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/2011/015/SE/AstraZeneca from Sweden)
Date: 2012-07-16
Institutions: European Commission
Subjects: European Globalisation Adjustment Fund, Sweden, collective dismissal, commitment of expenditure, employment aid, pharmaceutical industry, reintegration into working life

EUROPEAN COMMISSION 

Brussels, 16.7.2012  
COM(2012) 396 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/2011/015/SE/AstraZeneca from Sweden) 

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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  23  December  2011,  Sweden  submitted  application  EGF/2011/015  SE/AstraZeneca  for  a 
financial contribution from the EGF, following redundancies in AstraZeneca in Sweden. 

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 expected to participate in the measures 
Expenditure for personalised services (EUR) 
Expenditure for implementing EGF3 (EUR) 
Expenditure for implementing EGF (%) 
Total budget (EUR) 
EGF contribution (65 %) (EUR) 

EGF/2011/015 
Sweden 
(a) 
AstraZeneca 
None 
15.06.2011 – 15.10.2011 
26.10.2010 
23.12.2011 
543 
444 
987 
700 
6 396 600 
258 560 
3,9 
6 655 160 
4 325 854 

1. 

2. 

1 
2 
3 

The  application  was  presented  to  the  Commission  on  23  December  2011  and 
supplemented by additional information up to 16 April 2012. 

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. 

4. 

5. 

6. 

In order to establish the link between the redundancies and major structural changes 
in world trade patterns due to globalisation, Sweden argues that the pharmaceutical 
sector  is  increasingly  affected  by  globalisation.  The  pharmaceutical  industry  is 
currently  undergoing  significant  changes  in  order  to  retain  its  competitiveness  in  a 
tough  environment.  Many  companies  are  in  a  state  of  transition;  reorganisation, 
consolidation,  mergers  and  acquisitions  are  being  considered  in  order  to  maintain 
growth  centres.  The  industry  is  increasingly  seeking  synergies  to  hold  down  the 
increasing costs of research and development (R&D) activities.  

Global  investments  and  biotechnological  research  are  on  the  increase  and  new 
competitors  can  be  found  in  China,  Brazil  and  India.  Prospects  for  R&D  funding 
vary by region, with the US expecting growth, Europe contemplating fiscal austerity 
that may restrict investment for several years, and most Asian countries maintaining 
strong financial commitments to R&D (share of total global R&D spending in 2009-
2011:  US  (34,71 %-34,0 %),  Asia  (33,6 %-35,3 %),  Europe  (24,1 %-23,2 %)). 
During the recession, the Asian R&D communities increased their R&D investment 
and  stature.  Among  the  global  research  communities,  the  state  of  R&D  in  the  EU 
gives  rise  to  most  concern.  Trying  to  recover  from  recession  and  forced  to  cut 
deficits,  can  in  turn  affect  government  support  for  R&D4.  According  to  Growth 
Consulting  Company  Frost  &  Sullivan's  report  of  20105,  about  70 %  of  questioned 
pharmaceutical  companies  are  likely  to  outsource  manufacturing  to  Asia.  Those 
markets  also  demand  that  the  drugs  are  tested  on  the  local  population,  thus  the 
presence of R&D in Asian markets is growing. 

Moreover, the challenge for the pharmaceutical industry is the increasing presence of 
generics  as  patents  expire  for  major  branded  products.  The  generic  industry  has 
recently  undergone  a  major  restructuring.  Mergers  and  acquisitions  have 
concentrated a growing share of the global generic market in the hands of the sector's 
leading  players.  Generic  drugs  are  generally  manufactured  in  low-wage  Asian 
countries and command around 10 % of the original price once the patent expires. As 
a result, many companies are affected and must undergo cutbacks. The big European 
manufacturers concentrate on conducting the expensive clinical phases, as well as the 
marketing and approval process. Research activities are in a decline.  

Many  non-European  countries  are  designing  strategies  for  biosciences  and  industry 
in  areas  of  pharmaceuticals,  biotechnology  and  medical  technology.  The  European 
companies  must  adapt  their  production  to  this  situation.  AstraZeneca  (which  had 
three R&D centres in Sweden) followed the trend and adopted a new R&D strategy 
in 2010. This included the necessity to focus on fewer disease areas, closures of sites 
(including  that  in  Lund  and  Umeå)  and  significantly  greater  utilisation  of  external 
resources  through  outsourcing.  Following  the  global  trends,  AstraZeneca  also 
increased  R&D  investments  in  China  and  Russia  (AZ  China  is  the  largest 
multinational pharmaceutical company in the prescription market in China; in 2011 
AZ also announced opening a Predictive Science Centre in St. Petersburg).  

