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 13 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (application EGF/2013/009 PL/Zachem from Poland)
Date: 2015-01-21
Institutions: European Commission
Subjects: European Globalisation Adjustment Fund, Poland, cessation of trading, chemical industry, collective dismissal, commitment of expenditure, financial aid, financial management, management audit, reintegration into working life, social partners













EUR-Lex - 52015PC0013 - EN











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52015PC0013

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 13 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (application EGF/2013/009 PL/Zachem from Poland) /* COM/2015/013 final */









EXPLANATORY MEMORANDUM
Article 12 of Council Regulation (EU,
Euratom) No 1311/2013 laying down the multiannual financial framework for
the years 2014-2020[1]
allows for the mobilisation of the European Globalisation Adjustment Fund (EGF)
within the annual ceiling of EUR 150 million (2011 prices) over
and above the relevant headings of the financial framework.
The rules applicable to the contributions
from the EGF for applications submitted until 31 December 2013 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 Fund[2].
On 9 October 2013, Poland submitted application EGF/2013/009 PL/Zachem for a financial contribution from the EGF, following redundancies in
Zachem and 2 suppliers in Poland.
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. || EGF/2013/009 
 Member State || Poland 
 Article 2 || (a) 
 Primary enterprise || Zakladi Chemizne Zachem 
 Suppliers and downstream producers || 2 
 Reference period || 31.3.2013-31.7.2013 
 Starting date for the personalised services || 4.3.2013 
 Application date || 9.10.2013 
 Redundancies during the reference period || 615 
 Redundancies before and after the reference period || 0 
 Total eligible redundancies || 615 
 Redundant workers expected to participate in the measures || 50 
 Expenditure for personalised services (EUR) || 220 410 
 Expenditure for implementing EGF[3] (EUR) || 10 000 
 Expenditure for implementing EGF (%) || 4.34% 
 Total budget (EUR) || 230 410 
 EGF contribution (50 %) (EUR) || 115 205 
1.           The application was presented
to the Commission on 9 October 2013 and supplemented by additional information
up to 16 June  2014.  
2.           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.
Link between the redundancies and major structural changes in world trade patterns due to globalisation
3.           In order to establish the
link between the redundancies and major structural changes in world trade
patterns due to globalisation, Poland argues that the EU has undergone a significant loss of market share
in the chemical industry, losing its top position in the world for sales of chemicals.
From 1992 to 2012, the EU share in the world market of chemicals drastically declined,
from 35.2% in 1992 to 30.5% in 2002 and to 17.8% in 2012[4]. The trend in recent
years has evidenced the migration of chemical manufacturing towards Asia, and China in particular. China witnessed a spectacular increase in the manufacture of chemicals
from a 8.7% share in 2002 to 30.5% in 2012, due to rising sales in the emerging
markets. The level of production in the Asian economies is also driven by lower
labour costs, access to markets, subsidies, taxes and regulation. According to
the report "Chemical industry vision 2030"[5], by 2030 some 66% of
global chemical sales and 5 to 8 of the global top 10 chemical companies will
come from Asia. China in particular is highly attractive for its economic
potential and growth rates, but the rest of Asia, including countries such as India, Singapore or South Korea, should not be underestimated.   
Source: CEFIC
4.           The OECD[6] also highlighted in a 2012
report that the transfer of several industrial sectors into non-OECD countries,
up to that moment specialised in the production of low value added basic
chemicals, was raising their interest in producing high value added chemicals in
proximity to the manufacturing centres. Toluene[7],
which is a complex compound, was affected by these market trends. Thus, the
market for toluene, which production declined in Western Europe and North
Africa by between 8 and 17% and increased in other parts of the world, in
particular in the Middle East, Northeast Asia and Southeast Asia is changing.
