European Globalisation Adjustment Fund, who gets it and who pays the bill?

Press conference by László Andor, Member of the EC, on the Annual Report on the European Globalisation Adjustment Fund (EC Audiovisual Services, 14/11/2013)

The Budgets Committee of the European Parliament (EP) announced yesterday that they approved financial aid to the Netherlands, Greece, Romania and Spain, whose workers were laid off as redundant due to globalisation or the financial crisis. It seems that the applications of the authorities of each country to the EU were fruitful, however it remains to be seen if the EP as a whole and the Council of Ministers will support this decision.

European Globalisation Adjustment Fund

The fund that will support the workers who were characterized as redundant was set up by the EU in the end of 2006 to help workers remain in employment or find a new job. The measures that are implemented in order to achieve these goals are training programmes, occupational guidance or economic aid (such as micro-credits) to start their own company. The annual budget of the fund is calculated to 150 million euros for the period between 2014 to 2020.

Construction sector in the Netherlands

The first case comes from the land of tulip and more specifically its construction sector. The Netherlands applied for support from the European Globalisation Adjustment Fund (EGF) following the dismissal of 562 workers from 89 SME’s located in the provinces of Gelderland and Overijssel, where construction is one of the major employers. Thus, the EGF approved a financial aid of 1,625 million euros which will cover the reintegration into employment of 475 workers. The total package is estimated to 2.7 million euros, the rest will be covered by the Dutch government.

Greece: the case of Nutriart and its suppliers

It has been almost a year since the bankruptcy of the baking company Nutriart where more than five hundred people were left without a job. The EFG approved the application of the Greek government for support and will provide funds of 6,096 million euros to be given for the re-training of those 508 people in the regions of Attica and central Macedonia.  It needs to be mentioned though that EFG covers the 60% of the total cost, while the remaining 40% must be generated by national funds which are not in excess.

Steel producers in Romania

The steel product maker SC Mechel Campia Turzii SA and the downstream producer SC Mechel Reparatii Targoviste SRL laid off 1.000 Romanian workers a couple of years ago. The excuse was that the demand for finished and semi-finished products fell by a great extent because of China’s imports, a situation that forced the companies to downsize. The Romanian authorities applied for EU support for the aforementioned people. The decision was delayed but finally announced. EFG’s financial aid is reaches 3,571 million euros, half the amount that is needed to pay for vocational guidance and new business start-ups.

Spain: Food and beverage industry and wood product manufacturing

Spain applied for EGF’s support after the dismissal of 904 workers in 661 SME’s operating in the food and beverage services industry in the region of Aragón. The redundancies claimed to be an outcome of the poor spending on bars, restaurants and cafes in the beginning of the global financial crisis. Therefore, EGF will provide the amount of 960,000 euros for counselling, re-training and job-search assisting of the 280 redundant workers.

Apart from the region of Aragón, Spain also requested help from the EGF for Castilla y León where 500 workers in three wood product manufacturing firms were fired due to shrinking global demand for builders’ joinery and carpentry wood products. The region which is highly linked to this sector suffers from serious unemployment problems. The EGF plans to provide 700,000 euros meant to help 400 of these workers who will try to catch up  with their careers once again.

EU’s final decision and the delay of funds’ approval

There are two drawbacks in this project. First of all, the time that has passed in order to make the final decision is very long. In some cases (Romania), we observe a period of more than two years in between the application and the final decision. This delay is a matter the EU bodies have to take into great consideration. Of course things cannot be ideal but must stay within reasonable deadlines. Let’s just consider the workers who lost their job and are struggling to make ends meet without any help from their country or the EU. Why should they suffer that long?

Moreover, another issue that needs to be pointed out is the amount of money provided by the EGF. Of course, the funds are more than welcome in such turbulent times and we should give some credit to this; however these funds stand only for half of the total cost of the financial package. I mention it because there are countries that cannot support their own basic needs, let alone contributing to this programme.

Therefore, a much more thorough discussion must be done by the EU in order to be more realistic, especially for countries in economic distress.