The horizontal principles set out in Article 3 of the Treaty on European Union (TEU) and in Articles 9 and 10 of the Treaty on the Functioning of the European Union (TFEU), including the principles of subsidiarity and proportionality set out in Article 5 TEU, are to be respected in the implementation of Union funds, taking into account the Charter of Fundamental Rights of the European Union. Pursuant to Articles 8 and 10 TFEU, the Union is to aim to eliminate inequalities and promote equality between men and women as well as to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. The Commission and Member States should aim to integrate the gender perspective in the implementation of the funds. The objectives of Union funds should be pursued in the framework of sustainable development and the Union’s objectives of preserving, protecting and improving the quality of the environment as set out in Article 11 and Article 191(1) TFEU, taking into account the polluter-pays principle.
(2)
On 17 November 2017, the European Pillar of Social Rights (the ‘Pillar’) was jointly proclaimed by the European Parliament, the Council and the Commission as a response to social challenges in Europe. Taking into account the changing realities of the world of work, it is necessary for the Union to prepare for the current and future challenges of globalisation and digitisation, by making growth more inclusive and by improving employment and social policies. The 20 key principles of the Pillar are structured in three categories: equal opportunities and access to the labour market; fair working conditions; and social protection and inclusion. The Pillar acts as an overarching guiding framework for the European Globalisation Adjustment Fund for Displaced Workers (EGF) established by this Regulation, allowing the Union to put the relevant principles into practice in the case of major restructuring events.
(3)
On 20 June 2017, the Council endorsed the Union response to the United Nations (UN) 2030 Agenda for Sustainable Development. The Council underlined the importance of achieving sustainable development across the three dimensions – economic, social and environmental – in a balanced and integrated way. It is vital that sustainable development be mainstreamed in the Union policy framework and that the Union be ambitious in the policies that it uses to address global challenges. The Council welcomed the Commission communication of 22 November 2016 entitled ‘Next steps for a sustainable European future’ as a first step in mainstreaming the UN’s Sustainable Development Goals and applying sustainable development as an essential guiding principle to all Union policies, including through its financing instruments.
(4)
In February 2018, the Commission adopted a communication entitled ‘A new, modern Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020’. The communication stresses that the Union budget supports Europe’s unique social market economy. It is of the utmost importance to improve employment opportunities and to address skills challenges, especially those linked to digitisation, automation and a transition towards a resource-efficient and sustainable economy, in full compliance with the Paris Agreement, adopted under the UN’s Framework Convention on Climate Change (the ‘Paris Agreement’). Budgetary flexibility will be a key principle in the multiannual financial framework 2021 to 2027 (MFF 2021 to 2027) established by Council Regulation (EU, Euratom) 2020/2093 (4). Flexibility mechanisms will remain in place to allow the Union to react in a more timely manner and to ensure that budgetary resources are used where most urgently needed.
(5)
In its ‘White Paper on the Future of Europe’ of 1 March 2017, the Commission expresses concerns regarding isolationist movements and growing doubts over the benefits of open trade and the Union’s social market economy in general.
(6)
In its ‘Reflection Paper on Harnessing Globalisation’ of 10 May 2017, the Commission identifies the combination of trade-related globalisation and technological change as the major driver of increased demand for skilled labour and the reduction in the number of jobs that require lower qualifications. While acknowledging the advantages of more open trade, the Commission finds that appropriate means are needed to address related negative side effects. As the current benefits of globalisation are already unequally distributed among people and regions, causing a significant impact on those adversely affected, there is a danger that technological and environmental changes will further fuel those effects. Therefore, in line with the principles of solidarity and sustainability, it will be necessary to ensure that the benefits of globalisation are shared more fairly by reconciling economic growth and technological advance with adequate social protection and active support for access to employment and self-employment opportunities.
(7)
In its ‘Reflection Paper on the Future of Union Finances’ of 28 June 2017, the Commission underlines the need to reduce economic and social divergences between and within Member States and finds that, therefore, a key priority is to invest in sustainable development, equality, social inclusion, education and training as well as health.
