OREANDA-NEWS. July 15, 2015. The European Commission has proposed to provide Belgium with € 6.2 million from the European Globalisation Adjustment Fund (EGF) to help 4,500 workers made redundant in Belgium by Ford — and eleven of its suppliers and downstream producers — back into employment.

EU Commissioner for Employment, Social Affairs, Skills and Labour Mobility Marianne Thyssen commented: "Vehicle production in Europe has dropped significantly in recent years and structural change in the car industry in response to globalisation is ongoing". She added: "This proposal to allocate over six million euros from the EGF would help to prepare 4 500 redundant workers for new job opportunities and help them to manage this difficult transition".

Belgium applied for support from the EGF following the final shutdown of the Ford production plant in Genk and the subsequent dismissal of 5,111 workers in Ford and eleven of its suppliers and downstream producers. These redundancies were the result of a significant loss of market share of the EU automotive industry within the past decade. This application covers the redundancies at the plant in 2014 and is a follow-up to a first application concerning the Ford Genk closure, which covered the initial wave of redundancies in 2013.

The measures co-financed by the EGF would help 4,500 redundant workers to find new jobs by providing them with individual job search assistance and general information services (including active job-oriented guidance, job fairs, social intervention advisors, competence-consciousness in the context of career-oriented coaching, etc.), as well as a variety of training courses and hiring bonuses.

The total estimated cost of the package is €10.4 million, of which the EGF would provide €6.2. The proposal now goes to the European Parliament and the EU's Council of Ministers for approval

Background

The application is based on the fact that the EU share in the global market for passenger vehicles has been shrinking in recent years, within the general upward trend of the sector. The EU market share dropped from 32.2 % in 2007 to 23.2 % in 2012, representing a decline of 28.2 %.

The economic and financial crisis further aggravated the situation for the European automotive industry, which has also been hampered by import restrictions in third countries (new import licensing requirements, e.g. in Argentina and Brazil, and rising import duties, e.g. in Russia).

The Belgian car industry has suffered the full impact of these trends, with a decline in production by 15.58 % over the period 2011-2013.

The redundancies at Ford Genk and its suppliers primarily affect the province of Limburg, in the Flemish Region, in northeast Belgium. The province of Limburg is a former coal-mining area in which employment is strongly dependant on traditional industry.

It's been estimated that the closure of Ford Genk, which was the largest employer in the province of Limburg, would lead to a rise in the unemployment rate by between 1.8 and 2 percentage points together with a reduction in GDP of between 2.6 and 2.9 %, and a potential drop in labour productivity of 10.9 %. It will moreover be very difficult for the former Ford workers to find new employment due to the lack of job openings and a high concentration of unemployment in the area.

The province of Limburg previously received EGF support for two other mass redundancy cases, being the first wave of redundancies in Ford Genk in 2013 and earlier, the textile sector.

More open trade with the rest of the world leads to overall benefits for growth and employment, but it can also cost jobs, particularly in vulnerable sectors and among lower-skilled workers. This is why Commission President Barroso first proposed setting up a fund to help those adjusting to the consequences of globalisation. Since starting operations in 2007, the EGF has received 136 applications. Some €550 million has been requested to help more than 128,331 workers.

The Fund continues during the 2014-2020 period as an expression of EU solidarity, with further improvements to its functioning. Its scope has been broadened to include workers made redundant because of the economic crisis, as well as fixed-term workers, the self-employed, and, by way of derogation until the end of 2017, young people not in employment, education or training (NEETs) residing in regions eligible under the Youth Employment Initiative (YEI), up to a number equal to the redundant workers supported.