European Globalisation Adjustment Fund for Displaced Workers - Performance

(million EUR)

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Globalisation and technological change are likely to increase further the interconnectedness and interdependence of world economies. Labour reallocation is an integral and inevitable part of such economic change. These trends risk further tilting the already unequal distribution of the benefits from globalisation, causing a significant impact on the people and regions adversely affected.

Ensuring a fair distribution of the benefits of change calls for offering assistance to displaced workers. When the number of displaced workers is particularly large, providing assistance may go beyond the means of the individual Member State, requiring EU-level action. In particular, EU intervention through the EGF generates European added value by increasing the number, variety and intensity of services offered to even more dismissed workers and for a longer period of time than would be possible without EGF funding.

The EGF aims at supporting socioeconomic transformations that are the result of globalisation and of technological advance as well as of environmental changes by helping displaced workers and self‑employed persons whose activity has ceased to adapt to structural change.

The EGF is an emergency fund that operates reactively to assist displaced workers affected by major restructuring events. It is guided by—and helps implement—the principles defined under the European Pillar of Social Rights ⁽¹⁾ (including equal opportunities and access to the labour market, fair working conditions, and social protection and inclusion) and enhances social and economic cohesion among regions and Member States. It adds to existing mainstream restructuring assistance programmes and services for labour market actors, without replacing existing resources.
 

The EGF’s objectives are to demonstrate solidarity and promote decent and sustainable employment by helping in the case of major restructuring events. Emphasis shall be placed on measures that help the most disadvantaged groups. 

The EGF co-finances coordinated packages of personalised services designed to facilitate the re-integration of the beneficiaries, the most disadvantaged among them, into employment or self-employment. Its focus is on active labour market measures (e.g., training and retraining, up-skilling, job-search assistance and guidance, outplacement assistance, aid for self-employment or business start ups, temporary financial incentives and allowances). Assistance is granted for a limited period.

The EGF is implemented under shared management. DG Employment, Social Affairs and Inclusion is the lead for the Commission.

The employment policies are a shared competence between the EU and the Member States ^{( 2)}. The two parties shall work towards developing a coordinated strategy for employment and particularly for promoting a skilled, trained and adaptable workforce, and labour markets’ responsiveness to economic change with a view to achieving economic, social and territorial cohesion in the EU. The EU will contribute to a high level of employment by supporting and, if necessary, complementing action by Member States ^{( 3)}. 

In compliance with the principles of subsidiarity and proportionality ⁽⁴⁾, funding from the EU budget concentrates on activities whose objectives cannot be sufficiently achieved by the Member States alone and where EU intervention can bring additional value compared to action by Member States alone. 

Therefore, the mobilisation of the EGF to co-finance measures to support redundant workers can be justified in case of major restructuring events that, by their scale and effects, cause a significant impact and can test the limits of what regular national labour market programmes are able to provide to assist displaced workers. Assistance from the EGF is always offered in addition to the efforts of the Member States at a national, regional and local level. The EGF generates European added value by increasing the number, variety and intensity of services offered to even more dismissed workers and for a longer period of time than would be possible without EGF funding ^{( 5)( 6)}. 

The 2021-2027 multiannual financial framework ⁽⁷⁾, the Interinstitutional Agreements on Better Law-Making ⁽⁸⁾ between the European Parliament, the Council of the European Union and the European Commission, and the Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources, of 16 December 2020 ⁽⁹⁾, determine the budgetary framework of the EGF. The objective, scope and conditions for the mobilisation are set out in the EGF regulation ⁽¹⁰⁾. For each eligible case, the EGF is mobilised jointly by the European Parliament and the Council through a decision adopted in accordance with the provisions of the EGF regulation and a transfer from the reserve budget line to the EGF operational budget line. 

The EGF’s design shows a clear complementarity with the more preventive assistance offered by the European Social Fund Plus which consists of multiannual programmes that support long-term goals such as the anticipation and management of changes and restructuring. Unlike the European Social Fund Plus, the EGF is established to provide support in exceptional circumstances and outside a multiannual programming scheme. EGF and European Social Fund Plus measures are sometimes used by Member States to complement each other to provide both short- and long-term solutions ⁽¹¹⁾. 

^{(1)European Pillar of Social Rights action plan.}

^{(2)Articles 2 to 5 of the Treaty on the Functioning of the European Union.}

^{(3) Articles 145 and 147 of the Treaty on the Functioning of the European Union.}

^{(4) Article 5 of the Treaties (2002) C 325/01.} 

^{(5) Mid-Term Evaluation of the European Globalisation Adjustment Fund (EGF) 2014-2020.}

^{(6) Ex-post evaluation of the European Globalisation Adjustment Fund (EGF) 2014-2020.}

^{(7) Council Regulation (EU, Euratom) 2020/2093.}

^{(8) Interinstitutional Agreements on Better Law-Making.}

^{(9) Interinstitutional Agreement of 16 December 2020.}

^{(10) Regulation (EU) 2021/691.}

^{(11) SWD(2018) 192 final, page 34.}

The EGF builds on its predecessor under the 2014-2020 multiannual financial framework. In particular, it remains outside the budgetary ceiling of the multiannual financial framework given the non-programmable nature of its mandate. The maximum amount for the 2021–2027 period is set at almost EUR 1.467 billion in current prices.

