Communication to the commission on application EGF/2009/017 LT/Construction of buildings received from Lithuania for a financial contribution from the European Globalisation Adjustment Fund
Date: 2010-01-18
Institutions: European Commission
Subjects: EU employment policy, European Globalisation Adjustment Fund, Lithuania, building industry, dismissal, globalisation, integration into employment

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EUROPEAN COMMISSION 

Brussels, 18.1.2010 
SEC(2010)21 final 

COMMUNICATION TO THE COMMISSION 

on application EGF/2009/017 LT/Construction of buildings  
received from Lithuania for a financial contribution from the 
European Globalisation Adjustment Fund 

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COMMUNICATION TO THE COMMISSION 

on application EGF/2009/017 LT/Construction of buildings  
received from Lithuania for a financial contribution from the 
European Globalisation Adjustment Fund 

Lithuania  submitted  application  EGF/2009/017  LT/Construction  of  buildings  for  a  financial 
contribution from the European Globalisation Adjustment Fund (hereinafter 'EGF'), following 
redundancies in the NACE Revision 21 Division 41 (construction of buildings) in the NUTS II 
region of Lithuania (LT00). 

1. 

2. 

3. 

4. 

The application was received by the Commission from the Lithuanian authorities on 
23 September 2009. 

The application meets the conditions for deploying the EGF as set out in Article 2(b) 
of Regulation (EC) No 1927/2006 of the European Parliament and of the Council of 
20  December  2006  on  establishing  the  European  Globalisation  Adjustment  Fund2, 
and  was  submitted  within  the  deadline  of  10  weeks  referred  to  in  Article  5  of  that 
Regulation. 

SUMMARY OF THE APPLICATIONS, AND ANALYSIS 

(a)  Analysis  of  the  link  between  the  redundancies  and  major  structural  changes  in 
world trade patterns or the financial and economic crisis 

The application relates to 1 612 redundancies in the buildings construction industry 
during  the  reference  period  of  nine  months  between  16  October  2008  and  15  July 
2009.  

In  order  to  establish  the  link  between  the  redundancies  and  the  financial  and 
economic  crisis,  Lithuania  argues  that  the  global  economic  and  financial  crisis  has 
had  a  serious  impact  on  construction  demand  and  activity  in  Lithuania,  as  well  as 
severely reducing the industry's access to financial credits. As a result, the volume of 
construction  activity  in  Lithuania  has  decreased  in  each  of  the  quarters  of  the 
reference period specified in point 3 compared with the previous quarter: 2008 Q4 by 
9.20 %; 2009 Q1 by 42.81 %; and 2009 Q2 by 48.04 %, with the redundancies as a 
consequence.  The  slow-down  in  construction  activity  in  Lithuania  in  2009  Q1  was 
the worst in any of the EU-27 Member States. 

The slow-down in construction activity in Lithuania is not expected to reverse until 
after the country has emerged from recession. 

These steep drops in construction activity are consistent with trends seen elsewhere 

1 

2 

Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 
establishing  the  statistical  classification  of  economic  activities  NACE  2  Revision  2  and  amending 
Council Regulation (EEC) No 3037/90 as well as certain EC regulations on specific statistical domains 
(OJ L 393, 30.12.2006, p. 1). 
OJ L 48, 22.2.2008, p.82 

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5. 

6. 

7. 

8. 

9. 

in the EU, where the industry has suffered declines of 2.9 % in 2008 and 11.5% in 
2009 Q1 compared with the corresponding periods of the previous year3. 

In conclusion, the opinion of the Commission services is that the 1 612 redundancies 
in the buildings construction industry can be linked, as required by Articles 1 and 2 
of Regulation (EC) 1927/2006, to the financial and economic crisis, which has led to 
a sharp reduction in construction activity in Lithuania. 

(b) Demonstration of the number of redundancies and compliance with the criteria of 
Article 2(b) 

Lithuania submitted the application under the intervention criterion of Article 2(b) of 
Regulation  (EC)  No  1927/2006,  which  requires  at  least  500  redundancies  to  occur 
within a nine-month period of reference in a NACE 2 division in one region or two 
contiguous regions at NUTS II level.  

