Explanatory Memorandum to COM(2023)129 - Globalisation Fund application from Spain - EGF/2022/003 ES/Alu Ibérica - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2023)129 - Globalisation Fund application from Spain - EGF/2022/003 ES/Alu Ibérica. |
|---|---|
| source | COM(2023)129 |
| date | 16-03-2023 |
CONTEXT OF THE PROPOSAL
1. The rules applicable to financial contributions from the European Globalisation Adjustment Fund for Displaced Workers (EGF) are laid down in Regulation (EU) 2021/691 of the European Parliament and of the Council of 28 April 2021 on the European Globalisation Adjustment Fund for Displaced Workers (EGF) and repealing Regulation (EU) No 1309/20131.
2. On 30 November 2022, Spain submitted an application EGF/2022/003 ES/Alu Ibérica for a financial contribution from the EGF, following displacements in Alu Ibérica LC S.L. (Alu Ibérica) in Spain.
3. Following its assessment of this application, the Commission has concluded, in accordance with all applicable provisions of Regulation (EU) 2021/691, that the conditions for awarding a financial contribution from the EGF are met.
SUMMARY OF THE APPLICATION
| EGF application | EGF/2022/003 ES/Alu Ibérica |
| Member State | Spain |
| Region(s) concerned (NUTS2 level 2) | Galicia (ES11) |
| Date of submission of the application | 30 November 2022 |
| Date of acknowledgement of receipt of the application | 14 December 2022 |
| Date of request for additional information | 14 December 2022 |
| Deadline for provision of the additional information | 5 January 2023 |
| Deadline for the completion of the assessment | 16 March 2023 |
| Intervention criterion | Article 4(2), point (a), of Regulation (EU) 2021/691 |
| Enterprise | Alu Ibérica LC S.L. (Alu Ibérica) |
| Sector(s) of economic activity (NACE Revision 2 division)3 | Division 24 (Manufacture of basic metals) |
| Reference period (four months): | 10 May 2022 – 10 September 2022 |
| Number of displacements during the reference period (a) | 303 |
| Number of displacements before or after the reference period (b) | 0 |
| Total number of displacements (a + b) | 303 |
| Total number of eligible beneficiaries | 303 |
| Total number of targeted beneficiaries | 303 |
| Budget for personalised services (EUR) | 1 429 400 |
| Budget for implementing EGF4 (EUR) | 70 600 |
| Total budget (EUR) | 1 500 000 |
| EGF contribution (85 %) (EUR) | 1 275 000 |
ASSESSMENT OF THE APPLICATION
Procedure
4. Spain submitted application EGF/2022/003 ES/Alu Ibérica within 12 weeks of the date on which the intervention criteria set out in Article 4 of Regulation (EU) 2021/691 were met, on 30 November 2022. The Commission acknowledged receipt of the application and requested additional information from Spain on 14 December 2022. Such additional information was provided within 15 working days of the request. The deadline of 50 working days of the receipt of the complete application within which the Commission should finalise its assessment of the application's compliance with the conditions for providing a financial contribution expires on 16 March 2023.
Eligibility of the application
Enterprises and beneficiaries concerned
5. The application relates to 303 displaced workers whose activity has ceased in Alu Ibérica. The enterprise operated in the economic sector classified under the NACE Revision 2 division 24 (Manufacture of basic metals). The redundancies are located in the NUTS 2 region of Galicia (ES 11).
Intervention criteria
6. Spain submitted the application under the intervention criteria of Article 4(2), point (a), of Regulation (EU) 2021/691, which requires the cessation of activity of at least 200 displaced workers over a reference period of four months in an enterprise in a Member State, including workers displaced in suppliers and downstream producers and / or self-employed persons whose activity has ceased.
7. The reference period of four months for the application runs from 10 May 2022 to 10 September 2022.
8. There were 303 displaced workers in Alu Ibérica during the reference period.
Calculation of displacements and of cessation of activity
9. Pursuant to Article 6, first paragraph, point (a), in conjunction with Article 5, first paragraph, point (c), of Regulation (EU) 2021/691, the cessation of activities of the displaced workers during the reference period has been calculated from the date of the de facto termination of the contract of employment or its expiry.
