Explanatory Memorandum to COM(2025)140 - Amendment of Regulation (EU) 2021/691 as regards support to workers affected by imminent job displacement in enterprises undergoing restructuring - Main contents
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dossier | COM(2025)140 - Amendment of Regulation (EU) 2021/691 as regards support to workers affected by imminent job displacement in enterprises ... |
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source | COM(2025)140 ![]() |
date | 01-04-2025 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The aim of this proposal is to enable the European Globalisation Adjustment Fund for Displaced Workers (‘the EGF’) to not only support displaced workers, but also workers affected by imminent job displacement.
Employees of enterprises undergoing restructuring should be able to benefit from personalised packages of measures in case they are affected by imminent job displacement. To enable their employees to benefit from such support, enterprises undergoing restructuring may request the relevant Member State to submit an application for EGF assistance if the intervention criteria are met and if the enterprise wishes to offer EGF co-financed assistance.
Restructuring events often occur in a series of waves of lay-offs. Under its current set-up, the EGF is only able to help workers that have already lost their jobs. However, if it is already known when a next batch of workers will lose their jobs, they should be helped in response to this imminent threat so as to mitigate its impact.
Whereas longer-term anticipatory assistance falls under the European Social Fund Plus (ESF+), the EGF is an emergency instrument to respond to restructuring events. This proposal supports and strengthens the emergency character of the EGF. In the short term, it is often not possible to reprogramme ESF+ funding, and enterprises undergoing restructuring have limited means to support the workers affected by redundancy. The EGF could fill this gap by responding to restructuring events occurring over a mid-term timeframe.
According to the Autumn 2024 Economic Forecast, growth in the EU is expected to pick up to 1.5% in 2025, as consumption shifts up a gear and investment is set to rebound from the contraction of 2024. However, elevated uncertainty and structural shifts are expected to weigh on segments of the economy, notably in manufacturing. Whereas the EU experienced a phase of extraordinary employment growth over the past few years, data from Eurofound’s European Restructuring Monitor show that the tide has been turning since 2024. The number of jobs cuts announced for the near future related to large-scale restructuring within the EU now far exceeds the number of job creations.
According to the data collected by the European Restructuring Monitor, large-scale restructuring across all countries observed and all sectors lasted for more than a year (387 days). The larger the restructuring event, the longer the duration. For restructuring events involving more than 3 000 workers, the average duration is almost 1 000 days.
Economic disruptions, for example those caused by the twin transition or by globalisation, have adverse effects on workers whose skills are no longer needed. However, employment contraction can go hand-in-hand with labour and skills shortages. Therefore, the workers concerned must be supported by access to active labour market policy measures, such as education and retraining, to allow them to acquire the skills needed to move into new roles or jobs.
In light of the twin transition and new geopolitical challenges, it is vital to enhance productivity growth while ensuring social inclusion and preserving equity, to ensure that workers benefit from EU solidarity.
This proposal is therefore needed to cushion the adverse effects economic disruptions have on the workforce, and to boost the EU’s economic competitiveness. It underlines the character of the EGF as a reactive emergency response instrument to assist workers who are affected by imminent job displacement in enterprises undergoing restructuring.
The support provided to those workers would consist of packages of personalised services to equip them with the skills needed to move into a different role, or to change jobs. Short-time work schemes are not eligible given they are funded by Member States’ national budgets. Extending EU solidarity to those workers through such support would take into account existing support that are available to them at national level.
Workers who are affected by imminent job displacement or anticipate job displacement in enterprises undergoing restructuring can benefit from EGF support under the provisions setting the support available to displaced workers.
In the current context of economic disruptions, it is vital to support both workers who are made redundant and workers who anticipate imminent job displacement by accelerating the procedure to mobilise EGF support. To achieve that, Regulation (EU) 2021/691 could set out a procedure whereby the Commission, under strict conditions, can request the European Parliament and the Council to mobilise the full maximum annual amount budget at the beginning of each year. If that mobilisation is approved, the Commission would adopt individual financing decisions in relation to the applications introduced by the EU countries concerned. The Commission will immediately inform the European Parliament and the Council of its adoption, including the conditions that led the Commission adopting the financing decisions, as well as the corresponding amounts.
If the full maximum annual amount is not used by the Commission in a given year, that amount will lapse at the end of the financial year.
The proposed amendment will be fully accommodated within the existing provisions of the MFF Regulation (Article 8 of Council Regulation 2020/2093 of 17 December (as amended by Council Regulation 2024/765 of 29 February 2024), as well as with the existing provisions of the Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, cooperation in budgetary matters, sound financial management, and new own resources of 16 December 2020 (Point 9) (the IIA).
