EurWORK European Observatory of Working Life

European Globalisation Adjustment Fund

Definition

The European Globalisation Adjustment Fund (EGF) was set up by the European Commission in 2007 to provide support to people who lost their jobs as a result of major structural changes due to globalisation. Since its establishment, the EGF has been adapted to cover restructuring related to issues other than globalisation. According to Regulation (EU) 2021/691 of 28 April 2021, the EGF:

'shall support socioeconomic transformations that are the result of globalisation and of technological and environmental changes by helping displaced workers and self-employed persons whose activity has ceased to adapt to structural change.'

Background

The EGF comes under Article 175 of the Treaty on the Functioning of the European Union. Although it complements other policies and financial instruments aimed at addressing problems associated with globalisation (such as the structural funds), the objective of the first EGF regulation (Regulation (EC) No 546/2009 of 18 June 2009) is unique. Unlike the European Social Fund, for example, the EGF is not designed as an annual programme to ensure the anticipation of, adaptation to and positive management of change in a global economic environment. Instead, it represents a specific one-off funding opportunity for employees adversely affected by reorganisation.

Since January 2007, the fund has been amended three times, through different regulations. Regulation (EU) 2021/691, which has extended the scope of the EGF, set out funding for the period from 1 January 2021 to 31 December 2027. As of January 2021, the EGF’s budget for 2021–2027 was €1.6 billion, which represents roughly €225 million per year.

Current status

In general, the EGF can be used only in the event of major restructuring that affects over 200 ‘displaced workers’. ‘Displaced worker’ is a new concept established in Regulation (EU) 2021/691. It means:

'a worker, regardless of the type or duration of his or her employment relationship, whose employment contract or relationship is ended prematurely by redundancy, or whose employment contract or relationship is not renewed, for economic reasons.'

The EGF provides financial support when the cessation of activity of at least 200 displaced workers or self-employed people takes place:

  • over a reference period of four months, in an enterprise in a Member State, including where that cessation of activity applies to its suppliers or downstream producers
  • over a reference period of six months, particularly in small and medium-sized enterprises, where all operate in the same economic sector and are located in one region or two contiguous regions, or in more than two contiguous regions provided that there are at least 200 workers or self-employed people affected in two of the regions combined
  • over a reference period of four months, particularly in small and medium-sized enterprises, where all operate in the same or different economic sectors and are located in the same region.

The EGF funds 65–80% of the costs of projects designed to help workers who have been made redundant find another job or set up their own business. EGF cases are managed and implemented by national or regional authorities, with each project running for two years. The rules on intervention criteria, eligible beneficiaries, eligible actions, applications and so on are set out in Regulation (EU) 2021/691.

The EGF can co-finance measures such as help with job seeking, career advice, education, training and retraining, mentoring and coaching, and help with entrepreneurship and business creation. It can also provide training or subsistence allowances or similar support, including allowances for carers, mobility and relocation allowances, and employers’ recruitment incentives.

Individual workers made redundant can benefit from EGF support. This includes self-employed, temporary and fixed-term workers. However, the funds are used to finance projects in support of individuals, with no direct financial support provided to individual workers.

Commentary

Although the European Commission originally estimated that the EGF budget could support between 35,000 and 50,000 workers per year, the first assessments of the fund, published in 2008, demonstrated that it had a more modest impact. As a result, changes have been made to raise the fund’s profile. Between 2007 and 2014, the Commission approved 134 applications from Member States, representing support of €561.1 million for 122,121 redundant workers. Since 2015, according to the most recent data published by the European Commission, the European Commission has approved 40 applications, representing support of about €74 million for 43,340 redundant workers.

The 2018 mid-term evaluation of the EGF, based on applications received in 2014 and 2015, showed that, for the 13 cases that had been completed by October 2016, the average reemployment rate achieved was 56%. This was higher than the 49% rate achieved in the previous period (2007–2013), although it was based only on short-term data. The evaluation also demonstrated the reasons for the use or non-use of the EGF by Member States. The main issue mentioned in this regard was the eligibility criteria, specifically the threshold of 500 redundant employees (as large companies are not prevalent in many Member States). According to the evaluation, ‘the help offered by the EGF would otherwise not have been available. This shows the complementarity and additionality of EGF measures’.

Related dictionary terms

 European Monitoring Centre on Change European Restructuring Monitor European Social Fund restructuring Social Policy Agenda solidarity principle

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