3 European Globalisation Adjustment
Fund
(34211)
13483/12
COM(12) 462
| Commission Report on the activities of the European Globalisation Adjustment Fund in 2011
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Legal base |
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Document originated | 4 September 2012
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Deposited in Parliament | 10 September 2012
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Department | Work and Pensions
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Basis of consideration | EM of 22 September 2012
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Previous Committee Report | None
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Discussion in Council | None planned
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Committee's assessment | Politically important
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Committee's decision | Not cleared. For debate in European Committee B, together with the draft Regulation to continue the European Globalisation Adjustment Fund, already recommended for debate[11]
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BACKGROUND
3.1 The European Globalisation Adjustment Fund (EGF) has been
in operation since January 2007 and was introduced to provide
support for workers affected by large scale redundancies occurring
as a result of shocks due to globalisation and trade shifts.
It provides one-off, time limited individual support, geared directly
to redundant workers, so that they are able to find new jobs as
quickly as possible. Expenditure from the Fund is allowed only
for active labour market policies, including training measures.
It must not be used for activities that are ordinarily carried
out by public employment services or are receiving other EU funding,
for example, through the European Social Fund. It cannot finance
the restructuring of companies or sectors. At a practical level,
Member States have to apply to the EGF on a case-by-case basis,
with each application subject to agreement by the Council and
the European Parliament.
3.2 The EGF was amended in June 2009, in response to the financial
crisis, through a mix of permanent and temporary changes to improve
take up. Permanent revisions included:
- reduction of the qualifying number of redundancies, from 1,000
to 500; and
- extension of the period of support, from 12 to
24 months.
Temporary derogations, to run to 31 December 2011,
were:
- enlargement of the scope of
the EGF to cover redundancies caused by the impact of the global
financial and economic crisis; and
- an increase in the maximum contribution from
the EGF (the co-financing rate) from 50% to 65%, thus reducing
the direct match-funding from applicant Member States.
3.3 The 2006 Regulation establishing the EGF
requires the Commission to send to the Council and the European
Parliament, before 1 July each year, a quantitative and qualitative
report on the activities of the fund in the previous year.
THE
DOCUMENT
3.4 This Report is that for 2011. It contains
information on applications submitted, decisions adopted or requests
refused and actions funded, including the winding-up of financial
contributions made. While not intended for this purpose, this
information will be used also in negotiations on the proposal
for the new EGF in the next Multiannual Financial Framework (which
we have recommended for debate in European Committee B).[12]
3.5 In its overview of the year the Commission
says that:
- it received 26 applications
for contributions from the EGF, in contrast to 31 in 2010;
- the Budgetary Authority (the Council and European
Parliament) took 22 decisions to draw on the EGF, with a total
of 128.2 million (£100.5 million), which was 54.1%
higher than for 2010;
- four final reports were received in 2011 from
Member States following completed implementation;
- it submitted a proposal to extend the June 2009
temporary crisis derogation;[13]
and
- it proposed a continuation of the EGF in the
period 2014-20.[14]
3.6 In more detail the Commission reports:
- its case for renewal of the
temporary provisions and the European Parliament's support for
the measure;
- efforts to improve the decision-making process
for the EGF;
- it received 26 applications for contributions
from the EGF, in contrast to 31 in 2010;
- the 26 applications together targeted 16,870
redundant workers, ranging from 153 to 1,517 workers per case,
with three applications targeting more than 1,000 workers and
six targeting fewer than 500;
- the total amount requested was 77.5 million
(£60.8 million), ranging from 1.1 million (£882,000)
to 6.8 million (£5.4 million), with an average of 3
million (£2.3 million);
- the amounts proposed per worker varied from slightly
above 1,200 (£941) to over 19,000 (£14,895);
- the applications were submitted by ten Member
States Austria, Denmark, Germany, Italy, the Netherlands,
Portugal, Spain, Sweden, and for the first time, Greece and Romania;
- the applications related to 20 sectors of the
economy (eight of which were sectors which had not been presented
in an EGF application before road transport, tobacco,
social work, ICT services, warehousing and storage, motorcycles,
metalworking and pharmaceuticals), covering most frequently construction
(four applications) and automotive, electronic equipment and metalworking
(two applications each);
- of the 26 applications, 20 were to support workers
made redundant as a direct result of the global financial and
economic crisis ('crisis-related'), with the remaining six cases
to respond to major structural changes in world trade patterns
due to globalisation ('trade-related');
- applying for EGF support was made a lot easier
by the temporary 'crisis derogation';
- the Budgetary Authority (the Council and European
Parliament) took 22 decisions to draw on the EGF (five relating
to applications made in 2011, 16 relating to applications received
in 2010 and one from 2009);
- these targeted 21,213 redundant workers in 12
Member States, with a total of 128.2 million (£100.5
million) paid from the EGF (25.6% of the maximum annual amount
available to the EGF);
- this was 54.1% higher than for 2010 (83.2
million (£65.2 million));
- in 2011, payment appropriations for the EGF were
