OREANDA-NEWS. July 15, 2015. The European Commission has proposed to provide Germany with € 6.9 million from the European Globalisation Adjustment Fund (EGF) to help 2,692 former workers of Adam Opel AG and one of its suppliers to find new jobs.

EU Commissioner for Employment, Social Affairs, Skills and Labour Mobility Marianne Thyssen commented: "The impact of the global economic and financial crisis on demand for cars, especially in some segments, still exerts its consequences on employment in the motor industry". She added "Many workers are experiencing hardship and EU solidarity to helping them to manage these difficult transitions is therefore important. The almost seven million we have proposed would help these redundant car workers to adapt their skills and facilitate their transition to a new job".

Germany applied for support from the EGF following the dismissal of 2,881 workers by Adam Opel AG and one of its suppliers. These job losses were the result of the shutdown of the Opel production plant in Bochum, triggered by the drop in demand over the period of 2007 to 2013, as a consequence of the global economic and financial crisis.

The measures co-financed by the EGF would help 2,692 redundant workers to find new jobs by providing them with career guidance and peer groups, vocational training, business start-up advisory services, job scouting, mentoring and advisory services after reemployment and training allowances.

The total estimated cost of the package is €11.5 million, of which the EGF would provide €6.9. The proposal now goes to the European Parliament and the EU's Council of Ministers for approval.

Background

As a consequence of the financial and economic crisis, the number of newly registered cars in the EU and EFTA Member States decreased from more than 16 million down to 12 million over the period 2007-2013. Manufacturers of small and medium-sized vehicles of the medium-price segment have been particularly hard hit, whereas sales of economy as well as of premium or luxury vehicles were not as much affected by the crisis. A shift from medium-priced vehicles to economy vehicles could be observed, in addition to the sharp overall drop in car sales which can be attributed to the economic and financial crisis.

Adam Opel AG, as one of the major players in the medium-priced segment of small and medium-sized vehicles, has been particularly hard hit by the crisis. Between 2007 and 2013, Opel sales in Europe fell by 39 % and the enterprise is facing problems of overcapacity.

The redundancies have a significant adverse impact on the local economy in Bochum. Bochum is a city in the Ruhr valley, a highly urbanised industrial area in North Rhine-Westphalia. The Ruhr district, traditionally a coal-mining and steel producing region, has been facing tremendous structural challenges since the 1960s.

The city of Bochum presents an unemployment rate far above the German average, with a significant share of job seekers aged over 55. Since more than 25% of the Opel redundant workers are also 55+, the employment situation in Bochum will worsen significantly.

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.