4 
5 

2011 Global R&D Funding Forecast, www.rdmag.com 
"Dynamics in the Pharma and Biotech Industry", Frost & Sullivan, 2010, www.frost.com  

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

7. 

8. 

Sweden  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  543  redundancies  in  AstraZeneca  during  the  four-month 
reference period from 15 June 2011 to 15 October 2011. A further 444 redundancies 
(987  in  total)  occurred  before  and  after  the  reference  period  and  are  related  to  the 
same  collective  redundancy  procedure.  The  redundancies  were  calculated  in 
accordance with the second indent of the second paragraph of Article 2 of Regulation 
(EC) No 1927/2006.  

Explanation of the unforeseen nature of those redundancies 

9. 

The Swedish authorities argue that, in the light of the fact that Sweden had a strong 
position  in  medical  research,  the  collective  redundancies  in  AstraZeneca  had  not 
been expected. While the worsening situation in the pharmaceutical sector due to the 
rising  dominance  of  generics  had  been  foreseen,  the  impact  on  AstraZeneca  was 
more  severe  than  anticipated.  AstraZeneca  was  considered  to  be  a  stable  company 
due to its long and successful history, dominating Swedish science industry with one 
quarter of those working in life sciences being AstraZeneca employees. Furthermore, 
the  Swedish  government  has  for  a  long  time  promoted  the  location  of  an 
interdisciplinary  research  centre  in  Lund  –  the  European  Spallation  Source  –  and 
AstraZeneca was expected to devote additional resources to research in Lund. Taking 
into consideration the great medical need in the respiratory tract/inflammation area, 
the closure of the R&D site in this therapy category in Lund came as a surprise.  

Identification of the dismissing enterprises and workers targeted for assistance 

10. 

The application relates to 987 redundancies, of which 543 occurred during and 444 
before  and  after  the  reference  period;  these  are  eligible  for  inclusion  in  accordance 
with  Article  3a(b)  of  Regulation  (EC)  No  1927/2006.  Sweden  estimates  that  700 
redundant  workers  will  opt  to  receive  assistance  from  the  EGF.  The  remaining 
workers  are  expected  to  find  employment  through  their  own  initiative  without 
requiring assistance from the EGF or to retire. 

11. 

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 
55-64 years old 
> 64 years old 

Number
255
445
689
11
1
536
163
0

Percent 
36,43 
63,57 
98,43 
1,57 
0,14 
76,57 
23,29 
0 

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12. 

There are seven workers with a longstanding health problem or disability within this 
group.  

13. 

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

Category 
211  Physicists,  chemists  and  related 
professionals 
213 Computing professionals 
221 Life science professionals 
311 Physical and engineering science 
technicians  
343 Administrative associate 
professionals 
411Secretaries 
822 Chemical products machine operators 
Others 

Number
132

Percent 
18,86 

29
43
84

14

29
51
318

4,14 
6,14 
12,00 

2,00 

4,14 
7,29 
45,43 

14. 

In  accordance  with  Article  7  of  Regulation  (EC)  No  1927/2006,  Sweden  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 

15. 

The affected enterprises are located in four of the 290 Swedish municipalities.  The 
majority  of  the  staff  was  made  redundant  in  Lund  in  southern  Sweden,  but  the 
redundancies  also  affect  Umeå  in  northern  Sweden,  Södertälje  in  the  metropolitan 
area and to a lesser extent Mölndal in western Sweden. Skåne County, where Lund is 
located,  is  one  of  the  most  dynamic  labour  markets  in  Sweden.  However, 
employment in the industrial sector will remain unchanged and the projected increase 
will  occur  in  the  private  service  sector.  In  Västerbotten  County,  where  Umeå  is 
located,  business  structure  faces  a  generational  shift  problem  and  companies  will 
need a skilled labour force. The local labour market in Umeå has suffered a number 
of  company  closures.  In  Stockholm  region  (located  in  Södermanland  County),  it  is 
the private service sector that is dominant. There is a high demand for skilled labour. 
However,  Sodertalje  is  the  municipality  that  has  the  highest  unemployment  rate  in 
the  county  and  has  a  problematic  socio-economic  structure  in  terms  of  the  labour 
market.  The  labour  market  in  Mölndal  (in  Västergötland  County)  depends  on  the 
vicinity  of  Gothenburg,  where  industry  is  export-oriented  and  the  automotive 
industry  is  of  national  importance.  In  Mölndal  itself,  there  are  several  companies 
focusing on pharmaceuticals and medical technology.  

