EUROPEAN COMMISSION

Brussels, 23.10.2017

COM(2017) 618 final

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the mobilisation of the European Globalisation Adjustment Fund following an
application from Finland – EGF/2017/005 FI/Retail

EXPLANATORY MEMORANDUM

CONTEXT OF THE PROPOSAL

1.The rules applicable to financial contributions from the European Globalisation Adjustment Fund (EGF) are laid down in Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006 1 (the ‘EGF Regulation’).

2.On 12 June 2017, Finland submitted an application EGF/2017/005 FI/Retail for a financial contribution from the EGF, following redundancies 2 in the economic sector classified under the NACE Revision 2 Division NACE Revision 2 Division 47 (Retail trade, except motor vehicles and motorcycles) in the NUTS level 2 regions of FI19 - Lansi Suomi, FI1B - Helsinki-Uusimaa, FI1C - Etelä-Suomi and FI1D - Pohjois- ja Itä-Suomi FI1D in Finland.

3.Following its assessment of this application, the Commission has concluded, in accordance with all applicable provisions of the EGF Regulation, that the conditions for awarding a financial contribution from the EGF are met.

SUMMARY OF THE APPLICATION

ASSESSMENT OF THE APPLICATION

Procedure

4.Finland submitted application EGF/2017/005 FI/Retail within 12 weeks of the date on which the intervention criteria set out in Article 4 of the EGF Regulation were met, on 12 June 2017. The Commission acknowledged receipt of the application on the same date and requested additional information from Finland on 19 June 2017. Such additional information was provided within six weeks of the request. The deadline of 12 weeks of the receipt of the complete application within which the Commission should finalise its assessment of the application's compliance with the conditions for providing a financial contribution expires on 23 October 2017.

Eligibility of the application

Enterprises and beneficiaries concerned

5.The application relates to 1 660 workers made redundant in the economic sector classified under the NACE Revision 2 Division 47 - Retail trade, except motor vehicles and motorcycles. The redundancies made are located in the NUTS level 2 regions of FI19 - Lansi Suomi, FI1B - Helsinki-Uusimaa, FI1C - Etelä-Suomi and FI1D - Pohjois- ja Itä-Suomi FI1D in Finland.

Intervention criteria

6.Finland submitted the application under the intervention criteria of Article 4(1)(b) of the EGF Regulation, which requires at least 500 workers being made redundant over a reference period of nine months in enterprises operating in the same economic sector defined at NACE Revision 2 Division and located in one region or two contiguous regions defined at NUTS 2 level in a Member State. In the Helsinki-Uusimaa (FI1B) region alone there are 835 redundancies.

7.The reference period of nine months for the application runs from 3 August 2016 to 3 May 2017.

Calculation of redundancies and of cessation of activity

8.The redundancies during the reference period have been calculated as follows:

–1 660 from the date of the employer's individual notice to lay off or to terminate the contract of employment of the worker.

Eligible beneficiaries

9.The total number of eligible beneficiaries 1 660.

Link between the redundancies and major structural changes in world trade patterns due to globalisation

10.In order to establish the link between the redundancies and major structural changes in world trade patterns due to globalisation Finland argues that retail trade is going through a period of major changes, due to globalisation (online trading). Changing patterns of consumers` habits, digitization and the economic crisis also play a role in changes.

11.Online sales are growing for many years already. It is expected that by 2019 13 % of the global retail trade will be online, while in 2014 it was only 6,3 % 7 . Consumers initially turned to online shops. More recently they tend to turn to international web-shops, based in non EU countries.

12.Online shopping has a major impact on the sales of conventional department stores. The lead web-shops are in China, India and the US.

13.In Finland online sales of retail products have increased by 34 % in the period 2010-2015. Finns tend to purchase more from foreign online stores than other Scandinavians 8 . As a consequence the sales in the Finnish department stores decreased. In 2014 sales in department store trade went down by 4,3 % compared with 2013, while in in 2016 the decrease was 2,8 % compared with the 2015 sales 9 .

14.There is also a major swap in retail jobs. While routine, full time jobs disappear, there are new openings, as part time jobs, with new skills such as IT skills, forecasting, data analysis, communication, customer knowledge and logistics 10 . 43 % of retail staff is over the age of 45 years and without the skills mentioned.

