Proposal for a Decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund
Date: 2009-08-10
Institutions: European Commission
Subjects: Germany, commitment of expenditure, dismissal, fund (EU), globalisation, mobile phone, reintegration into working life, telecommunications industry

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 10.8.2009 
COM(2009) 423 final 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the mobilisation of the European Globalisation Adjustment Fund 

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EXPLANATORY MEMORANDUM 

The Interinstitutional Agreement of 17 May 20061 allows for the mobilisation of the European 
Globalisation  Adjustment  Fund  (EGF)  through  a  flexibility  mechanism,  within  the  annual 
ceiling of EUR 500 million over and above the relevant headings of the financial framework. 
Eligibility  rules  applicable  to  the  contributions  from  the  Fund  are  laid  down  in  Regulation 
(EC)  No 1927/2006  of  the  European  Parliament  and  the  Council  of  20  December  2006 
establishing the European Globalisation Adjustment Fund2. 

The  Commission  services  have  carried  out  a  thorough  examination  of  the  application 
submitted by Germany  in  accordance with Regulation (EC) No 1927/2006 and in  particular 
with Articles 2, 3, 4, 5 and 6 thereof. 

The most important elements of the assessment can be summarised as follows: 

Case EGF/2009/002 DE / Nokia 

1. 

2. 

3. 

The application was received by the Commission from the German authorities on 6 
February  2009,  and  supplemented  by  additional  information  submitted  by  the 
Member State up to 20 May 2009. It was based upon the specific intervention criteria 
of  Article  2(a)  of  Regulation  (EC)  No  1927/2006,  and  was  submitted  within  the 
deadline of 10 weeks referred to in Article 5 of that Regulation.  

Germany  submitted  this  application  under  the  intervention  criterion  of  Article  2(a) 
Regulation (EC) No 1927/2006, which requires at least 1,000 redundancies over a 4-
month period in an enterprise including workers made redundant in its suppliers and 
downstream  producers.  The  application  demonstrates  that  a  total  of  1 337 
redundancies  occurred  in  one  enterprise:  Nokia  GmbH  during  4-month  period  of 
reference (from 30 July 2008 to 29 November 2008). 

Analysis  of  the  link  between  the  redundancies  and  the  major  structural  changes  in 
world  trade  patterns  is  based  on  the  following  information.  The  redundancies  were 
caused by the decision of the telecommunications group Nokia to close its factory in 
Bochum.  Germany  indicates  that  the  redundancies  follow  from  a  general  trend3 
amongst mobile phone manufacturers towards a delocalisation of their production to 
the "emerging" markets in the Asia Pacific region, which are characterised by high 
growth  rates  of  demand  for  mobile  phones.  The  production  of  mobile  phones  has 
been  delocalised  not  only  to  China,  but  also  to  South  Korea,  India,  Mexico  and 
Brazil. The applicant states that the low wage countries have also become attractive 
as location for R&D activities. Reference is made to the research and development 
(R&D)  centres  for  mobile  phones  that  Nokia  has  developed  in  China,  Hong  Kong, 
Macao and Taiwan. 

4. 

The local and regional impact is set out as follows in the application : 

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OJ C 139, 14.6.2006, p. 1. 
OJ L 406, 30.12.2006, p. 1. 
This  trend  was  already  established  in  the  Commission  assessment  of  application  EGF/2007/003 
DE/BenQ (SEC(2007)1142) and EGF/2007/004 FI/Perlos (SEC(2007)1228) 

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The  territories  concerned  by  the  redundancies  are  the  city  of  Bochum,  the 
administrative  region  of  Arnsberg  at  NUTS  II  (nomenclature  of  territorial  units  for 
statistics)  level  and  the  Land  North  Rhine  Westphalia  at  NUTS  I  level.  The  main 
responsible  stakeholders  are  the  Bochum  Labour  Office,  the  central  office  of  the 
Federal  Employment  Office,  the  regional  directorate  North  Rhine  Westphalia,  the 
Ministry for Labour, Health and Social Affairs of North Rhine Westphalia, IG Metall 
North Rhine Westphalia, Nokia GmbH and the transfer company PEAG. 

The applicant states that the redundant workers fall within the competence of 4 local 
employment offices: Bochum, Gelsenkirchen, Recklinghausen and Dortmund, all of 
which  have  traditionally  an  unemployment  rate  that  is  significantly  higher  than  in 
other  parts  of  North  Rhine  Westphalia  and  in  Germany.  In  December  2008,  for 
example,  the  unemployment  rate  reached  10,2  %  for  Bochum,  12,3  %  for 
Gelsenkirchen,  10,7  %  for  Recklinghausen  and  12,2  %  for  Dortmund,  whereas  for 
North Rhine Westphalia it was 8,1 % and for Germany 7,4 %. In the context of the 
current economic and financial crisis the employment situation in the affected areas 
seems particularly vulnerable, given the presence of the automotive (Opel) and steel 
industry in Bochum and Dortmund, the still ongoing reconversion from coal mining 
to  other  labour  intensive  sectors  in  Gelsenkirchen  and  the  dependence  of 
Recklinghausen  of  one  big  supplier  to  the  car  industry  (Hella)  and  the  chemical 
industry manufacturing synthetic materials for the automotive industry. 

In  conclusion,  in  these  circumstances,  the  redundancies  can  be  seen  to  have  a 
significantly negative effect on the local economy. 

The  application  concerns  1 337  redundancies  in  Nokia  GmbH,  of  which  1 316  are 
targeted for assistance.  