The  application  demonstrates  1 612  redundancies  in  128  enterprises,  all  operating 
within  the  NACE  Revision  2  Division  41  (construction  of  buildings)  during  the 
period between 16 October 2008 and 15 July 2009. All of these redundancies were 
calculated  in  accordance  with  the  second  indent  of  paragraph  2  of  Article  2  of 
Regulation (EC) No 1927/2006, i.e. from the date of the de facto termination of the 
contract of employment before its expiry.  

The entire territory of Lithuania forms a single region at NUTS II level (LT00). 

It is the opinion of the Commission services that the total number of 1 612 job losses 
in the NACE Revision 2 Division 41 (construction of buildings) in Lithuania during 
the  reference  period  meet  the  criteria  of  Article  2(b)  of  Regulation  (EC)  No 
1927/2006. 

(c) Explanation of the unforeseen nature of those redundancies 

10. 

The speed and depth of the global economic crisis were not foreseen by either firms 
or  governments.  The  nature  of  the  recession  as  far  as  the  construction  sector  was 
concerned, with a sudden tightening of financial credit and a rapid slowdown in new 
orders  was  unprecedented  in  recent  times.  The  redundancies  in  the  construction 
industry could not, therefore, have been foreseen or easily prevented. 

(d)  Identification  of  the  dismissing  enterprises,  suppliers  or  downstream  producers, 
sectors, and the categories of workers to be targeted 

11. 

The  application  EGF/2009/017  LT/Construction  of  buildings  concerns  a  total  of 
1 612 redundancies in the following 128 enterprises: 

UAB Alytaus statybos grupė 
UAB Pusinė troba 
UAB Alsva 
Renato Jankeviciaus individuali įmonė 
UAB Sarinos būstas 

8  UAB VDE Statyba 
18  UAB Statybų laukas 
62  UAB Statybų trikampis 
1  UAB Piniava 
32  UAB Kopta 

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4 
1 
4 
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3 

Impact of the economic crisis on key sectors of the EU – the case of the manufacturing and construction 
industries, June 2009 Update. Published by DG Enterprise and Industry, 29 June 2009.. 

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UAB Virgeda 
UAB Plesta 
UAB GPI statyba 
UAB Arkunas 
UAB Stasoma 
UAB Vigysta 
UAB Ariogalos statybinės konstrukcijos 
UAB TK sprendimai 
UAB Betonsta 
UAB Ampresta  
UAB Ranguva 
UAB Mitnija 
UAB Skrobline 
UAB Elsmika 
UAB Mano biuras 
UAB Gertauta 
UAB Daliktos statyba 
UAB Litgelis 
UAB Res digna 
UAB Monolitinis karkasas 
UAB Naujoji statyba 
UAB Medga 
UAB Vanesos statyba 
UAB Vikstada 
UAB Statybų projektai 
UAB Kauno statybos trestas 
UAB Jungtinės vykdytojų pajegos 
UAB Baltasta 
UAB Elstart 
UAB Tesidė 
UAB Argedestos statyba 
UAB Novacity 
UAB Tomstata 
UAB Ralsta 
UAB Laisvės parkas 
AB Gargždų statyba 
UAB Baltijos projektai 
UAB Crepidoma 
UAB Elektrovista 
UAB Elitija 
UAB ELK statyba 
UAB Genra 
UAB Kresta 
UAB Litnomus 
UAB Neto 
UAB Optimalus statybos sprendimai 
UAB Veikmanda 
UAB Zegre 
UAB Žigija 
UAB Autofurgonas 
UAB Daista 
UAB Pamario kiras 
UAB Stakreta 

14  UAB Genestas 
18  UAB S&R Building 
54  UAB Lista 
21  UAB Vilmestos statyba 
45  UAB Linasta 
14  UAB Meliovesta 
9  UAB Statekas 
4  UAB Kruonio hidroakumuliacinės elektrinės statyba 
4  UAB Ukmergės statyba 
13  UAB Degela 
3  UAB Didlaukis 
6  UAB Ravsta 
38  UAB Baltų Statyba 
10  AB BSA Construction 