Eligible beneficiaries
10. The total number of eligible beneficiaries is 303.
Description of the events that led to the displacements and cessation of activity
11. The event giving rise to these displacements is the loss of competitiveness resulting from the increase in the prices of energy and raw materials, such as magnesium, together with the decline in world aluminum prices resulting from production overcapacity in China that led Alu Ibérica into liquidation5.
12. The EU primary aluminium industry, made up of 12 smelters located in 8 Member States, accounts for 3% of global production6. As an electro-intensive industry, it is highly dependent on competitive and stable electricity prices. Aluminium is one of sectors most vulnerable to the surge in energy prices.
13. According to Eurometaux, the nonferrous metals trade body, producers faced electricity and gas costs over ten times higher in 2022 than in 2021 far exceeding the sales price for their products7. About one million tonnes of aluminium production were halted or idled between October 2021 (when energy prices started to rise) and October 20228, because of rising energy prices and the difficulties in securing energy contracts at long-term fixed prices.
14. In December 2021, Alcoa9 curtailed aluminium production (227 000 tonnes) at San Ciprián (Spain) until 202410. In 2022 Q4, Aluminium Dunkerque, Europe’s largest primary smelter for aluminium, has reduced output by 22% (63 800 tonnes)11; while Speira curtailed 50% of its smelter production at the “Rheinwerk” plant in Neuss, until further notice. Smelting production will be reduced to 70 000 tonnes of primary metal per year12. This wave of cutbacks follows indefinite shutdowns of Norsk Hydro’s aluminium smelter in Slovakia13 and Alu Ibérica14 in Spain.
15. Halting or closing production in Europe triggers increased imports. EU imports of aluminium from China increased on average by 20% in volume in February-June 2022 compared to the same period previous year15; and from Russia by 13% in March-June 2022 compared to 202116.
16. According to Eurometaux17, China covers more than half of the global production of processed minerals and metals and is the major EU supplier for several critical raw materials (in particular magnesium, a key material in aluminium production). China has a near-total monopoly on global magnesium production (89%) and supplies around 93% of the EU’s requirements, since EU closed its last magnesium production plant in 2001. In 2021 Q4, there was a shortage of Chinese magnesium triggered by rising coal cost in China. Magnesium spot prices increased by 157% on average between September and October 202118. The shortage caused big concerns at European aluminium smelters for the potentially catastrophic effects of a magnesium supply shortage on the aluminium production.
17. China has considerably subsidized its domestic production of metals and other strategic materials through its Made in China 2025 industrial strategy. As a result, Chinese industry has developed overcapacities for various metals such as, tungsten, lead, and especially aluminum19. According to OECD, China’s growing dominance of the aluminium industry has led to substantial disruption for other countries and global trade patterns20.
Expected impact of the displacements as regards the local, regional or national economy and employment
18. The territories most affected by Alu Ibérica bankruptcy and subsequent redundancies are the NUTS level 3 region A Coruña and the city of the same name.
19. In 2020 the impact of the pandemic resulted in a significant drop in activity and employment rates (by 3,20% and 4,66%, respectively) in A Coruña. Likewise, the unemployment rate increased significantly to stand at 11,63% in 2020. Despite improvement since then, the unemployment rate stood at 9,50%21 in Q3 2022 (latest data available), which is 3,5 percentage points higher than the EU average (6%)22.
20. Large enterprises like Alu Ibérica (250 employees or more) represent 0,1% of the total business in Galicia, where 93% of businesses have five or less employees, including 67,64% which have no employees23.
21. The closure of Alu Ibérica has a significant impact on the labour market and the economy of the city of A Coruña, due to its size. According to the Spanish authorities, Alu Ibérica generated a turnover of more than EUR 130 million, with significant economic impact on local actors involved in the production process: personnel expenses EUR 20 million, external services EUR 80 million, and local taxes of about EUR 1,5 million.
22. In September 2022, the total number of workers (i.e. people affiliated with social security) in the city of A Coruña amounted to 93 341, of which 7 479 are manufacturing workers. According to Spanish authorities, each direct job lost in the industry trigger the loss of 1,03 jobs in ancillary enterprises. Thus, the impact of the closure of Alu Ibérica is estimated at 615 job losses (303 direct and 312 in in ancillary enterprises), which represent a loss of 8,2% of the manufacturing jobs.
