European Globalisation Adjustment Fund (EGF)

25 June 2007
by eub2 -- last modified 25 June 2007

The EGF aims to help workers made redundant as a result of changing global trade patterns to find another job as quickly as possible. The fund was launched by the European Union in 2007 and will provide up to 500 million euro a year in support.

Why do we need it ?

More open trade leads to overall benefits for growth and employment, but it can cost some jobs. All Member States, large and small, new and old, can be affected by these changes and will all therefore be eligible for EGF assistance.

While the EU Structural Funds support the anticipation and management of change with activities such as life-long-learning with a strategic and long-term perspective, the EGF will provide one-off, time-limited individual support geared to helping workers who are 'severely and personally affected by trade-adjustment redundancies'.

How did it come about?

In 2005 the Commission report on ‘European Values in a Globalised World’ emphasised the benefits of opening markets and increased international competition, but also highlighted the need to help workers whose jobs disappear to find new jobs quickly.

Commission President Barroso proposed offsetting up a Globalisation adjustment Fund (EGF) to provide a European response to help those adjusting to the consequences of globalisation. This was designed to be a sign of solidarity from those who benefit from openness to the few who face the sudden shock of losing their job.

In December 2005, EU leaders agreed to establish the EGF. During 2006 the Council and the European Parliament debated and refined the concept, until it was adopted on 20 December 2006.

What does it do?

Starting from 1 January 2007, the EGF can fund active labour market policies focused entirely on helping the workers affected by globalisation-related redundancies, 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,
• measures to stimulate in particular disadvantaged or older workers, to remain in or return to the labour market.

It is intended to complement support provided by the employers and national authorities concerned in terms of active employment measures. It will not fund passive social protection measures such as retirement pensions or unemployment benefits, which are the competence of the Member States.

How does it work?

Applications to the Fund must be submitted by Member States. Individuals or companies affected by redundancies and wishing to benefit from the Fund should contact their national authorities.

There are four main stages to the process:

1. When a Member State is made aware of large-scale redundancies caused by the effects of globalisation, it immediately mobilises its employment services to design a plan to help the workers affected.
2. Once the plan is ready, it may submit an application to the European Union for part-funding through the EGF.
3. The European Commission will assess the plan and propose it to the EU's Budgetary Authority (the Council and the European Parliament) for its approval.
4. If the Council and Parliament approve the proposal, the Member State may receive up to 50% of the cost of its action plan.

In total, the EGF can provide up to €500 million in assistance each year.

Who can benefit?

Only the workers affected by the redundancies may benefit. The EGF does not contribute towards the restructuring of companies or industrial sectors.

However, assistance is not limited to the workers of the main company or sector experiencing difficulties – if the company's suppliers also face difficulties as a result, then their workers may also benefit.

The fund applies as much to small and medium-sized enterprises (SMEs) as large companies and multinationals.

How does it fit in with other EU funds, like the structural funds?

The EU Structural Funds, in particular the European Social Fund (ESF), consist of multi-annual programmes in support of strategic, long-term goals – notably anticipation and management of change and restructuring, with activities such as life-long-learning.

The EGF is a response to a specific, European scale crisis. It will provide one off, time-limited individual support, geared directly to helping workers who have suffered trade-related redundancies.

What has it done so far?

Details of all cases will be posted on this site as they are notified to the Commission, and will be updated to show the decision of the Budgetary Authority .

Source: European Commission