Cause and Effect in European Politics and Law

The Employment Crisis – a New Brussels' Priority

Zhaneta Kuyumdzhieva, trainee, September 13, 2012

“The persistently worsening employment situation represents the biggest worry of European citizens and governments today, as well as a threat to Europe's medium-to-long term stability, competitiveness and prosperity. Between 2008 and mid-2012, the EU27 unemployment rate has climbed from around 7% to 10.4%, or 25 million unemployed, and in the euro area this is 11.2%, i.e. nearly 18 million people. More than one out of every five youngsters seeking a job cannot find one. Employment has also become more precarious: nearly 94% of jobs created in the 15-64 age group in 2011 were part-time; and 42.5 % of young employees are on temporary contracts. Long-term unemployment has risen to over 10 million people in 2011, and the number of people at risk of poverty or social exclusion in the EU has risen to 116 million.”

With those highly concerning data begins a paper prepared for the plenary sessions of the two-day conference “Jobs 4 Europe” that took place in Brussels and ended on 7 September. The main topics on the agenda were the creation of a dynamic labour market in Europe through investments in human resources and mobility; analysis of the impact of the crisis on employment with a focus on the “programme countries” ( the countries with adjustment programmes under the auspices of the IMF – Greece, Portugal, Ireland in the eurozone and Romania outside the eurozone), wages, households without revenues; sectors with a potential for jobs creation – the “green” economy, the healthcare sector and the ICT sector; employment policy for the entire working age population and possible strategies for reaching full employment – guarantees, social economy.

The conference stressed the importance of the measures in the package for increasing the employment rate from April 2012 that contains recommendations for improving national policies in this regard. During the conference, a clear consensus emerged between the EU institutions representatives and those of the business sector and the academia that fighting unemployment must become a priority and that timely and coordinated measures have to be put in place.

One of the bodies whose competences were expanded already in 2009 in order to ensure a more adequate presence in low employment conditions – the European Globalisation Adjustment Fund (EGF) – issued its 2011 annual report just days ago. According to the report, just over 21 thousands workers who lost their jobs were supported in finding new job opportunities. The measures offered by EGF to the unemployed are implemented mainly through active individual assistance for finding a job, vocational training courses, ad-hoc incentives for their participation in the provided activities or through support for starting their own business.

According to László Andor, the EU Commissioner for Employment, Social Affairs and Inclusion, the EGF has been a direct expression of European solidarity and a practical mechanism to support the recovery of people and regions following mass dismissals. EGF was established in 2007 and according the Commission’s proposal the scope of its activity has to be expanded in the next financial period 2014 – 2020 to offer protection to temporary employed or individually employed workers, as well as measures in case of mass dismissals in extreme situations. Since its establishment, the EGF has supported almost 78 000 workers and about 4% of the persons who benefited by the support measures found a job soon after that.

The conditions for getting assistance by the EGF are laid out in the Fund’s statute from 20 December 2006. At that time the body aimed mainly at supporting people who had lost their jobs as a result of transformations in the world trade models due to globalisation such as closing or relocating of enterprises out of the EU. In overall, EGF can allocate up to 500 million euros per year if during a 4-month period an enterprise based in an EU member state has made at least 500 job cuts or if the same number of job cuts has occurred during a 9-month period in enterprises (mainly SME) in a region or in two neighbouring regions. Assistance from the Fund can be sought also in cases that do not fall into the two presumptions above – for example in cases of substantial job cuts in small labour markets or in situations when employment or the situation of the economy on regional level suffer serious decline.

Until the spring of 2009, the EGF and the country that has applied for assistance from the Fund shared the financial burden of the measures for reintegration of workers from regions or sectors that suffered severe economic blows. As of 1 May of the same year entered into force an amendment to the above rule that expanded the scope of action of EGF, so that the deadline for applying for assistance for reasons linked to the effects of the financial and economic crisis was extended until the end of 2011. The share of national co-financing was reduced to 35%.

The Commission’s data, presented in its June 2011 proposal for amendments of the 2009 EGF statute show that in 2009 and 2010 the applications linked to the negative effects of globalisation were 10, covering 9643 workers, while the applications linked to the financial crisis were 46, covering 44 464 workers. According to the 2011 EGF activity report, 22 decisions have been taken in total on just 5 applications from 2011, 16 from 2010 and just one application from 2009. The allocated financing amounts to 128 million euros and is aimed to benefit 21 213 workers that have lost their job in 12 member states.

Bulgaria has applied only once for EGF financing – in October 2009 for the Kremikovtsi metallurgic plant. The 2010 EGF activity report mentions that the application was rejected because it did not fill all the conditions. In 2013, in the framework of the European semester, the Commission will present a new method for assessment of the governments’ performance in implementing the employment programmes. The member states in their turn will be supported by the EU financial instruments (such as the European Social Fund) to apply reforms on national level.

We can say that last week in Brussels we saw a strong political will to take action aimed to reverse the negative employment trends and to fulfil the goals of the Europe 2020 strategy. The ball is now in the courts of the national governments. The countries that had to apply the toughest measures in cutting jobs heard at the conference the promise of the new Secretary General of the International Labour Organisation (ILO) Guy Ryder that ILO is ready to support them and that in those countries the social dialogue has to be reinforced while in some of them, such as Greece, it has first to be recovered.