II Dinatos statyba 

3  AB Kasyba 
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3  UAB Amasta 
1  UAB Andovos Statyba 

46  UAB Arkadis 
21  UAB Art & Go Investment 
18  UAB Darvilda 
11  UAB Eikos Statyba 

8  UAB Gerika 
22  UAB Kantus 

3  UAB Kaupasta 
26  UAB Kerma 
8  UAB Litosta 
7  UAB LK Investicijos 
6  UAB Mažoji Statyba 
1  UAB Merko Statyba 
1  UAB Mividarsta 
6  UAB Muruva 
1  UAB Neo domus 
2  UAB Progresyvios Inzinerinės Sistemos 
1  UAB Ramunstata 
37  UAB RexRangas 
22  UAB Rolgesa 
4  UAB Rūmas 
18  UAB Rumsta 
3  UAB Sine Modum 
2  UAB Statybų rojus 
2  UAB Tauneris 
5  UAB Tavastis 
2  UAB Telktis 
2  UAB Tofista 
21  UAB Vilniaus akmuo 
1  UAB Vilniaus meistrai 
2  UAB Andaima 
5  UAB Stamela  
2  AB Narunas 
1  UAB Uzvenčio statybos trestas 
12  UAB Jonapolė 
58  UAB Konig 

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20 
28 
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3 
16 
3 
2 
59 
14 
1 
9 
3 
1 
11 
4 
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32 
4 
7 
14 
2 
10 
17 
12 
6 
6 
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4 
1 
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6 
27 
1 
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13 
2 
3 
3 
33 
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49 
20 
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UAB Gerbustas 
UAB Šilna 
UAB Senlaukis 
UAB Vidstaka 
UAB Algirsta 
UAB Statybos gaire 

2  UAB Altesta 

135  UAB Apdailos grupe 

II Edmesta 

32 
2  UAB Druskininku statyba 
6  UAB Gintarine statyba 
4  UAB Statyba ir priežiura 

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12. 

Of the 1 612 dismissals, 806 are targeted for assistance. Of these 87 % are male and 
13 % are female. 79 % belong to the 25 to 54 years age group, 14 % belong to the 55 
to  64  years  age  group,  and  7 %  belong  to  the  below  25  years  age  group.  None  are 
over  65  years  of  age.  In  terms  of  categories4,  84  (10 %  of  those  targeted  for 
assistance)  workers  belong  to  the  category  'manager';  62  (7.7 %)  belong  to  the 
category  'professionals';  16  (2 %)  to  the  category  'technicians  and  associate 
professionals';  29  (3.6 %)  belong  to  the  category  'clerks';  3  (>1 %)  belong  to  the 
category 'service workers and shop and market sales workers'; 3 (>1 %) belong to the 
category 'skilled agricultural and fishery workers'; 452 (56.1 %) to the category 'craft 
and related trades workers'; 29 (3.6 %) to the category 'plant and machine operators 
and assemblers'; and 128 (15.9 %) to the category 'elementary occupations'. 86 of the 
workers targeted for assistance have a long-standing health problem or disability. All 
of the redundant workers and all of the targeted workers are EU citizens. 

(e) Description of the territories concerned and their authorities and stakeholders 

13. 

The entire territory of Lithuania is affected by the redundancies in the construction 
industry. 

The  main  stakeholders  include  the  Lithuanian  Labour  Exchange,  the  district  and 
county  labour  exchanges,  the  municipalities,  the  employers  and  employees 
organisations, training centres, the Chamber of Commerce, and the Lithuanian state 
social insurance board and labour inspectorate. 

(f)  Expected  impact  of  the  redundancies  as  regards  local,  regional  or  national 
employment 

14. 

Unemployment in Lithuania is amongst the highest in the EU, and has risen sharply 
since  the  start  of  the  economic  and  financial  crisis,  reaching  16.7  %  in  July  2009. 
The  increase  in  unemployment  over  the  period  July  2008  –  July  2009  in  Lithuania 
was 10.9 %, the highest in the EU.   

The construction industry has been especially badly affected, losing around 10 % of 
its  jobs  in  Lithuania  in  2008  alone.  Although  there  have  been  signs  of  a  recent 
improvement  in  the  job  situation  in  the  building  industry,  statistics  from  the 
Lithuanian Labour Exchange continue to show that there were almost four times as 
many  construction  industry  workers  unemployed  in  2009  Q2  than  there  were 
vacancies in the industry. 