15.To date, the NACE Revision 2 Division 47 - Retail trade, except motor vehicles and motorcycles sector has been the subject of 8 EGF applications 11 .

Events giving rise to the redundancies and cessation of activity

16.The retail sector in Finland accounts for 7 % of all jobs, but it is open for young, part time workers with new skills. Web-shop purchases from countries outside of the EU increased from 6 % (2008) to 19 % (2016) of all sales. 32 % of online purchases are from other EU MS and 16 % of online trading is from non EU countries. 23 % of Finnish international online trading is from China 12 .

17.The trend is similar in other EU countries; the online purchase from non EU members increased from 13% to 20% of all international online purchase in the 2012-2016 periods (source: EUROSTAT).

18.Anttila Oy was a retail company, created in 1952 as a mail order company. It concentrated mainly on consumer electronics, clothing and homeware. Anttila department stores could be found in 23 localities.

19.Anttila was making loss for a number of years, mainly due to the decline of the entire department store business. The company tried to restore its profitability. It was recapitalised and the owner has changed. Anttila also reduced its staff (2015) 13 .

20.Despite all efforts the cash-flow and profitability of the company declined further, mainly due to international online trading. The company was looking for external financial resources, without success 14 .

21.The number of customers in Anttila`s department stores decreased annually by 10-20 %. In music, films, games and household appliances the sales collapsed in Anttila`s department stores, due to digitisation and online trading 15 .

22.In 2016 it had to file for bankruptcy. A notice of termination was given to all the 1 222 employees. Early 2017 Anttila closed down completely. The personnel at Oy Vallila, a subsidiary of Anttila, also lost their jobs.

23.The recession in Finland also had impact on Anttila`s sales 16 . Anttila staff used to work 30-35 hours/week. Current vacancies are for 12 hours/week.

24.Stockmann is a traditional Finnish department store chain, known as seller of high end, top quality products. Stockman faced similar problems like Anttila, but to less extent 17 .

25.Stockmann started the improvement of its financial and market position in 2015. In 2017 it closed down the Oulu store. Currently it has 6 department stores left. Stockman`s problems are partly linked to e-commerce, changing shopping habits and the weak consumer confidence in the economy 18 .

26.The number of customers in Stockmann`s department stores decreased by more than 40 % in 2012-2016. In the same period sales turnover decreased by 38 %. Operational margin went into negative 19 .

Expected impact of the redundancies as regards the local, regional or national economy and employment

27.All four NUTS-2 regions of Finland are affected. The biggest impact is in Helsinki-Uusimaa (835 job losses). There were 317 251 unemployed job seekers in March 2017 in Finland. That was 10,3 % of the labour force. 38 % were over 50 years of age 20 . There were 6 unemployed people for each vacancy. 4 % of all unemployed people were from trade 21 .

Länsi-Suomi

28.In the Pirkanmaa area 22 the retail and wholesale trade represents a significant share of the turnover of all sectors, about 30 %. The economy of the region is slowly recovering due the export industries and building.

29.In March 2017 the number of the unemployed listed at the Pirkanmaa Centre for Economic Development, Transport and Environment (ELY Centre) was 31 577. That was 12,9 % of the labour force, higher than the national average 23 .

30.The Anttila department store chain was a significant employer in the region. Finding a new employment was the most difficult for the older than 50 years.

Helsinki-Uusimaa

31.At the end of March 2017, the number of unemployed jobseekers in the Uusimaa region was 86 659 and unemployed jobseekers accounted for 10,3 % of the labour force.

32.The number of long-term unemployed people in March 2017 was 34 942. People over the age of 50 accounted for up to 36 % of unemployed jobseekers 24 .

Etelä-Suomi

33.Anttila was a major employer in the retail sector in Turku city. With the closure of Anttila a considerable number of jobs were lost.

34.This is a region with 11,6 % unemployment. Companies take on young workers for part-time work. Many of the unemployed are over the age of 50 25 .

35.In late spring 2017, the South-western area of the region unemployment was about 26 224 people. That was 11,6 % of the labour force. In addition to that further 10 600 people were engaged in employment promoting services 26 .

Pohjois-ja Itä-Suomi

36.Stockmann and Anttila were both significant retail sector employers in the Oulu area. The cessation of their business activities in the city led to a considerable number of redundancies, many of those affected were in older age groups.

