CELEX: 52012PC0622
Language: en
Date: 2012-10-19
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/2012/005 SE/Saab from Sweden)

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		52012PC0622
		
			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/2012/005 SE/Saab from Sweden) /* COM/2012/0622 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 25 May 2012, Sweden submitted application EGF/2012/005 SE/Saab for a financial contribution from the EGF, following redundancies in
Saab Automobile SA, one of its subsidiaries and 16 of its suppliers 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. || EGF/2012/005 
 Member State || Sweden 
 Article 2 || (a) 
 Primary enterprise || Saab Automobile SA 
 Suppliers and downstream producers || 16 
 Reference period || 19.12.2011 – 19.4.2012 
 Starting date for the personalised services || 20.12.2011 
 Application date || 25.5.2012 
 Redundancies during the reference period || 3 239 
 Redundancies before and after the reference period || 509 
 Total eligible redundancies || 3 748 
 Redundant workers expected to participate in the measures || 1 350 
 Expenditure for personalised services (EUR) || 10 509 120 
 Expenditure for implementing EGF[3] (EUR) || 400 000 
 Expenditure for implementing EGF (%) || 3,67 
 Total budget (EUR) || 10 909 120 
 EGF contribution (50 %) (EUR) || 5 454 560 
1.           The application was
presented to the Commission on 25 May 2012 and supplemented by additional
information up to 20 August 2012.
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, Sweden refers to the 2011 Automobile Industry
Pocket Guide[4]
which shows that the EU-27 in 2010 with 15,1 million units had 26 %
of worldwide passenger car production, a major reduction from 34,1 % in
2005 and 35,9 % in 2000. During the same decade, the market share of the
BRIC countries had risen from 8,4 % (2000) to 15,8 % (2005) and
33,5 % (2010).
4.           The declining share of the
European market as a proportion of the world market for passenger cars is also
borne out by the Cars 21 final report, published on 6 June 2012[5].
5.           The latest semiannual
report from the European Automobile Manufacturers' Association (ACEA)[6] shows that new passenger car
registrations in the EU continue to decline. Thus, the June 2012 figure is
2,8 % below that of June 2011, itself 7,3 % below that of June 2010.
The trend has been almost constantly downwards during the past five years (2008
to 2012, with a small increase only in 2009).
6.           Saab's
situation had been uncertain over the past few years, with General Motors
announcing in August 2008 that it wished to sell the company. Following several
rounds of fruitless negotiations, the Dutch company Spyker Cars bought Saab on
23 February 2010. It soon ran into liquidity problems halting production. An
attempt to sell the business to a Chinese company failed when General Motors
refused to assign the licences for the cars it wanted to construct. On 19
December 2011, Saab Automobile filed for bankruptcy.
7.           To
date, the automotive sector has been the subject of the most numerous EGF
applications, with 16 cases, of which seven are based on trade related
globalisation, while the other nine are crisis related[7].
Demonstration of the number of
redundancies and compliance with the criteria of Article 2(a)
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.
9.           The application cites 3 239
redundancies in Saab Automobile AB and its subsidiary
SAAB Automobile Powertrain AB during the four-month reference period from 19 December 2011 to 19 April 2012 and a further 509 redundancies
with 16 subcontractors before the reference period, but related to the same
collective redundancy procedure. All of these redundancies were calculated in
accordance with the third indent of the second paragraph of Article 2 of
Regulation (EC) No 1927/2006. The Swedish authorities have confirmed in
accordance with the same third indent that all these redundancies have
meanwhile been effected.
Explanation of the unforeseen nature
of those redundancies
10.         The Swedish authorities
argue that despite the problems experienced by Saab during the past several
years, the bankruptcy and closure were unforeseen. Several buyers were
interested in taking over the company and its workforce, and several car
designs and models were attractive to potential buyers. It was only when GM as
the former owner refused to assign the necessary licences to a potential
Chinese buyer, that the company ran out of options and decided to file for
bankruptcy.
Identification of the dismissing
enterprises and workers targeted for assistance
11.         The application relates to
3 748 redundancies of which 3 239 occurred in Saab Automobile AB and
its subsidiary Saab Automobile Powertrain AB and the remaining 509 within 16
subcontractors. As the list of subcontractors is confidential though available
for audit, the companies are listed as A, B, C etc. hereunder.
 Company || Number of redundancies 
 Saab Automobile Aktiebolag || 2 960 
 Saab Automobile Powertrain AB || 279 
 A || 71 
 B || 45 
 C || 7 
 D || 88 
 E || 123 
 F || 20 
 G || 8 
 H || 14 
 I || 11 
 J || 20 
 K || 8 
 L || 31 
 M || 10 
 N || 16 
 O || 5 
 P || 32 
 Total || 3 748 
12.         Of this total, 1 350
workers are targeted. Most of the remaining workers (in particular, the
technicians and other well qualified workers) have already found new jobs. The
break-down of the targeted workers is as follows:
 Category || Number || Percent 
 Men || 1 000 || 74,07 
 Women || 350 || 25,93 
 EU citizens || 1 320 || 97,78 
 Non EU citizens || 30 || 2,22 
 15-24 years old || 15 || 1,11 
 25-54 years old || 1 200 || 88,89 
 55-64 years old || 135 || 10,00 
 > 64 years old || 0 || 0,00 
13.         Among these workers, there
are 20 with longstanding health problems or disabilities.