4 

According to the International Standard Classification of Occupations (ISCO) ISCO-08 classification of 
the ILO adopted in December 2007. 

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15. 

In  conclusion,  in  such  circumstances,  the  redundancies  can  be  seen  to  have  a 
negative effect on the national and local economies described. 

(g) Co-ordinated package of personalised services to be funded and a breakdown of 
its  estimated  costs,  including  its  complementarity  with  actions  funded  by  the 
Structural Funds 

16. 

The  proposed  package  of  personalised  measures  outlined  in  the  application 
comprises ten distinct actions, in addition to the technical assistance necessary for the 
implementation  of  the  package.  The  ten  actions,  which  combine  to  form  a  co-
ordinated  package  of  personalised  services  aimed  at  re-integrating  workers  into  the 
labour market, are: 

–  Training  and  retraining  will  be  provided  for  workers  whose  skills  are  not  in 
demand  in  the  local  labour  market.  Such  training  will  be  focussed  on  providing 
these workers with skills for which there is a demand. The actions will last for an 
average of five months, and it is estimated that 200 workers will benefit from this 
measure. 

–  Outplacement assistance, through the form of supported employment according to 
the  national  law  on  support  of  employment,  will  be  offered  in  three  different 
formats: 
(a) For those workers who are particularly disadvantaged, have dependent children 
under  the  age  of  8,  or  are  over  50  years  of  age,  employment  subsidies  will  be 
provided  to  stimulate  them  to  remain  in  or  return  to  the  labour  market.  It  is 
estimated that 120 workers will benefit from this action, which will last between 6 
and 12 months. 
(b) Support  will  be  provided  for  the  acquisition  of  professional  skills  to  40 
workers.  This  will  allow  them  to  acquire  new  skills  directly  in  the  workplace. 
(c) For  those  without  skills  but  who  are  at  risk  of  exclusion  from  the  labour 
market,  special  time-limited  public  work  employment  will  be  provided  for  a 
maximum  of  6  months  in  order  to  avoid  demoralisation  and  demotivation.  It  is 
estimated that 150 workers will benefit from this latter action. 

–  Training  allowances  will  be  paid  to  redundant  workers  participating  in  training 
and  retraining  (as  described  above).  An  additional  allowance  will  enable  the 
workers  to  travel  to  and  from  such  training.  200  workers  will  benefit  from  this 
support, which is estimated to last an average of 5 months.  

–  Entrepreneurship  promotion  –  two  similar  measures,  differing  mainly  in  their 
intensity,  will  be  aimed  at  redundant  workers  setting  up  their  own  businesses.  
In  both  the  workers  will  be  eligible  to  receive  compensation  for  training  or 
counselling  relating  to  business  start-up  or  business  organisation,  compensation 
for  the  costs  involved  in  registration  of  self-employment,  health  and  social, 
insurance costs, and the costs of machinery, equipment and instruments required 
for the workplace. 
In  the  first  measure,  under  national  rules  the  total  support  for  entrepreneurship 
may  not  exceed  15  times  the  minimum  monthly  salary.  It  is  estimated  that  100 
workers will benefit from this action. 
It  is  estimated  that  an  additional  50  workers  will  benefit  from  a  more  intense 

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entrepreneurship promotion measure based upon the national law on the support 
of employment. The ceiling for assistance is higher. 

–  Mobility  allowances  –  in  order  to  facilitate  geographic  mobility,  and  to  allow 
redundant  workers  to  seek  new  employment  outside  the  areas  in  which  they 
currently  live,  this  measure  will  support  the  travel  costs  of  an  estimated  10 
workers for a maximum of three months. 

–  Employment  incentives  –  to  encourage  redundant  workers  to  accept  new 
employment  as  quickly  as  possible,  a  bonus  equal  to  three  times  the  minimum 
salary  may  be  paid  to  workers  who  accept  a  permanent  or  a  temporary  contract 
with  a  minimum  duration  of  6  months,  within  2  months  of  registering  with  the 
local  labour  exchange.  Is  is  estimated  that  40  workers  will  benefit  from  this 
measure. 

