Estimated budgetary impact 

Estimated cumulative Budget 

Average  EGF  budget 
2007 and 2008 

for 

Higher uptake due to 'normal' 
year 

Eligibility  threshold  lowered 
from 1,000 to 500 worker 

+80%  

+20%  

Intervention  period  extended 
from 12 to 24 months 

+ 25% 

Funding  rate  increased  from 
50% to 75% 

+ 50%  

scope 

enlarged 
EGF 
changes in world markets 

to 

+ 30% 

EUR 35 million 

EUR 63 million 

EUR 75 million 

EUR 94 million 

EUR 141 million 

EUR 183 million 

scope 

enlarged 
EGF 
"economic disturbance" 

to 

Not estimated 

Up to EUR 500 million 

6. 

COMPARING THE OPTIONS 

6.1. 

Effectiveness 

The principle of effectiveness concerns achieving the intended results of the action. 
The  intended  result  for  the  EGF  is  to  assist  workers  made  redundant  as  a  result  of 
globalisation  to  re-integrate  into  employment.  Both  variants  of  Option  3  have  the 
potential to reach more workers and address more globalisation events than under the 
unchanged  scenario  under  Option  1.  Furthermore,  both  variants  of  Option  3  and 
Option  4  give  the  labour  market  authorities  more  time  to  fine  tune  the  package  of 

EN 

35 

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individualised  services  offered  to  each  redundant  worker,  ensure  that  the  package 
meets the real needs of the worker concerned, and implement it until quality results 
are achieved. 

6.2. 

Added value for the EU 

The EGF was created to enable the Community to provide support for workers made 
redundant  as  a  result  of  major  structural  changes  in  world  trade  patterns.  Under 
Options 1, 2 and 3 "Trade", changes in world trade continue to be the focus of EGF 
actions.  Under  Option  3  "Market",  which  itself  includes  changes  in  world  trade,  as 
well as under Option 4, other globalisation events leading to redundancies can also 
be included. In all 4 cases, the EGF allows the Community to show its solidarity with 
the workers concerned, and therefore represents a clear added value for the EU. By 
concentrating on cases with a European dimension and by complementing measures 
of the Member States, Community actions are clearly additional to the efforts made 
at national, regional and local levels. 

By limiting the proposed amendments to those required to achieve the specific policy 
objectives of making the EGF a better performing and more flexible instrument, the 
principle of proportionality is respected. 

In respect of the principle of subsidiarity, the Member States continue under all three 
Options to hold the same role as today vis-à-vis the EGF: they design and present the 
applications for EGF assistance and define, in the application, the nature and range of 
active  measures  to  be  included;  moreover,  they  remain  responsible  for  the 
implementation of measures. 

6.3. 

Budgetary constraints 

The  basic  assumption  for  all  4  Options  under  examination  is  to  remain  within  the 
current  budgetary  reserve  of  EUR  500  million  per  year.  Therefore,  budgetary 
constraints are not relevant for any of the 4 Options. 

6.4. 

Comparison of Options against the objectives. 

The following table compares the three Options against the operational objectives: 

Objective 
achieved/problem 
addressed 

to 

be 
be 

to 

Option 1 

Option 2  Option  3- 
Variant A 

Option  3- 
Variant B 

Option 4 

Adapt  the  eligibility  criteria 
to better reflect labour market 
characteristics 

Increase  the  effectiveness  of 
reintegration measures 

Make  co-funding  from  the 
to 
EGF  more 
Member States 

attractive 

0 

0 

0 

EN 

0 

0 

0 

36 

+ 

+ 

+ 

++ 

++ 

++ 

++ 

++ 

++ 

   EN 

 
Ensure  equivalent  treatment 
of  all  workers  affected  by 
developments 
global 
markets 

in 

0 

0 

0 

+ 

++ 

Improve 
the 
applications and measures 

quality 

of 

0 

Provide  legal  certainty  about 
undefined  key  elements  in 
the current EGF Regulation. 

0 

6.5. 

Conclusion 

+  

0 

++ 

++ 

+ 

+ 

++ 

+ 

Of the two variants Trade and Markets in Option 3 the "Markets" variant appears to 
be the one that best expands eligibility for EGF assistance without breaking the link 
between the EGF and changes in world trade patterns, as trade-related redundancies 
continue to be eligible; the market-related events becoming eligible under Option 3 
Markets  could  lead  to  future  changes  in  world  trade  patterns  and  thus  add  a 
prospective element to the EGF. This is also the case under Option 4. 

From the analysis above, it appears that Option 4 – " Improvements and operational 
changes responding to a serious disturbance in the economy caused by globalisation" 
– provides  all  the  benefits of  Options  1 and 2 and 3, both variants, and in addition 
can  lead  to  more  affected  workers  receiving  assistance  from  the  EGF.  Option  4  is 
therefore considered to better fulfil the objectives of responsiveness and of solidarity 
in as much as it makes support available to more redundant workers. 

7. 

