Opinion of the European Economic and Social Committee on 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
Date: 2009-03-24
Institutions: European Economic and Social Committee
Subjects: ESC opinion, dismissal, economic recession, financial management, financial services, globalisation, principle of proportionality, reintegration into working life








C_2009228EN.01010301.xml










22.9.2009   


EN


Official Journal of the European Union


C 228/103





Opinion of the European Economic and Social Committee on 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
COM(2008) 867 final – COD 2008/0267
2009/C 228/20
On 20 January 2009 the Council decided to consult the European Economic and Social Committee, under Article 159(3) of the Treaty establishing the European Community, on 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’

On 13 January 2009 the Committee Bureau instructed the Consultative Commission on Industrial Change to prepare the Committee’s work on the subject.
Given the urgent nature of the work, the European Economic and Social Committee appointed Mr PARIZA CASTAÑOS as rapporteur-general at its 452nd plenary session, held on 24 and 25 March 2009 (meeting of 24 March), and adopted the following opinion by 152 votes to five with twelve abstentions.
1.   Conclusions and recommendations







1.1


The European Economic and Social Committee (EESC) supports the proposal by the European Commission that the scope of the European Globalisation Adjustment Fund (EGF) should be temporarily extended to help workers made redundant as a result of the current international economic crisis.










1.2


There is an urgent need for the Parliament, Council and Commission to step up negotiations so that the new Regulation can be adopted as soon as possible during the current term of office.










1.3


The EESC proposes that an evaluation of the EGF should be carried out 12 months after the publication of the Regulation in the Official Journal to review procedures and the management of the Fund, and take stock of the economic situation and labour markets. The evaluation would be carried out by the EESC in partnership with the European Commission.










1.4


The Committee considers that the budget reserve of EUR 500 million is insufficient and proposes that EUR 1 000 million should be made available for the Fund, with provisions for future increases, depending on how the economic crisis develops.










1.5


It currently takes seven months from the time the file is submitted for payment to be made by the Commission. This is too long to be of help to workers who have lost their jobs and the Committee therefore proposes that the EGF be given its own initial budget funding.










1.6


The Committee agrees that the number of redundancies required to trigger access to the Fund should be reduced to 500; that funding should be available for 24 months; and that the EU should make a financial contribution of up to 75 %.










1.7


The EESC proposes that the social partners should be given a more active role at all stages in processing applications for EGF assistance at company, regional, national and EU level.




2.   Background







2.1


In March 2006 the Commission presented a proposal to establish a European Globalisation Adjustment Fund (1), with the aim of providing specific, one-off support to facilitate the re-integration into employment of workers in areas or sectors suffering the shock of serious economic disruption as a result of economic delocalisation to third countries, a massive increase of imports, or a progressive decline of the EU market share in a given sector. The Commission drew up a proposal for a regulation, which the Council referred to the EESC for its opinion.










2.2


On 13 December 2006, the EESC adopted opinion CCMI/036 (2) (rapporteur: Mr Van Iersel; co-rapporteur: Mr Gibellieri), welcoming the Commission’s proposal and agreeing with the objectives of the EGF. The Committee made a number of comments and suggestions with a view to the efficient operation of the EGF regulation (3).










2.3


Regulation (EC) No 1927/2006 (4) on establishing the European Globalisation Adjustment Fund has applied since 1 January 2007 and will do so until 2013. Support from the Fund may amount to an annual total of EUR 500 million, and is supplementary to the Structural Funds, in particular the European Social Fund. The European Commission’s Directorate General for Employment, Social Affairs and Equal Opportunities is responsible for managing the EGF.










2.4


Applications must be submitted by the Member States, not by the companies or workers affected.










2.5


In July 2008 the Commission drew up a communication (5) evaluating the first months of operation of the EGF (6) and analysing the prospects and proposals for future modifications.










2.6


The Commission’s review was positive, although take-up was less than had been expected, and it announced that it would simplify procedures, promote exchange of good practice and improve publicity for the Fund; it also undertook to make proposals to modify the regulation before issuing the next annual report, which is to be drawn up in mid-2009.










2.7


On the other hand, many workers are losing their jobs and numerous businesses are closing down either temporarily or permanently as a result of the world financial and economic crisis.










2.8


In its European Economic Recovery Plan (7), the European Commission announced its intention of making the EGF a more effective instrument for early intervention, as part of Europe’s response to the crisis. To this end, the regulation must be amended so that it can intervene more rapidly in some sectors, in particular to co-finance training and job placements for people who lose their jobs as a result of the economic crisis.