(8)
Globalisation, technological change and climate change are likely to further increase the interconnectedness and interdependence of world economies. Labour reallocation is an integral and inevitable part of such change. If the benefits of change are to be distributed fairly, offering assistance to displaced workers and those threatened by displacement is of the utmost importance. The main Union instruments to assist affected workers are the European Social Fund Plus (ESF+), which is to be established by a Regulation of the European Parliament and of the Council and is designed to offer assistance in an anticipatory manner, and the EGF, which is designed to offer assistance in a reactive manner in the case of major restructuring events. The Commission’s communication entitled ‘EU Quality Framework for anticipation of change and restructuring’ of 13 December 2013 is the Union policy instrument that sets the framework of best practice for anticipating and dealing with corporate restructuring. It offers a comprehensive framework on how the challenges of economic adjustment and restructuring and their employment and social impact are to be addressed by adequate policy means. It also calls upon Member States to use Union and national funding in a way that ensures that the social impact of restructuring, especially the adverse effects on employment, can be cushioned more effectively.
(9)
The European Globalisation Adjustment Fund, established by Regulation (EC) No 1927/2006 of the European Parliament and of the Council (5) for the MFF 2007 to 2013 (the ‘Fund’), was set up to enable the Union to show solidarity towards workers who had lost their jobs as a result of major structural changes in world trade patterns due to globalisation.
(10)
The scope of Regulation (EC) No 1927/2006 was broadened by Regulation (EC) No 546/2009 of the European Parliament and of the Council (6) as part of the European Economic Recovery Plan, set out in the Commission communication of 26 November 2008, in order to include workers who had lost their jobs as a direct consequence of the global financial and economic crisis.
(11)
For the duration of the MFF 2014 to 2020, Regulation (EU) No 1309/2013 of the European Parliament and of the Council (7) extended the scope of the Fund to cover job displacements resulting not only from a serious economic disruption caused by a continuation of the global financial and economic crisis addressed in Regulation (EC) No 546/2009, but also from any new global financial and economic crisis. Furthermore, Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (8) (the ‘Financial Regulation’) amended Regulation (EU) No 1309/2013 to introduce, inter alia, rules allowing the Fund, exceptionally, to cover collective applications involving small and medium-sized enterprises (SMEs) located in one region which operate in different economic sectors defined at NACE Revision 2 division level, where the applicant Member State demonstrates that SMEs are the main or only type of business in that region.
(12)
As a response to the possible withdrawal of the United Kingdom from the Union without a withdrawal agreement, Regulation (EU) 2019/1796 of the European Parliament and of the Council (9) amended Regulation (EU) No 1309/2013 to specify that redundancies resulting from such a withdrawal would fall within the scope of the Fund. Due to the withdrawal of the United Kingdom with a withdrawal agreement, that Regulation did not apply.
(13)
The Commission carried out a mid-term evaluation of the Fund to assess how and to what extent it had achieved its objectives. The Fund proved to be effective, attaining a higher reintegration rate of displaced workers than in the previous programming period. The evaluation also found that the Fund generated Union added value. This is particularly true in terms of its volume effects, meaning that Fund assistance not only increased the number and variety of services offered, but also the level of intensity of those services. Moreover, the Fund interventions had high visibility and demonstrated the Union added value directly to the public. However, several challenges were identified. The mobilisation procedure was considered to be too long. In addition, many Member States reported problems in putting together the extensive background analysis of the event that triggered the redundancies. The main reason why Member States were discouraged from applying for support from the Fund were financial and institutional capacity problems. This could simply be due to a lack of personnel: currently, Member States can ask for technical assistance only once they implement the Fund support. Since redundancies can happen unexpectedly, it is important to ensure that Member States are ready to react immediately and are able to submit an application without delay. Moreover, in certain Member States, more profound institutional capacity-building efforts seem to be necessary in order to ensure the efficient and effective implementation of EGF cases. Moreover, the threshold of 500 displaced jobs has been criticised as being too high, especially in less-populated regions.
(14)
The EGF’s role continues to be important as a flexible instrument to support workers who lose their jobs in large-scale restructuring events and to help them to find other jobs as quickly as possible. The Union should continue to provide specific, one-off support to facilitate the reintegration into decent and sustainable employment of displaced workers in areas, sectors, territories or labour markets suffering a shock of serious economic disruption. Considering the interplay and mutual effects of open trade and economic and financial developments such as asymmetric economic shocks, technological change, digitisation, significant changes in the trade relations of the Union or the composition of the internal market, as well as other factors including the transition to a low-carbon economy, and considering the fact that it is increasingly difficult to single out a specific factor that causes job displacements, the mobilisation of the EGF should be based only on the significant impact of a restructuring event. Given the purpose of the EGF, which is to provide support in emergencies, complementing the more anticipatory assistance offered by ESF+, the EGF should remain a flexible and special instrument outside the budgetary ceilings of the MFF, as set out in the Commission communication entitled ‘A Modern Budget for a Union that Protects, Empowers and Defends The Multiannual Financial Framework for 2021-2027’ of 2 May 2018 and the Annex thereto.