16. 

The main stakeholders are the Swedish Public Employment Services in all affected 
municipalities,  as  well  as  trade  unions  (Unionen,  SACO,  IF  Metall),  conversion 
bodies  (Trygghetsradet)  and  the  University  of  Lund.  The  conversion  bodies  are 
owned by the employers and trade unions.  

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

17. 

The  Swedish  authorities  argue  that  the  closure  of  the  AstraZeneca  site  is  a  heavy 
burden for Lund and also affects the entire pharmaceutical sector. This development 

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will probably cause an imbalance in the labour market in the region. The situation for 
job-seekers  in  the  pharmaceutical  sector  had  already  worsened  during  the  period 
2008-2010.  Unemployment  increased  in  all  affected  municipalities  from  January 
2009 to November 2011: in Lund from 2 467 to 3 025, Umeå from 3 725 to 4 539, 
Sodertalje from 3 100 to 5 555 and Mölndal from 1 458 to 1 663.  

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 

18. 

Sweden  developed  a  package  of  measures  in  support  of  the  redundant  workers  of 
AstraZeneca  that  would  not  be  otherwise  possible  to  implement  with  the  support 
available  to  the  same  extent.  Since  the  redundant  workers  are  mostly  highly 
educated, they would not be prioritised within the framework of the regular Swedish 
labour market policy.  

The package of measures proposed by Sweden for EGF funding is the following: 

-  Job-search  assistance.  This  measure  consists  of  individual  meetings  of  the 
redundant  worker  at  the  local  PES  in  order  to  develop  a  personal  action  plan  and 
present a complete CV. The worker can be also supported by a personal coach. It is 
estimated that all targeted workers will take up this action. 

-  Occupational  guidance.  This  activity  is  aimed  at  job  seekers  who  want  to  change 
occupation  and  is  composed  of  guidance  on  available  jobs,  required  skills  and 
training,  trainee  programmes  and  mobility  grants.  It  is  estimated  that  300  targeted 
workers will take up this action. 

-  Training  and  retraining.  This  measure  will  provide  education  and  training  on  an 
individual  scale  in  new  skills  for  new  jobs.  Targeted  workers  will  need  to  change 
occupations to those in demand. A wide range of training will be offered. The length 
of the training courses differs from one to 24 months with an average of six months. 
It is estimated that 350 targeted workers will take up this action. 

-  Aid  for  self-employment.  This  measure  is  targeted  to  workers  who  wish  to  start 
their  own  businesses.  They  will  receive  special  guidance  on  drawing  up  business 
plans  and  applying  for  the  necessary  funds  to  get  the  business  started.  Those  who 
decide to start a business will receive training in legislation on tax laws, accountancy, 
labour law, occupational health and safety and environmental issues. It is estimated 
that 70 targeted workers will take up this action. 

- Job-search allowances will be offered to workers participating in active measures. 
The  allowances  are  calculated  on  a  'per  day  of  activity'  basis  for  an  average  of  6-
month  participation.  It  is  estimated  that  300  targeted  workers  will  be  offered  these 
allowances.  

- Mobility allowances will cover commuting expenses and will be given in addition 
to  other  allowances.  It  is  estimated  that  150  targeted  workers  will  be  offered  these 
allowances. 

- Measures to stimulate older workers. These activities will include the establishment 
of  a  competence  platform  for  older  workers  together  with  the  County  Council  and 

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19. 

20. 

University of Lund. Persons interested in starting a business will receive support in 
terms of extensive training and marketing. It is estimated that 100 targeted workers 
will take up this action. 

The expenditure for implementing the EGF, which is included in the application in 
accordance  with  Article  3  of  Regulation  (EC)  No  1927/2006,  covers  preparatory, 
management,  information  and  publicity  and  control  measures.  Sweden  plans  to 
produce posters and other information material and organise a conference informing 
about the activities.  