MONITORING AND EVALUATION 

The  EGF  Regulation  in  its  Article  16  provides  that  the  Commission  shall  present 
each year to the European Parliament and the Council a quantitative and qualitative 
report  on  the  activities  carried  out  under  the  EGF  Regulation  in  the  previous  year. 
This  report  contains  inter  alia  the  Commission's  observations  on  its  monitoring 
activities during the year in question. 

Under Article 17 of the EGF Regulation, the Commission is required to carry out by 
31 December 2011, in close cooperation with Member States, a mid-term evaluation 
of the effectiveness and sustainability of the results obtained under the EGF. Member 
States  have  already  made  a  commitment  to  provide  information  on  individual 
beneficiaries for the purpose of the evaluation. For this reason policy Options 3 and 4 
entail  no  extra  procedural  burdens  in  terms  of  monitoring  and  evaluation.  By  31 
December  2014,  the  Commission  is  required  to  carry  out,  with  the  assistance  of 
external experts, an ex-post evaluation in order to measure the impact of the EGF and 
its added value. 

In addition to the formal evaluation arrangements, the Commission departments will 
continue  to  monitor  the  main  indicator  (number  of  workers  reinserted  into 
employment) on the basis of final reports received from the Member States. 

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37 

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Annex 1 

Brussels, 2.7.2008 

COM(2008) 421 final 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Solidarity in the face of Change: 
The European Globalisation Adjustment Fund (EGF) in 2007 - Review and Prospects 

EN 

38 

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COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Solidarity in the face of Change: 
The European Globalisation Adjustment Fund (EGF) in 200710 - Review and Prospects 

The EGF one year on 

One  of  the  main  themes  of  the  Renewed  Social  Agenda11  is  responding  flexibly  and 
confidently to change brought about by globalisation. Part of that response includes showing 
solidarity to those who are negatively affected by globalisation. The European Globalisation 
Adjustment Fund (EGF) was designed as one way to show solidarity – to help workers made 
redundant by globalisation to find a new job quickly. Following the adOption of Regulation 
(EC) No. 1927/2006 by the European Parliament and Council on 20 December 2006, the EGF 
became operational from 1 January 2007. 

This Communication reviews the EGF after one year in operation and makes suggestions as to 
immediate and longer term ways to improve its performance. 

Helping workers to adjust to change 

The EGF received ten applications in 2007 targeting 11,339 workers. Four applications were 
approved by the Commission before the end of 2007, following mobilisation of the necessary 
funds  by  the  EU  Budgetary  Authority;  five  remained  under  consideration,  and  one  was 
withdrawn (to be re-submitted at the beginning of 2008 after some technical modifications). 
The  EGF  granted  assistance  amounting  to  €  18.6  million  or  3.7%  of  the  maximum  amount 
allowed  under  the  Interinstitutional  Agreement  on  budgetary  discipline  and  sound  financial 
management12. The funds were used for active labour market measures for the 5,113 workers 
concerned.  The  details  for  the  year  2007  of  the  applications  and  decisions  made,  and  the 
actions funded, can be found in the annex to this report. 

The maximum annual amount of € 500 million per year  is not an expenditure target. Rather, it 
is entered in the budget reserve and provides for the possibility of adequate funding, should 
there be a high incidence of restructuring in any given year. The commitment appropriations 
necessary  for  each  intervention  are  mobilised  by  means  of  transfer  to  the  EGF  budget  line, 
following agreement of the Budgetary Authority upon proposal from the Commission. 

That being said, take-up is limited. There are various reasons for this. It is partly due to the 
favourable economic climate in 2007. It is natural that the Member States did not apply for 
support  in  a  period  when  labour  markets  were  working  well.  But  the  limited  take-up  could 
also  reflect  Member  State  uncertainty  about  eligibility  for  funding.  Although  the  EGF  can 

10 

11 
12 

Report  submitted  under  Article  16  of  Regulation  (EC)  No.  1927/2006  (OJ  L  406,  30.12.2006,  p.  1, 
Regulation as corrected in OJ L 48, 22.02.2008, p. 82) 
COM(2008) 412 of 02.07.2008 
Interinstitutional  Agreement  between  the  European  Parliament,  the  Council  and  the  Commission  on 
budgetary  discipline  and  sound  financial  management  (2006/C  139/01).  OJ  C139,  14.6.2006,  p.1; 
Agreement as amended by the Decision of the European Parliament and of the Council of 18 December 
2007  amending  the  Interinstitutional  Agreement  of  17  May  2006  on  budgetary  discipline  and  sound 
financial management as regards the multiannual financial framework (2008/29/EC). OJ L6, 10.1.2008, 
p. 7-8. 

EN 

39 

   EN 

 
                                                 
intervene  immediately  once  workers  are  made  redundant,  the  Member  States  have  been 
hesitant to apply for EGF funding right from the first day of the redundancy crises because of 
uncertainty over whether or not their application would be approved.  

Hence, there is room for improvement in EGF performance. 

