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European Commission

MEMO

Brussels, 14 November 2013

Employment: 2012 report on European Globalisation Adjustment Fund - frequently asked questions

See also IP/13/1076

What are the objectives of the EGF?

The EGF, an initiative proposed by European Commission President José Manuel Barroso, was established by the European Parliament and the EU's Council of Ministers at the end of 2006 to show solidarity with, and provide support to, workers made redundant as a consequence of major changes in world trade patterns.

It was designed as a means to reconcile the overall long-term benefits of open trade in terms of growth and employment with possible short-term adverse effects, particularly on employment, of the most vulnerable and lowest skilled workers. The measures typically supported by the EGF include intensive personalised job-search assistance, a variety of training and up-skilling measures, entrepreneurship promotion as well as various financial incentives/allowances during the support period.

In June 2009, the EGF rules were revised to strengthen the role of the EGF as a crisis intervention instrument forming part of Europe's response to the financial and economic crisis. The 2009 amendment of the EGF Regulation included temporary modifications applicable from 1.5.2009 until 30.12.2011 (eligibility of workers made redundant as a result of the crisis and increased co-funding rate of 65% instead of 50%), as well as several permanent modifications (threshold reduced to 500 redundancies, implementation period increased to 24 months from the date of application etc.). In June 2011, the Commission proposed to extend the temporary modifications – the so-called 'crisis derogation' - until the end of 20131 which was fully endorsed by the European Parliament in September 2011. In the Council, however, the Commission proposal did not receive the necessary qualified majority.

Since a political agreement on the extension of the crisis criteria was not reached, current applications for EGF support (submitted between 1 January 2012 and 31 December 2013) can be presented only on the grounds of structural changes in world trade patterns, and the co-funding rate has been brought back to the original 50 % of total eligible costs. However, the permanent changes in the amendments brought by the 2009 Regulation continue, easing Member States' applications in cases of redundancies caused by major structural changes in world trade patterns.

What will be new in the next period?

As part of its package for the next Multi-Annual Financial Framework beyond 2013, the Commission proposed in October 20112 that the EGF should continue during the period of 2014-2020 and that its scope should be expanded to include workers made redundant because of an unexpected crisis, as well as categories of workers not yet covered by the EGF, e.g. fixed-term and self-employed workers. Based on the Commission's proposal, the Council and the European Parliament agreed on 11 October 2013 on the text for the new EGF Regulation for the 2014-2020 period. Member States will be able to apply for EGF co-funding under the new Regulation from January 2014 onwards. In regions of high youth unemployment, the EGF will additionally be able to provide measures for young people not in employment, education or training.

How much funding will be available in 2014-2020

In its initial proposal, the Commission proposed €3 billion for the period 2014-2020, or a maximum annual amount of €429 million. However, in the context of the deal on the Multiannual Financial Framework the maximum annual amount has been put at €150 million.

This reduced level of funding represents a significant cut compared to the current annual ceiling of €500 million, but is still above the highest annual application level so far (€135 million).

Who qualifies for EGF support under the current EGF Regulation and how does the Fund work?

EGF funding is for workers, not companies. It aims to complement the support provided by Member States and the employers concerned to help redundant workers find new job opportunities. Member States applying for funding must fulfil the criteria set out in the EGF Regulation.

For each application, the decision is taken by the Council and the European Parliament, on the basis of a Commission proposal.

The EGF only funds active employment measures to help people remain in the labour market, such as counselling, training and business creation. Passive social protection measures, such as retirement pensions or unemployment benefits, are excluded as these are the competence of the Member States. The EGF currently covers up to 50% of the overall costs of support (after the expiry of the temporary increase to 65%), the other half being the responsibility of the Member State.

Did Member States use the temporary 'crisis derogation'?

The temporary 'crisis derogation' applied to all applications received from 1 May 2009 to 30 December 2011. In this period, a total of 79 applications were submitted by 18 Member States (not counting cases withdrawn by the applicant Member States).

65 of these applications (82%) targeted workers who had lost their jobs as a result of the financial and economic crisis, while 14 applications (18%) were submitted for workers dismissed because of changes in world trade patterns due to globalisation.

2009
(as from 1.5.2009)

2010

2011

Total no. of applications
up to 30.12.2011

% of
79 applications

crisis-related

23

23

19

65

82 %

trade-related

3

6

5

14

18 %

Totals
1.5.2009-30.12.2011

26

29

24

79

100%


Situation 12.8.2013 (*)

Applications submitted under the 'crisis derogation' represent roughly 85% of the total EGF amounts requested and workers targeted for assistance over the same period.

requested
EGF contribution
in € million

workers targeted
for assistance

% of
79 applications

crisis-related

270.1

85%

56 292

85%

trade-related

46.7

15%

9 993

15%

79 applications
1.5.2009-30.12.2011

316.8

100%

66 285

100%


Situation 12.8.2013 *)

*) The above figures differ slightly from those presented in the 2011 Annual Report MEMO – reasons:

Budgeted amounts and numbers of workers can still change during the assessment of an EGF application by the Commission services. Furthermore, when an application is withdrawn by a Member State, the respective case data are no longer reflected in the statistics.