For the 2021-2027 multiannual financial framework, the EGF was redesigned to ensure greater inclusiveness and flexibility to better respond to current and future economic challenges, such as automation and digitalisation, the transition to low‑carbon economy, etc. Therefore, its scope has been broadened to any type of significant restructuring event regardless of the cause, and the eligibility threshold has been lowered from 500 to 200 displaced workers. Moreover, the EGF co-financing rate has been aligned with the highest European Social Fund Plus co‑financing rate in the respective Member State.

Programme website:

• EGF

Impact assessment:

• The impact assessment of the EGF was carried out in 2018.
• For further information please consult SWD(2018) 289 final.

Relevant regulation:

• Regulation (EU) 2021/691 of the European Parliament and of the Council.
• Biennial reports:
  Every 2 years the Commission reports to the European Parliament and the Council on the activities of the EGF. The latest report (August 2023) covers the 2021-2022 period.

Evaluations:

• The midterm evaluation of the EGF 2014-2020 was published in 2018. For further information please consult SWD(2018) 192 final.
• The ex-post evaluation of the EGF 2014-2020 was published in 2021. For further information please consult SWD(2021) 381) final ⁽¹²⁾.
• To improve monitoring of the EGF, a beneficiary survey will be conducted at the end of each intervention. By means of the survey, the broader impacts of the EGF on beneficiaries’ general employability, such as the acquisition of new skills, gain of self-confidence, increased motivation, etc. will be measured.
• The midterm evaluation of the EGF 2021-2027 is due by mid-2025 and is expected to offer first insights on the fund’s performance.

⁽¹²⁾ SWD/2021/381 final.

–    In 2021, five applications, submitted at the end of 2020 by five Member States, were adopted. As a result, they were paid out partly from assigned revenues from the 2014-2020 period and partly from the budget allocated for 2021-2027. Four of these applications were submitted in relation to the repercussions of the COVID-19 crisis, and one application was linked to a trade-related restructuring event.

–    The new EGF regulation for 2021-2027 only entered into force in May 2021 but it has been applied retroactively since 1 January of that year. A derogation clause was therefore introduced to ensure that funding gaps would be avoided. In 2021, eight applications were submitted by four Member States, requesting a total of EUR 18 million to assist 740 dismissed workers. In four cases, the COVID-19 pandemic was the main factor that led to the dismissals. Three cases had a trade-related background and one had crisis. The EGF was mobilised in 2021 in four cases while the rest, received in the second half of 2021, benefited from EGF support in the first half of 2022. In 2022, three applications were submitted by three Member States, requesting a total of EUR 21 million to assist 2 442 dismissed workers. The first case had the COVID-19 pandemic as the main factor that led to the dismissals, the second was due to a company take-over and the third one had a trade-related background. Only one case was mobilised in 2022 (EUR 17.7 million), while the remaining two benefited from EGF support in the first half of 2023 (EUR 3.2 million). In 2023, four applications were submitted by three Member States, requesting a total of EUR 9.8 million to assist 2 249 dismissed workers. The main factor that led to the dismissals was bankruptcy for two of the cases and trade for the other two. Two cases were mobilised (EUR 4.98 million). The other two received in November-December 2023 will be put forward to the Budgetary Authority in the first quarter of 2024. 

–    The low number of EGF applications after 2020 has been a surprise to the Commission. During the EGF Contact Persons meeting that took place on 24 November 2022, participants were invited to share their thoughts on the low uptake of the EGF in the current programming period. The principal reason behind the low number of applications is the good situation on national labour markets, often with many unfilled vacancies. Jobs have been preserved thanks to the measures to maintain them, such as short-term work schemes. Also, there is currently a lot of funding available to absorb from other EU programmes like the REACT-EU, which was oftentimes easier to access or offered more favourable conditions. Furthermore, considerable support was available to keep people in employment during the pandemic, which contributed to the underutilisation of the EGF. Furthermore, several countries are faced with administrative overload due to the launch of the 2021-2027 European Social Fund Plus programmes. The EGF and the European Social Fund Plus are usually implemented by the same managing authorities and have limited capacity to concentrate on possible EGF applications due to the European Social Fund Plus negotiations.

–    Despite the economic recovery and declining inflation (although still higher than before),, uncertainty persists, in relation to (i) geopolitical instability, (ii) the persistence of supply chain bottlenecks and (iii) the economic consequences of the EU sanctions against Russia over Ukraine. 

–    As an emergency response tool, the EGF will be ready to react to these challenges and to help in possible further major restructuring events in 2024, if needed.

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Link to file with complete set of EU core performance indicators

2021-2027 Indicator metadata set