Improving the current operation of the EGF 

Immediate steps can be taken to improve the operation of the EGF:  

–  Simplify procedures: The Commission will simplify its procedures to respond quickly and 
clearly to Member States on the eligibility of their applications13. It will also disseminate 
detailed  information  on  the  previous  cases,  successful  or  unsuccessful,  in  order  to  help 
Member States assess the criteria used by the EU Institutions in coming to their decisions. 
The  Commission  will  examine  ways  to  accelerate  the  processing  of  applications, 
streamlining its internal procedures while maintaining a high quality of analysis. 

–  Promoting  exchange  of  experience  and  good  practice,  including  the  methodologies 
extensively  tested  through  the  ESF,  and  in  particular  the  EQUAL  Community  Initiative. 
This can reduce delays arising in the Member States while they devise adequate measures 
for  a  large-scale  redundancy  crisis.  A  commendable  example  is  the  approach  used  by 
Portugal, where a Ministerial Decision adopted a set of measures which can be drawn on at 
short notice in typical EGF cases. 

–  Intensify awareness-raising activities in order to achieve greater visibility of the Fund. 

Looking to the future - adjusting the EGF Regulation 

In the light of experience, with a view to reinforcing the impact of the EGF on the creation of 
jobs, training and opportunities for Europe's workers, the Commission is actively examining 
ways  in  which  the  Fund  could  be  modified,  within  the  present  budgetary  limits,  so  as  to 
improve its performance.  

The  EGF  Regulation  (in  its  Article  20)  indeed  provides  that  the  Commission  may  submit  a 
proposal, on the basis of the first annual report, for the European Parliament and the Council 
to review the Regulation. 

Covering redundancies not directly attributable to changes in trade patterns: 

The EGF focuses on redundancies caused by major structural changes in global trade patterns. 
Globalisation may also work through other types of structural change. Such changes include 
major  progress  in  production  and  product  technology;  changes  in  the  organisation  of 
production (such as company outsourcing); and the access to, and price of, raw materials and 
other inputs. This is particularly illustrated by recent increases in oil prices and their impact 
on sectors where fuel inputs represent a high cost factor. Such major and abrupt changes may 
lead to redundancies which cannot  be  covered by the existing Regulation. The Commission 

13 

Including: the definition of a redundancy (Article 1 of the EGF Regulation); the interpretation to give to 
criteria  such  as  'a  substantial  increase'  or  'a  rapid  decline'  (Article  2);  the  definition  of  small  labour 
markets  and  exceptional  circumstances  (Article  2);  the  precise  meaning  of  the  'use'  of  a  financial 
contribution (Article 13.2). 

EN 

40 

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will examine these drivers of globalisation to see if they could be considered triggers for EGF 
support. 

Expanding the scope of the EGF to smaller redundancy events: 

The general requirement of at least 1,000 redundancies could be reduced in order to give more 
flexibility to Member States to present applications, including for SMEs and isolated labour 
markets14.  The  Commission  is  analysing  the  implications  of  reducing  this  threshold  on 
numbers  of  eligible  persons  and  the  budget.  A  possible  alternative  to  reducing  the  existing 
threshold  could  be  to  include  not  just  the  redundancies  in  the  suppliers  or  downstream 
producers of the main company in question but also other redundancies in other companies in 
the concerned geographical area. 

Expanding the duration of EGF assistance: 

As not all workers who lose jobs find employment during the period of EGF support, there is 
a  need  for  longer  term  support.  Consideration  could  be  given  to  extending  the  maximum 
period for the use of EGF funding beyond the 12 months specified in the current regulation. 
Other  possibilities  such  as  using  the  EGF  to  foster  mobility  of  workers  between  Member 
States  are  also  being  examined.  Consideration  might  also  be  given  to  devoting  a  limited 
amount of funds to analysis and anticipation of the changes due to globalisation. 

Conclusion 

The Commission invites the European Parliament and the Council to take note of the positive 
impact  of  the  EGF  in  its  first  year  of  operation.  The  Commission  will  simplify  procedures, 
promote  exchange  of  good  practice  and  intensify  awareness-raising  about  the  EGF.  It  will 
assess the feasibility of modifying the Regulation and will make appropriate proposals in this 
regard before issuing the next annual report.  

14 

The  report  "l’Europe  dans  la  mondialisation"  presented  to  the  French  Ministers  for  the  Economy, 
Industry and Employment, and for Work, Social Relations, Family and Solidarity, and published on 15 
April 2008, alluded to such a possibility. 

EN 

41 

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ANNEX 

1. 

