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.           The Greek authorities submitted application EGF/2014/009 EL/Sprider Stores for a financial contribution from the EGF, following redundancies in Sprider Stores S.A. in Greece.

3.           Following its assessment, 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

EGF application || EGF/2014/009 EL/Sprider Stores

Member State || Greece

Region(s) mainly concerned (NUTS level 2) || Κεντρική Μακεδονία (Central Macedonia) (EL12) Aττική (Attica) (EL30)

Date of submission of the application || 6.6.2014

Date of acknowledgement of receipt of the application || 13.6.2014

Date of request for additional information || 20.6.2014

Deadline for provision of the additional information || 1.8.2014

Deadline for the completion of the assessment || 24.10.2014

Intervention criterion || Article 4(1)(a) of the EGF Regulation

Primary enterprise || Sprider Stores S.A.

Sector(s) of economic activity (NACE Rev. 2 division)[2] || Division 47 ('Retail trade, except of motor vehicles and motorcycles')

Number of subsidiaries, suppliers and downstream producers || 0

Reference period (four months) || 17 November 2013 - 17 March 2014

Number of redundancies or cessations of activity during the reference period (a) || 703

Number of redundancies or cessations of activity before or after the reference period (b) || 58

Total number of redundancies (a + b) || 761

Total estimated number of targeted beneficiaries || 761

Number of targeted young persons not in employment, education or training (NEETs) || 550

Budget for personalised services (EUR) || 11 941 500

Budget for implementing EGF[3] (EUR) || 210 000

Total budget (EUR) || 12 151 500

EGF contribution (60 %) (EUR) || 7 290 900

ASSESSMENT OF THE APPLICATION

Procedure

4.           The Greek authorities submitted application EGF/2014/009 EL/Sprider Stores within 12 weeks of the date on which the intervention criteria set out in paragraphs 6 to 8 below were met, on 6 June 2014. The Commission acknowledged receipt of the application within two weeks of the date of submission of the application, on 13 June 2014. The Commission requested additional information from the Greek authorities on 20 June 2014. Such additional information was provided within six weeks of the date 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 24 October 2014.

Eligibility of the application

Enterprises and beneficiaries concerned

5.           The application relates to 761 workers made redundant in Sprider Stores S.A. an enterprise which operated in the economic sector classified under NACE Rev. 2 division 47 ('Retail trade, except of motor vehicles and motorcycles'). The stores were mainly located in the NUTS[4] level 2 regions of Κεντρική Μακεδονία (Central Macedonia) (EL12) and Aττική (Attica) (EL30).

Intervention criteria

6.           The Greek authorities submitted the application under the intervention criterion of Article 4(1)(a) of the EGF Regulation, which requires at least 500 workers being made redundant or self-employed persons' activity ceasing, over a reference period of four months in an enterprise in a Member State, including workers made redundant or self-employed persons' activity ceasing in its suppliers and downstream producers.

7.           The reference period of four months is from 17 November 2013 to 17 March 2014.

8.           The application relates to 703 workers made redundant[5] in Sprider Stores during the reference period of four months.

Calculation of redundancies and of cessation of activity

9.           All the redundancies have been calculated from the date of the de facto termination of the contract of employment or its expiry.

Eligible beneficiaries

10.         In addition to the workers already referred to, the eligible beneficiaries include 58 workers made redundant before the reference period of four months. These workers were made redundant after the general announcement of the projected redundancies on 30 September 2013. A clear causal link can be established with the event (the enterprise filing for bankruptcy) which triggered the redundancies during the reference period.

11.         The total number of eligible beneficiaries is therefore 761.

Link between the redundancies and economic crisis addressed in Regulation (EC) No 546/2009

12.         In order to establish the link between the redundancies and the global financial and economic crisis addressed in Regulation (EC) No 546/2009, Greece argues that the Greek economy is for the sixth consecutive year (2008-2013) in deep recession. According to ELSTAT, the Greek Statistical Authority, since 2008 the Greek GDP has decreased by 25,7 percentage points, public consumption by 21 percentage points and private consumption by 32,3 percentage points whilst unemployment increased by 20,6 percentage points.

