New EU Regulation on European Globalisation Adjustment Fund makes application criteria less strict
The European Globalisation Adjustment Fund for Displaced workers (EGF, formerly European Globalisation Adjustment Fund) continues to operate during the EU programming period 2021–2027. Member States will now be able to apply for financial contributions on more flexible grounds in the event of redundancies. The required threshold of redundancies will also be reduced.
The new EGF Regulation, which provides for new application criteria, entered into force on 3 May 2021. The reviewed criteria shall be applied retroactively as of 1 January 2021.
Required number of redundancies down to 200 people
Individual EU Member States have been eligible for support from the EGF in the event that companies established in them have had to dismiss some of their employees for reasons related to changes in world trade patterns and due to a global financial and economic crisis. Along with the new regulation, other unforeseen and unexpected events affecting the business of companies will also be admitted as criteria for submitting applications.
Whereas the earlier limit for dismissals was 500, Member States will now be able to apply for EGF support from the European Commission if more than 200 people are made redundant at once by a single company or in the same sector, or if dismissals in a small labour market region have a significant impact on employment and the economy.
Easing the conditions was found necessary because not all Member States have been able to make efficient use of the Fund during the previous programming period.
Other criteria that relate, among others, to the classification of sectors of activity, the reference period and regional limitations will continue to apply essentially as before.
EGF supports labour market measures in case of redundancies
In the event of major restructuring, EGF support is granted for active employment policy measures, such as different forms of training, education, promotion of mobility, pay subsidies and start-up grants. The purpose of the funding is to support re-employment measures for the benefit of the dismissed and not to promote business activity as such.
In EGF-supported projects, the EU’s funding share is 60 per cent and the national contribution amounts to 40 per cent.
Finland’s national managing authority for the EGF is the Ministry of Economic Affairs and Employment. It monitors the lay-offs situation in different regions very closely, consults the European Commission in advance to see if the criteria under the EGF Regulation are fulfilled, and prepares and submits national EGF applications. The regional Centres for Economic Development, Transport and the Environment (ELY Centres) and Employment and Economic Development Offices (TE-Offices) are in charge of implementation.
Finland has made extensive use of EGF support
During the Fund’s ten-year history, the total amount spent on EGF-supported projects in Finland is approximately EUR 40 million, counting both national contributions and EU funding. Finland has made use of EGF funding in connection with major job losses in the ICT sector in particular. In 2015–2016, Finland applied for more EGF funding than any other EU Member State. The latest application, submitted to the EGF on 30 December 2020, concerns layoffs by Finnair and companies associated with it.
Erja Nikula, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 058 +358 29 504 7058
Outi Viljamaa, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 7982