Applications received in 2007 

Table 1: Applications received in 2007 

Date 
application 

of 

Member 
State 

Firm, sector or 
region affected 

1 

9/3/2007 

France 

23/3/2007 

France 

Suppliers to 
Peugeot-
Citroën 

Suppliers to 
Renault 

27/6/2007 

Germany  BenQ 

18/7/2007 

Finland 

Perlos 

9/8/2007 

Italy 

10/8/2007 

Italy 

17/8/2007 

Italy 

Textile sector 
in Sardinia 

Textile sector 
in Piedmont 

Textile sector 
in Lombardy 

2 

3 

4 

5 

6 

7 

8 

9 

Number 
of 
workers 
affected 

Workers 
targeted 
for 
assistance 

EGF 
support 
requested 

(Euro) 

Intervention 
criterion 
(Art.  2  of  R. 
1927/2006) 

1,345

267

2,558,250  Art. 2 (a) 

1,057

628

1,258,030  Art. 2 (a) 

3,303

915

1,044

3,303

12,766,150  Art. 2 (a) 

915

2,028,538  Art. 2 (c) 

1,044

12,038,700  Art. 2 (b) 

1,537

1,537

9,286,850  Art. 2 (b) 

1,848

1,848

14,660,750  Art. 2 (b) 

12/9/2007  Malta 

Textile sector 

675

675

681,207  Art. 2 (c) 

8/10/2007 

Spain 

Delphi 

(withdrawn) 

10 

9/10/2007 

Portugal  Automobile 

1,549

1,122

2,425,675  Art. 2 (b) 

sector in 
Lisboa-
Alentejo 

Total 

13,273

11,339

57,704,150 

Of the 10 applications for assistance received by the EGF in 2007, four were approved before 
the  end  of  the  year,  five  remained  under  consideration,  and  one  was  withdrawn  (to  be  re-
submitted at the beginning of 2008 after some technical modifications).  

No  applications  were  refused  in  2007,  either  on  grounds  of  ineligibility  or  due  to  a  lack  of 
sufficient appropriations. 

Details of all applications are available on the Commission's EGF web site, at: 

http://ec.europa.eu/employment_social/egf/applications07_en.html 

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42 

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EGF Applications in 2007 per Member State: 

Seven Member States applied for a contribution from the EGF, including Italy in respect of 
the textile sector in three separate regions, and France in respect of two separate redundancy 
events. The application from Spain was withdrawn and subsequently re-submitted in 2008. 

EGF Applications in 2007 by the amount of contribution requested: 

The  amount  of  assistance  requested  is  at  the  discretion  of  the  applicant  Member  State,  and 
depends inter alia upon the severity of the redundancy event to which the application refers. 
There is no recommended or maximum amount. The requested amounts range from € 681,207 
in  the  Maltese  application  (EGF/2007/008)  to  €  14,660,750  in  the  Ital ian  application  in 
respect of the textile sector in Lombardy (EGF/2007/007). 

EGF Applications in 2007 by the number of workers targeted for assistance: 

Although  the  EGF  is  designed  primarily  to  assist  in  cases  of  large-scale  redundancies, 
Member States may also make applications in respect of small labour markets or exceptional 
circumstances. Furthermore, a Member State may choose to focus the assistance on only some 
of  the  redundant  workers,  if  it  feels  that  these  face  exceptional  difficulties  in  remaining  in 
employment.  While  most  applications  (5  out  of  9)  target  over  1,000  workers,  two  others 
concerning  'small  labour  markets'  target  a  smaller  number,  and  in  the  case  of  the  two 
contributions  granted  to  France  (EGF/2007/001  and  EGF/2007/002),  the  Member  State 
specifically  aimed  the  assistance  at  a  sub-set  of  the  workers  affected,  whose  employer  had 
gone bankrupt. 

EGF Applications in 2007 by the amount of contribution requested per worker (Euro): 

The package of individualised services that the applicant Member States propose to offer is at 
their discretion. The amount requested per worker affected can therefore vary according to the 
severity  of  the  redundancy  event,  the  labour  market  situation  in  the  region  affected,  the 
individual  circumstances  of  the  workers  affected,  or  even  the  general  cost  structures  in  the 
Member State or region concerned. In practice, the amounts proposed per worker have varied 
greatly, from just over € 1,000 in the case of  Malta (EGF/2007/008) up to over € 11,000 in the 
case of the Italian application in respect of the textile sector in Sardinia. In general terms, the 
assistance proposed per worker tends to be higher in regions, or sectors, in which the workers 
face particular labour market problems, or in which the costs are higher than the EU average. 

EGF Applications in 2007 by intervention criteria: 

The EGF permits applications that respect one of the three criteria in Article 2 of Regulation 
(EC) No. 1927/2006. An application may be made if 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, resulting in: 

(a) 

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  

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43 

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(b) 

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. 

Three of the applications received in 2007 cited the criteria of Article 2(a). Four more cited 
the criteria of Article 2(b). 

In addition, taking into account the small size of some EU labour markets, or other undefined 
exceptional circumstances, an EGF contribution may be made; 

(c) 

in  small  labour  markets  or  in  exceptional  circumstances,  duly  substantiated  by  the 
Member State(s) concerned, even if the conditions set out in (a) and (b) above are not 
entirely met, when redundancies have a serious impact on employment and the local 
economy.  

Two of the applications received in 2007 cited the criteria of Article 2(c).  

2. 