13.         Moreover the decline in GDP has widened the gap between the Greek per capita GDP and the per capita GDP of the EU, cancelling the progress towards economic convergence made by Greece in the 1995-2007 period.

14.         Furthermore, to deal with foreign debt payments, in 2008 the Greek government took unpopular measures such as increasing tax revenues, streamlining public expenditure and decreasing public employees' salaries. Wages in the private sector have also been decreasing in an attempt to increase the competitiveness of the Greek economy. Since 2008, thousands of enterprises have stopped their activities and closed down, making their staff redundant and thousands of self-employed persons have ceased their activities, contributing to the sharp increase of unemployment. An immediate effect of the reduced income has been a decrease in consumption.

15.         In 2009, the drop of household consumption in Greece followed the same negative trend as in the EU-27. In 2010 and 2011, there was a recovery in household consumption at EU-27 level followed by a drop in 2012. Household consumption in Greece has been declining since the beginning of the financial and economic crisis and the figures have been worsening every year.

Household consumption (% change compared with the previous year)

|| 2008 || 2009 || 2010 || 2011 || 2012

EU-27 || 0,44 || -1,67 || 1,04 || 0,26 || -0,74

Greece || 4,67 || -1,91 || -6,39 || -7,91 || -9,07

16.         According to the ELSTAT report on household income and living conditions, 23 % of Greeks were below the poverty threshold[6] in 2012.

17.         To date, the retail sector has been the subject of another three EGF applications[7] also based on the global financial and economic crisis.

Events giving rise to the redundancies and cessation of activity

18.         According to the Greek authorities, the events giving rise to the redundancies were mainly two: (1) the decrease of available household income ― due to the increase in the tax burden, decreasing salaries (of both private and public employees) and rising unemployment ― resulting in a huge drop of purchasing power; (2) the drastic reduction of loans to enterprises and individuals due to the lack of cash in the Greek banks. According to the Bank of Greece, the annual growth rate for loans granted to households and enterprises (excluding financial undertakings) has been negative since 2010 due to cash shortfall in the Greek banks.

19.         Spider Stores was founded in 1971. In 1999, the Group Hajioannou bought 80 % of the enterprise and the expansion of the Sprider Stores began until it became the largest Greek multinational 'Value Fashion' clothing retail chain, as proudly stated in its website[8]. In 2000 the subsidiary Sprider Bulgaria was created to better support the presence of the group in the Balkans. Seven years later, in 2007, the enterprise expanded its presence in South-eastern Europe with the opening of five stores in Romania, one in Lemesos (Cyprus) and another shop in Sofia (Bulgaria). Next year, Sprider Stores opened 21 new stores in Greece, (10 stores in Athens and Thessaloniki and 11 all around the country) and 16 abroad, in Romania, Bulgaria, Cyprus, Poland and Serbia. In 2009, the company had a network of 114 clothing stores, 1 500 employees and a turnover of EUR 150 million.

20.         Due to the drop of purchasing power of the Greek households following the decline of the Greek economy since the beginning of the economic and financial crisis, demand for products other than basic staples plummeted and the turnover of Sprider Stores started declining accordingly.

Sprider Stores turnover (2009-2013) Million euro

2009 || 2010 || 2011 || 2012 || 2013[9]

150,01 || 138,03 || 112,15 || 77,70 || 22,36

21.         Another consequence of the recession of the Greek economy was the cash flow shortage. To remedy it Sprider Stores sought financial help from banks, unsuccessfully. According to the press this is the main argument provided by Sprider Stores when the shutdown of its operations was announced[10]

22.         The reduction in turnover which resulted from the drop in consumption together with the tightening of credit made unworkable the attempts of Sprider Stores to find a solution and ended in the enterprise filing for bankruptcy and the subsequent redundancies.

