European Globalisation Adjustment Fund

The European Globalisation Adjustment Fund (EGF) aims to support redundant workers, mainly in regions and sectors which have been disadvantaged by exposure to the globalised economy. It has a potential annual budget of EUR 500 million to facilitate the reintegration into employment of workers.

ACT

Regulation (EC) No 1927/2006 of the European Parliament and of the Council of 20 December 2006 on establishing the European Globalisation Adjustment Fund [See amending act(s)].

SUMMARY

The European Globalisation Adjustment Fund (EGF) supports the re-integration of European workers affected by redundancies directly associated with major changes in global commercial trade. The support is provided on an individual basis and for a limited period. In the longer term, the measures contained in the fund aim to help redundant workers find and hold on to a new job.

Until 31 December 2011, the fund also provides aid to workers who have lost their jobs due to the global financial and economic crisis.

Intervention criteria

For the EGF to intervene, an application for a grant must be submitted by a Member State.

A financial contribution can be provided where major structural changes in world trade patterns lead to a serious economic disruption in a European Union (EU) country. This could be a substantial increase in imports, a decline in market share in a given sector or a delocalisation of undertakings to third countries. The EGF may also intervene where redundancies are directly and demonstrably the result of the financial and economic crisis.

The economic crisis or disruption must result in:

• at least 1000 redundancies over a period of 4 months in an enterprise, including redundancies in its suppliers or downstream producers; or
• at least 1000 redundancies, over a period of 9 months, in a NACE 2 sector in one region or two contiguous regions at NUTS II level;
• in small labour markets or in exceptional circumstances, the EGF may intervene even if the intervention conditions are not entirely met, when the redundancies have a serious impact on employment and the local economy. The aggregated amount of contributions for exceptional circumstances may not exceed 15 % of the EGF each year.

Financed measures

More specifically, the EGF finances:

• job-search assistance;
• tailor-made retraining;
• entrepreneurship promotion;
• aid for self-employment;
• special temporary "income supplements" (job-search allowances, mobility allowances, training allowances, measures to stimulate disadvantaged or older workers to remain in or return to the labour market, etc.).

The EGF does not finance passive social protection measures such as unemployment benefits.

Operation

The annual number of workers to benefit from the fund depends on several factors. These factors include the development of the employment market, the number of eligible applications made by the Member States and the budgetary resources available, although the potential annual funding of EUR 500 million has not been fully allocated to date.

Workers will benefit from the EGF assistance via the Member States. The assistance is not handed out to enterprises. In addition, the period of validity of the fund is limited to 24 months from the date on which the application was submitted.

The EGF is a solidarity fund intended to respond to an emergency or crisis situation. It does not finance the restructuring of companies or sectors.

Context

Generally speaking, the effects of opening up economies to international competition are positive. Globalisation boosts competitiveness and opens up new opportunities for growth and employment.

Nonetheless, at the same time, this exposure to world trade may also have adverse effects on the economy. The intensification of trade flows means that local, national and regional socio-economic systems face greater competition, which affects the less competitive sectors where the adjustment costs (retraining of the workforce and conversion of production structures) are high. This can sometimes result in massive job losses.

In addition to the Structural Funds or the European Strategy for Growth and Jobs which already offer a general response in terms of managing and anticipating the challenges of globalisation, this specific fund is essential in order to avert any threat of lasting individual impoverishment.

RELATED ACTS

Report from the Commission to the European Parliament and the Council on the activities of the European Globalisation Adjustment Fund in 2009 [COM(2010) 464 final – Not published in the Official Journal].

Report from the Commission to the European Parliament and the Council on the activities of the European Globalisation Adjustment Fund in 2008 [COM(2009) 394 final – Not published in the Official Journal].

Communication from the Commission to the European Parliament and the Council of 2 July 2008 “Solidarity in the face of Change: the European Globalisation Adjustment Fund (EGF) in 2007” Review and Prospects [COM(2008) 421 final - Not published in the Official Journal]. The Commission gives a positive report on the implementation of the European Globalisation Adjustment Fund (EGF) after its first year. However the effectiveness of the Fund could be improved in the short term, by simplifying its procedures, increasing its visibility and promoting exchange of experience.

The Commission studies the possibility of reinforcing its impact on the creation of jobs and training for Europe’s workers. The EGF could also be used to foster mobility of workers, and to better analyse and anticipate changes in the economy.

Last updated: 17.01.2011