This proposal also assists enterprises undergoing restructuring in actively managing economic transitions in a socially responsible manner.
• Consistency with existing policy provisions in the policy area and other Union policies
This proposal is one of the flagship actions under pillar 4 of the EU’s industrial action plan for the European automotive sector COM(2025) 95 final. It supports the aims of the Union of Skills and the European Competitiveness Compass.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The legal basis is the Treaty on the Functioning of the European Union (TFEU), and in particular the third paragraph of Article 175.
If specific actions are needed that fall outside the scope of the EU Structural Funds, Article 175 third paragraph TFEU allows the European Parliament and the Council to take action in line with the ordinary legislative procedure and after consulting the European Economic and Social Committee and the European Committee of the Regions.
• Subsidiarity (for non-exclusive competence)
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 Member States acting alone. The mobilisation of the EGF to fund measures aimed at assisting displaced workers and those affected by imminent job displacement to find new employment respects the principle of subsidiarity and creates European added value.
It is standard practice for national labour market programmes to assist displaced workers, and it is also good practice for companies to train their workforce. The EGF does not aim to replace such programmes. In case of restructuring events that have a significant impact on the labour market, the national labour market programmes are put at test. Companies undergoing restructuring often have limited budgets to help their surplus employees adjust. Therefore, because of the scale and effects of large-scale restructuring and as the EGF is an expression of solidarity in Member States, assistance can be better delivered at EU level. EGF support will make EU solidarity more meaningful for workers that have been affected by restructuring events and for Europeans in general.
The mobilisation of the EGF creates added value by increasing the overall number of services offered to workers affected by restructuring events, as well as the variety of services offered and their level of intensity. The EGF can also test innovative ideas, identify best practices and incorporate them into the national support packages. EGF co-financed measures also contribute in general to improving the support available to workers facing job displacement.
• Proportionality
In line with the principle of proportionality, this proposal does not go beyond what is necessary to achieve its goals. The administrative burden on the EU and on the national authorities applying for EGF support has been limited to what is necessary for the Commission to exercise its responsibility in implementing the EU’s budget. Since the financial contribution is made to the EU country under the principle of shared management, that country will be required to report on how the funding was used.
• Choice of the instrument
Since this proposal amends Regulation (EU) 2021/691, the instrument has to be a Regulation.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
This proposal is adopted in response to the heightened economic uncertainty and risks as well as the fact that the EGF does not respond appropriately to restructuring events that occur over longer timeframes. The Commission has analysed the challenges and concluded that this proposal is needed to ensure that the EGF can respond effectively to show solidarity with workers, regions, and enterprises that have been affected.
4. BUDGETARY IMPLICATIONS
The EGF is a special instrument not included in the budgetary ceilings of the multiannual financial framework. Article 8 i of Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027, as amended byArticle 1 i of Council Regulation (EU, Euratom) 2024/765 of 29 February 2024, provides that the EGF may not exceed a maximum annual amount of EUR 30 million (in 2018 prices), based on Article 312 TFEU. This proposal, based on Article 175 TFEU, cannot amend the maximum annual amount.
The functioning of the EGF is governed by point 9 of the draft Interinstitutional Agreement between the European Parliament, the Council and the Commission on cooperation in budgetary matters and on sound financial management. The present proposal is compatible with these provisions.
5. OTHER ELEMENTS
• Detailed explanation of the specific provisions of the proposal
The proposed amendments specify that announced job displacements that will occur over a certain timeframe in the near future fall within the EGF’s scope. The aim is to allow for a more common approach to job displacements triggered by large-scale restructuring events. Enterprises undergoing restructuring must be able to request EGF assistance through national authorities. The funding must be used to offer personalised packages of active labour market policy measures to workers that are affected by imminent job displacements in the near future.
Since the EGF is implemented under shared management, each EU country sets-up a single entry point to handle requests by enterprises. The EU country concerned then submits an application for EGF assistance. Expenses incurred by the applicant EU country for preparatory, management, information and publicity, and control and reporting activities relating to such applications must be co-financed at 100% across the EU.
In order to facilitate future evaluations, a beneficiary survey should be conducted after the implementation of each financial contribution from the EGF. The beneficiary survey is prepared by the Commission. As the enterprises are the only ones having access to the contact details of the beneficiaries, they should assist the Commission by sending out to the beneficiaries the invitation to take part in the survey. The Commission should use the collected data for evaluation purposes.
In order to implement this Regulation, in particular the guidance, information, evaluation and information measures, the Commission deems it necessary to raise the ceiling for the technical assistance to 1.5% of the EGF’s maximum annual amount.