Contributions granted in 2007 

Following mobilisation of the necessary funds by the Budgetary Authority, the Commission 
took decisions to award financial contributions from the Fund in the following four cases: 

Table 2: Contributions granted by the Commission in 2007 

EGF number 

Member 
State 

Case 

Amount 
granted 

(Euro) 

Decision  of 
Budgetary 
Authority 

the 

Financing 
Decision  of 
Commission 

the 

EGF/2007/001 

France 

Suppliers 
to PSA 

2,558,250 2007/726/EC  

C (2007) 6150  

23/10/2007  
of 
294, 
L 
(OJ 
13/11/2007, p.21) 

of 4/12/2007 

EGF/2007/002 

France 

Suppliers 
to Renault 

1,258,030 2007/726/EC  

C (2007) 6149  

of 23/10/2007  

of 4/12/2007 

EGF/2007/003 

Germany  BenQ 

12,766,150 2008/30/EC  

C (2007) 6747  

(OJ 
L 
13/11/2007, p.21) 

294, 

18/12/2007  
6, 

of 
(OJ 
10/01/2008, p. 9) 

L 

of 18/12/2007 

EGF/2007/004 

Finland 

Perlos 

2,028,538 2008/30/EC  

C (2007) 6742  

of 18/12/2007  

of 18/12/2007 

(OJ 
10/01/2008, p. 9) 

L 

6, 

EN 

44 

   EN 

 
Total 

18,610,968  

The Budgetary Authority did not reject any proposal put to it by the Commission for funding 
from the EGF, and did not modify in any way the proposals as submitted by the Commission. 

3. 

Actions funded 

The  EGF  Regulation  limits  the  Fund  to  financing  Active  Labour  Market  Policy  (ALMP) 
measures  that  form  part  of  a  coordinated  package  of  personalised  services  designed  to 
reintegrate  redundant  workers  into  the  labour  market.  In  addition,  the  EGF  may  finance 
Technical Assistance activities carried out by the Member State to facilitate the preparation, 
management, information and publicity, and control of the contribution. 

The breakdown of the estimated costs of the proposed actions in the four EGF interventions 
granted in 2007, along with their supporting Technical Assistance activities, is as below. 

Table 3: Expenditure of specific Active Labour Market Policy measures 

Eurostat Classification of Labour Market Policy (LMP) Interventions 

EGF  Amount 
(Euro) 

% of total 

LMP services 

1 

Job-search assistance 

1.1.2 

Individual case-management services 

306,623 

1.6%

LMP measures 

2 

Labour market (re-)training 

2.1 

Institutional training 

2,715,632 

14.6%

  Training allowances/Job search allowances 

13,476,688 

72.4%

4 

4.1 

4.2 

7 

Employment incentives 

Recruitment incentives 

Employment maintenance incentives 

Start-up incentives 

Technical Assistance (Article 3 of R. 1927/2006) 

Total 

821,050 

325,000 

326,475 

639,500 

4.4%

1.7%

1.8%

3.4%

18,610,968 

100%

Measures  not  shown  above  were  not  proposed  by  the  Member  States  in  the  four  EGF 
interventions granted in 2007. 

4. 

Profile of the workers benefiting from EGF assistance 

EN 

45 

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A  total  of  5,113  workers  have  benefited  from  assistance  from  the  EGF  in  the  four 
contributions  granted  in  2007.  These  workers  are  spread  across  a  number  of  regions  of 
France, Germany and Finland. 

EN 

46 

   EN 

 
Table 4: Profile of the workers benefiting from EGF assistance in 2007 

  EGF/2007/001 EGF/2007/002 EGF/2007/003  EGF/2007/004 Total 

  PSA (France)  RSA (France) 

BenQ 
(Germany) 

Perlos 
(Finland) 

Total  workers  targeted  for 
assistance 

of which: women 

% 

of which: non-EU citizens 

of which, aged: 

15-24 

25-54 

55-64 

65+ 

of  which,  with  a 
long-
standing  health  problem  or 
disability 

267 

628 

3,303 

915 

5,113

41 

15% 

0 

2 

236 

29 

0 

4 

155 

25% 

5 

15 

553 

60 

0 

49 

797 

24% 

91 

34 

3,149 

121 

0 

n/a 

302 

1,295

33% 

25% 

0 

96 

91 

787 

37 

0 

50 

142 

4,725

247 

0 

103 

5. 

Complementarity with actions funded by the Structural Funds, notably the ESF 

The EGF funds only Active Labour Market Measures and, like the ESF, cannot contribute to 
passive  social  protection  measures.  However,  while  the  Structural  Funds  consist  of  multi-
annual  programmes  in  support  of  strategic,  long-term  goals  –  notably  anticipation  and 
management of change and restructuring, with activities such as life-long-learning – the EGF 
is a response to a specific, large-scale crisis. Thus, while its actions are similar to those of the 
ESF, it provides one-off, time-limited individual support, geared directly to helping workers 
who have suffered trade-related redundancies. Member States can start to implement actions 
under the EGF immediately upon learning of a major redundancy event, and therefore do not 
have to change an existing Structural Fund programme in order to do so. 

Member  States  are  encouraged,  however,  to  use  the  period  of  implementation  of  the  EGF 
contribution (12 months from the date of application) to assess the longer-term needs caused 
by the redundancy event, and to modify any ESF programmes necessary. 

