CELEX: 52011PC0251
Language: en
Date: 2011-05-06
Title: 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/2010/025 DK/Odense Steel Shipyard from Denmark)

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		52011PC0251
		
			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/2010/025 DK/Odense Steel Shipyard from Denmark) 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/2010/025 DK/Odense Steel Shipyard from Denmark) /* COM/2011/0251 final  */
			
				
		
		
			
			   	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 management[1] 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 Fund[2].
On 6 October 2010, Denmark submitted application EGF/2010/025 DK/Odense
Steel Shipyard for a financial contribution from the
EGF, following redundancies in Odense Steel Shipyard in Denmark.
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/2010/025 
 Member State || Denmark 
 Article 2 || (a) 
 Primary enterprise || Odense Steel Shipyard 
 Suppliers and downstream producers || 0 
 Reference period || 13.4.2010 – 31.7.2010 
 Starting date for the personalised services || 1.10.2010 
 Application date || 6.10.2010 
 Redundancies during the reference period || 710 
 Redundancies before and after the reference period || 646 
 Total eligible redundancies || 1 356 
 Redundant workers targeted for support || 950 
 Expenditure for personalised services (EUR) || 20 874 362 
 Expenditure for implementing EGF[3] (EUR) || 943 948 
 Expenditure for implementing EGF (%) || 4,3 
 Total budget (EUR) || 21 818 310 
 EGF contribution (65 %) (EUR) || 14 181 901 
1.                      
The application was presented to the Commission
on 6 October 2010 and supplemented by additional information up to 8 March
2011.
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 or the global financial and economic crisis
3.                      
In order to establish the link between the
redundancies and the global financial and economic crisis, Denmark argues that
shipyards in Europe over the last decades have been losing substantial market
shares to Asia. The global financial and economic crisis then further affected
the global shipbuilding market, such that, according to the Community of
European Shipyards' Associations (CESA), the global orderbook dropped from
194,2 million CGT[4]
to 156,2 million CGT between 2008 and 2009, while new orders dropped
from 43,0 million CGT to 16,5 million CGT during the same
period.
4.                      
In its annual report for 2009-2010, CESA writes
that this reduction in the world orderbook was leading to a fast shrinking of
shipyards' workloads. Since the collapse of demand in the standard cargo ships
segments, the European yards’ market shares in the tankers, container ships and
bulk carriers segments contracted further as approximately
1,5 million CGT, roughly 17 % of the current orderbook of CESA
members were cancelled since the second half of 2008. According to CESA, the
high value and complexity of ships completed in 2009 helped reduce the impact
in terms of turnover – 5 % as compared with 20 % decrease in terms of
tonnage. The full impact of the current conditions on the European yards would,
however, be delayed due to long production leadtimes. Since 2008, the new
orders intake in the CESA shipyards had reduced dramatically. In terms of
employment, at the end of 2009, on average about 20 % of the jobs at
shipyards had already been affected. Without new contracts before the summer of
2010, CESA estimated that an employment crisis with half the jobs at stake
could be unavoidable. Numerous European shipyards were increasingly resorting
to short-time work, announcing or executing lay-offs. Some yards had already
declared bankruptcy, triggering a chain reaction to their suppliers.
5.                      
This is the third EGF case in the shipbuilding
sector, and the arguments presented in the two previous cases (EGF/2010/001
DK/Nordjylland[5]
and EGF/2010/006 PL/H. Cegielski-Poznan[6])
remain valid. 
Demonstration of the number of
redundancies and compliance with the criteria of Article 2(a)
6.                      
Denmark 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.
7.                      
The application cites 710 redundancies in Odense Steel Shipyard during the reference period from 13 April 2010 to 31 July 2010 as well as a further 646 during the
period from 10 August 2009, when the shipyard closure announcement was made, to
January 2011 (incl.). The applicant Member State chose not to use the full four
months for the establishment of its reference period, as the figure reached in
three and a half months was sufficient to establish eligibility. All of these
redundancies were calculated in accordance with the first indent of the second
paragraph of Article 2 of Regulation (EC) No 1927/2006.
Explanation of the unforeseen nature
of those redundancies
8.                      
The Danish authorities argue that the closure of
the shipyard and the resulting redundancies could not have been foreseen. The
shipyard owners invested heavily into the yard until 2009; this would not have
happened if the closure had been expected. It must be noted that this is one of
the biggest and most modern shipyards in Europe, holding records such as that
of having built (in 2006-08) the biggest container ships in the world, Emma
Maersk and her E-class sister. The yard has been known for designing and
building innovative vessels that apply the newest technology in design and
equipment. 