sourced differently from in the past, minimising the use of ESF
funds (which complements the EGF);
- 47.6 million (£37.3 million) was credited
to the EGF budget line at the beginning of the year and a further
50 million (£39.76 million) was added in an amending
budget;
- four final reports were received in 2011 from
Member States following completed implementation two cases
in Belgium, one in Sweden and one in Ireland;
- these show that in these cases 45% of targeted
workers (2,352 of 5,228) had found new jobs or were self-employed,
10.9% were in education and training and the remaining 44.1% were
unemployed or inactive for personal reasons;
- these are the first completed cases under the
revisions allowing for an extended 24-month implementation period
and 65% co-financing;
- these results were hampered by the reduced absorption
capacities of local and regional labour markets as a direct consequence
of the global financial and economic crisis;
- the figures relate to a snap-shot in time and
usually increase following the end of the EGF period especially
in the medium term if those workers continue to be supported through
Member States' own expense or with the help of the European Social
Fund;
- feedback from the three Member States indicates
increased self-confidence and employability of targeted workers
following EGF implementation the Member States reported
an ability to act more flexibly and innovatively to assist lower-skilled
and harder-to-help jobseekers;
- twenty final reports on completed EGF cases had
been received up to December 2011, since the EGF started, out
of 97 applications;
- the limited results so far received are inadequate
to draw firm conclusions on the added value of EGF support for
redundant workers;
- up to 0.35% of the EGF resources available can
be used for technical assistance in the form of, for example,
information and administrative support, monitoring, audit, control
and evaluation activities 483,868 (£379,328)
was actually used for these purposes;
- five EGF cases were wound up in 2011, all of
which had 12 month implementation periods with a co-financing
rate of 50%;
- one EGF contribution was returned in full by
the Spanish authorities in 2011, totalling 382,200 (£299,626);
- budget implementation varied from 4.7% to 29.6%,
with unspent funds to be returned to the EU Budget totalling 27.6
million (£21.7 million);
- this may be due to a lack of accurate and informed
planning, including overestimating the number of workers wishing
to participate, and or the numbers opting for more expensive schemes;
- there may have been delays in implementation
and Member States may not have taken advantage of the flexibility
to move money between budget items;
- when comparing the 40 final reports available
up to July 2012, the Commission found that 24 months implementation
helped Member States to plan more realistically, implement more
quickly, and re-budget as necessary;
- an analysis of trends over the period January
2007 to December 2011 considered 97 applications, of which 66
were related to the global financial crisis under the temporary
derogation and eligible for 65% of EGF funding;
- the number of trade-related applications remained
consistent at six per year since 2009;
- the Netherlands and Spain submitted the highest
number of applications (16 each), followed by Italy (12) and Denmark
(eight);
- seven Member States had still not applied, including
the United Kingdom;
- Italy requested EGF assistance for the largest
number of workers (13,910 in 12 applications), followed by Spain
(12,806 in 16 applications) and Ireland (9,835 in six applications);
- 414.9 million (£325.3 million) was
requested from the EGF in this period, with Italy requesting the
highest amount (66.2 million (£51.9 million)) followed
by Ireland (60.6 million (£47.5 million)) and Denmark
(49.9 million (£39.1 million) in eight applications);
- the average amount of funding per worker was
highest in Austria at around 15,000 (£11,759), followed
by Denmark with 10,000 (£7,840) Lithuania,
Slovenia and the Czech Republic requested less than 1000
(£784) per worker;
- whilst 32 sectors were identified for EGF assistance,
the majority of them were in manufacturing - automotive (14),
textiles (10), printing (nine) and machinery and equipment (eight);
- over 19,000, or 21.7% of the total number of
workers, were targeted in the automotive sector, textiles, at
just over 11,000 workers (12.6%) was second, with construction
third with nearly 7000 workers (7.8%);
- the mid-term evaluation of the EGF assessed the
impact of the EGF in more detail, covering 15 EGF cases in 12
Member States; and
- it found that, after 12 months of EGF support,
42% of targeted workers had found new jobs, with numbers increasing
in the medium term a positive result, bearing in mind
the type of worker targeted and the disadvantaged regions the
EGF supports.[15]
THE
GOVERNMENT'S
VIEW
3.7 The Minister for Employment, Department for
Work and Pensions (Mr Mark Hoban), comments that:
- as a report on the activities
of an EU instrument, this report does not in itself have any implications;
- the Government has, however, made clear that
it opposes extension of the EGF into the next Multiannual Financial
Framework period primarily on the grounds that it is an inefficient
instrument for managing those at risk of unemployment, or made
unemployed, as a result of large redundancies;
- the Government believes that the EGF was intended
to be time-bound and sees no case for its extension, with other
instruments such as the European Social Fund being more suitable
for improving the capacity of national institutions and programmes
to manage labour market shocks;
- moreover, the Government has been clear that
it wants to see real policy results and budgetary restraint in
the EU over the coming years, as well as the longer term, in order
to avoid unaffordably high costs to the UK and to UK taxpayers;
- to deliver this goal, the Government is committed
to continue to work hard to limit EU spending, reduce waste and
inefficiency and ensure that where EU funds are spent they deliver
the best possible value for money for taxpayers; and
- as part of this, it is essential that EU expenditure
is closely scrutinised on the basis of value for money.