37.Unemployment in the Oulu area remains high; in March 2017 there were 25 928 unemployed people. In addition the Employment and Economic Development Offices (TE Offices) had about 9 650 people in services for promoting employment 27 .

Targeted beneficiaries and proposed actions

Targeted beneficiaries

38.The estimated number of redundant workers expected to participate in the measures is 1 500. The breakdown of these workers by sex, citizenship and age group is as follows:

Eligibility of the proposed actions

39.The personalised services to be provided to redundant workers consist of the following actions:

–Coaching measures and other preparatory measures: this measure includes job-seeking training for self-confidence building and updating job-seeking skills. It also includes job coaching on an individual basis.

–Employment and other business measures: this measure is to provide information, counselling and expert services for planning the re-employment of the beneficiaries through online services, vocational and job-seeking guidance, job offers, competency mapping, work ability evaluations and try-outs.

–Training courses: this measure is to provide vocational, continuing, change training and re-training courses. It also includes training courses for supporting entrepreneurship. The courses will be tailored to the target group.

–Start-up grant: the purpose of the grant is to promote the creation of business activity and employment of individual persons. The start-up grant helps to launch and establish a full-time business gradually. It is provided up to maximum 12 months. Training and coaching is also linked to the grant.

–Career coaching pilots: for beneficiaries over 50 years old the pilot project will look at any physical or mental issues and other matters that may act as an impediment to re-employment. In addition some of the beneficaries might need intensive guidance.

–Pay-subsidy: this subsidy will be available to support employment in a new job, by reducing the payroll costs. The pay subsidy will be 30-50 percent of the payroll costs and paid to the employer. The length of the subsidy is 6-18 months, depending on the length of the unemployment period.

–Allowances for travel and accomodation: may be granted to the job seeker for travel costs and accomodation costs incurred during job-seeking or during training, aimed at promoting employment.

40.The proposed actions, here described, constitute active labour market measures within the eligible actions set out in Article 7 of the EGF Regulation. These actions do not substitute passive social protection measures.

41.Finland has provided the required information on actions that are mandatory for the enterprise concerned by virtue of national law or pursuant to collective agreements. They have confirmed that a financial contribution from the EGF will not replace such actions.

Estimated budget

42.The estimated total costs are EUR 4 165 600, comprising expenditure for personalised services of EUR 3 906 600 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 259 000.

43.The total financial contribution requested from the EGF is EUR 2 499 360 (60 % of total costs).

44.The costs of the actions identified in the table above as actions under Article 7(1)(b) of the EGF Regulation do not exceed 35 % of the total costs for the coordinated package of personalised services. Finland confirmed that these actions are conditional on the active participation of the targeted beneficiaries in job-search or training activities.

45.Finland confirmed that the costs of investments for self-employment, business start-ups and employee take-overs will not exceed EUR 15 000 per beneficiary.

Period of eligibility of expenditure

46.Finland started providing the personalised services to the targeted beneficiaries on 3 August 2016. The expenditure on the actions will therefore be eligible for a financial contribution from the EGF from 3 August 2016 to 12 June 2019.

47.Finland started incurring the administrative expenditure to implement the EGF on 3 August 2016. The expenditure for preparatory, management, information and publicity, control and reporting activities shall therefore be eligible for a financial contribution from the EGF from 3 August 2016 to 12 December 2019.

Complementarity with actions funded by national or Union funds

48.The source of national pre-financing or co-funding is the public employment services item in the administrative branch of the Ministry of Economic Affairs and Employment (MEAE). Some services will also be funded from the operating expenditure of the ELY Centres and the TE Offices. Technical support tasks will be funded from the operating expenditure of MEAE and the ELY Centres. An effort will be made to provide national pre-funding for all actions and tasks.

49.Finland has confirmed that the measures described above receiving a financial contribution from the EGF will not also receive financial contributions from other Union financial instruments.

Procedures for consulting the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities

50.Finland has indicated that the co-ordinated package of personalised services has been drawn up in consultation with the representatives of the ELY Centres of Uusimaa, Pirkanmaa, Pohjois-Pohjanmaa, Varsinais-Suomi and the TE office of Uusimaa. The representatives of Anttila and of the trade unions (PAM: Service Unions United) were also included.

51.The MEAE established a working group, which includes all the above mentioned local and regional authorities, the representatives of Anttila and PAM. The working group addresses the redundancies in the retail sector and participated in the preparation of the EGF application.