5.           Zaklady Chemiczne Zachem
(hereinafter called 'Zachem'), was a Polish manufacturer of chemical products
based in Bydgoszcz, and one of the subsidiary units of Ciech. Zachem was
responsible for the production of semi-finished  and
finished and organic and non-organic chemical products for the automotive,
chemical, furniture, construction, textile, paper, leather, and related industries
as well as for the energy sector and for the manufacturers of cables. The
flagship product was TDI (toluene di-isocyanate), which
main component is toluene, until the shutdown of the line in December 2012. The
enterprise also produced ECH (epichlorohydrin), an activity which was shut down
some months later.
Demonstration of the number of
redundancies and compliance with the criteria of Article 2(a)
6.           Poland 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 or downstream producers.
7.           The application cites 615
redundancies in 3 enterprises operating in the NACE  Revision 2 Division 20 (Manufacture
of chemicals and chemical products) in the NUTS 2 Kujawsko-Pomorskie Province
(PL61) during the four-month reference period from 31 March 2013 to 31 July
2013. All of these redundancies were calculated in accordance with the third
indent of the second paragraph of Article 2 (2) of Regulation (EC) No
1927/2006.  
Explanation of the unforeseen nature
of those redundancies
8.           The redundancies in Zachem
were unforeseen because of the suddenness of the increase in market supply of
TDI. The surplus supply of 30%, as a result of investments undertaken in other
parts of the world to benefit from economies of scale and to further integrate
the supply chain, enabled these producers to manufacture at a lower average
cost. This together with low transport costs resulted in Zachem's inability to
compete in this environment. As far as the second source of revenue is
concerned, the manufacture of ECH (Epichlorohydrin) from the raw
material propylene, while ECH prices remained stable, the prices of
propylene increased by around 160% in Europe. Considering the surplus supply of
ECH and Zachem's low operating scale, sales of ECH became unprofitable for the
group and the situation was not expected to improve with the increase of ECH
global capacity in Asia in the future, and even now, the average use rate of
facilities is projected to decrease.
9.           These circumstances brought
on the decision to discontinue Zachem's production operations, engage in
corporate reorganisation and eventually decide on redundancies. This had a
sudden negative impact on the economic situation of suppliers.  ZACHEM UCR Sp.
Z o.o. relied for 92% of its revenue on services to Zachem. Metalko, a spin-off
of Zachem, which also provided machinery repair and maintenance services to the
primary enterprise, incurred serious losses.  
Identification of the dismissing
enterprises and workers targeted for assistance
10.         The application relates to
615 redundancies in Zachem and its suppliers, ZACHEM UCR Sp. z.o.o and Metalko
Sp z.o.o.
 Suppliers of Zachem and number of dismissals 
 ZACHEM UCR Sp. z.o.o   || 53 || Metalko Sp z.o.o. || 6 
 Total suppplier enterprises: 2 || Total dismissals: 59 ||   
11.         The break-down of the redundant
workers is as follows:
 Category || Number || Percent 
 Men || 484 || 78.7 
 Women || 131 || 21.3 
 EU citizens || 615 || 100.0 
 Non EU citizens || 0 || 0.0 
 15-24 years old || 3 || 0.5 
 25-54 years old || 460 || 74.8 
 55-64 years old || 152 || 24.7 
 > 64 years old || 0 || 0 
12.         In terms of occupational
categories, the break-down is as follows:
 Category || Number || Percent 
 Representatives of public authorities, senior officials and managers || 10 || 1.6 
 .Professionals || 57 || 9.3 
 Technicians and associate professionals || 68 || 11.1 
 Clerical support workers || 102 || 16.6 
 Craft and related trades workers || 54 || 8.8 
 Plant and machine operators and assemblers || 324 || 52.7 
13.         In accordance with Article
7 of Regulation (EC) No 1927/2006, Poland 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
14.         The territory concerned is
the NUTS 2 voivodeship (region) Kujawsko-Pomorskie (PL61), located in the
central part of Poland. Its area extends along 18,000 km2and
the population stands at around 2.1 million inhabitants. The voivodeship
contains 52 cities and towns, of which the two capital cities, Bydgoszcz and Torun. The cities most affected by the redundancies are Bydgoszcz (367,000 inhabitants), Toruń (200,000) and Włocławek (120,000). 
