Which objective(s) does the Commission pursue?

The European Globalisation Adjustment Fund (EGF) provides support to workers made redundant because of major restructuring events, helping them find sustainable employment as quickly as possible. The objective of the post 2020 legislative proposal is to ensure that the EGF will be more responsive to unexpected shocks on Member States’ labour markets, while reducing administrative burden. Therefore the proposal:

• broadens the scope of EGF to cover any type of mass restructuring event. Consequently, it will no longer be necessary for the applicant Member State to deliver extensive documentation on what caused the restructuring event. The administrative burden will be reduced for Member States at application stage.

• intends to ensure a swifter mobilisation of EGF assistance. A streamlined mobilisation procedure will reduce administrative burden for all parties involved, and will ensure that assistance is delivered quicker.

• aligns the co-funding rate of the EGF with the highest co-funding rate of the European Social Fund Plus (ESF+) in the respective Member State. This will ensure complementarity between the EGF, as a reactive emergency response instrument, and the ESF+ as offering anticipative measures and long-term structural assistance.

• introduces a common monitoring system with output and result indicators. This includes the collection of qualitative data. As most data will be collected by means of a beneficiary survey, this will not add administrative burden.

• simplifies interinstitutional negotiations. The EGF being a special instrument outside and above the MFF ceilings, the Commission proposes an unlimited duration of the future EGF. This would reduce administrative burden on the side of all institutions involved, as the regulation would not need to be renegotiated at the end of each MFF.

Estimated savings and benefits

The Commission proposal takes on board a number of recommendations identified by the mid-term evaluation for reducing administrative burden and enhancing the benefits of the EGF.

In particular, the proposal broadens the scope and lowers the threshold of the EGF. According to the evaluation, this would make the EGF not only more relevant and better suited for future economic challenges, but also fairer, as it would not focus on a very specific group of displaced workers. The broadened scope would also lead to a more balanced use of the EGF for all Member States, including the EU-13 Member States (which have not used EGF very often). The burden of having to provide evidence to demonstrate that job losses were caused by globalisation or a crisis would be eliminated. As this currently is one of the most time-consuming steps in the application phase (and one of the biggest obstacles to the use of the fund), this simplification would speed up the mobilisation of EGF assistance. The broadened scope and the lower threshold would also offer more possibilities for smaller Member States to apply for assistance.

As suggested by the evaluation, the European Commission not only proposes procedural simplifications in order to make the preparation and assessment of the applications faster, but also to speed up the actual mobilization of funds. This is to guarantee a quicker delivery of assistance to displaced workers, and thus a quicker reintegration of these persons into the labour market.

As for monitoring and reporting requirements, the mid-term evaluation concluded that in order to better analyse the EGF’s effectiveness, Member States should be required to collect more detailed monitoring data, especially on the category of workers (professional and educational background), their employment status and the type of employment found. In order not to overburden the Member States, the Commission proposes to collect most of the data by means of a beneficiary survey, for which it will provide a template.

The evaluation suggests embedding EGF assistance more closely in the ‘EU Quality Framework for anticipation of change and restructuring’ and designing a more coordinated approach for both preventive measures in anticipation of major restructuring events and one-off reactive measures such as those co-financed by the EGF. As higher co-financing rates in the ESF were a disincentive to the use of the EGF, the Commission proposes to align the co-financing rate of the EGF with the highest ESF+ co-financing rate in the respective Member State. This will help ensure that the funds are used in a complementary way as intended.

The impact assessment, which accompanies the Commission proposal, confirms that the above-mentioned benefits as indicated by the mid-term evaluation will overall be achieved by the Commission proposal.

Outcome of Legislative Procedure

The key changes in the final compromise text compared to the initial Commission proposal are as follows:

➢  Change of the name of the Fund

The fund will be called European Globalisation Adjustment Fund for displaced workers (EGF) and the current abbreviation EGF will be maintained.

➢ Intervention criteria

The co-legislators agreed on a reduction of the threshold to 200 displacements (compared to the Commission’s proposal of 250), while keeping the reference periods during which redundancies would need to occur as in the Commission proposal (four months).

➢ Increase of the co-financing rate of the EGF

The Commission proposed to align the co-financing rate to the highest ESF+ rate in the respective Member State. The Council proposedto introduce a minimum co-financing rate of 60% in order to ensure that no Member State will be worse off than in the current period when the co-financing rate is 60%.

The alignment to the highest ESF+ co-financing rate in the respective Member State, while introducing a 60% minimum rate, was agreed by co-legislators.

➢ Mobilisation procedure

The Commission proposal provided for a simplified and quicker mobilisation procedure. The European Parliament, however, proposed to maintain the same procedure as in the current Multiannual Financial Framework period, which requires the adoption of two separate acts to be adopted by the Parliament and Council for the mobilisation of the Fund: a decision for the mobilisation and a budgetary act (budgetary transfer to the relevant budgetary lines in accordance with the Financial Regulation). The adopted act maintains the current procedure in place.

➢  Balanced solution for the performance management framework

The Council proposed several amendments that would have significantly weakened the performance measurement framework, based on a perceived administrative burden. The Parliament supported the Commission proposals and even tried to add indicators.

The co-legislators agreed on the following compromises:

• a more nuanced wording as concerns the beneficiary survey, explaining that it aims at data collection only and that no analysis by Member States is required;

• deletion of both long-term results indicators as well as indicative case-specific targets;

• the full set of result indicators is kept;

• the empowerment to change the indicators by a delegated is removed;

• Regarding the provision on communication and visibility, the initial Commission’s wording of the proposal was kept.

➢  Duration of EGF regulation limited to the MFF period

The Commission proposed an unlimited duration for the EGF in line with the European Solidarity Fund, equally outside the Multiannual Financial Framework (MFF). This was also the solution preferred by Parliament. The Council, however, proposed to introduce a time limitation to the MFF period (2021-2027).

Co-legislators agreed to limit the duration of the Regulation to the MFF 2021-2027.

➢  Collection and processing of data on beneficiaries for control and audit purposes - Single Data-mining tool

The Interinstitutional agreement covers obligations to Member States to collect data in an interoperable way to allow detection of irregularities and fraud and also requires the Commission to develop and make available to Member States a single-data mining tool for their use. As was the case for the Common Provisions Regulation, the co-legislators agreed on a less ambitious wording according to which the use of the single data-mining tool is merely encouraged, allowing Member States to develop their own tools. The Commission issued a statement indicating that in the Commission’s view, the compromise agreed does not properly reflect the Inter-institutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline.

Estimated savings and benefits

In comparison to the original Commission proposal, the final text of the Regulation agreed by the co-legislators offers a balanced compromise and is fully supported by the Commission (with the exception of the wording regarding the clause on the single data-mining tool).

The adopted legislative act offers an even lower threshold, making the EGF easier to use for smaller Member States.

However, the co-legislators did not agree to change the mobilisation procedure. This would have lowered adminstrative burden, and would have ensured a quicker delivery of assistance to displaced workers, and thus a quicker reintegration of these persons into the labour market.

As for monitoring and reporting requirements, the co-legislators dropped the requirement to collect long-term results indicators as well as to set indicative case-specific targets. This hampers an effective monitoring of how the EGF achieves its objectives.

As the co-legislators limited the duration of the EGF regulation, the legislative act will need to be renegotiated for the following MFF. An unlimited duration could have lowered administrative burden.