Management and control systems

52.The application contains a description of the management and control system which specifies the responsibilities of the bodies involved.

–Finland has notified the Commission that the financial contribution will be managed by MEAE, which acts as managing and certifying authority for EGF and as an intermediate body distributing EGF funds. The management functions for EGF have been assigned to the Employment and Entrepreneurship Department.

–The certifying functions are within the Human Resources and Administration Unit. Payments to beneficiaries are executed via the regional ELY Centres and TE Offices.

–With regard to auditing, the responsible body is the independent Internal Auditing Unit, operating under the Permanent Secretary of the MEAE.

Commitments provided by the Member State concerned

53.Finland has provided all necessary assurances regarding the following:

–the principles of equality of treatment and non-discrimination will be respected in the access to the proposed actions and their implementation,

–the requirements laid down in national and EU legislation concerning collective redundancies have been complied with,

–the dismissing enterprises which have continued their activities after the lay-offs, have complied with their legal obligations governing the redundancies and provided for their workers accordingly,

–the proposed actions will not receive financial support from other Union funds or financial instruments and any double financing will be prevented,

–the proposed actions will be complementary with actions funded by the Structural Funds,

–the financial contribution from the EGF will comply with the procedural and material Union rules on State aid.

BUDGETARY IMPLICATION

Budgetary proposal

54.The EGF shall not exceed a maximum annual amount of EUR 150 million (2011 prices), as laid down in Article 12 of Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020 28 .

55.Having examined the application in respect of the conditions set out in Article 13(1) of the EGF Regulation, and having taken into account the number of targeted beneficiaries, the proposed actions and the estimated costs, the Commission proposes to mobilise the EGF for the amount of EUR 2 499 360, representing 60 % of the total costs of the proposed actions, in order to provide a financial contribution for the application.

56.The proposed decision to mobilise the EGF will be taken jointly by the European Parliament and the Council, as laid down in point 13 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management 29 .

Related acts

57.At the same time as it presents this proposal for a decision to mobilise the EGF, the Commission will present to the European Parliament and to the Council a proposal for a transfer to the relevant budgetary line for the amount of EUR 2 499 360.

58.At the same time as it adopts this proposal for a decision to mobilise the EGF, the Commission will adopt a decision on a financial contribution, by means of an implementing act, which will enter into force on the date at which the European Parliament and the Council adopt the proposed decision to mobilise the EGF.

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the mobilisation of the European Globalisation Adjustment Fund following an
application from Finland – EGF/2017/005 FI/Retail

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006 30 , and in particular Article 15(4) thereof,

Having regard to the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management 31 , and in particular point 13 thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)The European Globalisation Adjustment Fund (EGF) aims to provide support for workers made redundant and self-employed persons whose activity has ceased as a result of major structural changes in world trade patterns due to globalisation, as a result of a continuation of the global financial and economic crisis, or as a result of a new global financial and economic crisis, and to assist them with their reintegration into the labour market.

(2)The EGF is not to exceed a maximum annual amount of EUR 150 million (2011 prices), as laid down in Article 12 of Council Regulation (EU, Euratom) No 1311/2013 32 .

(3)On 12 June 2017, Finland submitted an application to mobilise the EGF, in respect of redundancies in the economic sector classified under the Statistical classification of economic activities in the European Community ('NACE') Revision 2 Division 47 - Retail trade, except motor vehicles and motorcycles in the Nomenclature of Territorial Units for Statistics ('NUTS') 33 level 2 regions of FI19 - Lansi Suomi, FI1B - Helsinki-Uusimaa, FI1C - Etelä-Suomi and FI1D - Pohjois- ja Itä-Suomi FI1D in Finland. It was supplemented by additional information provided in accordance with Article 8(3) of Regulation (EU) No 1309/2013. That application complies with the requirements for determining a financial contribution from the EGF as laid down in Article 13 of Regulation (EU) No 1309/2013.

(4)The EGF should, therefore, be mobilised in order to provide a financial contribution of EUR 2 499 360 in respect of the application submitted by Finland.

(5)In order to minimise the time taken to mobilise the EGF, this decision should apply from the date of its adoption,

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the Union for the financial year 2017, the European Globalisation Adjustment Fund shall be mobilised to provide the amount of EUR 2 499 360 in commitment and payment appropriations.  

