Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund in accordance with point 28 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (application EGF/2010/010 CZ/Unilever from the Czech Republic)
Date: 2011-02-15
Institutions: European Commission
Subjects: Czechia, EU aid, budgetary procedure, commitment of expenditure, dismissal, financial management, fund (EU), globalisation, interinstitutional agreement, reintegration into working life

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EUROPEAN COMMISSION 

Brussels, 15.2.2011 
COM(2011) 61 final 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the mobilisation of the European Globalisation Adjustment Fund in accordance with 
point 28 of the Interinstitutional Agreement of 17 May 2006 between the European 
Parliament, the Council and the Commission on budgetary discipline and sound 
financial management (application EGF/2010/010 CZ/Unilever from the Czech 
Republic) 

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EXPLANATORY MEMORANDUM 

Point  28  of  the  Interinstitutional  Agreement  of  17  May  2006  between  the  European 
Parliament,  the  Council  and  the  Commission  on  budgetary  discipline  and  sound  financial 
management1  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. 

The rules applicable to the contributions from the EGF are laid down in Regulation (EC) No 
1927/2006  of  the  European  Parliament  and  of  the  Council  of  20  December  2006  on 
establishing the European Globalisation Adjustment Fund2. 

On 24 March 2010, the Czech Republic submitted application EGF/2010/010 CZ/Unilever for 
a financial contribution from the EGF, following redundancies in Unilever ČR spol.s r.o. in 
Nelahozeves in the Czech Republic (henceforth 'Unilever'). 

After  a  thorough  examination  of  this  application,  the  Commission  has  concluded  in 
accordance  with  Article  10  of  Regulation  (EC)  No  1927/2006  that  the  conditions  for  a 
financial contribution under this Regulation are met. 

SUMMARY OF THE APPLICATION AND ANALYSIS 

Key data: 
EGF Reference no. 
Member State 
Article 2 
Primary enterprise 
Suppliers and downstream producers 
Reference period 
Starting date for the personalised services 
Application date 
Redundancies during the reference period 
Redundancies before and after the reference period 
Total eligible redundancies 
Redundant workers targeted for support 
Expenditure for personalised services (EUR) 
Expenditure for implementing EGF3 (EUR) 
Expenditure for implementing EGF (%) 
Total budget (EUR) 
EGF contribution (65 %) (EUR) 

EGF/2010/010 
Czech Republic 
(a) 
Unilever ČR spol.s r.o. 
0 
16.9.2009 – 16.1.2010 
16.10.2009 
24.3.2010 
634 
0 
634 
460 
474 463 
23 723 
4,8 
498 186 
323 820 

1. 

2. 

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2 
3 

The  application  was  presented  to  the  Commission  on  24  March  2010  and 
supplemented by additional information up to 20 September 2010. 

The application meets the conditions for deploying the EGF as set out in 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.  

OJ C 139, 14.6.2006, p. 1. 
OJ L 406, 30.12.2006, p. 1. 
In accordance with the third paragraph of Article 3 of Regulation (EC) No 1927/2006. 

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Link  between  the  redundancies  and  major  structural  changes  in  world  trade  patterns 
due to globalisation or the global financial and economic crisis 

3. 

In order to establish the link between the redundancies and the global financial and 
economic  crisis,  the  Czech  Republic  argues  that  the  consumption  and  sale  of  food 
products  such  as  those  produced  by  Unilever  in  the  Czech  Republic  declined 
seriously due to this crisis. It has quoted Eurostat statistics which show that over the 
twelve-month period from September 2008 to August 2009 retail turnover in the EU-
27  declined  by  3,32 %,  in  the  Euro  zone  by  4,52 %,  and  in  the  Czech  Republic  by 
5,88 %. 

The  Unilever  production  plant  in  Nelahozeves  supplied  products  to  the  entire  EU 
market,  and  the  decline  in  demand  for  its  products  made  it  unsustainable. 
Approximately  45 %  of  its  production,  however,  supplied  the  'local'  market  –  the 
Czech and Slovak Republics – and figures from the Czech Statistical Office, quoted 
in the application, confirm that sales in the retail trade sector in the Czech Republic 
declined by 5,88 % in the year to September 2009. 