14.         In terms of occupational
categories, the break-down is as follows:
 Category || Number || Percent 
 Legislators, senior officials and managers || 27 || 2,00 
 Professionals || 215 || 15,93 
 Technicians and associate professionals || 180 || 13,33 
 Clerks || 193 || 14,30 
 Service workers and shop and market sales workers || 16 || 1,19 
 Craft and related trade workers || 88 || 6,52 
 Plant and machine operators and assemblers || 523 || 38,74 
 Elementary occupations || 5 || 0,37 
 Others || 103 || 7,63 
15.         The 103 persons listed as
"others" comprise a mix of workers from various small categories,
such as directors, medical staff, and artists.
16.         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
17.         The vast majority of the
redundant workers reside in the municipalities of Trollhättan, Vänersborg and
Uddevalla, which are located between 70 and 90 km north of Gothenburg, the
principal city of the industrialised county of Västra Götaland. This is an area
of already high unemployment, due to previous factory closures. Manufacturing
is the largest business sector in Trollhättan with its 55 500 inhabitants.
The Swedish Public Employment Service will be
the main stakeholder in all the affected municipalities, together with the City
of Trollhättan, University West, the trade unions and the outplacement
organisations Trygghetsrådet TRR and Startkraft.
Expected impact of the redundancies
as regards local, regional or national employment
18.         After Saab's bankruptcy,
unemployment in Trollhättan in January 2012 rose to over 20 %, the highest
unemployment figure among the 290 municipalities in the country. Neighbouring
municipalities also experienced a sharp rise in unemployment for the same
reason, even though many of these already had very high levels. 
Saab Automobile also contributed to indirect
effects on employment and value added through purchases of inputs and
consultancy as well as other services from suppliers. The National Institute of
Economic Research (NIER) produced an estimate of the impact of the closure of
Saab on the Swedish economy, which shows that in 2010 Saab generated about
3 200 jobs among its subcontractors, which at the time was equivalent to
0,9 external jobs per job at Saab.
About 2 000 of the 3 600 Saab workers
live in Trollhättan, which is 8,4 % of those employed in the municipality.
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
19.         Sweden proposes EGF
measures and actions which go beyond what the Employment Service would normally
offer, so that it works with an "extended toolkit" to find
tailor-made solutions. In practice this will strengthen efforts in areas such
as job-search support, vocational guidance, tailor-made training and further
training (e.g. in new IT skills), validation of work experience, outplacement,
entrepreneurship promotion measures or support for self-employment, and special
time-limited measures (support for jobseekers, relocation allowances, training
allowances, measures to assist disadvantaged or older employees to keep their
jobs or to re-enter the labour market, etc.).
20.         EGF supported workers will
be offered a wider programme of measures to choose from, including measures not
normally offered by the PES. They could benefit from longer-duration measures
than usually available, and an enhanced service at an earlier stage than can normally
be offered. One focus of all the measures listed hereunder is the move towards
green jobs, where Sweden is one of the leading players at international level.
Forecasts predict future labour shortages in this area, which the EGF measures
could help to avert. The largest wave power park in the world will be completed
in 2014-15 in Sotenäs Municipality, within commuting distance of the
Trollhättan region.
21.         The EGF measures will
include the following :
–     
Job-search support : The targeted workers will receive earlier and more personalised
support than could normally be given, and those with a long employment record
will receive special assistance. Group work will be included among the measures
on offer. Job coaching efforts will be made available to the workers.
–     
Vocational guidance : Targeted workers will receive enhanced support at an early stage,
individually or in groups. The objective is that the participants will arrive
at a realistic vocational orientation within a field where there is a demand
for labour and where, upon completion of a supplementary training course, the
participant is judged as having good chances of finding a job. Special
attention will be given to job opportunities in the green sectors.
–     
Validation of experience and labour market training
: Validation of experience is currently available
under the general schemes for the areas of electricity, construction,
healthcare, industry, transportation and catering / restaurants. The EGF
support will open new possibilities to the redundant workers in other areas
where they have gained experience and where they might obtain the necessary
qualifications either directly or with the help of limited further training,
including in green job sectors. Apprenticeship training will also be offered to
those who wish to pursue this option.