–  Temporary financial aid, aimed at motivating redundant workers to accept a new 
job  at  a  lower  wage  rate  than  their  previous  job,  will  be  paid  to  workers  who 
accept a new job under a contract of not less than six months (the contract can be 
either temporary or permanent). It is estimated that 40 workers will benefit from 
this action. 

–  Job-search allowances – redundant workers involved in active job search activities 
will  be  eligible  for  a  time-limited  support  equivalent  to  15 %  of  the  Lithuanian 
minimum  salary  for  a  period  of  up  to  three  months.  It  is  estimated  that  650 
workers will benefit from this action. 

–  Support for child-care and care of disabled family members – in order to facilitate 
the reintegration of redundant workers with dependent children (up to 8 years of 
age) or disabled family members with special care needs, an additional allowance 
will be paid for a maximum period of three months in order to cover the additional 
costs that the workers will face in order to avail of training or other actions. It is 
estimated that 15 workers will benefit from this action. 
An  additional  5  workers  will  benefit  from  an  allowance  to  cover  the  costs  of 
dependent children (up to 8 years of age) or disabled family members with special 
care needs, for a maximum of 6 months after taking up new employment. 

–  Support  for  improving  qualifications  –  this  measure  will  specifically  target  25 
higher  educated  redundant  workers  to  acquire  new  competencies  in  order  to 
facilitate their reintegration into the labour market. 

17. 

18. 

The  administrative  expenditure,  as  described  in  the  application,  in  accordance  with 
Article 3 of Regulation (EC) No 1927/2006, covers the preparation, management and 
control activities of the application as well as information and publicity.  

The  personalised  services  as  part  of  the  co-ordinated  packages  presented  by  the 
Lithuanian authorities in the application are active labour market measures that fall 
within the eligible actions as defined in Article 3 of Regulation (EC) No 1927/2006. 

The  total  costs  of  these  services  are  estimated  by  the  Lithuanian  authorities  at 
EUR 1 609 485 and the administrative expenditure at EUR 111 889 (= 6.5 % of the 

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total  amount).  The  total  requested  contribution  from  the  EGF  is  EUR  1 118 893 
(65 % of the total costs).  

Actions 

Estimated 
Number of 
workers 
targeted 

Estimated cost 
per worker 
targeted (in 
EUR) 

Total costs 
(EGF and 
national co 
financing) (in 
EUR) 

Personalised services (first paragraph of Article 3 of Regulation (EC) No 1927/2006) 

Training and retraining 

Outplacement assistance 

Training allowances 

Entrepreneurship promotion (basic) 

Entrepreneurship promotion (intensive) 

Mobility allowances 

Employment incentives 

Temporary Financial Aid 

Job-search allowances 

Support for care of children and disabled 
family members (during training) 

Support for care of children and disabled 
family members (while in employment) 

Support for improving qualifications 

Subtotal personalised services 

200

310

200

100

50

10

40

40

650

15

5

25

870 

992 

900 

3 475 

8 690 

210 

690 

690 

100 

139 

174 000

307 400

180 000

347 500

434 500

2 100

27 600

27 600

65 000

2 085

1 390 

6 950

1 390 

34 750

1 609 485

Technical assistance for implementing EGF (third paragraph of Article 3 of Regulation 
(EC) No 1927/2006) 

Preparatory 

Management 

Information and publicity 

Control activities 

Subtotal administrative expenditure 

TOTAL ESTIMATED COSTS 

EGF contribution (65 % of total costs) 

12 000

91 989

3 500

4 400

111 889

1 721 374

1 118 893

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19. 

As  regards  the  complementarity  with  actions  funded  by  the  Structural  Funds, 
Lithuania confirms that the measures described above are complementary. The EGF 
assistance  will  be  directly  targeted  at  mitigating  the  consequences  of  mass 
redundancies  associated  with  the  effects  of  globalisation,  while  support  from  the 
European  Social  Fund  (ESF)  is  programmed  and  used  to  finance  active  labour 
market policy measures planned over the 2007-2013 programming period. The ESF 
support is multi-annual and unsuited to respond quickly to unexpected shocks in the 
labour market, unlike the EGF.  