The  Czech  Republic  argues  that  many  consumers  had  changed  their  spending 
patterns in response to the uncertainties created by the global economic crisis. Some 
consumers  curbed  their  spending,  and  others  switched  to  lower-quality  products. 
Both factors had a severe impact on the demand for branded products such as those 
produced  by  Unilever.  The  application  quotes  Eurostat  figures  on  Consumer 
Confidence,  which  show  severe  declines  in  the  EU-27  and  in  the  Czech  Republic 
during 2009. 

Decreased  consumer  confidence  and  decreased  sales  led  inexorably  to  decreased 
production at Nelahozeves, and a re-organisation of production capacity by Unilever. 
The firm decided to close its factory at Nelahozeves and to supply the local and EU 
markets from other production sites, including those based elsewhere in the EU. 

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

4. 

5. 

The  Czech  Republic  submitted  this  application  under  the  intervention  criteria  of 
Article  2(a)  of  Regulation  (EC)  No  1927/2006,  which  requires  at  least  500 
redundancies over a four-month period in an enterprise in a Member State, including 
workers made redundant in its suppliers and downstream producers. 

The application cites 634 redundancies in Unilever during the four-month reference 
period  from  16  September  2009  to  16  January  2010.  All  of  the  redundancies  were 
calculated in accordance with the third indent of the second paragraph of Article 2 of 
Regulation (EC) No 1927/2006. In accordance with the requirements of this indent, 
the Czech Republic has provided the Commission with additional information on the 
actual number of redundancies effected. 

Explanation of the unforeseen nature of those redundancies 

6. 

The  Czech  Republic  argues  that  the  global  economic  and  financial  crisis  was 
unforeseen, and that its severity was unforeseeable. 

Identification of the dismissing enterprises and workers targeted for assistance 

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7. 

The application cites a total of 634 redundancies in the enterprise Unilever ČR, spol.s 
r.o. in Nelahozeves in the NUTS II region of Střední Čechy. All redundant workers 
have  been  offered  to  participate  in  the  outplacement  programme,  460  of  them 
accepted the offer. 

8. 

The break-down of the targeted workers is as follows: 

Category 
Men 
Women 
EU citizens 
Non EU citizens 
15-24 years old 
25-54 years old 
> 54 years old 

Number
219
241
460
0
42
358
60

Percent 
47,6 
52,4 
100,0 
0,0 
9,1 
77,8 
13,1 

9. 

In terms of professional categories, the break-down is as follows: 

Category 
Production workers 
Machine operators 
Production managers 
Quality control 
Crane and forklift drivers 
Electricians 
Administrative professionals 
Senior managers 
Financial professionals 
IT professionals 

Number
235
117
40
21
18
14
4
5
3
3

Percent 
51,1 
25,4 
8,7 
4,6 
3,9 
3,1 
0,9 
1,1 
0,6 
0,6 

10. 

In accordance with Article 7 of Regulation (EC) No 1927/2006, the Czech Republic 
has  confirmed  that  a  policy  of  equality  between  women  and  men  as  well  as  non-
discrimination has been applied, and will continue to apply, during the various stages 
of the implementation of and, in particular, in access to the EGF. 

Description of the territory concerned and its authorities and stakeholders 

11. 

12. 

Nelahozeves, where the Unilever factory was located, is located in Central Bohemia 
north  of  Prague,  in  the  district  of  Mělník.  The  district  has  a  population  of 
approximately  100 000,  and  its  economy  is  largely  dependent  on  food  processing, 
and the chemical and energy industries. The district is characterised by a high share 
of SMEs active in its economy.  

The  principal  stakeholders  include  the  Ministry  of  Labour  and  Social  Affairs 
(MOLSA),  Unilever  ČZ  spol.s  r.o.,  the  Labour  Office  in  Mělník,  and  the 
Independent Trade Union for workers in the food industry in the regions of Bohemia 
and Moravia (NOSPP). 