A detailed overview of all 110 EGF applications received so far (from 1.1.2007 up to 12.8.2013) by Member State, year and application type is attached in the Annex.

What are the findings of the 2012 annual report?

In 2012, the Commission received 11 applications for EGF support. These were submitted by nine Member States for a total of € 58 499 659 in EGF support to target 10 403 redundant workers in six sectors. For two sectors (activities of call centres and consumer electronics), this was the first time that an EGF application was presented.

In terms of paid-out funding, the European Parliament and the EU's Council of Ministers took 19 decisions in 2012 to provide EGF funding (five of these were in response to applications made in 2012, 13 concerned applications received in 2011 and one was in response to an application received in 2010). These decisions targeted 15 700 workers dismissed in eleven Member States (Austria, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Romania, Spain and Sweden) and awarded € 73 536 222 from the EGF.

The €73.5 million paid out represent a 43% decrease in terms of EGF support compared to 2011 (€128.2 million for 22 contributions were granted in 2011 to support over 21 000 workers). This decrease is partly explained by the reduced EGF co-financing rate (50% instead of the previous 65%) and to a greater extent by the reduction in new applications after the 'crisis derogation' lapsed at the end of 2011. Furthermore, the total estimated cost of the support packages presented by Member States in 2012 (EGF and national shares together) were on average lower than in 2011 (average 6.6 million in 2012 for 19 cases, compared to an average of almost 9 million in 2011 for 22 cases).

What kind of measures did the EGF finance to help redundant workersin 2012??

Similarly to previous years, the measures for which the Member States requested EGF assistance included intensive, personalised job-search assistance and guidance, a variety of vocational training, up-skilling and retraining measures, temporary financial incentives and allowances during the support period, and other types of support such as business creation and public employment schemes.

The EGF complements the European Social Fund (ESF), which is the major EU instrument for supporting employment in the EU. While the EGF provides tailor-made assistance to redundant workers in response to specific, European-scale mass redundancies, the ESF supports strategic, long-term goals (e.g. increasing human capital, managing change) through pre-programmed multi-annual programmes, the resources of which cannot normally be reallocated to deal with crisis situations caused by mass redundancies.

What has the EGF achieved since its launch at the end of 2006?

The EGF contributions aim to co-finance active labour market policy measures proposed and organised for the workers by the Member State authorities.

Since 2007, when the Fund became operational, the Commission has received 110 applications for assistance amounting to €471.2 million from 20 Member States (situation on 12.8.2013, see Annex). Over 100 000 redundant workers have been targeted for EGF assistance – and many of them have already received, or are about to receive, the tailor-made assistance. The highest number of applications (18) originate from Spain, followed by the Netherlands (16).

The applications cover 35 industrial sectors: The majority of the applications (82%) concern manufacturing, out of which the automotive industry represents the biggest share (19 applications, or 17% of all applications, targeting almost 24 000 workers, assistance worth €120 million), followed by machinery and equipment (12 applications, or 11% of all applications, targeting more than 9 000 workers, assistance worth €58.2 million), textiles (9% or all applications), and the printing industry (8%). A further 8% of all applications were linked to the construction industry broadly defined and another 10% to services (aircraft maintenance, wholesale and retail trade, ICT services, road transport, social work, warehousing/storage, publishing and call centre communication services).

What are other important results?

Member States have reported over the past few years a series of interesting facts and encouraging information indicating that the personal situation, employability and self-confidence of the workers concerned visibly improved thanks to the tailor-made EGF assistance and services, even if not all of them found new work immediately.

The EGF enabled Member States to act more intensively in the areas affected by redundancies, in terms of the numbers of people assisted and the duration, type and quality of support, than would have been possible without EGF funding. The EU funds enabled countries to respond more flexibly to the current employment challenges, to devote more attention to lower skilled people and harder-to-help job seekers, and to include innovative actions in their measures as well. The EGF has proved to be a useful instrument at a time of budget deficits and public sector cuts, when national resources have become scarce and when Member States and companies are struggling to recover from the crisis.

The outcomes of the skills enhancement measures implemented by Member States with the help of the EGF and the other 'softer' benefits for the workers indicate that the EGF supports Member States effectively in their efforts to prepare for future employment challenges (e.g. response to demographic ageing, greener and knowledge-based economy etc.).

As the results of the cases with the longer implementation period (24 months, following the 2009 amendment of the EGF Regulation) become available, the EGF’s impact will be assessed in more detail, including in the ex-post evaluation, which is due by 31 December 2014.

Annex: Breakdown of EGF applications by Member State, year and application type (situation 12 August 2013)

Figures and graphics available in PDF and WORD PROCESSED

1 :

COM(2011) 336 final, 10.6.2011.

2 :

COM(2011) 608 final, 6.10.2011.


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