The main stakeholders include the municipal
authorities of Bydgoszcz, the regional government authorities of
Kujawsko-Pomorskie, the local representative of the central government
administration, the employment offices of Torun, Bydgoszcz (where the largest
number of redundancies were registered),  Naklo and Znin.
The social partners include:
NSZZ
‘Solidarność’ (Executive Board of the Bydgoski Region)
All-Poland Alliance of Trade Unions (OPZZ) of the Kujawsko-Pomorskie Province
Trade Unions Forum
(Executive Board of the Kujawsko-Pomorskie Province)
Business Centre Club Convent
Kujawy and Pomorze Chamber of Craft and Enterprise 
Kujawy and Pomorze
Association of Employers and Entrepreneurs
Expected impact of the redundancies
as regards local, regional or national employment
15.         The Kujawsko-Pomorskie region
(PL61), located in the central part of Poland, has benefited from industrial
expansion in a wide range of sectors; agri-business, chemicals, waste
management, construction and mechanical industry. 
16.         Bydgoszcz, which counted
361 254 inhabitants in December 2012, is the biggest city in the region,
and had an unemployment rate of 9.1% in June 2013. It is connected through the
main national roads and railway networks to the rest of the country. Torun, second biggest city, had a population of 204 299 in December 2012 and an unemployment
rate of 10.2% in June 2013[8].

17.         Despite the economic
expansion the region has benefited from, by the end of July 2013, the region
had the highest unemployment rate in the country, amounting to 17.4%. During
the reference period, the district employment office of Bydgoszcz registered
722 unemployed people, of whom 426 were directly or indirectly dismissed from
Zachem, which used to be the biggest employer in the area, with up to 7 000
workers.
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.         All the following measures
combine to form a co-ordinated package of personalised services which aims at
re-integrating the redundant workers into employment. Out of the 615 workers
dismissed, the measures described below will be aimed at the 50 most
disadvantaged persons and will go beyond what the ESF and national measures
combined can do for the affected group.
– Hiring incentives: This measure is
targeted at 45 redundant workers from Zachem and will provide incentives to
employers who decide to hire these workers. The redundant workers will be
registered in the Unemployment Services, and the District Employment Office
will monitor all newly created jobs on an ongoing basis, focusing specifically
on the new jobs created for the unemployed persons benefiting from the hiring
incentive. The potential employer will require specific qualifications, skills
and professional experience for a certain position. The employer who will
employ an unemployed worker from Zachem for at least 24 months will be granted
a hiring incentive. The costs of this form of support, which is to be provided
by the District Employment Office in Bydgoszcz to 45 redundant workers of ZACHEM
S.A. and the two supplier enterprises, are estimated at ca. EUR 213 300 (ca.
PLN 900 000).
- Intervention works: This measure aims
to cover pay and social security contributions for 5 people by the District
Employment Office in Bydgoszcz, which are estimated at ca. EUR        7 110. The
potential employer concludes an agreement with the Labour Office. The measure
is normally targeted to help long-term unemployed, unemployed aged 50 and
above, unemployed people with low qualifications, unemployed people without
work experience, young people up to 25 years old, single mothers, disabled
people, social work clients and former inmates. In the context of this
application, Poland wishes to use this measure specifically for redundant
workers over 50 years of age.
19.         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 activities,
management and implementation, information and publicity and control activities.

20.         The personalised services
presented by the Polish authorities are active labour market measures within
the eligible actions defined by Article 3 of Regulation (EC) No 1927/2006. The
Polish authorities estimate the total costs at EUR 230 410, of which the
expenditure for personalised services at EUR 220 410 and the expenditure for
implementing the EGF at EUR 10 000 (4.34% of the total amount). The total
contribution requested from the EGF is EUR 115 205 (50 % of the total costs).
