CELEX: 51980PC0410
Language: en
Date: 1980-07-25
Title: PROPOSAL FOR A REGULATION (EEC) OF THE COUNCIL on assistance from the European Social Fund to provide income support for workers in the shipbuilding industry (submitted to the Council by the Commission)

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DOCUMENTS "COM"
COM (80) 410
Vol. 1980/0145
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                               COM(80)410 final
                                               Brussels , 25 July 1980
              PROPOSAL FOR A REGULATION ( EEC ) OF THE COUNCIL
       on assistance from the European Social Fund to provide income
       support for workers in the shipbuilding industry
              ( submitted to the Council by the Commission )
                        I
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    CCM(80 ) 410 final
 ---pagebreak---                                                                               i a. --«mt&m
                                                                                          k
                    EXPLANATORY MEMORANDUM
1 . Of those sectors subject to economic difficulties for
  ' several years , shipbuilding is one sector to which the
     Community has accorded priority for measures to assist
     the industry to adapt its competitive capacity and com­
     pensate for any negative repercussions on workers arising
     from the crisis .
                  ■              ' ■    '    ■                              :            ί
     Ir» its Resolution of 19 September 1978 ( 1 ), the Council       .
     recognized the need for structural adjustments in the
     shipbuilding sector and requested the public authorities             .              j
     to support the industry 's efforts in this connection and to                         '
     make available the necessary funds to cover the social                              ;
     objectives implicit in such a' policy .
     With the same end in view, the Commission presented to the                          (
     Council several proposals relating in particular to economic ,                      |
     industrial and regional matters ( 2 ) and has called on Community
     financial instruments , one being the Social Fund .                                 ,
         . .                                    ••            .                          1
2 . Social Fund assistance in this sector has of necessity been         ~
     limited to' traditional aid measures : vocational training and
     geographical mobility .                 .
( 1 ) OJ N° C 229 of 27.9.1978 , p. 1 .
( 2 ) See Council Directive 78 / 338 / EEC of 4.4.1978 on aid to shipbuilding ,
      OJ N° L 98 of .1 1 . 4.1 978 ; Proposal for a Council Decision for Community
       assistance towards investment in the retsructuring or conversion of the
      shipbuilding industry, doc . C0M(78)769 of 11.1.1979 . Communication from
      the Commission to the . Council of 28.9.1979 on a scheme to promote the
       scrapping and building pf oceangoing ships ; C0M<79)446 of 25.9.1979 ; anc
       the proposal for a Council Regulation instituting a specific Community
       regional development measure in certain zones adversely affected by the
      c.estructuring of the shipbuilding industry, C0M(79)540 of 15.6.1979 .
 ---pagebreak---  The Commission was Led to propose extending the Fund 's means - of
 assistance by a new aid measure in view of the discouraging employment
 outlook in shipyards , particularly in the ocean-going merchant ship sector ,
 the difficulties encountered by certain categories Of workers in finding
 new employment due to the shortage of suitable jobs , and the parcicularly
 high cost of certain social security measures , such as early retirement .
 The new measure is designed to ensure an equitable income for elderly *
 workers who lose their job as a result of reorganisation .
The proposed extension , however , should be of an experimental nature, that
                                    /
is in the field of application of the aid measure will be strictly limited
             t
to one category of workers (persons aged 55 and over ) engaged in one clearly
specified activity (new ocean-going merchant vessel construction ) while the
duration of the action and the relevant appropriation will be limited .
On the one hand, this new aid measure , even if it is in line with future
development for which provision is specifically made in the Fund rules and
regulations , is likely to represent an innovation compared with existing aid
measures , in that it does not exclude Fund intervention in areas that could
come under the heading of social security, regardless of the fact that this
type of measure has proved effective in other sectors undergoing restructuring ,
in particular the ECSC industries . It -would not be appropriate to extend its
                                          t
application in the context of the Social Fund without testing its effectiveness
through an initial experiment of limited scope , in addition , it would not be
desirable , through a specific action implemented to meet the needs of an
exceptional situation with undeniable Community implications , to establish a
precedent that could lead the Social Fund to institute similar measures for
workers in other sectors or activities where -the Community does not bear
equivalent responsibility .