The Employment Service can offer shorter
vocational courses aimed at filling occupations with a skills shortage that
cannot be remedied with the usual training system. The EGF contribution will
enable it to broaden the numbers of courses available, to provide for graduate
level entry, to extend the duration from the usual six months to twelve months
and to include the qualification as Project Manager within the individual's
existing or potential area of expertise.
–     
Work placement and job-search support : The duration of work placements with potential employers can be
extended with the EGF support beyond the usual six months, if this is expected
to help the worker in question to be hired by the relevant employer.
–     
Support for business start-ups : In addition to the normal provisions for business start-ups, the
support of the EGF will enable the workers to receive enhanced start-up
allowances and longer mentoring, as well as additional training, counselling
and marketing advice.
–     
Mobility allowances : These are granted in support of households relocating to a new city, travel costs to interviews, and travel costs for commuting.
22.         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 and control activities as well as information and publicity.
23.         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 at EUR 10 909 120,
of which the expenditure for personalised services at
EUR 10 509 120 and the expenditure for implementing the EGF at
EUR 400 000 (3,67 % of the total amount). The total contribution
requested from the EGF is EUR 5 454 560 (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) 
 Job-search support || 1 350 || 373 || 503 550 
 Vocational guidance || 1 350 || 93 || 125 550 
 Validation of experience and labour market training || 800 || 6 000 || 4 800 000 
 Work placement and job-search support || 800 || 5 000 || 4 000 000 
 Support for business start-ups || 90 || 9 778 || 880 020 
 Mobility allowances || 400 || 500 || 200 000 
 Sub total personalised services ||   || 10 509 120 
 Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006) 
 Preparatory activities ||   || 80 000 
 Management ||   || 190 000 
 Information and publicity ||   || 60 000 
 Control activities ||   || 70 000 
 Sub total expenditure for implementing EGF ||   || 400 000 
 Total estimated costs ||   || 10 909 120 
 EGF contribution (50 % of total costs) ||   || 5 454 560 
24.         Sweden confirms that the
measures described above are complementary with actions funded by the
Structural Funds. The Swedish Public Employment Service will adapt review lists
to ensure that recipients of EGF support do not also receive assistance from
other Union financial instruments, so that all double financing can be
prevented.
Date(s) on which the personalised
services to the affected workers were started or are planned to start
25.         Sweden started the
personalised services to the affected workers included in the co-ordinated
package proposed for co-financing to the EGF on 20 December 2011. 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.         Since production at the
Saab plant was halted, the Employment Service has been ready to undertake
measures on behalf of the personnel involved. This has resulted in positive
relations with the municipality, the employers, the trade union organisations
and the outplacement organisations Startkraft and Trygghetsrådet (both
themselves set up by collective agreements).
27.         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
28.         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 
29.         Sweden has notified the
Commission that the financial contribution will be managed by the Swedish
Public Employment Service (PES) which will be formally appointed as the
managing and paying authority. The project accounts will be examined by the
Internal Audit Unit, which is a separate body attached to the board of PES. Its
task is to examine the internal control and verification process at PES and
suggest improvements, as well as providing advice and support for the Board and
the Director General. Project auditing will take place on a regular basis.
Financing
30.         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 5 454 560,
representing 50 % of the total cost. The Commission's proposed allocation
under the Fund is based on the information made available by Sweden.
31.         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.
32.         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.
33.         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.
34.         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 
35.         After the adoption of the
two arms of the Budgetary Authority of the EGF cases currently in the pipeline,
the available payment appropriations on the EGF budget line would amount to
EUR 6 618. A transfer of EUR 5 447 942 from the
European Progress Microfinance Facility would be used to cover the additional
amount needed for the present application.
36.         The payment needs of the
European Progress Microfinance Facility by the end of the year based on the
latest estimations provided by the European Investment Fund which is its
managing authority allow for the transfer of EUR 5 447 942 to
the EGF budget line.
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/2012/005 SE/Saab 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 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 European
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 Interinstitutional
Agreement of 17 May 2006 allows the mobilisation of the EGF within the annual
ceiling of EUR 500 million.
(3)       Sweden submitted an
application to mobilise the EGF, in respect of redundancies in the enterprise Saab Automobile SA, one of its subsidiaries and 16 of its suppliers, on 25 May 2012 and supplemented it by
additional information up to 20 August 2012. 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 5 454 560.
(4)       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 5 454 560 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 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]               http://www.acea.be/images/uploads/files/20110921_Pocket_Guide_3rd_edition.pdf
[5]               http://ec.europa.eu/enterprise/sectors/automotive/files/cars-21-final-report-2012_en.pdf
[6]               http://www.acea.be/images/uploads/files/20120717_PRPC-FINAL-1206.pdf
[7]               Regular updates here : http://ec.europa.eu/social/BlobServlet?docId=4558&langId=en
[8]               OJ C 139, 14.6.2006, p. 1.
[9]               OJ L 406, 30.12.2006, p. 1.
[10]             OJ C […], […], p. […].