All  applicants  are  required,  as  part  of  the  application  process  for  the  EGF,  to  describe  how 
they intend to promote the complementarity of the EGF actions with those of the Structural 
Funds. 

EN 

47 

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6. 

Results achieved 

2007 was the first year of implementation of the EGF. The principal source of information on 
results achieved by the EGF will be the final report to be presented by the Member State after 
the end of the period specified for the use of the contribution, which is twelve months from 
the date of application. This final report must be submitted by the Member States no later than 
six months after the end of the period of use of the contribution. None of the Final Reports in 
respect of contributions granted in 2007 were due during 2007, and thus the Commission has 
as yet no detailed information on the results obtained.  

Table 5: The reporting timetable for the contributions granted in 2007 

Date 
application 

of 

Member State 

Contribution 
granted 

End of 12 month 
period  for  use  of 
the contribution 

Deadline  for 
Final Report 

1 

2 

3 

4 

9/3/2007 

France 

23/10/2007 

8/3/2008 

8/9/2008 

23/3/2007 

France 

23/10/2007 

22/3/2008 

22/9/2008 

27/6/2007 

Germany 

18/12/2007 

26/6/2008 

26/12/2008 

18/7/2007 

Finland 

18/12/2007 

17/7/2008 

17/1/2009 

The Commission will wind up the financial contribution no later than six months after it has 
received all of the information required in the Final Report. 

7. 

Technical Assistance activities undertaken by the European Commission 

Information and publicity 

Regulation (EC) No. 1927/2006 (Article 9) places a responsibility on the Commission to: 

"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." 

Internet site 

The  internet  site  (http://ec.europa.eu/egf)  has  been  operational  since  March  2007,  and 
contains  sections  on  basic  questions  and  answers  about  the  EGF,  news,  key  documents, 
applications,  a  library  of  relevant  reports  and  links,  and  details  of  the  EGF  responsible 
authorities in the Member States. The website was updated and improved on a regular basis, 
with documents in different languages being added as they became available.  

EGF video 

In  2007  the  Commission  released  a  video  on  the  EGF  for  the  use  of  the  media,  and  other 
interested  parties.  The  nine  minute  video  includes  coverage  of  the  French  and  Finnish  EGF 
activities, and can be viewed at: 

http://ec.europa.eu/avservices/video/video_prod_en.cfm?type=detail&prodid=4097 

EN 

48 

   EN 

 
 
Leaflet 

In  2007  the  Commission  published  an  information  leaflet  on  the  EGF  in  22  languages  (all 
official languages apart from Irish). This leaflet is available in limited quantities on paper, but 
is also freely available on the Commission's EGF internet site, at: 

http://ec.europa.eu/employment_social/egf/docs/egf_leaflet_en.pdf  
(for other languages the 'en' can be replaced with the relevant two-letter code). 

Audit and control activities 

There were no specifically EGF audit or control activities carried out by the Commission in 
2007. 

Evaluation 
The EGF Regulation does not provide for an evaluation of the EGF until 31 December 2011. 
The Commission has already taken steps to ensure that appropriate information is gathered by 
the Member States from the start of the EGF. 

Meetings with the National Authorities 

At the start of 2007 the Commission established a network of contact points in the Member 
States, in order to assist the Member States to prepare for potential applications as well as the 
implementation  of  the  Fund.  The  network  is  registered  formally  as  the  'Expert  group  on 
Contact  Persons  of  the  European  Globalisation  Adjustment  Fund',  or  in  short,  the  'EGF 
Contact Persons' (code E02100). 

The Commission regularly updates the members of the group on the Fund, and invites them to 
meetings  for  exchanges  of  experience  and  information.  The  members  of  the  group  are 
officials  within  the  ministries  in  the  Member  States  that  either  have,  or  are  likely  to  have, 
responsibility for applying for or implementing a contribution from the EGF. 

Two meetings of the group were held in Brussels during 2007, on 1 March and 9 October. 

8. 

Financial report 

Funds contributed 

Under the Interinstitutional Agreement of 17 May 2006, the EGF may not exceed a maximum 
annual  amount  of  EUR  500  million  (2006  prices)  which  can  be  drawn  from  any  margin 
existing  under  the  global  expenditure  ceiling  of  the  previous  year,  and/or  from  cancelled 
commitment appropriations from the previous two years, excluding those related to heading 
1B  of  the  financial  framework.  In  addition,  under  Article  12.6  of  Regulation  (EC)  No. 
1927/2006, at least one quarter of the annual maximum amount must remain available on 1 
September of each year in order to cover needs arising until the end of the year. 

During 2007 four EGF contributions were granted by the Budgetary Authority (see Table 2). 

The  funds  granted  by  the  Budgetary  Authority  represent  3.72%  of  the  maximum  annual 
amount.  No  contributions  were  granted  before  1  September  2007,  and  therefore  the  entire 
amount remained available in order to cover needs arising until the end of the year. 

EN 

49 

   EN 

 
Reimbursements 

There were no reimbursements made during 2007. 