(15)
In order to retain the European nature of the EGF, an application for support should be triggered when a major restructuring event has a significant impact on the local or regional economy. Such an impact should be determined by reference to a minimum number of job displacements within a specific reference period. Taking into account the findings of the mid-term evaluation, the threshold should be set at 200 job displacements within a reference period of four months (or six months in sectoral cases). Considering that waves of dismissals in different sectors within the same region have an equally significant impact on the local labour market, regional applications should also be possible. In small labour markets, such as in small Member States or remote regions, including the outermost regions as referred in Article 349 TFEU, or in exceptional circumstances, it should be possible for applications to be submitted in cases with a lower number of job displacements. In general, Member State should not submit their applications for EGF assistance later than 12 weeks after the end of the reference period. However, in order to prevent a funding gap due to the fact that this Regulation will enter into force after 1 January 2021 and in order to provide legal certainty, that time limit should be suspended between 1 January 2021 and the entry into force of this Regulation.
(16)
The EGF, as a fund designed for major restructuring events, should not be mobilised in cases of dismissal in the public sector which are the consequence of budgetary cuts. However, the EGF should be able to support workers displaced from enterprises active on a competitive market that provide goods or services to publicly financed entities affected by budgetary cuts. The EGF should also be able to support self-employed persons whose activity has ceased as a result of budgetary cuts.
(17)
In order to express Union solidarity towards unemployed persons, the co-financing rate of the EGF, as a reactive fund, should be aligned with the highest co-financing rate of ESF+, as a proactive fund, in the Member State concerned, but in any case should not be lower than 60 %.
(18)
Part of the budget of the Union allocated to the EGF should be implemented by the Commission under shared management with Member States within the meaning of the Financial Regulation. Therefore, when implementing the EGF under shared management, the Commission and the Member States should respect the principles referred to in the Financial Regulation, such as sound financial management, transparency and non-discrimination.
(19)
The European Monitoring Centre on Change, which is based in the European Foundation for the Improvement of Living and Working Conditions in Dublin, assists the Commission and the Member States with qualitative and quantitative analyses in order to help in the assessment of trends of globalisation, technological and environmental changes, restructuring and the use of the EGF. The European Restructuring Monitor, updated on a daily basis, follows the reporting of large-scale restructuring events throughout the Union, on the basis of a network of national correspondents. It could help identify potential cases for intervention at an early stage.
(20)
Displaced workers and self-employed persons whose activity has ceased should have equal access to the EGF, independently of their type of employment contract or relationship. Therefore, displaced workers and self-employed persons whose activity has ceased should be regarded as possible EGF beneficiaries for the purposes of this Regulation.
(21)
Financial contributions from the EGF should be primarily directed at active labour market policy measures and personalised services that aim to reintegrate beneficiaries rapidly into decent and sustainable employment within or outside their initial sector of activity, while preparing them for a greener and more digital European economy. The support should also seek to promote self-employment and enterprise creation, including through the establishment of cooperatives. Measures should reflect the prospective needs of the local or regional labour market. However, where relevant, the mobility of displaced workers should also be supported in order to help them find new employment elsewhere. There should be a particular focus on the dissemination of skills required in the digital age and on overcoming gender stereotypes in employment, where appropriate. The inclusion of pecuniary allowances in coordinated packages of personalised services should be restricted. The measures supported by the EGF should not replace passive social protection measures. Employers could be encouraged to participate in the national co-funding for the EGF-supported measures in addition to the measures which they are required to provide by virtue of national law or collective agreements.
(22)
When implementing and designing a coordinated package of personalised services aiming to facilitate the reintegration of the targeted beneficiaries, Member States should address the objectives of the Digital Agenda and the Digital Single Market Strategy. Particular attention should be paid to the gender pay gap within the sectors of information and communication technologies (ICT) and science, technology, engineering and mathematics (STEM) by promoting the retraining and requalification of women into those sectors. When implementing and designing a coordinated package of personalised services, Member States should aim to increase the representation of the less represented gender, thus contributing towards the reduction of the gender pay gap and the pension gap.