 ---pagebreak---           At its experimental stage ^ Fund assistance for the new eld measure should
          apply to no more than 2 000 to 3 000 persons , and the cost , spread over
          the 1980 and 1981 financial years , should not exceed 11 million EUA .
    3 . In 1979, the work forcf employed in shipbuilding (excluding navsl shipbuilding )
          in the Community countries declined by about 22 000 - nearly 15% compared
          with the previous year . The total work force (nearly 129 000 workers at end
         1979 ) has declined overall by 36% since 1975 when there were 200 000 workers .
 Employment in shipbuilding in the Community ( at year end ).
(New merchant shipbuilding sector <3 ))
                               1975           1978            1979
Belgium                        6138           5140            5100
Denmark                      1^630           12000            9900 ( April 1980
France               **      27628           2201a          20900
Federal Republic             « 6800          32400          27369 ( average 1979 )
   of Germany         *
Ireland                         869            840             750
Italy                        25000           20000          1 9000
Netherlands         ***      22662           17540          14540 ( east )
United Kingdom        *      54550           41050          31200
Total                       200277          150980         12C759
   * Excluding naval shipbuilding
 ** Shipyards with more than 150 workers
*** Revised figures , including shipyards affected by reorganisation .
The orutlook fot the next few years does not seem any more promising (4 ). According
to available information it is feared that the sector will experience the effects
of economic growth generally forecast as weak in the short term , which carries
a real risk that the level of production will again be affected. It is possible
that the jobs of some 30.000 people in the shipbuilding industry will be under
threat in 1980 and I98I .
(3 ) Source : Report on the State of the shipbuilding industry in the Community
       ( situation at 1.1.1980 ).
(4 ) See above-mentioned report on the State of the shipbuilding industry in the
       Community .
 ---pagebreak--- Despite the industry 's efforts to diversify and place workers in related
activities , such as naval shipbuilding , the surplus manpower has not been
easily or quickly absorbed, particularly in regions already at a disadvantage
due to inadequate development .                                        >
Frequently, readaptation of workers is made still more difficult on
account of the imbalance in the age pyramid; a high proportion of elderly
workers is a typical feature of this sector . The proportion of the work force
aged 50 of over represents nearly one-quarter of the total for the Com­
munity (nearly one-third in certain Member States ).
There is little or no likelihood that these workers will be offered new jobs ,
and vocational training or measures to facilitate geographical mobility
                                              do little to improve their
prospects . If they have not yet reached the age when they are eligible for
retirement - under statutory or contractual schemes - they remain dependent
on the unemployment funds which are then faced with heavy losses in income .
In the interests of ensuring thatreorgani sation takes place in acceptable and
equitable social conditions , it is therefore of ten pref erable to give these
workers the option of stopping work before pensionable age , while ensuring
that their income is maintained at an acceptable level . Member States tend
to implement this type of measure ever more frequently and to apply it to
this category of workers in preference to more traditional aids . As a rule
the cost is charged to public funds , the unemployment insurance system or
employers' contributions in the context of collective agreements .
             I
                         , t
                            I
The increasingly important part that the public authorities play in the
introduction of these social measures helps the implementation of economic
reorganisation .    .
It seems appropriate for the Community to share this burden thus taking
on some of the responsibility for mitigating the negative social con­
sequences of reorganisation , in line with the principles set out in the
 ---pagebreak---                             - 5 -
 above-mentioned Council Resolution of 19 September 1978 . For the reasons
 set out in ( 2 ) above . Social Fund assistance in this respect should , at
 least at first / be limited on an experimental basis to be confirmed sub­
 sequently if the first experiment produces positive results .
 It is understood , during this experiment , that the Commission wi 11 ensure
 that the Fund 's assistance will retain its character of additionality -
 thanks notably yo the promotion of new aetions in Member States ,- and does
 not simply constitute a reimbursement to the national treasuries for
 initiatives which even without the Community 's financial intervention would
 have taken place .                                              ;
There are , moreover , several precedents for Community participation in income
support measures in the case of definitive cessation of activity : since 1969,
and at the request of certain Member States , payments of this type have been
allowed under ECSC readaptation aid . The Commission is proposing to extend
this form of intervention to workers in the iron and steel industry beyond
the limits laid down by Article 56 of the ECSC Treaty, by invoking Article
95 of the Treaty (5 ). The European Agricultural Guidance and Guarantee
Fund makes payments in the form of annual lump sum amounts to farmers
over 55 who cease working in this sector (6 ). Similarly, the Commission
proposed the introduction of Cpmmunity income support for sea fishermen
over 50 obliged to cease fishing (7 ).
