14 European Globalisation Adjustment
Fund
| (27356)
7301/06
COM(06) 91
+ ADD 1
+ ADD 3
| Draft Regulation to establish the European Globalisation Adjustment Fund
Impact assessment of the proposal
Rationale for the intervention criteria
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| Legal base | Article 159 EC; co-decision; QMV
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| Department | Work and Pensions
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| Basis of consideration | Minister's letter of 19 October 2006
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| Previous Committee Report | HC 34-xxv (2005-06), para 5 (19 April 2006)
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| To be discussed in Council | December 2006
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| Committee's assessment | Politically important
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| Committee's decision | Cleared; but further information requested. Relevant to the debate on the EU-China relationship (para 4 of this Report)
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Previous scrutiny of the draft Regulation
14.1 The purpose of the proposed Globalisation Adjustment Fund
is to meet part of the cost of Member States' activities to help
individuals find employment where there have been large numbers
of redundancies as a result of changes in international patterns
of trade. The Commission says that the Fund would contribute to
economic and social cohesion within the EC.
14.2 Article 2 of the draft Regulation provides that
the "intervention criteria" for a financial contribution
from the Fund would be as follows:
- has there been a major change
in world trade patterns?
- has it led to a "massive" increase
of imports to the EC or a progressive decline in the EC's market
share or relocation of business from the EC to a third country?
- has this caused at least 1,000 redundancies in
an enterprise (including its suppliers and any downstream producers)
in a region where unemployment is higher than the EU or national
level? or
- has it caused at least 1,000 redundancies over
a period of six months in one or more enterprises in a business
sector which represents at least 1% of employment in the region?
14.3 Article 3 of the draft Regulation provides that
the financial contribution from the Fund would be towards the
cost of action to re-integrate redundant workers into the labour
market. Such action would include, for example, help to search
for a job, career guidance, re-training, income support during
re-training and temporary wage supplements for people aged 50
or more who agree to re-enter the labour market at a lower wage.
14.4 Article 5 sets out the information a Member
State would be required to supply in support of an application
for a contribution from the Fund, such as an analysis of the link
between the redundancies and the major change in international
trade patterns which had caused them;[36]
the effect of the redundancies on local, regional or national
employment; and the action the Member State is taking or will
take to help the redundant workers.
14.5 Article 10 provides for the Commission to be
responsible for assessing the application and deciding if a contribution
should be made. The value of the contribution would be limited
to up to half the cost of the action to be taken by the Member
State. If the Commission considered that a contribution should
be made, it would ask the Council and the European Parliament
to authorise it.
14.6 The Commission proposes that the Fund's total
annual expenditure should not exceed €500 million; the expenditure
would be financed from underspends on other EC programmes.
14.7 When we considered the draft Regulation in April,
the Parliamentary Under-Secretary of State at the Department of
Work and Pensions (Mr James Plaskitt) told us that the Government
believes that the Globalisation Adjustment Fund could play a useful
part in the response to the consequences of globalisation. The
UK would want to ensure that measures supported under the European
Globalisation Adjustment Fund did not undermine existing national
policies or overlap with other European Union funding streams
such as the Structural and Cohesion Funds.
14.8 We recognised that changes in the pattern of
world trade can have a devastating effect on local communities
in Europe. We shared the Commission's view that the sooner redundant
workers can find re-employment the better.
14.9 We noted that the Government wanted to ensure
that the Fund would not undermine existing national policies or
overlap with funding from other EC sources; and that it would
also try to ensure that the Regulation is sufficiently tightly
drawn to secure the effectiveness of the Fund. We asked the Minister
to tell us what amendments to the Regulation he considered necessary
for these purposes.
The Minister's letter of 19 October
14.10 The Minister tells us that the Government continues
to believe that the Globalisation Fund could be useful. Discussions
so far in the Council working party have focussed mainly on Articles
2, 3 and 10. The Government attaches priority to obtaining amendments
to:
- increase from 1000 to 2000
the number of redundancies required to trigger assistance from
the Fund (while accepting the need to show some flexibility in
the negotiations abut the precise figure);
- reduce the number of months during which the
redundancies would have to occur from six to around four; and
- remove from Article 3 of the Regulation provision
for assistance from the Fund for wage subsidies and in-work income
supplements.
14.11 There are a few other points, but of lower
priority, which the Government will pursue in the negotiations
on the draft Regulation: for example, the Government considers
that there need not be an annual review of the Fund in 2008 because
the Fund will not have been in operation long enough to make one
worthwhile.
14.12 The Minister says that the Finnish Presidency
hopes to achieve a political agreement on the proposed Regulation
in December.
Conclusion
14.13 We are grateful to the Minister for his
explanation of the amendments the Government will seek. In the
light of his letter, we see no need to continue to keep the draft
Regulation under scrutiny. Accordingly we clear it but we ask
the Minister to keep us informed of the progress of the negotiations
on the document.
36 The Commission acknowledges "the difficulty
of demonstrating a mechanical link between specific redundancies
and changing trade patterns" but considers that "the
applicant Member State should be able to provide evidence and
justification of a serious economic disruption, brought about
by at least one of three elements" (namely, relocation, increase
in imports or loss of market share) - see ADD 1, page 13. Back
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