As  regards  the fulfilment of  the  criteria set out in Article 6 of Regulation (EC) No 
1927/2006 the application provided the following elements: The German authorities 
confirmed  that  the  financial  contribution  from  the  EGF  does  not  replace  measures 
which  are  the  responsibility  of  companies  by  virtue  of  national  law  or  collective 
agreements. The German authorities have given assurances that the actions provide 
support for individual workers and are not to be used for restructuring companies or 
sectors.  The  German  authorities  confirmed  that  the  eligible  actions  do  not  receive 
assistance from other Community financial instruments. 

5. 

6. 

In  conclusion,  for  the  reasons  set  out  above,  it  is  proposed  to  accept  application 
EGF/2009/002  DE/Nokia  submitted  by  Germany,  relating  to  the  redundancies  in  one 
enterprise  Nokia  GmbH,  as  evidence  has  been  provided  that  these  redundancies  result  from 
major  structural  changes  in  world  trade  patterns  which  have  led  to  a  serious  economic 
disruption, affecting employment and the local economy. A co-ordinated package of eligible 
personalised  services  has  been  proposed  of  which  the  requested  contribution  of  the  EGF  is 
EUR 5 553 850. 

Financing 

The  total  annual  budget  available  for  the  EGF  is  EUR 500 million.  An  amount  of 
EUR 7 523 850 has already been mobilised for prior applications in 2009 leaving an amount 
of EUR 492 476 150. 
The  Commission's  proposed  allocation  under  the  Fund  is  based  on  the  information  made 
available by the applicant. 

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On the basis of the application for support from the Fund submitted by Germany in support of 
workers made redundant by Nokia GmbH, the total estimates of the coordinated package of 
personalised services to be funded is as follows: 

EGF/2009/002 DE/ NOKIA 

Total : EUR 5 553 850 

In  the  light  of  the  examination  of  this  application4,  and  considering  the  maximum  possible 
amount of a grant from the Fund determined in accordance with Article 10 of Regulation (EC) 
N° 1927/2006 as well as the scope for reallocating appropriations, the Commission proposes 
to  deploy  the  European  Union  Globalisation  Adjustment  Fund  for  a  total  amount  of 
EUR 5 553 850, to be allocated under heading 1a of the financial framework. 

This amount of support will leave more than 25 % of the maximum annual amount earmarked 
for the EGF available for allocation during the last four months of the year 2009, as required 
by Article 12(6) of Regulation (EC) No 1927/2006. 

By  presenting  this  proposal  to  deploy  the  Fund,  the  Commission  initiates  the  simplified 
trialogue  procedure,  as  required  by  Point  28  of  the  Inter-institutional  Agreement  of 
17 May 2006, in view of securing the agreement of the two arms of the budgetary authority 
on the need to use the Fund and the amount required. The Commission invites the first of the 
two  arms  of  the  Budgetary  Authority  that  reaches  agreement  on  the  draft  mobilisation 
proposal,  at  appropriate  political  level,  to  inform  the  other  arm  and  the  Commission  of  its 
intentions. 

In  case  of  disagreement  by  either  of  the  two  arms  of  the  budgetary  authority,  a  formal 
trialogue meeting will be convened.  

The  Commission  will  also  present  a  transfer  request  in  order  to  enter  in  the  2009  budget 
specific  commitment  and  payment  appropriations,  as  required  in  Point  28  of  the 
Interinstitutional Agreement of 17 May 2006. 

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Communication  to  the  Commission  on  an  application  to  mobilise  the  European  Globalisation 
Adjustment Fund introduced by Germany (SEC(2009)1094) setting out the analysis of the Commission 
on the request. 

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Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the mobilisation of the European Globalisation Adjustment Fund 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  the  Inter-institutional  Agreement  of  17 May  2006  between  the  European 
Parliament,  the  Council  and  the  Commission  on  budgetary  discipline  and  sound  financial 
management5, and in particular point 28 thereof, 

Having  regard  to  Regulation  (EC)  No  1927/2006  of  the  European  Parliament  and  of  the 
Council  of  20 December  2006  establishing  the  European  Globalisation  Adjustment  Fund6, 
and in particular Article 12(3) thereof, 

Having regard to the proposal from the Commission7, 

Whereas: 

(1) 

(2) 

(3) 

The  European  Globalisation  Adjustment  Fund  (EGF)  was  established  to  provide 
additional  support  to  redundant  workers  who  suffer  from  the  consequences  of  major 
structural  changes  in  world  trade  patterns  and  to  assist  them  with  their  reintegration 
into the labour market. 

The Interinstitutional Agreement of 17 May 2006 allows the mobilisation of the EGF 
within the annual ceiling of EUR 500 million. 

Germany  submitted  an  application  to  mobilise  the  EGF,  in  respect  of  workers  made 
redundant  by  Nokia  GmbH  on  6  February  2009.  This  application  complies  with  the 
requirements for determining the financial contributions as laid down in Article 10 of 
Regulation (EC) No 1927/2006,  therefore  the  Commission  proposes  to  deploy  an 
amount of EUR 5 553 850. 

(4) 

The  EGF should,  therefore,  be  mobilised in order to provide a financial  contribution 
for the application submitted by Germany, 

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OJ C 139, 14.6.2006, p.1. 
OJ L 406, 30.12.2006, p. 1. 
OJ C […], […], p. […] 

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HAVE DECIDED AS FOLLOWS: 

Article 1 

For  the  general  budget  of  the  European  Union  for  the  financial  year  2009,  the  European 
Globalisation  Adjustment  Fund  shall  be  mobilised  to  provide  the  sum  of EUR 5 553 850 in 
commitment and payment appropriations. 

Article 2 

This Decision shall be published in the Official Journal of the European Union. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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