Demonstration of the redundancies and
identification of the dismissing enterprises
9.                      
The application relates to 1 356
redundancies in total in Odense Steel Shipyard. Following a survey, the
applicant Member State has concluded that close to 70 % of the workers
affected will wish to benefit from the EGF measures.
10.                  
The break-down of the targeted workers is as
follows:
 Category || Number || Percent 
 Men || 903 || 95,0 
 Women || 47 || 4,9 
 EU citizens || 950 || 100,0 
 Non EU citizens || 0 || 0,0 
 15-24 years old || 58 || 6,1 
 25-54 years old || 726 || 76,4 
 55-64 years old || 162 || 17,1 
 > 64 years old || 4 || 0,4 
11.                  
There are no workers with longstanding health
problems or disabilities among either the affected or the targeted workers.
12.                  
In terms of occupational categories, the
break-down is as follows:
 Category || Number || Percent 
 Professionals || 30 || 3,2 
 Technicians and associated professionals || 616 || 64,8 
 Clerks || 19 || 2,0 
 Service workers and shop and market sales workers || 153 || 16,1 
 Elementary occupations || 132 || 13,9 
13.                  
In accordance with Article 7 of Regulation (EC)
No 1927/2006, Denmark 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.                  
Odense is Denmark's third largest city with
almost 200 000 inhabitants. The city is in the centre of the island
of Funen, where the total population is close to 500 000. Funen is the
eastern part of the region of Southern Denmark, which has a total of
1 200 000 inhabitants. The infrastructure of both Funen and the
region is well developed and the working population increasingly commutes to
work outside their home towns. In the case of the Odense Steel Shipyard
workers, however, commuting cannot be seen as the solution to their employment
problem, as there are few employment opportunities for workers elsewhere on the
island and no labour shortage in Denmark as a whole in the metallurgical
sector. Major efforts will therefore have to be made to prepare the redundant
workers for new jobs.
15.                  
Odense has access to the sea via a canal and the
Odense Fjord, on which Odense Steel Shipyard is located in the small town of
Munkebo (5 500 inhabitants). Munkebo is part of Kerteminde
Municipality, forming the northeast part of Funen.
16.                  
In 2008, the total workforce in Odense and
Kerteminde was 109 000 people. The direct losses at Odense Steel
Shipyard covered by this application therefore amount to more than 1 % of
the workforce, to which must be added further job losses from subcontractors,
which will arise at a later stage, and further losses from the shipyard itself,
when it closes down completely. It is estimated that the indirect job losses
will eventually be as heavy as the direct ones, so that the shipyard closure is
regarded as a major crisis in the regional economy.
The educational standard of the employed
workforce in Kerteminde is below both the national average and the average in
Funen. In 2008, about 27,3 % of the workforce in Kerteminde had received
some further education, while the corresponding figure for Funen was 33 %
and the national average was 34,8 %.
17.                  
Both the municipalities of Odense and Kerteminde
are closely involved in this application, which they have supported from the
outset. 
Expected impact of the redundancies
as regards local, regional or national employment
18.                  
The general employment situation deteriorated
sharply in Denmark during 2009 and 2010. Unemployment rose from a record low of
3,3 % for the year 2008 to 8,2 % in December 2010 (source: Eurostat[7]).
19.                  
The industrial structure of Kerteminde is
characterised by a high share of employment in manufacturing, particularly in
metallurgy. Many jobs in this industry have already been lost to other
countries with lower wages. The shipyard workers being dismissed have a high
technical expertise which is difficult to apply in other industries in Funen or
even the whole of Denmark.
In addition, the shipyard is being wound down
in stages, with groups of workers being dismissed as the final ship orders are
completed. It is expected that a further 1 100 workers will be dismissed
in three waves in 2011. Without significant retraining, it will be hard for
these workers to find new employment.
20.                  
Since the announcement of the closure in August
2009, a consortium of local, regional and national stakeholders has discussed
and formulated a strategy for new growth opportunities in the region. It is
this strategy that guided the choice of measures in the application.
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
21.                  
The Region of South Denmark is, on the one hand,
defining and designing measures which can be taken under the Lisbon goals with
the objective of strong European competitiveness. The regional Growth Forum
uses both ESF and ERDF funding, as well as national labour market assistance to
achieve these long-term goals of promoting new growth industries in the area.
22.                  
In order to help these immediate redundancies,
however, more specific activities need to be undertaken. These include
education, training, employment incentives and support for entrepreneurship.