Article 2

This Decision shall enter into force on the day of its publication in the Official Journal of the European Union. It shall apply from [the date of its adoption] 34*.

Done at Brussels,

(1) OJ L 347, 20.12.2013, p. 855.

(2) Within the meaning of Article 3 of the EGF Regulation.

(3) Commission Regulation (EU) No 1046/2012 of 8 November 2012 implementing Regulation (EC) No 1059/2003 of the European Parliament and of the Council on the establishment of a common classification of territorial units for statistics (NUTS) as regards the transmission of the time series for the new regional breakdown (OJ L 310, 9.11.2012, p. 34).

(4) OJ L 393, 30.12.2006, p. 1.

(5) In accordance with the fourth paragraph of Article 7 of Regulation (EU) No 1309/2013.

(6) The dismissals occurred at two major department store chains (Anttila and Stockman) and at a subsidiary (Vallila). Anttila and Vallila have closed down completely.

(7) http://www.emarketer.com/public_media/docs/....2016_Worldwide_ECommerce_Report.pdf

(8) http://kauppa.fi/eng/press_releases/e_commerce_of_goods_increasing_despite_recession_24804 http://www.postnord.fi/globalassets/suomi/tutkimukset/e-commerce-in-nordics-2017_eng_low.pdf ,

(9) http://tilastokeskus.fi/til/klv/2016/12/klv_2016_12_2017-02-15_tie_002_en.html http://tilastokeskus.fi/til/klv/2014/12/klv_2014_12_2015-02-12_tie_002_en.html ,

(10)

    http://www.stat.fi/til/tyti/2016/13/tyti_2016_13_2017-04-12_kat_002_en.html

(11) EGF/2010/010 CZ/Unilever, EGF/2010/016_ES/Aragon retail, EGF/2011/004 EL/ALDI Hellas, EGF/2014/009 EL/Sprider Stores, EGF/2014/013 EL/Odyssefs Fokas, EGF/2015/011 GR/Supermarket Larissa, EGF/2016/005 NL/Drenthe Overijssel Retail, EGF/2017/003 GR/Attica retail

(12) http://www.postnord.com/en/media/publications/

(13)

    http://www.helsinkitimes.fi/business/14110-anttila-declares-bankruptcy.html

(14)

    https://www.statista.com/statistics/243872/number-of-employees-in-the-e-commerce-segment-in-china

(15)

    http://www.ifpi.org/downloads/GMR2016.pdf

(16)

    http://www.reuters.com/article/stockmann-seppala-idUSL6N0VC0NQ20150202

(17)

    https://ek.fi/wp-content/uploads/Luottamusindikaattori1412eng.pdf

(18)

    http://tilastokeskus.fi/til/kbar/2016/07/kbar_2016_07_2016-07-27_tie_001_en.html

(19)

    https://fashionunited.uk/news/retail/a-challenging-turnaround-ahead-for-the-owner-of-lindex/2015062216813

(20)

    https://julkaisut.valtioneuvosto.fi/handle/10024/79319

https://julkaisut.valtioneuvosto.fi/handle/10024/79798

(21)

    https://www.ammattibarometri.fi

(22) `Areas` in article 28-30 and 33-38 mean NUTS 3 level regions.

(23)

    https://julkaisut.valtioneuvosto.fi/handle/10024/79319

(24)

    https://julkaisut.valtioneuvosto.fi/handle/10024/79798

(25)

    https://www.ammattibarometri.fi

(26)

    https://julkaisut.valtioneuvosto.fi/handle/10024/79319

(27)

    https://julkaisut.valtioneuvosto.fi/handle/10024/79319

(28) OJ L 347, 20.12.2013, p. 884.

(29) OJ C 373, 20.12.2013, p. 1.

(30) OJ L 347, 20.12.2013, p. 855.

(31) OJ C 373, 20.12.2013, p. 1.

(32) Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020 (OJ L 347, 20.12.2013, p. 884).

(33) Commission Regulation (EU) No 1046/2012 of 8 November 2012 implementing Regulation (EC) No 1059/2003 of the European Parliament and of the Council on the establishment of a common classification of territorial units for statistics (NUTS) as regards the transmission of the time series for the new regional breakdown (OJ L 310, 9.11.2012, p. 34).

(34)  Date to be inserted by the Parliament before the publication in OJ.