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

23.         Since Sprider Stores was present in all Greek regions, the redundancies are spread out over the whole Greece. The Greek authorities argue that the redundancies in Sprider Stores will further aggravate the unemployment situation, which already deteriorated as a result of the economic and financial crisis and seems to be particularly fragile. Greece has the highest unemployment rates amongst EU Member states.

Unemployment rate

Source: Eurostat[11]

24.         Most of the redundancies (64 %) are concentrated in Attica and Central Macedonia. In Q4 2013, the unemployment rate in both territories was above the national average (27,5 %). In Attica was 28,2 % whilst in Central Macedonia it was 30,3 %[12]. Furthermore, there is a lack of job offers in Attica and Central Macedonia if compared with the high number of job seekers. As a result, more than 70 % of the unemployed persons have been unemployed for more than 12 months. In Central Macedonia the situation of young job-seekers is particularly dramatic, since the youth unemployment rate is 60,4 %.

25.         Moreover, Attica accounts for 43 % of the Greek GDP; therefore the impact of the closure of businesses based in this region reaches the whole Greek economy.

Targeted beneficiaries and proposed actions

Targeted beneficiaries

26.         The estimated number of targeted workers expected to participate in the measures is 761. The breakdown of these workers by sex, citizenship and age group is as follows:

Category || Number of targeted beneficiaries

Sex: || Men: || 112 || (14,7 %)

|| Women: || 649 || (85,3 %)

Citizenship: || EU citizens: || 761 || (100,00 %)

|| non-EU citizens: || 0 || (0,00 %)

Age group: || 15-24 years: || 37 || (4,9 %)

|| 25-29 years: || 171 || (22,5 %)

|| 30-54 years: || 549 || (72,1 %)

|| 55-64 years: || 4 || (0,5 %)

|| over 64 years: || 0 || (0,00 %)

27.         Additionally the Greek authorities will provide personalised services co-financed by the EGF to up to 550 young people not in employment, education or training (NEETs) under the age of 30 on the date of submission of the application, given that 682 of the redundancies referred to in paragraph 7 occur in NUTS level 2 regions, which are eligible under the Youth Employment Initiative[13].

28.         The total estimated number of targeted beneficiaries expected to participate in the measures, including NEETs, is therefore 1 311.

Eligibility of the proposed actions

29.         The personalised services to be provided to redundant workers and NEETs consist of the following actions.

– Occupational guidance: This accompanying measure, which will be offered to all participants, covers the following stages:

1 Information addressed to NEETs. Unlike what happens with the 761 targeted workers, who are already identified (Sprider Stores former workers), the group of targeted NEETs is still to be defined. Among other criteria for selecting the targeted NEETs, the Greek authorities will use criteria aligned with the criteria included in the Greek Youth Guarantee Implementation Plan (i.e. young people at risk of exclusion, level of household income, education level, duration of unemployment, etc.), as well as, expressions of interest. For this purpose they intend to launch information campaigns aimed specifically at the NEETs.

2 Intake and registration. The first measure provided to all participants (workers and NEETs) includes information on available services and training programmes and on skills and training requirements.

3 Skills assessment and personal and occupational paper. This is intended to help workers and NEETs to identify their own skills and the opportunities related to their own interests and to establish a realistic career plan. The skills assessment involves intensive and personalised counselling, structured as a pathway consisting of various stages in which the worker and the counsellor work on an issue (e.g. opportunities, interests, analysis of the motivations and expectations, barriers, etc.). Following these assessments, a personal and occupational paper is put together, setting out a summary of the participant's skills, his/her individual project and an action plan.

4 Job-search support and career guidance. This includes: (1) training in horizontal issues such as development of social skills, adjustment to new situations, decision making; (2) job-search assistance including information on available jobs, active research of the local and regional employment opportunities, job-search techniques and training on drafting of CVs and cover letters and how to prepare a job interview; (3) career guidance : the counsellors will provide vocational guidance to the dismissed workers and will steer them towards specific job offers.