The target group of workers are already highly skilled, but in a field where
the outlook for future employment looks bleak. Hence, the measures proposed for
them will be somewhat more costly than would be the case for other workers in
mass layoffs, which often concern people with relatively low skills.
–     
Diagnosis, clarification and basic course: It is estimated that this will be taken up by some 70 % of
the redundant workers. The course will run over an average period of four weeks
and will contain both group-based teaching and additional one-to-one
counselling. The objective is to help the workers to understand their own
situation and to acquire the motivation to accept a complete reorientation, to
understand the opportunities open in the region, to identify their own
competencies, to identify opportunities of interest to them, and to decide on
further measures they wish to take. This measure will involve much more intensive
and personalised counselling than the Job Centres are normally able to provide.
–     
Vocational training and general education: It is estimated that this too will be taken up by 70 % of the
redundant workers, opting for various fields of education and retraining. Some
of the workers may need to reinforce their general education before they can
benefit from the training options.
–                   
The first of these options will be in Energy
Technology, involving power generation, energy storage, energy
infrastructure and energy efficiency -- the emphasis being on green energy in
these areas. This is a new training area which is not provided by the Job
Centres so far.
–                   
The second will be in Construction and
Landscaping, for which there are already large public commitments to be
implemented in coming years. The course will include specific learning in
energy efficient building. These are innovative training measures which depart
from what is available in the area.
–                   
The third will be in Robotics, an area of
strong growth, where Denmark is successful at international level. Main focus
areas would be industrial production, play and learning, and biological
production. This is not currently provided by Job Centres, but could be taken
on by them in future, if this scheme works well.
–                   
The fourth will be in Welfare Technology,
the development of which is already centred around Odense. The demand for
public welfare in hospitals and healthcare services is expected to increase in
future. The main focus will be a general introduction to technology and a
practical upgrading of skills. This course too is not currently provided by Job
Centres, but may offer good employment opportunities in the future.
–                   
The fifth is General Education, which may
be a prerequisite for many of the redundant workers so as to enable them to
take up the training offered. It is estimated that a quarter of the total
target group will take up this measure, which is scheduled to last for an
average of 22 weeks per person. While this is being offered by Job Centres,
they are currently flooded with demand from unemployed workers and not always
able to cope.
–     
Attract and retain the youth / higher
education: This will guide the young workers to
return to education, provide support and fund training costs for up to one
year. The support provided here goes beyond that which is normally available
from Job Centres.
–     
Employment Incentives -- Teaching in Enterprises: This will help the redundant
worker in transition to new employment, by facilitating learning and adjustment
for both the employer and the new employee. It will most often take place in
addition to one of the other measures preparing the worker for a new job. In
practical terms, it will be a course given to new employees at one to three
days per week and over a period of six to ten weeks. It will greatly facilitate
the decision for new employers to take on the redundant workers, as they will
be helped to adapt to their new workplace more quickly.
–     
Incentives to start a new business: Entrepreneurship in Denmark is at a low level, but increasing, and
is particularly low in the two municipalities most affected. The level of
interest in this measure expressed by the redundant workers was, however, above
average, and almost a third (285) of the workers expressed interest. The workshops
planned will help these workers to develop ideas and creativity, the screening
of ideas will help them to focus on the best cases for further development,
an entrepreneurship course of six weeks' duration will enable those who
decide to go down this route (estimated at 95 workers) to focus on how a
business is run; a smaller number (estimated at 45 workers) will then be helped
with advice on how to develop a product and with the necessary market
analysis. Some 20 new entrepreneurs will receive guidance and coaching in
the early start-up phase, and mentoring by means of a number of
sessions during the first year. Those who successfully start businesses will be
helped with marketing and public relations, including branding.
Entrepreneurs who fulfil stringent conditions can apply for a loan -- it
is estimated that some ten applicants will qualify for this final stage of
support.
–     
In addition to these measures, Denmark proposes
a subsistence allowance of EUR 100,67 per worker per day of
activity.
23.                  
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 as well as control activities. All partners involved in the measures
are committed to communicating the EGF support being provided.
24.                  
