11 Globalisation Adjustment Fund
| (30321)
5005/09
COM(08) 867
+ ADDs 1-2
| Draft Regulation amending Regulation (EC) No. 1927/2006 on establishing the European Globalisation Fund
Commission staff working documents: impact assessment and summary of assessment
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| Legal base | Article 159 EC; co-decision; QMV
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| Document originated | 16 December 2008
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| Deposited in Parliament | 13 January 2009
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| Department | Work and Pensions
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| Basis of consideration | EM of 22 January 2009
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| Previous Committee Report | None
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| To be discussed in Council | March 2009
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
11.1 Article 158 of the EC Treaty requires the Community to strengthen
its economic and social cohesion. Article 159 provides that the
Council may adopt legislation if it is necessary to achieve the
objectives of Article 158 and if those objectives cannot be attained
through the Structural and Cohesion Funds.
11.2 In 2006, with the aim of stimulating economic
growth and creating more jobs in the EU, the Council adopted a
Regulation to establish the European Globalisation Adjustment
Fund. Its purpose is to enable the Community to provide support
to people who are made redundant because of major structural changes
in world trade patterns due to globalisation.[29]
The Fund has a maximum annual budget of €500 million for
the period 2007-13. It may be used to provide up to 50% of the
cost of action by a Member State to re-integrate redundant people
into the labour market by providing, for example, training, occupational
guidance and allowances to help people search for jobs or re-locate
to find work.
11.3 A Member State may apply for support from the
Fund if, as a result of major structural changes in trade patterns,
there is a substantial increase in imports to the EU, or a rapid
decline in the EU's market share, which causes an enterprise and
its suppliers to make at least 1000 people redundant in the Member
State over a 4-month period. The Commission is responsible for
assessing the application and, where appropriate, seeking the
approval of the Council and European Parliament to make a contribution
from the Fund. The Member State must use the contribution within
12 months of applying for it.
11.4 During 2007 and the first half of 2008, the
Commission received 12 applications from eight Member States.
By December 2008, six applications had been decided, resulting
in payments from the Fund of €18.6 million in 2007 and €3.1
million in 2008.
11.5 In July 2008, the Commission published a report
on the way the Fund was working.[30]
It outlined changes to the Regulation which the Commission was
considering so as to improve take-up of support from the Fund.
11.6 In its European Economic Recovery Plan of 28
November 2008, the Commission announced its intention to revise
the rules of the Fund to make it a more effective means to respond
to the financial crisis in the EU.[31]
That is the main purpose of the draft Regulation.
The document
11.7 The draft Regulation provides for the rules
of the European Globalisation Adjustment Fund to be amended. The
main proposals are to:
- widen the scope of the Fund
until the end of 2010 so that the Community may support workers
made redundant as a result of the current global financial and
economic crisis as well as people made redundant because of changes
in world trading patterns due to globalisation;
- reduce the required number of redundancies from
at least 1000 to at least 500;
- widen eligibility for support to include workers
who are made redundant before or after the beginning of the 4-month
reference period so long as their redundancy can be linked to
the same cause as the redundancies made within the four months;
- increase the maximum contribution from the Fund
to 75% of the cost of the action by the Member State to help redundant
workers obtain work (at present, the maximum is 50%); and
- allow Member States two years in which to use
the contribution (at present, it must be used within a year).
The Government's view
11.8 The Parliamentary Under-Secretary of State at
the Department for Work and Pensions (Jonathan Shaw) tells us
that the Government believes that some of the proposed amendments
— and, in particular, those to reduce the required number
of redundancies from 1000 to 500 and to increase the maximum rate
of contribution from 50% to 75% — are not compatible with
the original aims of the Fund. Moreover, the Government does not
believe it is necessary expressly to widen the scope of the Fund
because Article 1 of the Regulation is already wide enough to
enable the Community to respond to redundancies caused by the
current global financial and economic crisis.
11.9 The Minister adds, however, that there is broad
support for the proposals among other Member States.
Conclusion
11.10 It seems to us to be a matter of opinion
whether the amendments proposed by the Commission are consistent
with the original aims of the European Global Adjustment Fund,
whether the original aims should be changed and whether the existing
Regulation is sufficiently wide to enable the Community to use
the Fund to respond to redundancies arising from the acute economic
difficulties some Member States are currently experiencing. We
do not find it surprising or a cause for concern that Member States
are not all of one mind about the answers to these questions.
Nor does it appear to us that the differences of opinion are a
sufficient or necessary reason for us to keep the draft Regulation
under scrutiny. In our view, the legal base for the measure is
appropriate and the proposals are consistent with the principles
of subsidiarity and proportionality. We have decided, therefore,
to clear the document from scrutiny and draw it to the attention
of the House by this Report.
29 Regulation No. 1927/2006: OJ No. L 406, 30.12.06,
p.1. Back
30
(29820) 11554/08 Commission Communication-Solidarity in the face
of change: the European Globalisation Fund in 2007 - review and
prospects. Back
31
(30213) 16097/08: HC 19-i (2008-09), chapter 4 (10 December 2008). Back
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