The  personalised  services  presented  by  the  Swedish  authorities  are  active  labour 
market measures within the eligible actions defined by Article 3 of Regulation (EC) 
No 1927/2006. The Swedish authorities estimate the total costs of these services at 
EUR 6 396 600  and  the  expenditure  for  implementing  the  EGF  at  EUR 258 560 
(3,9 %  of  the  total  amount).  The  total  contribution  requested  from  the  EGF  is 
EUR 4 325 854 (65 % of the total costs). 

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Actions 

Estimated 
number of 
workers 
targeted 

Estimated 
cost per 
worker 
targeted 
(EUR) 

Total costs 
(EGF and 
national 
cofinancing) 
(EUR) 

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

Job-search assistance 

Occupational guidance 

Training and retraining 

Aid for self-employment 

Job-search allowances 

Mobility allowances 

Measures to stimulate older workers 

Sub total personalised services 

700

300

350

70

300

150

100

81 

540 

56 700

162 000

9 000 

3 150 000

7 170 

501 900

7 170 

2 151 000

500 

75 000

3 000 

300 000

6 396 600

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) 

91 803

91 190

50 000

25 567

258 560

6 655 160

4 325 854

21. 

Sweden confirms that the measures described above are complementary with actions 
funded  by  the  Structural  Funds  and  that  measures  are  in  place  to  prevent  double 
funding. 

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

22. 

Sweden started the personalised services to the affected workers included in the co-
ordinated  package  proposed for co-financing to the EGF on 26 October 2010. This 
date therefore represents the beginning of the period of eligibility for any assistance 
that might be awarded from the EGF. 

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Procedures for consulting the social partners 

23. 

The  Swedish  Public  Employment  Service  (PES)  possesses  the  information  on  the 
planned  redundancies,  therefore  continuous  contacts  are  maintained  with  the 
employer,  trade  unions  and  other  stakeholders.  The  organisation  Invest  in  Skåne 
initiated the application and was involved in preparation of the project. The PES in 
Lund  had  regular  contacts  with  an  entrepreneurial  network  at  AtraZeneca.  Three 
main  trade  unions  participated  in  the  discussions  concerning  the  application.  The 
TRR organisation for corporate management and trade unions will participate in the 
steering group.  

24. 

The  Swedish  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 

25. 

As regards the criteria contained in Article 6 of Regulation (EC) No 1927/2006, the 
Swedish 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 EU financial instruments. 

Management and control systems  

26. 

Sweden has notified the Commission that the financial contribution will be managed 
by the Swedish Public Employment Service (PES) which has been appointed as the 
management  and  payment  authority.  The  project  accounts  will  be  examined  by  the 
Internal Audit Unit which is a separate body attached to the board of PES.  

Financing 

27. 

28. 

On  the  basis  of  the  application  from  Sweden,  the  proposed  contribution  from  the 
EGF  to  the  coordinated  package  of  personalised  services  (including  expenditure  to 
implement  EGF)  is  EUR 4 325 854  representing  65 %  of  the  total  cost.  The 
Commission's proposed allocation under the Fund is based on the information made 
available by Sweden. 

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. 

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29. 

30. 

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. 

31. 

The Commission presents separately a transfer request in order to enter in the 2012 
budget  specific  commitment  appropriations,  as  required  in  Point  28  of  the 
Interinstitutional Agreement of 17 May 2006. 

Source of payment appropriations  

32. 

Appropriations  from  the  EGF  budget  line  will  be  used  to  cover  the  amount  of 
EUR 4 325 854 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/2011/015/SE/AstraZeneca from Sweden) 

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 
management6, 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  Fund7, 
and in particular Article 12(3) thereof, 

Having regard to the proposal from the European Commission8, 

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 
30 December 2011 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. 

Sweden  submitted  an  application  to  mobilise  the  EGF,  in  respect  of  redundancies  in 
the enterprise AstraZeneca, on 23 December 2011 and supplemented it by additional 
information up to 16 April 2012. This application complies with the requirements for 
determining 
in  Article  10  of 
Regulation (EC) No 1927/2006.  The  Commission,  therefore,  proposes  to  mobilise  an 
amount of EUR 4 325 854. 

financial  contributions  as 

laid  down 

the 

6 
7 
8 

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

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(5) 

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

HAVE ADOPTED THIS DECISION: 

Article 1 

For  the  general  budget  of  the  European  Union  for  the  financial  year  2012,  the  European 
Globalisation  Adjustment  Fund  (EGF)  shall  be  mobilised  to  provide  the  sum  of 
EUR 4 325 854 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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