(23)
Given that the digital transformation of the economy requires a certain level of digital competence of the workforce, the dissemination of skills required in the digital age should be considered to be a horizontal element of any coordinated package of personalised services offered.
(24)
When drawing up active labour market policy measures, Member States should favour measures that significantly contribute to the employability of the beneficiaries. Member States should strive towards the reintegration into sustainable employment of the largest possible number of beneficiaries participating in these measures as soon as possible within six months of the end of the implementation period. The design of the coordinated package of personalised services should take into account the reasons for the redundancies where relevant and anticipate future labour market perspectives and required skills. The coordinated package of personalised services should be compatible with the transition towards a resource-efficient and sustainable economy.
(25)
When drawing up active labour market policy measures, Member States should pay particular attention to disadvantaged beneficiaries, including persons with disabilities, persons with dependent relatives, young and older unemployed persons, persons with a low level of qualifications, persons with a migrant background and persons at risk of poverty, given that those groups experience particular problems in re-entering the labour market. Nevertheless, the principles of gender equality and of non-discrimination, which are among the Union’s core values and are enshrined in the Pillar, should be respected and promoted when implementing the EGF.
(26)
In order to support beneficiaries effectively and rapidly, Member States should do their utmost to submit complete applications when applying for a financial contribution from the EGF. Where the Commission requires further information for the assessment of an application, the provision of such information should be subject to a deadline. Both Member States and the Union institutions should aim to process applications as quickly as possible.
(27)
In the interests of the beneficiaries and the bodies responsible for implementation of the measures, the applicant Member State should keep all actors involved in the application procedure informed of the progress of the application and should engage them where possible during the implementation of measures.
(28)
In compliance with the principle of sound financial management, financial contributions from the EGF should not replace support measures which are available for beneficiaries within the Union funds or other Union policies or programmes, but should, where possible, complement such measures.
(29)
Special provisions should be included for information and communication actions on EGF cases and outcomes. Member States and EGF stakeholders should raise awareness of the achievements of Union funding by informing the public. Transparency and communication activities are essential in making Union action visible on the ground and should be based on accurate and up-to-date information. With the aim of promoting the EGF and demonstrating its added value as part of the Union budget, communication and visibility material developed by Member States should be made available to Union institutions, bodies or agencies upon request. Therefore, a royalty-free, non-exclusive and irrevocable licence to use such material and any pre-existing rights attached to it should be granted to the Union.
(30)
To facilitate the implementation of this Regulation, expenditure should be eligible for a financial contribution from the EGF either from the date on which a Member State starts to provide personalised services or from the date on which a Member State incurs administrative expenditure in implementing the EGF.
(31)
In order to cover needs that arise, especially during the first months of each year, when the possibilities for transfers from other budget lines are particularly difficult, an adequate amount of payment appropriations should be made available on the EGF budget line in the annual budgetary procedure.
(32)
The MFF 2021-2027 and 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 resources (10) determine the budgetary framework of the EGF.
(33)
In the interests of the beneficiaries, assistance should be made available as quickly and efficiently as possible. The Member States and the Union institutions involved in the EGF decision-making process should do their utmost to reduce processing time and simplify procedures so as to ensure the smooth and rapid adoption of decisions on the mobilisation of the EGF.
(34)
SMEs are the backbone of the Union’s economy. Therefore, promoting entrepreneurship and supporting SMEs is key to ensuring economic growth, innovation, job creation and social integration. The Union actively promotes entrepreneurship by encouraging people to start their own business. In the case of major restructuring events, it should be possible to help displaced workers to launch their own business. In the event of an enterprise closing down, it should also be possible to help displaced workers to take over some or all of the activities of their former employer.
(35)
For transparency and information purposes, Member States should disclose in the final reports details of any State aid or Union funding that the enterprise dismissing the workers received in the five years preceding the report. However, this requirement should not apply to microenterprises or SMEs, in particular start-ups and scale-ups, in order to avoid any disproportionate administrative burden on Member States, particularly in the case of sectoral EGF applications involving more than one microenterprise or SME.
(36)
Pursuant to paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 for Better Law-Making (11), the EGF should be evaluated on the basis of information collected in accordance with specific monitoring requirements, while avoiding an administrative burden, in particular on Member States, and overregulation. Those requirements, where appropriate, should include measurable indicators as a basis for evaluating the effects of the EGF on the ground.
