European Court of Auditors find emergency funds for redundant workers should be paid out faster

25-6-2013 — / — A special fund to help workers made redundant by globalisation delivers only limited EU added-value and should be replaced by a more efficient system, according to a new report from the European Court of Auditors (ECA), the EU spending watchdog.

Between March 2007 and December 2012, the European Globalisation Fund paid out over € 600 million to workers who had lost their jobs in mass redundancies caused by shifting patterns in world trade. The auditors found that most eligible workers were offered personalised and well-coordinated assistance. But all the audited cases included income support measures which would have been paid by the Member States anyway. Income support represented 33 % of the reimbursed costs in all the cases examined. In addition, no adequate data existed to measure how effective the funds were in getting the laid-off workers back into jobs.

In their recommendations, the auditors say that the Globalisation Fund could be replaced by an adapted European Social Fund framework in order to bring support to workers more quickly.

“The evidence gathered during the audit did not convince us that the Globalisation Fund is the best way to deliver this much-needed specific support,” said Ville Itälä, the ECA Member responsible for the report, “It would be more effective simply to adjust the Social Fund to deal with these problems”.

The Globalisation Fund was designed to address short-term and ad-hoc emergency situations. Support includes training, aid for self-employment, coaching and outplacement. The Fund co-finances measures at a rate of 50 % or 65 %, with the balance being provided by the Member State concerned.

Notes to the editors:

European Court of Auditors (ECA) special reports are published throughout the year, presenting the results of selected audits of specific EU budgetary areas or management topics.

This special report (SR 7/2013) is entitled “Has the European Globalisation Adjustment Fund delivered EU added value in reintegrating redundant workers?” The ECA assessed whether the contribution made by the EGF to enabling redundant workers to return to the labour market as soon as possible was effective. The ECA looked to answer the following questions: Did all affected workers benefit from personalised EGF measures, and were EGF co-financed active labour market measures coordinated with other similar measures (i.e. ESF and Member State measures)? Was the EGF effective in terms of labour market re-integration? Is the nature of the EGF measures likely to deliver EU added value? Was the EGF approval procedure implemented in a timely manner? Eight cases in four Member States (two each in Denmark, Germany, Ireland and Lithuania) in which the EGF was deployed, were audited on the spot.

The European Globalisation Adjustment Fund (EGF) was established in 2006 to show EU solidarity towards workers affected by mass redundancies. The EGF should facilitate the re-integration into employment of those workers by providing financial contributions for time-limited and coordinated packages of personalised services. Such packages include active labour market measures such as training, aid for self-employment, coaching and outplacement. They also often include income support and other allowances paid to workers.

The European Social Fund (ESF) also supports redundant workers, mainly through lifelong learning programmes. However, whereas the purpose of the ESF is to address long-term structural imbalances, the EGF was designed to address short-term and ad-hoc emergency situations.

The ECA found that nearly all EGF eligible workers were offered personalised and well-coordinated measures, but that each EGF measure may have also been eligible for the ESF. Some Member States preferred to use the ESF rather than EGF. The auditors also found that no quantitative re-integration objectives were set, and that existing data are not adequate to assess the effectiveness of the measures in re-integrating workers into employment. The EGF delivered EU added value when used to co-finance services for redundant workers or allowances not ordinarily existing under Member States’ unemployment benefit systems.

The ECA recommended that:

(a) The Member States and the Commission take the necessary steps to ensure the availability of up-to-date and reliable data in order to monitor the achievement of objectives, as well as to compare the outcome of the various measures.

(b) The European Parliament, the Council and the Commission consider limiting EU funding to measures likely to provide EU added value, rather than funding already existing national workers’ income support schemes.

(c) The European Parliament, the Council and the Commission consider, as an alternative to the current EGF scheme, the possibility of adapting the ESF framework and its funding allocations in order to support more rapidly workers affected by mass redundancies.


Aidas Palubinskas

Press Officer European Court of Auditors

Desk: +352 4398 45410 Mobile: +352 621 552224 Twitter: @EUAuditorsECA


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