 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) 
 Hiring incentives || 45 || 4 740 || 213 300 
 Intervention works || 5 || 1 422 || 7 110 
 Sub total personalised services ||   || 220 410 
 Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006) 
 Preparatory activities ||   || 2 000 
 Management ||   || 2 000 
 Information and publicity ||   || 3 000 
 Control activities ||   || 3 000 
 Sub total expenditure for implementing EGF ||   || 10 000 
 Total estimated costs ||   || 230 410 
 EGF contribution (50 % of total costs) ||   || 115 205 
21.         Poland confirms that the
measures described above are complementary with actions funded by the
Structural Funds and that all double financing will be prevented. 
22.         The actions
proposed for EGF co-funding are complementary with ongoing measures co-funded by
the European Social Fund, particularly under the Human Capital Operational
Programme, Priority VIII ‘Regional human resources for the economy’,
Sub-measure 8.1.2 ‘Support to adaptation and modernisation processes in
the region’. Some of the workers made redundant by Zachem have already participated
in the project "Return to the labour market III – a
new career path". This project was opened to workers who had been made
redundant as a result of a restructuring process.
23.         The participants in the project benefited from training and
guidance and financial support to start self-employment activities, through
grants of up to EUR 10 000 per person and bridging support of up to EUR
250 per person per month for 6 months. Those interested in self-employment were
offered the opportunity to participate in specific training, workshops and
counselling sessions on how to prepare a business plan. Some 60 workers made
redundant by Zachem and its suppliers have already
participated in the project.
24.         Another project in which 190 current and former workers of
Zachem participated is called "The next step",  which is an occupational
activation programme for the workers of ZACHEM S.A. to increase their chances of
finding new employment by providing vocational
and psychological counselling, vocational training, business training, job
placement as well as one-off investment grants and bridging support. 
Date(s) on which the personalised
services to the affected workers were started or are planned to start
25.         Poland started the
personalised services to the affected workers included in the co-ordinated
package proposed for co-financing to the EGF on 4 March 2013. 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
26.         The Social Dialogue
committee in the province discussed the possibilities of assistance to workers made
redundant by Zachem S.A. and its suppliers. The proposed package of
personalised measures was discussed at the meeting of the Employment Council 
in Bydgoszcz, including trade unions, business  and local and regional
government representatives. 
27.         The Polish 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
28.         As regards the criteria
contained in Article 6 of Regulation (EC) No 1927/2006, the Polish 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 
29.         Poland has notified the
Commission that the financial contribution will be managed and controlled by
the same bodies as the European Social Fund. The Managing Authority,
responsible for the implementation of the EGF, will be the Ministry of Infrastructure
and Development, and specifically the Department for the European Social Fund.
The Managing Authority will transfer some tasks to the Intermediate Body, the
Provincial Employment Office in Torun. 
30.         The Paying Authority will
be the Department of Payment Authority of the Ministry of Finance.
31.         The Certifying Authority
will be set up at the Department of Certification and Designation in the
Ministry of Infrastructure and Development, in a different department from the
Managing Authority.  
32.         The Department for the ESF
and the Department of Certification and Designation are supervised by two
independent members of the Ministry's management. The EGF contribution will be
credited to a separate account of the Ministry of Finance which will transfer
the funds to the income account of the State budget. The co-funding to
implement the activities will come from national resources, including the
Labour Fund. 
The District Employment offices will keep a
separate expenditure register. Once implementation comes to an end, the
District Employment offices will submit a payment claim to the Provincial
Employment Office, which will approve and submit the payment claim to the
Managing Authority. The Managing Authority will submit the certificate and
statement justifying the expenditure to the European Commission. The Managing
Authority will carry out inspections to check the correct implementation of
procedures by the Intermediate Body. In turn, the Intermediate Body will verify
the method of providing assistance by the District Employment Offices.
According to the control systems, upon receipt of a decision on reimbursement
under the EGF, a timetable for inspections will be agreed. In case there have
been irregularities during the implementation of the actions, an authority may
decide to initiate additional verification activities. The Audit Authority for
the ESF will also be the AA for this case. 