 (5 ) See revised draft of the Commission Decision concerning the creation
      of special temporary! allowances to assist workers in the iron and steel -
      industry under the Community restructuring plan , Doc . C0M(79)436 fin .
 (6 ) See Council Directive of 17 April 1972 concerning measures to encourage
      the cessation of farming and the reallocation of utilized agricultural
      area for structural improvement , 0J N° L 96 of 23.4.1972 . ■
"(7 ) Proposal for a Council Directive on certain immediate measures for adjust -;
      ment in the fisheries sector COM ( 77 ) 543 of- 21 . 10.1977
      and the amendment to the proposal of COM ( 78 ) 247 of 8.6.1978 .
 ---pagebreak--- 6 . With respect to the legal basis for the new measure , i n addition to the
     types of aid which may supplement existing measures , Fund rules provide
     for assistance to maintain, for a fixed period , the incomes of persons who
     have lost their employment , or have been put on short time , or temporarily
     suspended and who are awaiting training or employment ( 8 ).
     However , the inclusion of this type of measure in the list of operational
     aids is subject to three conditions .
7 . First , under Article 3(2 ) of Regulation N° EEC 2396/ 71 , Fund aid may not
     be granted for social security benefits (9).. This rule is not formally
     laid down in the instruments relating to the new aid measures : it can ,
     however , be supposed that the intent of the legislation is that it should
    have a restrictive effect on Fund aid as a whole , even if the inclusion of
    aid to income support may be thought to constitute a partial exception to
    the rule ( 10 ).
    On the one hand it has been noted that under national schemes covered by
                                              *
    regulation or agreement in        respect of income support payments in the case of
    involuntary redundancy, the sources of finance do not generally tie such aid
    or payment to social security systems proper . On the other hand, even where
    expenditure on such aid measures was exceptionally covered by social security
    in the strict sense , the Community would be perfectly within its rights to
    make an exception to the rule excluding such expenditure from support from the
    Social Fund. In practice!, implementation of a measure tailored to fit the needs
    of elderly workers affected by the restructuring of shipyards has a two-fold aim
    since it will provide for the departure of some workers under acceptable social
    conditions while maintaining a steady number of permanent jobs in a sector
    where there is a serious threat to employment . The proposed aid is thus closely
                «
    associated with the Fund 's fundamental aims of promoting employment .
     ( 8 <) Article 3(3 ) ( a ) of Council Regulation EEC N° 2396/ 71 of 8 November 1971 ,
            as amended by Regulation EEC N° 2893 / 77 of 20 December 1977, 0J N° L 337
            of 27.12.1977 .
                                 I
     (9 ) Article 3(2 ) of Regulation (EEC ) N° 2396/71 ; ibidem .
     ( 10 ) Even the expenditure necessary to assure an income for those undertaking
            training courses to which the European Social Fund often contributes , may
            in certain circumstances be similar to forms of social security .
 ---pagebreak---                                    - 7 -  ,
    This exception to the rule is further justified since the Member
    States deploy a wide variety' of resources to finance early retirement and
    other income support measures / and if Fund intervention were to be limited
    to expenditure outside the domain of social security, it could become totally
    ineffectual or discriminatory .                                /
8 . Secondly, the Regulation provides that such aid is intended for "persons who
    have lost their employment , or have been put on short time , or temporarily
    suspended". Under the proposed action , it follows that aid should be re­
    served for measures to facilitate the elimination of jo.bs to be axed , or to
    accelerate the reorganisation of the sector in question - whether this involves
    departures , retirement at short notice or more gradual methods of elimination
    combining early retirement with periods of part-time work .
9 . Thirdly, one of the conditions governing aid as defined in Article 3(3 )
    is that it should be in the nature of a tide-over allowance , although this
    is not the sole condition (TT ).