3.8 The Minister, saying that the Government
therefore welcomes this annual report on implementation of the
EGF, continues that it raises, however, a number of issues that
cause concern, including:
- the poor return on EGF investments
while a small number, the four final reports submitted
in 2011 are part of a trend of low reintegration rates. This data
represents an improvement in raw terms over that reported for
2010 (where only 20% of workers had found employment). However,
the headline figures mask differences between cases an
Irish application led to only 557 of 2,589 identified workers
finding employment;
- the lack of quantitative data to back up the
Commission's claims that EGF interventions lead to greater employment
in the medium to long term (beyond a case's 12 or 24 month intervention
period), or that the EGF is the primary driver for obtaining employment
amongst targeted workers;
- the low number of applications from, and subsequent
grants to, the newer Member States over the lifetime of the EGF
for which data has been provided suggests that EGF support is
skewed away from those labour markets with weaker structures for
reintegrating workers suffering redundancies. The significant
discrepancy in the amount of funding requested per worker across
applications in 2011 suggests widely different support packages
on offer both within and between Member States;
- whilst the number of trade-related applications
has remained consistent over the years, the temporary derogation
for crisis-related applications has led to a sharp increase in
their number which place a greater drain on EU resources;
- a draft amending budget and global transfer were
both required to fund the EGF to the tune of more than 100% of
the appropriations credited to its budget line at the beginning
of 2011 this indicates poor financial forecasting by the
Commission and that the original allocation of funds to the EGF
fails to provide an adequate constraint on in-year spending; and
- the low rate of implementation of EGF assistance
in the five cases wound up in 2011, the implementation
rates varied from between 4.7% and 29.6%, revealing a concerning
lack of adequate forecasting and management of the personalised
services by Member States.
3.9 The Minister comments that:
- the Government regards these
findings as deeply concerning, not least given the disappointingly
low number of workers being returned to work and the growth in
spending from the EGF with, despite six fewer applications in
2011, a 54.1% increase in requested funding; and
- the Government has noted also, in Explanatory
Memoranda relating to EGF applications, the lack of adequate time
for parliamentary scrutiny of the large number of proposals, although
the return to original terms on co-financing and trade-related
criteria could result in a dip in applications, given past trends.
3.10 The Minister concludes that the Government
will closely scrutinise future proposals for the EGF in the context
of negotiations on the draft Regulation for the EGF for the period
2014-2020 and on the next Multiannual Financial Framework.
CONCLUSION
3.11 Although, as the Minister notes, this report
does not in itself have any direct policy implications, it is
extremely relevant to consideration of the continuation of the
EGF into the next Multiannual Financial Framework period. We share
the Government's doubts about this prospect, which are reinforced
by this document. So we recommend that the document be debated
with the draft Regulation to continue the EGF in the period 2014-2020,
which we have previously recommended for debate in European Committee
B.[16]
11 (33256) 15440/11 + ADDs 1-3: see HC 428-xlii (2010-12),
chapter 11 (23 November 2011) and HC 86-x (2012-13), chapter 1
(17 July 2012). Back
12
Ibid. Back
13
(32962) 12122/11: see HC 428-xxxvi (2010-12), chapter 7 (14 September
2011), HC 428-xxxviii (2010-12), chapter 8 (19 October 2011),
HC 428-xlii (2010-12), chapter 10 (23 November 2011), HC 428-xlvii
(2010-12), chapter 12(18 January 2012) and HC 428-lii (2010-12),
chapter 19 (29 February 2012). Back
14
Op cit. Back
15
See http://ec.europa.eu/social/keyDocuments.jsp?type=0&policyArea=0&subCategory=0&country=0&year=0&advSearchKey=evaluationemployment&mode=advancedSubmit&langId=en. Back
16
Op cit. Back
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