5 Guidance towards employment. The counsellors will also accompany the workers and NEETs during the implementation of their training pathways and individual plans of reintegration into employment. The participants interested in setting up a business will receive general support and counselling towards entrepreneurship in the framework of this occupational guidance measure.

6 Monitoring. This provides a follow up of the participants during the six months that follow the end of the implementation of the measures.

– Training, retraining and vocational training. This measure consists in providing vocational training courses to workers and NEETs which correspond to their needs, as identified during the occupational consultancy activity, and in areas and sectors with good developments prospects and that correspond to recognised needs in the labour market. The training courses could also be complemented with internship.

– Contribution to business start-up: The workers or NEETs who set up their own businesses will receive up to EUR 15 000 as a contribution to cover setting-up costs. In Greece, one of the major difficulties that entrepreneurs face when starting up a business is access to funding. Banks, due to the shortage of cash, turn down the majority of loan requests. This measure aims to promote entrepreneurship through this financial support.

– Job-search allowance and training allowance. To cover the expenses incurred when participating in the occupational guidance measure, the beneficiaries will receive EUR 50 per day of participation. While in training the allowance will be EUR 6 per hour.

– Mobility allowance. Those workers or NEETs who accept a job involving a change of residence will receive a lump sum of EUR 2 000 to cover the necessary expenditure.

30.         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.

31.         The Greek authorities have 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

32.         The estimated total costs are EUR 12 151 500, comprising expenditure for personalised services of EUR 11 941 500 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 210 000.

33.         The total financial contribution requested from the EGF is EUR 7 290 900 (60 % of total costs).

Actions || Estimated number of participants || Estimated cost per participant (EUR) (*) || Estimated total costs (EUR) (**)

Personalised services (Actions under Article 7(1)(a) and (c) of the EGF Regulation)

Occupational guidance || 1 311 || 1 250 || 1 638 750

Training, retraining and vocational training || 1 311 || 2 658 || 3 484 000

Contribution to business start-up || 200 || 15 000 || 3 000 000

Sub-total (a): || – || 8 122 750

(68,02 %)

Allowances and incentives (Actions under Article 7(1)(b) of the EGF Regulation)

Job-search allowance || 1 311 || 1 250 || 1 638 750

Training allowance || 1 100 || 1 800 || 1 980 000

Mobility allowance. || 100 || 2 000 || 200 000

Sub-total(b): || – || 3 818 750

(31,98 %)

Actions under Article 7(4) of the EGF Regulation

1. Preparatory activities || – || 40 000

2. Management || – || 40 000

3. Information and publicity || – || 100 000

4. Control and reporting || – || 30 000

Sub-total (c): || – || 210 000

(1,73 %)

Total costs (a + b + c): || – || 12 151 500

EGF contribution (60 % of total costs) || – || 7 290 900

(*) To avoid decimals, the estimated costs per worker have been rounded. However the rounding has no impact on the total cost of each measure which remains as in the application submitted by Greece.

(**) Totals do not tally due to roundings.

34.         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. The Greek authorities confirmed that these actions are conditional on the active participation of the targeted beneficiaries in job-search or training activities.

35.         The Greek authorities 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

36.         The Greek authorities started providing the personalised services to the targeted beneficiaries on 1 September 2014. The expenditure on the actions referred to in point 29 shall therefore be eligible for a financial contribution from the EGF from 1 September 2014 to 1 September 2016.

37.         The Greek authorities started incurring the administrative expenditure to implement the EGF on 15 July 2014. The expenditure for preparatory, management, information and publicity, control and reporting activities shall therefore be eligible for a financial contribution from the EGF from 15 July 2014 to 1 March 2017.

Complementarity with actions funded by national or Union funds

38.         The source of national pre-financing or co-funding is the Public Investment Programme of the Ministry of Development.