    The purpose of this provision would seem to be respected in that by maintain­
    ing the income of persons leaving it enables those who remain and whose jobs
          r
    are equally threatened by reorganisation to find another job or keep the
    one they have . In any reorganisation , there is a direct link between the
    departure of some who are beneficiaries of aid and the protection of the
    jobs of others who , without such aid , would have been in                u:
    an insecure situation .
    Lastly, refering once again to experience acquired with ECSC readaptation
    aids , if relevance in this context are the grounds given at the time for
    holding that the payment of tideover allowances to workers on early retire­
    ment was eligible for aid under Article 56(2 ) of the ECSC Treaty, within
    limits very similar to those cited in relation to the Social Fund . In line^
                                                                               \
    with the views of the High Authority at the time , it could be argued
    ( '1 ) This qualification may be deduced from the word "particularly"
            preceding the enumeration of the categories of aid in Article 3(3 ).
 ---pagebreak---                                      - 8 -
     that it would be invidious to discriminate between workers in the course
     of redeployment who are drawing unemployment benefit and , consequently,
     are eligible for income support , and those on early retirement who are
     not so eligible .
                                                                                             r
                                                                                             i
10 . The rules governing the gad mesure will be as follows :
     – The measure is intended to cover expenditure for income support , whether
       or not such expenditure falls within the domain of social security.
       The national authorities will be free to determine how the amount paid
       towards this aid will be divided among the different sources of financing
       of such expenditure , it being understood that unemployment payments
       cannot be the subject of Fund assistance .
                                                                                            ι
     - Schemes for facilitating the departure of the oldest workers to those
       with the longest service differ considerably from one country to another
       and from one shipyard to another in the same country . The new measure
       should be sufficiently flexible to cover types of costs as different as
       monthly early retirement payments and lump sum severance payments .                 I
     - With a view to concentrating the impact of the aid on those categories
       for whom training and re-employment measures are less pressing , it is
       proposed that payment should be restricted to workers over 55 » on condi­
       tion that they do not enter the labour market after leaving the ship­
       building sector . Thus , in line with the experimental nature of the intervention,;
       it  would be possible to envisage coverage for 2 000 to 3 000 persons
       leaving shipyards in 1980 and 1981 .
                                                                                  /•
 ---pagebreak---                                   I
                                            - 9 -
     - The Community financial contribution is fixed in relation to an amount
         approximating to the average amount of assistance provided in the existing
        Fund aids . Thus the maximum amount of. Fund assistance is 4'500 EUA per
     r person , to be- increased by -10% in ths case s of operations in certain priority
         regions .              •                                „
11 . The field of application of the new aid measure will be limited to operations
     presented under the heading " groups of undertakings " as specified in
     Article 5<1)(c ) of Council Decision 71 / 66 / EEC (12 ).
     The operations to be supported are those "undertaken because of substantial
     changes in the conditions or production or in the distribution of products "
     in recent years in shipbuilding firms , which are "thus forced to cease ,
     reduce or transform their activities permanently" - another condition laid
     down in Article 5(1)(c ).
                                          t
     The measure will be limited to groups of undertakings " ( Article 5 ) to
     protect the specific nature of the aid and to ensure - along the lines of
     the special aids the Social Fund has introduced in other areas (e.g. people
     under 25 , migrant children , handicapped persons ) - that applications for
     the same type of operation are subject to uniform selection criteria .
     ( 1j*) Decision of 1 February 1971 , 0J N° L 28 of 4.2.1971 , p. 15 , as amended
            by Decision 77 / 801 / EEC of 20.12.1977 , 0J N° L 337 of 27.12.1977 , p. 8 .
 ---pagebreak---                           - 10 -
12 . The choice indicated in the preceeding paragraph implies that
      the Commission is withdrawing its earlier proposal presented
      to the Council in January 1974 , giving access to Social Funds
     assistance for workers in the shipbuilding industry under
      Article 4 of Council Decision 71 / 66 / EEC . In fact it concerns
     a sector in which the Fund intervenes already under Article 5 ,
                     x
     notably in the form of priorities set out in the Guidelines
     of the Fund in as much as they are foreseen by Article 3b of
     Council Regulation EEC N° 2396 /71 , the proposed aid only completes
     the range of interventions for vocational training available for
     this sector and, in consequence , males -*!* point less to open a new
     heading for a normal specific action .