Technical assistance expenditure 

There was no expenditure during 2007 under the Technical Assistance provisions of Article 8 
of Regulation (EC) No. 1927/2006, as the relevant budget line had not yet been created. 

Irregularities reported during 2007 

There were no irregularities reported to the Commission under Commission Regulation (EC) 
No 1681/9415 during 2007 in respect of the EGF. 

Irregularities closed during 2007 

As 2007 was the first year of operation of the EGF, there were no irregularities from previous 
years to be closed. 

9.  Winding up of financial contributions made 

None  of  the  contributions  granted  since  the  start  of  the  EGF  were  wound  up  in  2007.  The 
Regulation  governing  the  EGF  provides  for  a  period  of  twelve  months  from  the  date  of 
application  for  the  Member  State  to  use  the  contribution,  followed  by  a  maximum  of  six 
months in which it must present a report on the execution of the financial contribution. Only 
after  receiving  that  report  may  the  Commission  proceed  to  wind  up  the  contribution. 
Expenditure on the first contribution granted by the Budgetary Authority, which relates to the 
application  EGF/2007/001  made  on  9  March  2007  by  France,  was  eligible  until  8  March 
2008, and France then has until 8 September 2008 to present its final report. 

15 

Commission Regulation (EC) No 1681/94 of 11 July 1994 concerning irregularities and the recovery of 
sums wrongly paid in connection with the financing of the structural policies and the organization of an 
information system in this field OJ L 178, 12/07/1994 p. 43 

EN 

50 

   EN 

 
                                                 
Overview of opinions expressed by experts from the Member States: 

Annex 2 

Member  States 
in favour 

Member  States 
opposed 

No response 

BG,  CZ, 
IE, 
EL,  ES,  FR, 
LV,  HU,  MT, 
AT,  PL,  PT, 
RO, FI 

DK,  DE,  LT, 
NL,  SK,  SE, 
UK 

BE,  EE, 
KY, LU, SL 

IT, 

-- 

-- 

-- 

-- 

-- 

-- 

Q1:  Do you consider that other factors, such 
as  technological  changes,  the  changing 
costs  of  inputs,  etc.,  which  lead  to 
in  world 
major  structural  changes 
markets 
trade,  should  be 
including 
the  basis  for  making 
included  as 
applications 
the  EGF  by  your 
to 
Member  State  (ref:  Annual  Report  of 
the EGF, 2007, page 2)? 

Q2a:  How many cases of mass redundancy in 
an  enterprise  (more  than  1000  job 
losses; more than 500 job losses within 
4  months)  occurred  in  your  Member 
State  between  01  January  2007  and  30 
June 2008? 

Q2b:  How  many  cases  of  concentrated 
redundancies  in  a  sector  (more  than 
1000  job  losses;  more  than  500  job 
losses  within  9  months)  occurred  in 
your Member State between 01 January 
2007 and 30 June 2008? 

Q2c:  What  was  the  total  number  of  workers 
made redundant in these cases? 

-- 

-- 

-- 

Q3: 

in  Article  2(a)  of 

Should workers made redundant before 
reference 
the  4-month  period  of 
the 
mentioned 
Regulation be eligible for support from 
the  EGF?  Do  you  consider  that  a 
modification  of 
to 
funding  of 
specifically  permit 
actions  in  favour  of  these  workers  is 
warranted? 

regulation 

the 

the 

DK,  FR,  SE, 
UK 

BE,  EE,  KY, 
LU, AT, SI 

BG,  CZ,  DE, 
IE, EL, ES, IT, 
LV,  LT,  HU, 
MT,  NL,  PL, 
PT, RO, SK, FI

Q4: 

Is  the  4-month  reference  period  (Art 
2(a)  of  the  EGF  Regulation)  sufficient 
to  cover  all  redundancies  in  a  typical 
case  of  mass  redundancy 
in  your 
country? 

BG,  CZ,  DK, 
IE, IT, LV, LT, 
HU,  MT,  NL, 
AT,  PT,  RO, 
SK,  FI,  SE, 
UK 

DE, EL, ES 

BE,  EE,  FR, 
KY,  LU,  PL, 
SL 

Q5:  Has  your  Member  State  considered 
making an application for funding from 
the EGF in favour of redundant workers 

NL, AT 

BG,  CZ,  DK, 
DE,  EL,  ES, 
IT,  LV,  LT, 

BE,  EE, 
IE, 
FR,  KY,  LU, 
SI 

EN 

51 

   EN 

 
  
  
in service sectors (such as financial and 
insurance  activities,  or  other  service 
sectors)? 

Q6:  Are  you  aware  of  cases  of  redundancy 
in  your  Member  State  that  would,  in 
your  opinion,  have  been  eligible  for  a 
contribution  from  the  EGF,  but  for 
which  no  application  was  made?  If  so, 
please  explain  why  no  application  was 
made. 

Q7: 

The Option of using the EGF to provide 
micro-credits  to  redundant  workers  is 
mentioned in a recital to the Regulation. 
Should 
this  measure  be  promoted? 
Please explain your answer. 