39.         Greek authorities have confirmed that the measures described above receiving a financial contribution from the EGF will not also receive financial contribution 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

40.         The Greek authorities have indicated that the co-ordinated package of personalised services has been drawn up in consultation with the representatives of the targeted beneficiaries and the Federation of private employees in Greece. In May 2014 the proposed application was discussed at two meetings with the social partners which were consulted on various issues related to the contents of the integrated package of measures.

Management and control systems

41.         The application contains a description of the management and control system which specifies the responsibilities of the bodies involved. Greece has notified the Commission that the financial contribution will be managed and controlled by the same bodies that manage and control the European Social Fund (ESF) funding in Greece. ESF Actions Coordination and Monitoring Authority (EYSEKT) will act as managing authority, the EDEL (Fiscal Audit Committee) as control authority and the Special Paying Authority Service as certification authority.

Commitments provided by the Member State concerned

42.         The Greek authorities have 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 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

43.         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[14].

44.         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 7 290 900, representing 60 % of the total costs of the proposed actions, in order to provide a financial contribution for the application.

45.         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[15].

Related acts

46.         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 7 290 900.

47.         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, in accordance with 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 (application EGF/2014/009 EL/Sprider Stores)

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[16], 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[17], and in particular point 13 thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)       The European Globalisation Adjustment Fund (EGF) was established 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 addressed in Regulation (EC) No 546/2009[18], 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 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.

(3)       Greece submitted an application to mobilise the EGF, in respect of redundancies[19] in Sprider Stores S. A. in Greece, on 6 June 2014 and supplemented it by additional information as provided by Article 8.3 of Regulation (EU) No 1309/2013. This 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)       According to Article 6 (2) of Regulation (EU) No 1309/2013, Greece has decided to provide personalised services co-financed by the EGF also to young persons not in employment, education or training (NEETs).

(5)       The EGF should, therefore, be mobilised in order to provide a financial contribution of an amount of EUR 7 290 900 for the application submitted by Greece,

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the European Union for the financial year 2014, the EGF shall be mobilised to provide the sum of EUR 7 290 900 in commitment and payment appropriations.

Article 2

This decision shall be published in the Official Journal of the European Union.

Done at Brussels,

For the European Parliament                        For the Council

The President                                                 The President

[1]               OJ L 347, 20.12.2013, p. 855.

[2]               Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC regulations on specific statistical domains (OJ L 393, 30.12.2006, p. 1).

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

[4]               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).

[5]               Within the meaning of Article 3(a) of the EGF Regulation.

[6]               In Greece, the poverty line is EUR 5 708 per year per person (for individuals) and EUR 11 986 for households comprising two adults and two children up to 14 years old.

[7]               EGF/2010/016 ES Aragón retail. COM(2010) 615

                EGF/2011/004 EL ALDI Hellas. COM(2011) 580

                EGF/2014/013 EL Odyssefs Fokas. Currently being assessed by the Commission.

[8]               http://www.spriderstores.ro/values/

[9]               First nine months of the year

[10]             Apparel retailer Sprider Stores shuts down operations after 32 years. "This development is due to the recalcitrant stance and refusal of the banks to continue funding," the company said. Source: www.ekathimerini.com

[11]             Code tsdec450

[12]             Source: ELSTAT. Q4 2013 Labour Force Survey

[13]             All Greek NUTS level 2 regions are eligible under the Youth Employment Initiative except Ιόνια Νησιά (Ionian Islands). Of the total number of redundancies 21 occurred in the Ionian Islands, 13 in Corfu and 8 in Zakynthos.

[14]             OJ L 347, 20.12.2013, p. 884.

[15]             OJ C 373, 20.12.2013, p. 1.

[16]             OJ L 347, 20.12.2013, p. 855.

[17]             OJ C 373, 20.12.2013, p. 1.

[18]             OJ L 167,  29.6.2009, p.26.

[19]             Within the meaning of Article 3(a) of the EGF Regulation.