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

13. 

The  Czech  authorities  argue  that  the  crisis  has  led  to  a  significant  increase  in 
unemployment  in  the  Czech  Republic.  In  Central  Bohemia,  where  the  Unilever 
factory was located, the unemployment rate increased from 3,6 % for the year 2008 
to 6,4 % in October 2009. In the district of Nelahozeves the rate in October 2009 was 
7,5 %. Although relatively low, and lower than the Czech national average (8,5 % in 
October 2009), the structure of unemployment in the country gives rise to concern. 
Unemployment  amongst  higher  educated  people  is  low,  but  amongst  people  with 
only  basic  education  the  unemployment  rate  is  over  25 %,  and  the  majority  of  the 
redundant  workers  in  Unilever  fall  into  this  category.  The  possibility  of  rapid  re-
absorption  into  the  labour  market  is  thus  considerably  reduced,  and  without 
additional support the workers risk slipping into long-term unemployment. 

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 

14. 

All the following measures combine to form a co-ordinated package of personalised 
services  aimed  at  re-integrating  the  workers  into  the  labour  market.  The  measures 
will be co-financed by Unilever and provided by the company or contractors working 
on its behalf. 

–  As an initial step, outplacement assistance will be provided in the form of advice 
on job loss, job search and career transition. A specialist in labour law issues, as 
well as a psychologist and a senior career transition consultant will be available to 
answer questions as required. In addition, a brochure will be produced and made 
available to the redundant workers, which will provide them with information on, 
inter  alia,  the  benefits  that  they  can  expect  to  derive  from  the  outplacement 
services, advice for handling their emotions, and suggested 'do’s and don’ts' prior 
to the start of the programme. 

–  One-to-one  counselling  and  job-search  assistance  will  include  responding  to 
specific  questions  concerning  job  search;  assessment  of  current  activities; 
preparation  of  future  activities;  evaluation  of  offers;  career  marketing  strategies; 
analysis  of  the  results  of  interviews;  job  search  using  the  internet  and  other 
information sources; identification  of target markets (companies that might  have 
appropriate  job  offers);  support  in  addressing  target  companies;  networking; 
preparation  of  CVs  and  motivation  letters;  contact  with  government  agencies; 
information, contact, support, and professional re-qualification in connection with 
business  creation;  psychological  support  if  needed;  and  psycho-diagnostic  tests 
and feedback. 

–  Job search allowances are provided to workers when they start their training and 

job search activities. 

–  Seminars  and  special  workshops  for  career  transition  will  focus  on  developing 
skills  useful  in  job-search  as  well  as  ongoing  career  management.  There  will  be 
separate  seminars  for  managers  and  workers,  in  recognition  of  their  different 
needs  and  labour-market  situations.  A  two-day  seminar  is  designed  to  prepare 
redundant  managers  to  conduct  an  effective  search  for  new  employment. 

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Participants  will  learn  a  project  management  approach  to  the  job  search  process 
that provides plans, measurements and benchmarks for a successful transition. For 
workers  a  one-day  programme  delivered  in  two  half-day  sessions  will  help 
factory,  maintenance,  operations,  service,  and  other  hourly-paid  workers  to 
identify  skills  and  accomplishments;  set  a  job  objective;  develop  a  list  of  job 
targets;  complete  a  job  application,  CV,  or  fact  sheet;  and  learn  important  job 
search  skills.  In  addition,  a  number  of  specific  workshops  will  be  organised, 
including 'CVs and letters that get results' and 'Dynamic Interviewing'. 

–  Training  and  mobility  allowances  are  provided  to  all  dismissed  workers  while 

undertaking outplacement activities. 