Q8:  Would  the  use  of  'mobility  allowances' 
(ref.  Article  3  of  the  EGF  Regulation) 
to  cover  the  expenses  incurred  by 
redundant workers in moving to another 
Member  State 
to  seek  alternative 
employment  or  training  activities  be  of 
interest  to  your  Member  State  when 
dealing with mass redundancies? 

Q9: 

The  Commission  is  considering  using 
the  technical  assistance  of  the  EGF  to 
undertake  forward-looking  activities, 
such  as  analyses  and  studies 
to 
anticipate changes due to globalisation, 
and to support expert personnel, both in 
Member States and by the Commission. 
Please  give  us  your  comments  on  this 
proposal. 

EL,  ES,  FR, 
IT, LV 

HU,  MT,  PL, 
PT,  RO,  SK, 
FI, SE, UK 

CZ,  DK,  DE, 
LT,  HU,  MT, 
NL,  PL,  PT, 
RO,  SK,  FI, 
SE, UK 

BG,  BE,  EE, 
IE,  KY,  LU, 
AT, SI 

BG,  CZ,  EL, 
LT,  HU,  MT, 
NL, RO, UK 

DK,  DE,  ES, 
FR,  LV,  PL, 
PT, SK 

BE, EE, IE, IT, 
KY,  LU,  AT, 
SI, FI, SE 

BG,  CZ,  DEK, 
DE,  EL,  ES, 
FR, 
IT,  HU, 
MT,  NL,  AT, 
PL, PTSK 

IE, 
BG,  CZ, 
EL,  ES, 
IT, 
LV,  LT,  MT, 
AT,  PL,  PT, 
SK, FI 

LV,  LT,  RO, 
FI, SE, UK 

BE,  EE, 
KY, LU, SI 

IE, 

DK,  DE,  HU, 
NL, SE, UK 

BE,  EE,  FR, 
KY,  LU,  RO, 
SI 

Specific criteria for Q. 10 

50% OK 

50% too high 

50% too low 

Q10:  Currently  the  EGF  contributes  up  to 
50% of the total cost of the coordinated 
services 
package 
provided  to  the  redundant  workers.  Do 
you  consider  that  this  intervention  rate 
is  correct,  too  high,  or  too  low?  Please 
explain your view.  

personalised 

of 

BG,  DK,  DE, 
ES,  HU,  NL, 
SK, SE 

UK 

Specific criteria for Q. 11 

12 months OK  Greater 

than 

Q11:  Currently  Member  States  must  use  the 
EGF  financial  contribution,  as  well  as 
any  interest  earned  thereon,  within  12 
be 
months.  Should 

period 

this 

12 

DK,  DE,  SK, 
SE, UK 

CZ,  ES,  FR, 
AT, FI 

CZ,  EL,  FR, 
IT,  LT,  MT, 
AT,  PL,  PT, 
RO 

to 

18 
months 

24 

BG,  EL, 
IT, 
LT,  MT,  NL, 
PL, PT, RO 

EN 

52 

   EN 

 
  
  
prolonged, and if so, for how long? 

Yes 

No 

No response 

Q12:  Regardless  of  whether  or  not  your 
Member  State  has  applied  for  EGF 
there  any  particular 
support,  are 
administrative 
(at  EU, 
problems 
national  or  regional  level)  you  would 
like to mention here? 

CZ,  DE, 
IE, 
EL,  ES,  FR, 
IT,  LT,  HU, 
MT, PL, PT 

DK,  LV,  RO, 
UK 

BG,  BE,  EE, 
KY, LU, SI 

Q13: 

a  need 

In order to use EGF funding, was or is 
there 
set  up  new 
to 
administrative  procedures  or  make 
changes  to  existing  ones?  Please  give 
details if possible. 

DE,  LT,  HU, 
SK, FI, UK 

DK,  EL,  MT, 
NL, PL, PT 

BG,  BE,  CZ, 
IE,  ES, 
EE, 
FR, 
IT,  KY, 
LV,  LU,  AT, 
RO, SI, SE 

EN 

53 

   EN 

 
  
  
Comparison between mass redundancies and growth rate in the EU15 (2002-2007)16 

Annex 3 

Number of mass 
redundancy events 
listed in the ERM 
Annual GDP Growth rate 

2002  2003  2004  2005  2006  2007 

≥1,000 workers 68 

80 

70 

77 

68 

34 

200817
38 

≥500 workers  

117 

144 

146 

176 

145  87 

67 

1.2 

1.2 

2.4 

1.8 

2.9 

2.7 

n.a. 

Over the period 2002-2007, the correlation coefficient between the number of mass 
redundancy events recorded by the ERM for the EU15 and the annual GDP growth rate is: 

•  -0,55 for mass redundancies equal to or above 1,000 workers;  

•  -0.19 for mass redundancies equal to or above 500 workers.  

16 

17 

The comparison for EU 27 is not possible as the ERM did not systematically record comprehensive data 
for the New Member States over the period 2002 – 2007.  
Q1 and Q2 

EN 

54 

   EN