Financing
33.         On the basis of the
application from Poland, the proposed contribution from the EGF to the
coordinated package of personalised services (including expenditure to
implement EGF) is EUR 115 205, representing 50 % of the total cost.
The Commission's proposed allocation under the Fund is based on the information
made available by Poland.
34.         Considering the maximum
possible amount of a financial contribution from the EGF under Article 12 of
Council Regulation (EU, Euratom) No 1311/2013, as well as the scope for
reallocating appropriations, the Commission proposes to mobilise the EGF for
the total amount referred to above.
35.         The proposed decision to
mobilise the EGF will be taken jointly by the European Parliament and the
Council, as laid down in point 13 of the Interinstitutional Agreement of 2
December 2013 between the European Parliament, the Council and the Commission
on budgetary discipline, on cooperation in budgetary matters and on sound
financial management[9].
36.         The Commission presents
separately a transfer request in order to enter in the 2015 budget specific
commitment appropriations, as required in Point 13 of the Interinstitutional
Agreement of 2 December 2013.
Source of payment appropriations 
37.         Appropriations from the EGF
budget line will be used to cover the amount of EUR 115 205 needed for the
present application.
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 13 of the
Interinstitutional Agreement of 2 December 2013 between the European
Parliament, the Council and the Commission on budgetary discipline and sound
financial management (application EGF/2013/009 PL/Zachem from Poland)
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 Regulation (EC) No
1927/2006 of the European Parliament and of the Council of 20 December 2006
establishing the European Globalisation Adjustment Fund[10], and in particular
Article 12(3) thereof,
Having regard to the Interinstitutional
Agreement between the European Parliament, the Council and the Commission of
2 December 2013 on budgetary discipline, on cooperation in budgetary
matters and on sound financial management[11], and in particular point 13 thereof,
Having regard to the proposal from the European
Commission[12],
Whereas:
(1)       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.
(2)       Article 12 of Council
Regulation (EU, Euratom) No. 1311/2013 of 2 December 2013 laying down the
multiannual financial framework for the year 2014-2020[13] allows the
mobilisation of the EGF within the annual ceiling of EUR 150 million
(2011 prices). Poland submitted an application to mobilise the EGF, in respect
of redundancies in the enterprise Zachem and 2 suppliers and downstream producers, on 9 October 2013 and supplemented it by
additional information up to 16 June 2014. This
application complies with the requirements for determining the financial
contributions as laid down in Article 10 of Regulation (EC) No 1927/2006.
The Commission, therefore, proposes to mobilise an amount of EUR 115 205 .
(3)       The EGF should, therefore,
be mobilised in order to provide a financial contribution for the application
submitted by Poland,
HAVE ADOPTED THIS DECISION:
Article 1
For the general budget of the European
Union for the financial year 2015, the European Globalisation Adjustment Fund
(EGF) shall be mobilised to provide the sum of EUR 115 205 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                        For
the Council
The President                                                 The
President
[1]               OJ L 347, 20.12.2013, p. 884.
[2]               OJ L 406, 30.12.2006, p. 1.
[3]               In accordance with the third paragraph of Article 3
of Regulation (EC) No 1927/2006.
[4]               The European chemical industry. Facts & Figures
2013, CEFIC (http://www.cefic.org/Facts-and-Figures)
[5]               Chemical Industry Vision 2030 : A European Perspective
[6]               OECD Environmental Outlook to 2050 – the consequences
of inaction, 2012, p. 304 
[7]               Toluene is an aromatic compound used in the
manufacture of benzene, p-xylene for polyethylene terephthalate (PET)
solid-state resins, and toluene diisocyanates (TDI) for polyurethane
applications, and it is widely used as a solvent.
[8]           http://wbj.pl/wp-content/uploads/2014/09/IiP2014.pdf
[9]               OJ C 373, 20.12.2013, p. 1.
[10]             OJ L 406, 30.12.2006, p. 1.
[11]             OJ C 373, 20.12.2013, p. 1.
[12]             OJ C […], […], p. […].
[13]             OJ L 347, 20.12.2013, p. 884.