The personalised services presented by the Danish
authorities are active labour market measures within the eligible actions
defined by Article 3 of Regulation (EC) No 1927/2006. The Danish authorities
estimate the total costs of these services at EUR 20 874 362 and
the expenditure for implementing the EGF at EUR 943 948 (4,3 %
of the total amount). The total contribution requested from the EGF is EUR 14 181 901
(65 % 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) 
 Diagnosis, clarification and basic course || 950 || 1 610,74 || 1 530 203 
 Vocational training in energy technology || 190 || 10 067,11 || 1 912 751 
 Vocational training in construction and landscaping || 140 || 5 369,13 || 751 678 
 Vocational training in robotics || 75 || 10 067,11 || 755 033 
 Vocational training in welfare technology || 70 || 12 080,54 || 845 638 
 General education || 235 || 7 973,15 || 1 873 690 
 Attract and retain in higher education || 110 || 6 711,41 || 738 255 
 Teaching in enterprises || 190 || 3 221,48 || 612 081 
 Stimulating entrepreneurship || 285 || 268,46 || 76 511 
 Screening of ideas || 140 || 134,23 || 18 792 
 Entrepreneurship course || 95 || 5 637,58 || 535 570 
 Course in product development || 45 || 3 758,39 || 169 128 
 Market analysis and feasibility study || 20 || 4 026,85 || 80 537 
 Business start-up cases || 20 || 5 637,58 || 112 752 
 Mentoring || 20 || 1 342,28 || 26 846 
 Advertisement and branding || 20 || 4 026,85 || 80 537 
 Start-up loan || 10 || 26 845,60 || 268 456 
 Subsistence allowance || 950 || 11 037,80 || 10 485 906 
 Sub total personalised services ||   || 20 874 362 
 Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006) 
 Preparatory activities ||   || 74 260 
 Management ||   || 482 694 
 Information and publicity ||   || 185 652 
 Control activities ||   || 201 342 
 Sub total expenditure for implementing EGF ||   || 943 948 
 Total estimated costs ||   || 21 818 310 
 EGF contribution (65 % of total costs) ||   || 14 181 901 
* The totals do not entirely tally due to
conversion from DKK and rounding.
25.                  
Denmark confirms that the measures described
above are complementary with actions funded by the Structural Funds and that
all double financing will be prevented.
Date on which the personalised
services to the affected workers were started or are planned to start
26.                  
Denmark started the personalised services to the
affected workers included in the co-ordinated package proposed for co-financing
to the EGF on 1 October 2010. 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
27.                  
The Region of Southern Denmark, and the
Municipalities of Odense and Kerteminde prepared the application together. This
work has involved a number of social partners, professional organisations,
unions and educational institutions. Joint meetings have been held, at which
detailed strategies for growth and extraordinary actions in the transition plan
were discussed and designed by the parties.
28.                  
The Danish 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
29.                  
As regards the criteria contained in Article 6
of Regulation (EC) No 1927/2006, the Danish 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 
30.                  
Denmark has notified the Commission that the
financial contribution will be managed and controlled by the same bodies as the
European Social Fund, which also has the Danish Enterprise and Construction
Authority as Managing Authority. The Certifying Authority will be vested in a
different department of the same body. The Auditing Authority will be the EU
Controllerfunction in the Danish Enterprise and Construction Authority. 
Financing
31.                  
On the basis of the application from Denmark, the
proposed contribution from the EGF to the coordinated package of personalised
services is EUR 14 181 901, representing 65 % of the total
cost. The Commission's proposed allocation under the Fund is based on the
information made available by Denmark.
32.                  
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.
33.                  
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.
34.                  
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.
35.                  
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 
36.                  
As the 2011 budget includes 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 14 181 901 needed for this
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 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/2010/025 DK/Odense Steel Shipyard from Denmark)
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 management[8], 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 Fund[9], and in particular Article
12(3) thereof,
Having regard to the proposal from the
Commission[10],
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)       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.
(3)       The Interinstitutional
Agreement of 17 May 2006 allows the mobilisation of the EGF within the annual
ceiling of EUR 500 million.
(4)       Denmark submitted an
application to mobilise the EGF, in respect of redundancies in the enterprise Odense Steel Shipyard, on 6 October 2010 and supplemented it by additional information up to 8 March 2011. 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 14 181 901.
(5)       The EGF should, therefore,
be mobilised in order to provide a financial contribution for the application
submitted by Denmark.
HAVE ADOPTED THIS DECISION:
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 14 181 901 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                       For
the Council
The President                                                 The
President
[1]               OJ C 139, 14.6.2006, p. 1.
[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]               Compensated Gross Tonnage (CGT) is an indicator of the amount of work that is necessary to build a
given ship and is calculated by multiplying the tonnage of a ship by a
coefficient, which is determined according to type and size of a particular
ship (http://en.wikipedia.org/wiki/Compensated_gross_tonnage)
[5]               COM(2010)451 final.
[6]               COM(2010)631 final.
[7]               http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
[8]               OJ C 139, 14.6.2006, p. 1.
[9]               OJ L 406, 30.12.2006, p. 1.
[10]             OJ C […], […], p. […].