23. The context of the COVID-19 crisis coupled with the Russian war of aggression against Ukraine worsen the outlook for economic development. The current rise in inflation, in particular the increase in prices of raw materials and energy, reduces enterprises’ margins and their competitiveness. For 2023, the Independent Authority for Fiscal Responsibility (AIReF) forecasts a limited increase for Galician GDP of 0,6%24. Employment forecasts are pessimistic for 2023, with a rise of about 0,2%25. This environment of uncertainty suggests less hiring in 2023.
24. Workers aged 45+ are already at a disadvantage in the regional labour market. In A Coruña 60% of the registered job seekers belong to this age category26. According to the Spanish authorities, 35% of Alu Ibérica redundant workers belong to the 45+ age group, the displacements are expected to have a strong impact on the unemployment of this age group.
25. Moreover, as the enterprise is in bankruptcy proceedings, the displaced workers will not receive any redeployment support financed by the dismissing enterprise.
26. The regional authorities consider that the workers displaced from Alu Ibérica will need additional support to overcome the issues of the local labour market described above and find new jobs.
Application of the EU Quality Framework for anticipation of change and restructuring (QFR)
27. Spain has described how the recommendations set out in the EU Quality Framework for anticipation of change and restructuring have been taken into account in the present case. The Galician authorities monitored the bankruptcy process to guarantee workers’ rights and seek alternatives for maintaining industrial activity (workers' main demand), either within the same sector or through operational restructuring of the facilities by way of a new investor.
28. Spain highlights that public bodies monitor restructuring processes and manage collective redundancies requests, although without authorisation/refusal capacity. These bodies can however set up programmes promoting job creation in partnership with local bodies or public-private bodies (redeployment agencies).
29. The legal obligation to provide workers with job-search assistance, occupational guidance and training for six months does not apply to enterprises in bankruptcy proceedings. Spain is applying for EGF co-financing to top-up the general services on offer to the workers in the regional public employment service (Emprego Galicia).
30. Regarding the activities undertaken to assist the displaced workers, Spain has reported that Emprego Galicia has provided the workers with access to its general services (job-search support, vocational counselling and training).
Complementarity with actions funded by national or Union funds
31. Spain has confirmed that the measures described below receiving a financial contribution from the EGF will not also receive financial contributions from other Union financial instruments.
32. The coordinated package of personalised services complements actions funded by other national or EU funds. Emprego Galicia's vocational counselling and training services benefit of ESF and Next Generation funding.
Procedures for consulting the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities
33. In compliance with Article 7 i of Regulation (EU) 2021/691, Spain has indicated that Association of Metal Industries and Associated Technologies of Galicia (ASIME)27 and the trade unions CCOO28 and UGT29 , the social partners that participate in the Social Dialogue in Galicia, supported the Regional Government of Galicia (Xunta de Galicia) when preparing the application by providing detailed information on the aluminium sector and related labor market. The co-ordinated package of personalised services has been drawn up in consultation with the social partners and discussed in two meetings on 2 and 10 November 2022. Through a collaboration agreement, the social partners will also be involved in the implementation of the services.
Targeted beneficiaries and proposed measures
Targeted beneficiaries
34. The estimated number of displaced workers expected to participate in the measures is 303. Pursuant to Article 8(7), point (f), of Regulation (EU) 2021/691, the provided breakdown of these workers by gender, age group and educational level is as follows:
| Category | Number ofContents | ||
| Gender: | Men: | 293 | (96,7 %) |
| Women: | 10 | (3,3 %) | |
| Non-binary | 0 | (0,0 %) | |
| Age group: | Below 30 years: | 0 | (0,0 %) |
| 30-54 years: | 294 | (97,0 %) | |
| Over 54 years: | 9 | (3,0 %) | |
| Educational level | Lower secondary education or less30 | 15 | (5,0 %) |
| Upper secondary31 or post-secondary education32 | 273 | (90,0 %) | |
| Tertiary education33 | 15 | (5,0 %) |
Proposed measures
35. The personalised services to be provided to displaced workers consist of the following measures:
- General information services and preparatory workshops: This is the first measure to be offered to all targeted beneficiaries and includes general information on available counselling and training programmes, allowances and incentives and workers' profiling. Preparatory workshops, will provide more in-depth information on redeployment, sectors that require licensing or certificates of professional competence, certification of competencies and soft skills acquired in work situations. Workshops on entrepreneurship are also foreseen.