–  Individual  career  transition  services  for  senior  managers  are  planned  for  senior 
staff. These services are designed to assist senior managers to make a successful 
career  transition,  and  are  designed  to  include  every  element  of  support  that  an 
individual  may  require,  and  is  customised  to  meet  varying  circumstances.  The 
individual  consulting  sessions  cover  the  following  topics:  dealing  with  emotions 
attached  to  the  transition  process;  self-assessment  using  appropriate  tools; 
comprehensive  evaluation  of  skills,  strengths,  values  and  accomplishments;  in-
depth exploration of career and job alternatives; comprehensive objective analysis 
and market strategy; marketing plans; preparation of a CV, cover letters and other 
written  materials;  in-depth  interview  and  networking  training;  guidance  in 
evaluating  and  negotiating  job  offers;  tailored  search  of  firms  and  guidance  in 
working  with  them;  access  to  office  facilities,  including  a  workstation  with 
computer, fax, e-mail and internet; support with research and finding vacancies in 
the  press;  and  consulting  sessions  with  senior  consultant  experts  in  Executive 
Search. 

–  Measures to stimulate older workers will be undertaken. These will cover weekly 
workshops and training as well as follow-up individual consultations with special 
focus on assertive self-promotion and IT skills. 

–  Aid for self-employment will cover information on self-employment, in particular 
on the legal requirements to become self-employed. It is included in outplacement 
workshops,  complemented  by  individual  consultation  on  market  opportunities 
emerging in a given region. 

–  Entrepreneurship  promotion  covers  a  workshop  on  the  requirements  to  set  up 

one's own company. 

–  Costs related to the implementation of the project (project team) cover the costs of 
the  project  team  and  are  directly  related  to  all  other  measures.  For  reasons  of 
transparency  the  Czech  authorities  have  opted  to  budget  and  present  these  costs 
separately. 

15. 

16. 

The  expenditure  for  implementing  EGF,  which  is  included  in  the  application  in 
accordance  with  Article  3  of  Regulation  (EC)  No  1927/2006,  covers  preparatory, 
management and control activities as well as information and publicity. 

The personalised services presented by the Czech authorities are active labour market 
measures  within  the  eligible  actions  defined  by  Article  3  of  Regulation  (EC)  No 
1927/2006.  The  Czech  authorities  estimate  the  total  costs  of  these  services  at 

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EUR 474 463  and  the  expenditure  for  implementing  EGF  at  EUR 23 723  (4,8 %  of 
the  total  amount).  The  total  contribution  requested  from  the  EGF  is  EUR 323 820 
(65 % of the total costs). 

Actions 

Estimated 
number of 
workers 
targeted 

Estimated 
cost per 
worker 
targeted 
(EUR) 

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

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

Outplacement assistance 

Counselling and job-search assistance 

Job-search allowance 

Career 
workshops 

transition 

seminars 

and 

special 

Training and mobility allowance 

Individual  career  transition  services  for  senior 
managers 

Measures to stimulate older workers 

Aid for self-employment 

Entrepreneurship promotion 

Costs  related  to  the  implementation  of  the 
project (project team) 

460

460

460

460

460

5

83

10

10

460

44 

174 

100 

340 

*20 423

80 040

46 000

156 400

164 

*75 292

4 775 

28 875

100 

950 

8 300

9 500

1 150 

11 500

94 

43 133

Sub total personalised services 

474 463

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

Preparatory activities 

Management 

Information and publicity 

Control activities 

Sub total expenditure for implementing EGF 

Total estimated costs 

EGF contribution (65 % of total costs) 

4 745

2 372

1 186

15 420

23 723

498 186

323 820

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* Totals do not tally due to rounding of unit costs per worker 

17. 

The Czech Republic confirms that the measures described above are complementary 
with actions funded by the Structural Funds. 

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

18. 

The  Czech  Republic  started  the  personalised  services  to  the  affected  workers 
included  in  the  co-ordinated  package  proposed  for  co-financing  to  the  EGF,  on  16 
October 2009. This date therefore represents the beginning of the period of eligibility 
for any assistance that might be awarded from the EGF. 

Procedures for consulting the social partners 

19. 

20. 

The Czech authorities reported that the measures accompanying the reorganisation of 
Unilever were discussed with the social partners and the labour office. Agreement on 
the accompanying measures was reached on 16 September 2009. 

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

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

21. 

