Editor's note

The European Globalisation Adjustment Fund (EGF) exists to support workers who lose their jobs as a result of changing global trade patterns so that they can find another job as quickly as possible. A maximum amount of € 500 million per year is available to the EGF to finance such interventions in the EU-27.

When a large enterprise shuts down or a factory is relocated to a country outside the EU, or a whole sector loses many jobs in a region, the EGF can help the redundant workers to find new jobs as quickly as possible. A maximum amount of € 500 million per year is available to the EGF to finance such interventions in the EU-27.

The EGF, an initiative first proposed by the Commission’s President, J.M. Barroso to provide help for people who lose their jobs due to the impact of globalisation, was established by the European Parliament and the Council at the end of 2006. In June 2009, the EGF rules were revised to strengthen the role of the EGF as an early intervention instrument. It forms part of Europe's response to the financial and economic crisis. The revised EGF Regulation entered into force on 2 July 2009 and applies to all applications received from 1 May 2009 onwards.

Commission’s opinion

"The impact of the recession has meant companies in the engineering sector have been hit hard by the sudden drop in demand for mechanical and electronic machinery. It is often hard for the redundant workers to find new opportunities with many having to move to other sectors. The Commission is confident that the support and training the EGF can provide, for example, to the Danish workers will make the transition to a new job easier”.

László Andor, EU Commissioner for Employment, Social Affairs and Inclusion.

Recent example

The European Commission approved two applications from Denmark (Brussels, 02 August 2010) for assistance from the EU Globalisation Adjustment Fund (EGF). More than € 10 mln is expected to assist Danish government to return 1,149 redundant workers back into employment. The workers lost their jobs in the engineering sector after the economic slowdown exacerbated an already difficult situation for two Danish companies, i.e. Linak A/S and the Danfoss Group. The applications will now go to the European Parliament and the EU Council of Ministers for the final approval (IP/10/1019).

The two Danish applications relate to 1,641 redundancies in total, of which 1,443 were in three companies in the Danfoss Group and 198 in Linak A/S. The dismissals were a consequence of the rapid decline in demand for mechanical and electronic machinery and financial pressures that left some companies with no alternative but to let workers go and transfer production to places with lower costs.

All the companies affected are located in Sønderborg, a municipality in a relatively isolated part of Denmark where the iron and metal industry represents around 25% of all employment and where the engineering sector was the largest single sector. The impact of these redundancies at local level is huge and will push up the unemployment rate in an area where it is already higher than the national average.

It is expected that the EGF assistance for the former workers of Danfoss Group and Linak A/S will help 1,149 of the most disadvantaged of these dismissed workers back into employment. It includes training in tourism and energy technology, education and training in business management and remedial education; employment incentives (such as incentives for people who wish to change careers) and also several incentives for business start-ups.

The total estimated cost of the package of is €15.5 million, of which the European Union has been asked to provide EGF assistance of €10.1 million.

Last three years’ account

There have been 64 applications to the EGF since the start of its operations in January 2007, for a total amount of about €365.3 million, helping more than 68,500 workers.

EGF applications related to the following sectors:

• automotive (France, Spain, Portugal, Austria, Germany, Sweden);
• textiles (Italy, Malta, Lithuania, Portugal, Spain and Belgium);
• mobile phones (Finland and Germany);
• domestic appliances (Italy);
• computers and electronic products (Ireland and Portugal);
• mechanical/electronic (Denmark);
• repair and maintenance of aircraft and spacecraft (Ireland);
• crystal glass (Ireland);
• ceramics and natural stone (Spain);
• construction (Netherlands, Ireland and Lithuania);
• carpentry and joinery (Spain);
• electrical equipment and furniture (Lithuania);
• publishing and printing industry (Netherlands and Germany),
• retail trade (Czech Republic and Spain) and wholesale trade (Netherlands).

Final reports from the earlier cases supported by the EGF show strong results in helping workers stay in the labour market and find new jobs (in bold are the countries from the Baltic Sea area).

The Fund’s purpose

The EGF can fund active labour market measures focused entirely on helping the workers made redundant as a result of globalisation, for example through:

- job-search assistance, occupational guidance, tailor-made training and re-training including IT skills and certification of acquired experience, outplacement assistance and entrepreneurship promotion or aid for self-employment,

- special time-limited measures, such as job-search allowances, mobility allowances or allowances to individuals participating in lifelong learning and training activities.

The EGF is not funding, so-called passive social protection measures, such as retirement pensions or unemployment benefits, which are the competence of the Member States.

The EGF’s benefit

Only the workers made redundant because of globalisation may benefit. The EGF does not finance company costs for modernisation or structural adjustment. The EGF is connected to other EU funds. For example, the EU Structural Funds, in particular the European Social Fund (ESF), support the anticipation and management of change with activities, such as life-long learning, with a strategic and long-term perspective. The EGF, on the other hand, provides one-off, time-limited individual support geared to helping workers who have suffered redundancies as a result of globalisation.

Additional information

EGF’s Annual Report: the production of an annual report on the EGF is a requirement of the EGF Regulation (Regulation (EC) No. 1927/2006).

The EGF annual report is also a key element in the renewed Social Agenda, as the Fund enables the Union to show its solidarity with those who are made redundant as result of globalisation.

EGF’s Legal Basis: the Regulation establishing the European Globalisation Adjustment Fund was adopted on 20 December 2006 and amended on 18 June 2009 to improve its operation.

The Commission revealed the following EGF Contacts in Latvia:

Ms Kristīne KĻUJEVA, Deputy Head of Budget Department
Ministry of Finance
E-mail: [email protected]

Some additional contacts are available too:

Ms Sofja RIBKINA, Deputy Head of European Union Budget Unit
Budget Department, Ministry of Finance
E-mail: [email protected]

Mrs. Alona NIKOLAJEVA, Labour Market Policy Division
Labour Department, Ministry of Welfare
E-mail: [email protected]

For further information, see:

- EGF website: http://ec.europa.eu/egf

- Video News Releases “Europe acts to fight the crisis: the European Globalisation Fund revitalized”:

http://ec.europa.eu/avservices/video/video_prod_en.cfm?type=details&prodid=9847&src=1

- Facing up to a globalised world – The European Globalisation Fund

http://ec.europa.eu/avservices/video/video_prod_en.cfm?type=detail&prodid=4096&src=4

- European Commission's newsletter on employment, social affairs and equal opportunities:  

http://ec.europa.eu/social/e-newsletter