- Occupational guidance towards employment or self-employment will be provided throughout the implementation period.
- Training. The training offer will include (1) training on key competencies and horizontal competencies, in particular basic IT skills needed for job-search; (2) recognition of prior learning: preparation for tests towards recognition of skills acquired through work experience; (3) re-skilling vocational training such as maintenance of buildings and urban equipment, warehouse operations, warehouse logistics, forklift and platform operator, industrial automation, Scrum Master34 certificate, etc.. The re-skilling training aims at providing new professional skills that are part of the National Catalogue of Professional Qualifications; and (4) up-skilling vocational training such as virtual and augmented reality for aluminium products, CAD/CAM35 solutions applied to aluminium components and parts, bespoke alloys36, treatment of aluminiums (lacquering, anodizing and chemical brightening), laser additive manufacturing, and a variety of welding techniques, such as FSW37 and hybrid laser MAG38 welding techniques, monitored electric arc welding systems, etc.. Training towards entrepreneurship will be provided for those aiming at self-employment.
- Intensive job-search assistance, including active search of the local and regional employment opportunities (also for self-employed persons) and job-matching.
- Tutoring after reintegration into work. The workers reintegrated into employment will be guided during the first months to prevent possible problems arising in their new jobs.
- Incentives. There will be a variety of incentives. (1) Participation incentive. The workers who take part in the measures and follow the agreed pathway to reintegration will receive up to EUR 400 (one pay-off or instalments). (2) Contribution to commuting expenses (EUR 0,19/kilometre plus additional costs such as tolls and parking costs, when duly justified and reimbursement of public transport costs). (3) Contribution to expenses for carers of dependent persons. Workers with caring responsibilities (children, elderly or disabled persons) will receive up to EUR 20 per day of participation in the measures. This aims to cover the additional costs faced by the participants with caring responsibilities in order to avail themselves of training or other measures. (4) Outplacement incentives. Those who return to employment as dependent workers or as self-employed will receive EUR 200 per month, for a maximum period of six months. The incentive is designed to stimulate workers, particularly those who are older, to remain in the labour market and to encourage quick reemployment.
36. Emerging and more dynamic sectors are constantly incorporating new working techniques and new technologies into production processes. For that reason, priority was given to skills needed in digitalisation, robotisation and for the transition to a green economy, (such as those related to new mobility, new fuels, electrical technologies, etc.) when designing the training offer. In this respect, ASIME has been a key actor.
37. Most of the proposed up-skilling trainings are in line with the requirements set out in Article 7(2) of Regulation (EU) 2021/691, like the training on bespoke alloys that focuses on sustainable manufacturing in recycling and remelting plants.
38. The proposed actions, here described, constitute active labour market policy measures within the eligible actions set out in Article 7 of Regulation (EU) 2021/691. These actions do not substitute passive social protection measures.
39. Spain has provided the required information on measures that are mandatory for the enterprise concerned by virtue of national law or pursuant to collective agreements. In accordance with Article 9(1) of Regulation (EU) 2021/691, Spain has confirmed that a financial contribution from the EGF will not replace such measures.
Estimated budget
40. The estimated total costs are EUR 1 500 000, comprising expenditure for personalised services of EUR 1 429 400 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 70 600.
41. The total financial contribution requested from the EGF is EUR 1 275 000 (85 % of total costs).
42. Pursuant to Article 8(7), point (m) of Regulation (EU) 2021/691, Spain has specified that the the national pre-financing and co-funding is provided by the Consellería de Promoción de Emprego e Igualdade (Regional Ministry of Employment and Equality).