 ---pagebreak---                                                                 χ
 Council Regulation on assistance from the European Social Fund to
 provide income support for workers in the shipbuilding industry
 The Council of the European Communities ,
 Having regard to the Treaty establishing the European Economic Community ,
Having regard to Council Regulation ( EEC ) No 2396/71 of 8 November 1971
 implementing the Council Decision of 1 February 1971 on the reform of the
 European Social FundH as amended by Regulation (EEXJ ) No 2893/77 »
 in particular Article 3 ( 3 ) thereof .
 Having regard to the proposal from the Commission \                     v■ .
                                                          A
Having regard to the Opinion of the European Parliament     ,
                                                                     5
Having regard to the Opinion of the Economio and Social Committee      ,
■Whereas the crisis in the shipbuilding industry in the Community and the
related restructuring measures are of a character that lead to signifi­
 cant numbers of job losses ,
                    %
Whereas to provide the Community with more effective means to alleviate
 the social consequences of the loss of jobs , provision should be made
 to institute , in the framework of the European Social Fund , a form of
 assistance to offset the losses in earnings of workers who on account
 of their age can no longer take advantage of vocational training or other
measures facilitating mobility ,
 Whereas on account of the experimental nature of this aid , it will operate
 for a limited period ,                -
Whereas the Council , in its resolution of 19 September 197^ recognising
the necessity of structural adjustments , invited the publio authorities
to limit the social consequences for the workers affected by the reduction
in industrial activity
 (D  QJ. No L 249 , 10.11.1971 , P. 54
  2  0J  No L 337 , 27.12.1977 , P. 1
  3  QJ  No
  4  OJ  No
  5  OJ  No
  6  OJ  No C 229 , 27.9.1978 , P. 1 .
 ---pagebreak---                                  /
                                         - 2 -
      HAS ADOPTED THIS REGULATION I
      Article 1
      1 , Assistance from the European Social Fund, may "be granted under
          Article 5 ( l ) ( c ) of Council Decision 71/66/EEC of 1 February 1971
          on the refofm of the European Social Fund ( 7 ) as amended by Decision
          77/8OI/EEC ( 8 ) for aid measures to cover the expenditure required -
          to provide income support for workers in the civil shipbuilding
          industry aged over 55 » who lose their jobs as a result of restruc­
          turing measures adopted in pursuance of the common aims for this
          sector defined at Community level and who are no longer available
          on the labour market •
      2 . Fund assistance shall be calculated on the basis of a maximum of
          9 000 European unitfe of account per person.
      Article 2
      This Regulation is applicable to operations requiring ! assistance which
      have been agreed by the Commission before 1st January] 1982 .
      Article 3                                               »
      This Regulation shall enter into force on
      This Regulation shall be binding in its entirety and directly appli­
      cable in all Member States .                                      ,
                                                     Done at Brussesl ,
                                                     For the Counoil
(7 ) OJ Ko L 28 , 4.2.1971 » P - 15
( 8 ) OJ Ko L 337 » 27.12.1977i       8.
 ---pagebreak---                                                                            Λ3
                                  FINANCIAL DETAILS
        PROPOSAL FOR A COUNCIL REGULATION AMENDING REGULATION (EEC ) No 2396/71
        AS AMENDED BY REGULATION (EEC ) No 2893/77 - NEW EUROPEAN SOCIAL FUND
        AID MEASURE RELATING TO INCOME SUPPORT FOR WORKERS IN THE SHIPBUILDING
        INDUSTRY
   1 . Budget entries concerned
        Chapter 51 - Social Fund – expenditure under Article 5 of "the Council
                                     Decision of 1 February 1971 •
        Article 512 - Consequences of industrial conversion.
                                '                               -
   2 . Legal basis
                              I
       Regulation to be adopted by the Council tuider Article 3 ( 3) of Regu­
        lation (EEC ) No 2396/71 of 8 November 1971 implementing the 'Council
        Decision of 1 February 1971 on behalf of the European Social Fund , as
        amended by Regulation (EEC ) No 2893/77 of 22 December 1977 ( l )*
                                   I
   3 * Aims of the measure
        Social measures accompanying restructuring measures in the shipbuilding
        sector .