As regards the criteria contained in Article 6 of Regulation (EC) No 1927/2006, the 
Czech authorities in their application:  

•  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; 

•  demonstrated that the actions provide support for individual workers and are not 

to be used for restructuring companies or sectors; 

•  confirmed  that  the  eligible  actions  referred  to  above  do  not  receive  assistance 

from other Community financial instruments. 

Management and control systems  

22. 

The Czech authorities have notified the Commission that the financial contributions 
will  be  managed  and  controlled  by  the  same  bodies  that  manage  and  control  the 
European Social Fund (ESF) funding in the Czech Republic. 

Financing 

23. 

On the basis of the application from the Czech Republic, the proposed contribution 
from the EGF to the coordinated package of personalised services is EUR 323 820, 
representing 65 % of the total cost. The Commission's proposed allocation from the 
Fund is based on the information made available by the Czech Republic. 

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24. 

25. 

26. 

Considering the maximum possible amount of a financial contribution from the EGF 
under  Article  10(1)  of  Regulation  (EC)  No  1927/2006,  as  well  as  the  scope  for 
reallocating  appropriations,  the  Commission  proposes  to  mobilise  the  EGF  for  the 
total  amount  referred  to  above,  to  be  allocated  under  heading  1a  of  the  financial 
framework. 

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

By  presenting  this  proposal  to  mobilise  the  EGF,  the  Commission  initiates  the 
simplified  trialogue  procedure,  as  required  by  Point  28  of  the  Interinstitutional 
Agreement of 17 May 2006, with a view to securing the agreement of the two arms 
of the budgetary authority on the need to use the EGF 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.  

27. 

The Commission presents separately a transfer request in order to enter in the 2011 
budget  specific  commitment  appropriations,  as  required  in  Point  28  of  the 
Interinstitutional Agreement of 17 May 2006. 

Source of payment appropriations  

28. 

The 2011 budget showing payment appropriations of EUR 47 608 950 on budget line 
04.0501 "European Globalisation Adjustment Fund (EGF)", this budget line will be 
used to cover the amount of EUR 323 820 needed for the present application. 

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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 in accordance with 
point 28 of the Interinstitutional Agreement of 17 May 2006 between the European 
Parliament, the Council and the Commission on budgetary discipline and sound 
financial management (application EGF/2010/010 CZ/Unilever from the Czech 
Republic) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, 

Having  regard  to  the  Interinstitutional  Agreement  of  17  May  2006  between  the  European 
Parliament,  the  Council  and  the  Commission  on  budgetary  discipline  and  sound  financial 
management4, 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  Fund5, 
and in particular Article 12(3) thereof, 

Having regard to the proposal from the Commission6, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  European  Globalisation  Adjustment  Fund  (EGF)  was  established  to  provide 
additional support for workers made redundant as a result of major structural changes 
in world trade patterns due to globalisation and to assist them with their reintegration 
into the labour market. 

The scope of the EGF was broadened for applications submitted from 1 May 2009 to 
include support  for workers made  redundant  as a direct result of the global financial 
and economic crisis. 

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

The  Czech  Republic  submitted  an  application  to  mobilise  the  EGF,  in  respect  of 
redundancies  in  Unilever  ČR  spol.s  r.o.  on  24  March  2010  and  supplemented  it  by 
additional  information  up  to  20  September  2010.  This  application  complies  with  the 
requirements for determining the financial contributions as laid down in Article 10 of 

4 
5 
6 

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

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Regulation (EC) No 1927/2006.  The  Commission,  therefore,  proposes  to  mobilise  an 
amount of EUR 323 820. 

(5) 

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

HAVE DECIDED AS FOLLOWS: 

Article 1 

For  the  general  budget  of  the  European  Union  for  the  financial  year  2011,  the  European 
Globalisation Adjustment Fund (EGF) shall be mobilised to provide the sum of EUR 323 820 
in commitment and payment appropriations. 

Article 2 

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

Done at [Brussels/Strasbourg], 

For the European Parliament 
The President 

For the Council 
The President 

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