| Measures | Estimated number of participants | Estimated cost per participant (EUR)39 | Estimated total costs (EUR)40 |
| Personalised services (measures under Article 7(2), second subparagraph, point (a) of Regulation (EU) 2021/691) | |||
| General information services and preparatory workshops (acogida y diagnóstico inicial) | 303 | 100 | 30 300 |
| Occupational guidance (orientación laboral) | 205 | 500 | 102 500 |
| Training (formación transversal, de especialización dentro del sector, de recualificación fuera del sector y en autoempleo) | 265 | 2 545 | 674 500 |
| Intensive job-search assistance (apoyo a la recolocación, prospección laboral) | 180 | 1 300 | 234 000 |
| Tutoring after reintegration into work (seguimiento en el empleo) | 150 | 250 | 37 500 |
| Sub-total (a): | – | 1 078 800 | |
| (75,47 %) | |||
| Allowances and incentives (measures under Article 7(2), second subparagraph, point (b) of Regulation (EU) 2021/691) | |||
| Incentives (beca de participación, beca de desplazamiento, incentivo para la inserción laboral por cuenta ajena o propia, incentivo para la conciliación) | 215 | 1 631 | 350 600 |
| Sub-total (b): | – | 350 600 | |
| (24,53 %) | |||
| Activities under Article 7(5) of Regulation (EU) 2021/691 | |||
| 1. Preparatory activities | – | 0 | |
| 2. Management | – | 47 267 | |
| 3. Information and publicity | – | 14 933 | |
| 4. Control and reporting | – | 8 400 | |
| Sub-total (c): | – | 70 600 | |
| (4,71 %) | |||
| Total costs (a + b + c): | – | 1 500 000 | |
| EGF contribution (85 % of total costs) | – | 1 275 000 |
43. The costs of the measures identified in the table above as measures under Article 7(2), second subparagraph, point (b) of Regulation (EU) 2021/691 do not exceed 35 % of the total costs for the coordinated package of personalised services. Spain confirmed that these measures are conditional on the active participation of the targeted beneficiaries in job-search or training activities.
Period of eligibility of expenditure
44. Spain started providing the personalised services to the targeted beneficiaries on 2 March 2023. The expenditure on the measures will therefore be eligible for a financial contribution from the EGF from 2 March 2023 until 24 months after the date of the entry into force of the Financing Decision.
45. Spain started incurring the administrative expenditure to implement the EGF on 1 March 2023. The expenditure for preparatory, management, information and publicity, control and reporting activities shall therefore be eligible for a financial contribution from the EGF from 1 March 2023 until 31 months after the date of the entry into force of the Financing Decision.
Management and control systems
46. The application contains a description of the management and control system required under Article 23 of Regulation (EU) 2021/691, which specifies the responsibilities of the bodies involved. Spain has notified the Commission that the financial contribution will be managed and controlled by the same bodies that manage and control the ESF+. The Xunta de Galicia41 will be the intermediate body for the managing authority.
Commitments provided by the Member State concerned
- the principles of equality of treatment and non-discrimination will be respected in access to the proposed measures and their implementation,
- the requirements laid down in national and EU legislation concerning collective redundancies have been complied with,
- any double financing will be prevented,
- the financial contribution from the EGF will comply with the procedural and material Union rules on State aid.
BUDGETARY IMPLICATION
Budgetary proposal
48. The EGF shall not exceed a maximum annual amount of EUR 186 million (in 2018 prices), as laid down in Article 8 of Council Regulation (EU, Euratom) No 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 202742.
49. Having examined the application in respect of the conditions set out in Article 13(1) and (2) of Regulation (EU) 2021/691, and having taken into account the number of targeted beneficiaries, the proposed measures and the estimated costs, the Commission proposes to mobilise the EGF for the amount of EUR 1 275 000, representing 85 % of the total costs of the proposed measures, in order to provide a financial contribution for the application.
50. The proposed decision to mobilise the EGF will be taken jointly by the European Parliament and the Council pursuant to Article 15(1), first subparagraph, second sentence, of Regulation (EU) 2021/691 and, as laid down in point 9 of the Interinstitutional Agreement of 16 December 2020 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 resources43.
Related acts
51. At the same time as it presents this proposal for a decision to mobilise the EGF, the Commission will present to the European Parliament and to the Council a proposal to transfer to the relevant budgetary line the amount of EUR 1 275 000.
52. At the same time as it adopted this proposal for a decision to mobilise the EGF, the Commission adopted a decision on a financial contribution that constitutes a financing decision within the meaning of Article 110 of Regulation (EU, Euratom) 2018/104644. That financing decision will enter into force on the date on which the Commission is notified of the approval of the budgetary transfer by the European Parliament and the Council pursuant to Article 15(2), first subparagraph, of Regulation (EU) 2021/691.