(37)
In order to enable political scrutiny by the European Parliament and continuous monitoring by the Commission of results obtained with EGF assistance, the Member States concerned should submit a final report on the implementation of the EGF.
(38)
Member States should support the Commission in carrying out evaluations by providing relevant data at their disposal.
(39)
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 should be open to participants for at least four weeks and should be launched during the sixth month after the end of the implementation period. Member States should assist the Commission in conducting the beneficiary survey, encouraging beneficiaries to participate by sending out the invitation to take part and at least one reminder. Member States should inform the Commission about the efforts made to contact the beneficiaries. The Commission should use the collected data for evaluation purposes. To ensure comparability between cases, the Commission should design the beneficiary survey template in close cooperation with the Member States and should provide translation into all official languages of the institutions of the Union.
(40)
In accordance with the objective of eliminating inequalities and promoting equality between men and women, analyses and reports related to the EGF should include gender-disaggregated information.
(41)
A list of indicators should be set out in an annex to this Regulation for the purpose of monitoring the use of the EGF and, in particular, progress towards the achievement of its objectives. Where necessary, the Commission may submit a legislative proposal to amend those indicators.
(42)
The Member States should remain responsible for the implementation of the financial contribution and for the management and control of the actions supported by Union funding, in accordance with the relevant provisions of the Financial Regulation. The Member States should justify the use made of the financial contribution received from the EGF. In view of the short implementation period for EGF interventions, reporting obligations should reflect the particular nature of those interventions.
(43)
Member States should prevent, detect and deal effectively with any irregularities, including fraud, committed by beneficiaries. Moreover, in accordance with Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (12) and Council Regulations (EC, Euratom) No 2988/95 (13) and (Euratom, EC) No 2185/96 (14), the European Anti-Fraud Office (OLAF) has the power to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. The European Public Prosecutor’s Office (EPPO) is empowered, in accordance with Council Regulation (EU) 2017/1939 (15), to investigate and prosecute criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (16).
Member States should take the necessary measures to ensure that any person or entity receiving Union funds fully cooperates in the protection of the financial interests of the Union, grants the necessary rights and access to the Commission, OLAF, the Court of Auditors and, in respect of Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, the EPPO, and ensures that any third parties involved in the implementation of Union funds grant equivalent rights. Member States should report to the Commission any irregularities detected, including fraud, and any follow-up action they have taken with regard to such irregularities and with regard to any OLAF investigations. Member States should cooperate with the Commission, OLAF, the Court of Auditors and, where applicable, the EPPO, in accordance with point (d) of Article 63(2) of the Financial Regulation on all matters related to suspected or established fraud.
(44)
To enhance the protection of the Union’s budget, the Commission should make available an integrated and interoperable information and monitoring system including a single data-mining and risk-scoring tool to access and analyse the relevant data, and the Commission should encourage its use with a view to generalised application by Member States.
(45)
The Financial Regulation lays down rules on the implementation of the Union budget, including the rules on grants, prizes, procurement, indirect management, financial instruments, budgetary guarantees, financial assistance and the reimbursement of external experts. Rules adopted on the basis of Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.
(46)
Reflecting the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement, and the commitment to the UN Sustainable Development Goals, the actions under this Regulation should contribute to the achievement of a target of 30 % of the Union budget expenditure supporting climate objectives and the ambition of 7,5 % of the Union budget reflecting biodiversity expenditures in 2024 and 10 % in 2026 and 2027, while considering the existing overlaps between climate and biodiversity goals.
(47)
In order to allow better monitoring of the use of the EGF, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in order to supplement this Regulation by setting out the criteria for determining the cases of irregularity to be reported and the data to be provided by Member States for the purpose of preventing, detecting and correcting irregularities, including fraud and recovering amounts unduly paid together with interest on late payments. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.
(48)
In order to ensure uniform conditions for the implementation of this Regulation with regard to the conduct of beneficiary surveys and the format for reporting irregularities, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council (17).
(49)
Since the objectives of this Regulation cannot be sufficiently achieved by the Member States, but can rather, by reason of their scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.
(50)
In order to ensure continuity in providing support in the relevant policy area and to allow implementation as of the beginning of the MFF 2021 to 2027, it is necessary to provide for the application of this Regulation from the beginning of the 2021 financial year. However, the Commission should initiate the budgetary procedure only upon the entry into force of this Regulation.
(51)
Regulation (EU) No 1309/2013 should therefore be repealed,