3.   Proposal to amend the EGF Regulation







3.1


The aim of this proposal is to enable the European Globalisation Adjustment Fund (EGF) to react more effectively in support of workers made redundant as a result of globalisation, to enlarge its scope temporarily by covering redundancies caused by the impact of the global financial and economic crisis and to bring the operation of the Fund closer into line with its solidarity objective. In order to achieve this objective certain provisions of Regulation (EC) No 1927/2006 on establishing the European Globalisation Adjustment Fund need to be amended.










3.2


Before drafting the proposal, the Commission consulted the Member States and the social partners, holding a conference in Brussels on 4 September 2008.










3.3


The amendment of the regulation is intended to ensure that the EGF meets the objective of solidarity with workers who have lost their jobs as a consequence of major changes brought about by globalisation, including a temporary provision to support workers made redundant as a result of the global financial and economic crisis.










3.4


The European Commission also proposes a number of modifications to the regulation in order to make the procedures and application requirements more flexible and straightforward, and to extend the coverage of the EGF.




4.   General comments







4.1


Thousands of European workers have been made redundant in recent months as a consequence of the international economic and financial crisis. The EESC considers that, alongside the economic and monetary policies being adopted under the European Economic Recovery Plan (8), the EU should also promote specific support policies for workers who lose their jobs.










4.2


In this period of crisis and uncertainty, European citizens should receive a clear message from the European Union, signalling its readiness to help workers who lose their jobs.










4.3


The Committee therefore backs the European Commission’s proposal that the scope of the EGF should be temporarily extended to assist workers who have been made redundant because of the current international economic crisis.










4.4


Article 28 of the Interinstitutional Agreement between the Parliament, Council and Commission states that the annual budget reserve for the EFG will be no more than EUR 500 million.










4.5


The EESC believes that in the current circumstances, this budget reserve may not be enough to attain these objectives. The Committee therefore proposes temporarily expanding the budget reserve for as long as the crisis remains acute, jobs continue to be destroyed and workers are laid off. The Committee proposes that EUR 1 000 million is reserved for the Fund for 2009, with a larger sum planned for 2010 if there is an increase in the number of applications for assistance.










4.6


It currently takes seven months from the time the file is submitted for payment to be made by the Commission. The Committee considers that this is too long to be of help to workers who have lost their jobs and it therefore proposes that the EGF be given its own initial budget funding.










4.7


The EESC endorses the Commission’s proposal to reduce the EGF application requirement from 1 000 redundancies to 500, as this better reflects the size of European businesses.










4.8


Given the effects of globalisation, the Committee agrees with the Commission (9) that account must be taken not only of redundancies caused by structural changes in world trade, but also by other types of structural change that are driven by technology, products, changes in the way production is organised, and access to raw materials and their price.










4.9


The Committee supports the Commission’s proposal to extend the EGF contribution period to 24 months, given that the initial 12-month period set out in the regulation is often not enough for unemployed workers to find jobs.










4.10


The Committee supports the Commission’s proposal that the EGF contribution limit should be raised from 50 % to 75 %, as given the critical nature of the current situation the EU should strengthen solidarity with workers who have been made redundant and with the Member States.










4.11


The EESC agrees that for the purposes of calculating the number of redundancies, a redundancy may be counted from the moment of either the employer’s individual notice to terminate the contract of employment of the redundant worker, or the de facto termination of a contract before its expiry.










4.12


The EESC’s interpretation of Article 2 is that it also covers redundancies in any company or region of the EU that occur as a result of relocation to other regions within the EU. Although all parts of the EU form a single internal market, the pressures exerted by globalisation on companies to compete at world level often lead to relocation to regions with lower production costs, both within and outside the EU.










4.13


In its earlier opinion (10), the EESC argued that the social partners and other stakeholders (businesses or regions) should be properly involved in the procedures. Article 5 of the regulation provides that in the application, the Member States must report on the procedures followed for consulting the social partners. The Committee considers that involvement of the social partners at company, regional and national level in the procedures should be a precondition for the acceptance of an application.










4.14


The Committee recommends strengthening the role of the European Commission in administrative and technical support for the Member States, to help them to prepare applications and thereby enhance the consistency of applications across Europe, and urges it to play a proactive role vis-à-vis the Member States and the social partners.