(h) Date(s) on which the personalised services to the affected workers were started or 
are planned to start 

20. 

Personalised services to the affected workers included in the co-ordinated packages 
proposed for co-financing through the EGF were started by Lithuania on 1 October 
2009. 

This  date  therefore  represents  the  beginning  of  the  period  of  eligibility  for  any 
assistance under the EGF (first paragraph of Article 11, first paragraph of Regulation 
(EC) No 1927/2006). 

(i) Procedures followed for consulting the social partners 

21. 

22. 

The  Lithuanian  authorities  confirmed  that  the  package  of  measures  has  been 
designed in full consensus with the social partners and that all measures included in 
the package were supported by the social partners. 

The Lithuanian authorities confirmed that the requirements laid down in national and 
EU legislation concerning collective redundancies have been complied with. 

(j) Information on actions that are mandatory by virtue of national law or pursuant to 
collective agreements 

23. 

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 Lithuanian 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  Lithuanian  authorities  demonstrated  that  the  actions  provide  support  for 
individual workers and are not to be used for restructuring companies or sectors. 

•  The  Lithuanian  authorities  confirmed  that  the  eligible  actions  referred  to  under 
points  16  to  18  above  do  not  receive  assistance  from  other  EU  financial 
instruments. 

24. 

(k) Management and control systems  

Lithuania  has  notified  the  Commission  that  the  financial  contributions  will  be 
managed and controlled by the same authorities and bodies charged with the delivery 

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and oversight of European Social Fund (ESF), and specifically EQUAL Community 
Initiative,  funding  in  Lithuania.  The  management  authority  will  however  deviate 
from  this  arrangement,  as  the  Lithuanian  Labour  Exchange,  under  the  Ministry  of 
Social  Security  and  Labour,  which  did  not  carry  out  this  role  under  the  EQUAL 
Community Initiative, has been designated for this role.  

(l) Conclusion 

25. 

In  conclusion,  for  the  reasons  set  out  above,  it  is  proposed  to  accept  application 
EGF/2009/017 LT/Construction of buildings submitted by Lithuania, relating to the 
redundancies  in  the  buildings  construction  industry,  as  evidence  of  a  direct  and 
demonstrable  link has  been  provided  that these redundancies result  from  the global 
economic  and  financial  crisis.  A  co-ordinated  package  of  eligible  personalised 
services  has  been  proposed.  Therefore,  it  is  proposed  to  mobilise  the  EGF  in 
response to the application from Lithuania. 

FINANCING 

•  The total annual budget available for the EGF is EUR 500 million. So far, eight cases have 
been  accepted  for  funding  in  2009,  and  a  further  three  cases  have  been  proposed  to  the 
budgetary authority, amounting to a total of EUR 53 039 047. 

•  Article 12 (6) of Regulation (EC) No 1927/2006 states that on 1 September of each year, at 
least EUR 125 million should remain available in order to cover any needs arising until the 
end of the year. 

•  After deduction of the amounts already accepted and already proposed for commitment, an 
amount  of  EUR 446 960 953  remains  available.  It  is  proposed  to  deploy  EUR 1  118  893 
from the EGF for application EGF/2009/017 LT/Construction of buildings. 

THE COMMISSION IS THEREFORE INVITED TO: 

–  conclude  that  the  conditions  for  a  financial  contribution  from  the  EGF  to  application 

EGF/2009/017 LT/Construction of buildings submitted by Lithuania are met; 

–  submit to the budgetary authority a proposal to authorise appropriations corresponding to 
EUR 1 118 893 as specified in point 18 as well as a request for the transfer of this amount 
in commitment appropriations to budget line 04.0501 (European Globalisation Adjustment 
Fund) in accordance with Article 12 (3) of Regulation (EC) No 1927/2006; 

–  authorise  the  transfer  of  an  identical  amount  in  payment  appropriations  from  budget  line 
04.0217  (European  Social  Fund  (ESF)  -  convergence)  to  budget  line  04.0501  (European 
Globalisation Adjustment Fund). 

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