       Specific aim
       Creation of a new aid with a view to allowing the Fund to undertake the
       necessary expenditure in supporting the income of older workers who
       leave . the shipbuilding sector .
  4 . Financial effects of the measures on expenditure*
       This measure is of an experimental nature , beginning in 1980 and ending
       in 1983 ( 2 ).                            .            '                I
( 1)0J No L 337 ? 27.12.1977 , P. 1
( 2 ) See article 2 of draft regulation.
               \
 ---pagebreak---     For the year 1980 an appropriation of 5 million EUA initially entered
    under Chapter - 100 of the 1979 Budget was later transferred to Article 512
    of Chapter 51 of the Fund . The appropriation required for '1981 will be
    entered under the same Article.                                   |
    The payments will be spread out as follows :
   Available in 1980 ("brought forward from 1979 ) s
               Commitments
                                                Payments (mEUA)
                 (mEUA)                                             1 982
                                           1980            | and subsequent years
                  5 (*)                     2,5                         2,5   ,
   Estimates 1981
                                                Payments (mEUA)
               Commitments
                  (mEUA)                      1980       ,               1982
                                                                and subsequent years
                  6               !         3                      #-3
                                  i
   Method of calculation
   – Number of beneficiaries :
      1
        Since this aid measure is of an experimental nature , Fund assistance under
                                                       .
     it hi s heading will affect some 2 000 to 3 000 beneficiaries . This number ps
        limited in view of the period of application of the measure but is large
     : enough to affect a number of job losses in various countries .                |
(*) This amount could only be absorbed if the Decision concerning the creation
     of the new aid were adopted in good time .
 ---pagebreak---                                   3
 - Amount of aid .
      The average amount used as the basis of calculation for the inter–
     vention of the Fund is 9 000 eua , an amount which is about twice
     the average annual expenditure upon which the Fund
     "bases its .calculations for training. It seems preferable not to
   . exceed the parameters currently^ used for the more usual Social Fund
      aids , since training operations may easily be spread over two year
     periods .                                            _   -
– The payments to which the Fund would contribute , could take the
     form of monthly payments ( in the case of early retirement payments ^
                                   4
     or lump sums ( e.g. severance payments or tide-over allowances ).
     The aid of the Fund would not exceed a man-jimim' amount of 4 500 eua
     per person, being 50 % of the amount indicated above . ( Fund aid may "
      be 10% higher in certain priority regions ).
Additional staff requirements
It is estimated that this proposal would necessitate the following staff
- 1 B grade official
- 2 C grade officials . -
This proposal is made subject to availability of adequate staffing '
resources .
Given the existing shortage of staff in the Social Fund - an issue
which has been raised on many occasions by the European Parliament -
the additional tasks of administration following the adoption of the'
new aid could not be wholly met within existing staffing levels .
                   '     [             ' ■ " '
 Even assuming that the tasks for which A grade staff are responsible
 ( the formulation and drafting of guidelines for the management of the
 new aid , contacts with sponsors and national authorities , checks on
the efficacy of the aid granted ) could be taken on by existing staff
 in post , the same could not be said of the tasks falling to B and C
grades without recourse to additional staff .
 It should be stressed that this new aid will involve a completely
 new type of measure by comparison with the traditional forms of inter­
 vention by the Social Fund . This will add to the burdens imposed by
 the work in question when compared with more routine tasks .
 ---pagebreak---                                                                  JL
Tasks falling to B grade officials
The B grade official would assume responsibility for the following
tasks , his workload being determined on an established geographical
basis :
- putting agreed allocations t?y the Commission into effect including
  numerous tasks concerned with computerised systems ;
- management of book-keeping concerned with applications for the
  new aid ;
- on the spot and on paper checks on the progress of operations receiving
  support ;
- preparation of payments ( both advance and final );
- assisting A grade officials in the execution of their duties .
Tasks falling to C grade officials
The two C grade officials , in additive to the usual typing and
secretarial work , would assist the A and B grade officials in their
accounting functions , in the preparation of payments , in keeping of
records and the 'on-line' correction of numerical information associa­
ted with applications from the date of their receipt to their final
payment .