The European Globalisation Adjustment Fund (EGF) was set up by the European Union in late 2006 to support to workers (not companies or institutions) who have been made redundant as a result of trade liberalisation, so that they can either remain in employment or find a new job quickly. It provides counselling; job search and mobility allowances; new ICT skills and other forms of training; entrepreneurial support, including micro-credits.
Since 2007 the EGF has spent almost EURO 68 million to help over 15,000 workers in eight Member States to find new jobs. The workers supported so far had been previously employed in the manufacture of vehicles, or mobile phones, or textiles and clothing.
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The Fund is activated, upon a request introduced by a Member State when one or more companies (national, multinational or SMEs) announce at least 1,000 redundancies either in an enterprise, or in a sector within a region, due to structural changes in world trade patterns. The Fund is designed to intervene in cases where the redundancies have a significant impact on a region or a sector and therefore there is an EU dimension in terms of scale and impact.
The EGF is open to all persons who work legally in the EU. It operates under the principle of subsidiarity, and in a system of shared management between the European Commission and the Member State. Responsibility for implementing the EGF lies with the authorities of the Member States concerned. The maximum amount available through the EGF is €500 million per year for the period of 2007 to 2013.
Since 1 January 2007, the EGF has been funding active labour market policies helping workers made redundant as a result of globalisation, for example through:
It complements support provided by the employers and national authorities concerned in terms of active labour market policy measures. It does not fund passive social protection measures such as retirement pensions or unemployment benefits, which are the competence of the Member States. Member States who have successfully applied for an EGF intervention can also use EGF money for information and communication activities highlighting the role of the Fund in their interventions to support workers.
The EU Structural Funds, in particular the European Social Fund (ESF), consist of multi-annual programmes[1] in support of strategic, long-term goals, and management of change and restructuring in the 2007-2013 period, with activities such as life-long learning. The EGF is a response to a specific, European scale crisis; it provides one-off, time limited individual support geared directly to helping workers who have become redundant for reasons related to international trade.
The European Commission proposed on 16 December 2008 that, in addition to its current scope, the Fund should be able to support workers made redundant as a result of the global financial and economic crisis. In addition, it proposes to reduce the threshold of redundancies from the current 1,000 to 500, to extend the period of each case from 12 months to 24 months, and to increase its contribution from 50 % of total cost to 75 % (the rest being contributed by the Member State). This proposal was submitted to the Council and the European Parliament in December 2008. It is expected that the amendment will be adopted in mid-2009. There is a need of this fund because the difference in labor costs at the international level remains an important determinant of the geographical distribution of production, because the large apparel companies are constantly seeking production bases lower labor costs. Additionally, the ongoing globalization of trade has intensified this situation. The search for lower labor costs have led to significant changes in the image of global apparel industry. The production of clothing gradually moved from Europe to Asia, which now hold nearly 45% of global garment production.[2]