4.15


The EGF should be supplementary to the Structural Funds, in particular the ESF: duplication must therefore be avoided. The Committee considers that regional authorities, the social partners and civil society organisations can cooperate in ensuring that the two funds are used properly, through the ESF participation procedures.










4.16


The EESC proposes that an evaluation be made of the EGF 12 months after the publication of the new Regulation in the Official Journal, to review the procedures set out in the regulation and the management of the Fund, and take stock of the state of the economy and of the labour markets. This evaluation must consider the following issues:






4.16.1


if the economic crisis and job losses continue, the scope of the EGF should be extended beyond 2011;










4.16.2


whether it is appropriate to make a further increase the budget reserve above the EUR 1 000 million mark, taking into account the applications which are made and how the economic crisis develops;










4.16.3


an assessment of whether the trigger number of 500 redundancies for requesting EGF assistance should be reduced, in the light of the problems of smaller businesses in certain sectors and regions;










4.16.4


similarly, depending on the analysis of the files processed, the intervention rate of up to 75 % stipulated under the amendment to the Regulation should be evaluated, as should the 24 month intervention period.








5.   Specific comments on the articles of the regulation







5.1


Article 1(1): Considering the effects of globalisation, the EESC suggests that the Regulation should also cover redundancies which are not a direct result of changes in trade patterns, but rather other structural changes related to technology, products, the organisation of production and access to raw materials (see 4.7 and 4.11).










5.2


Article 2. Intervention criteria: The Committee agrees that the trigger number of redundancies for EGF intervention should be reduced to 500, but considers that in the next evaluation, the possibility of further reducing the trigger number of 500 redundancies should be examined, depending on the sector and region affected (see 4.6).










5.3


Article 2. Calculating redundancies: the Committee supports the Commission proposal (see 4.10).










5.4


Article 5(2)(a). The Committee agrees with the amendment proposed by the Commission, and suggests also incorporating the proposal made above for Article 1(1). The Committee also suggests that point (f) be amended as follows: ‘Since the involvement of the social partners is essential to the effective use of the Fund, applications shall include the procedures followed for consulting and involving the social partners’ (see 4.12).










5.5


Article 8. The Committee agrees with the amendments to paragraphs 1, 2 and 3, but proposes the insertion of a new paragraph 4: ‘The Commission’s technical assistance shall be of a proactive nature, involving the Member States and the European and national social partners in using, monitoring and evaluating the EGF’ (see 4.13).










5.6


Article 10(1). The Committee agrees that the amount of the EGF’s financial contribution may be up to 75 % of the estimated cost (see 4.9).










5.7


Article 13(2). The Committee agrees that the financial contribution may be used for a period of 24 months (see 4.8).










5.8


Article 17. The Committee proposes that point (a) be amended as follows: ‘The Commission shall carry out in cooperation with the Member States and the social partners a mid-term evaluation of the effectiveness and functioning of the Fund, 12 months after the publication of the regulation in the Official Journal’ (see 4.15).










5.9


Article 20. The Committee proposes that the Commission’s proposal be amended as follows (new subparagraph): ‘Following the evaluation provided for in Article 17, on the basis of a proposal from the Commission, the European Parliament and the Council may review this Regulation, including the temporary derogation provided for in Article 1, paragraph 1a’.





Brussels, 24 March 2009

The President of the European Economic and Social Committee
Mario SEPI





(1)  COM(2006) 91 final, 2006/0033 (COD).

(2)  OJ C 318 of 23.12.2006, pp. 38-41.

(3)  The European Parliament adopted its resolution on 13 December 2006 (PE A6-0385/2006), OJ L 406, 30.12.2006, p. 1; corrigendum OJ L 048, 22.2.2008, p. 82. The CoR was consulted (opinion CdR 137/2006 fin, rapporteur: Ms Oldfather), OJ C 51, 6.3.2007.

(4)  OJ L 406 of 30.12.2006, p. 1. Corrigendum to the regulation in OJ L 48 of 22.2.2008, p. 82, and for the English version in OJ L 202 of 31.7.2008, p. 74.

(5)  COM(2008) 421 final.

(6)  Ten applications were received in 2007, and only five in 2008.

(7)  COM(2008) 800 final, of 26.11.2008.

(8)  COM(2008) 800 final.

(9)  Solidarity in the face of Change: The European Globalisation Adjustment Fund (EGF) in 2007 – Review and Prospects COM(2008) 421 final.

(10)  OJ C 318, 23.12.2006, pp. 38-41.