EPRSLibrary By / October 3, 2013

EU support for redundant workers in Italy

The European Globalisation Adjustment Fund (EGF) co-finances measures that aim at helping workers acquire new skills and find new jobs….

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The European Globalisation Adjustment Fund (EGF) co-finances measures that aim at helping workers acquire new skills and find new jobs. The Commission (EC) considers that two requests for aid to around 1 500 redundant workers in Italy meet the EGF criteria. Parliament and Council now have to decide on the related funding proposals for a total EU contribution of €3.7 million.

EGF: main features

The EU can resort to the EGF in case of mass redundancies due to major changes in global trade patterns. From May 2009 to December 2011, the Fund was also able to tackle mass job losses caused by the economic crisis. The EGF co-finances packages of tailor-made services, designed by Member States (MS) to facilitate the reintegration of affected workers into the labour market. As one of the flexibility instruments in the EU budget outside the Multiannual Financial Framework (MFF), the EGF can intervene only following a request by a MS to address a specific crisis, which meets the intervention criteria set in Regulation (EC) No 1927/2006 (as reviewed in 2009).

Funding proposals for workers in Italy

New skills - EGF
© creative soul / Fotolia

In June 2013, the EC positively assessed two Italian applications of December 2011 and November 2012, submitting related funding proposals to the EP and the Council, which decide jointly on the mobilisation of the EGF.

The December 2011 case relates to 529 job losses at two information and communication technology (ICT) manufacturers in Lombardy (northern Italy). Highlighting the reverse of the positive trend experienced by the sector up to 2008, Italy applied under the temporary provisions for the economic crisis, for which EU co-financing was 65%. Thus, the EGF would contribute over €1.1 million to services, including support to entrepreneurship.

The November 2012 case concerns over 1 000 redundancies at a car producer (De Tomaso Automobili). The request refers to structural changes in trade, underlined in the declining EU share of world car markets. The automotive sector accounts for the highest number of applications (16) since the creation of the EGF. Services for this case include: training, job-search assistance and hiring benefit. The EGF aid would be €2.6 million (50% co-financing).

The Budgets Committee approved the proposals for the ICT (rapporteur Salvador Garriga Polledo, EPP, Spain) and the automotive (rapporteur Dominique Riquet, EPP, France) cases. The plenary is to vote on both in October.

EGF: data and recent developments

Since 2007, 20 MS have submitted 110 requests for EGF aid to the EC. These concerned services for 100 000 workers in more than 30 different sectors, suggesting that changes in global trade and/or the crisis have had an impact on a range of economic activities in the EU. Total EU contributions paid under the scheme have so far amounted to €416 million. In 2011, an evaluation carried out for the EC identified both positive results and shortcomings in the functioning of the EGF. On average, 41.8% of the workers had new jobs when funding ended, but variations were significant from one case to another. A recurrent criticism, including in a recent report of the European Court of Auditors, relates to the length of time taken for the procedures.

In June 2011, the EC proposed to continue the Fund as a solidarity tool beyond 2013. After a 2011 EP resolution on the future of the EGF, in 2013 the EP’s Employment and Social Affairs Committee (rapporteur Marian Harkin, ALDE, Ireland) adopted a report with more than 100 amendments to the EC’s proposal. In its February 2013 conclusions on the 2014-20 MFF, the European Council cut the maximum annual budget of the EGF from the current €500 million to €150 million. According to press sources, progress has been made in trilogue negotiations on some sensitive issues on the Fund’s post-2013 rules, such as the return of crisis-related provisions, with final agreement likely soon.

A recent Briefing provides more details of the EGF.

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