MIL-OSI Europe: REPORT on the proposal for a decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund following an application from the Netherlands – EGF/2020/004 NL/The Netherlands KLM – A9-0187/2021

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Source: European Parliament

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the proposal for a decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund following an application from the Netherlands – EGF/2020/004 NL/The Netherlands KLM

(COM(2021)0226 – C9‑0161/2021 – 2021/0115(BUD))

The European Parliament,

 having regard to the Commission proposal to the European Parliament and the Council (COM(2021)0226 – C9‑0161/2021),

 having regard to Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006[1] (“EGF Regulation”),

 having regard to Council Regulation (EU, Euratom) No 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021-2027[2], and in particular Article 8 thereof,

 having regard to the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management as well as on new own resources, including a roadmap towards the introduction of new own resources[3], (“IIA of 16 December 2020”), and in particular point 9 thereof,

 having regard to the letter of the Committee on Employment and Social Affairs,

 having regard to the letter of the Committee on Regional Development,

 having regard to the report of the Committee on Budgets (A9-0187/2021),

A. whereas the Union has set up legislative and budgetary instruments to provide additional support to workers who are suffering from the consequences of major structural changes in world trade patterns or of the global financial and economic crisis, and to assist their reintegration into the labour market; whereas this assistance is made through a financial support given to workers and the companies for which they worked;

B. whereas the Netherlands submitted application EGF/2020/004 NL/KLM for a financial contribution from the European Globalisation Adjustment Fund (EGF), following 1 851 redundancies[4] in the company KLM Royal Dutch Airlines in the NUTS level 2 region Noord-Holland (NL32) in the Netherlands, within a reference period for the application from 15 August 2020 to 15 December 2020;

C. whereas the application relates to 1 851 workers made redundant in KLM Royal Dutch Airlines, of which 650 redundancies occurred during the reference period and 1 201 occurred before or after the reference period and a clear causal link can be established with the event which triggered the redundancies during the reference period;

D. whereas the application is based on the intervention criteria of Article 4(1), point (a), of the EGF Regulation, which requires at least 500 workers being made redundant over a reference period of four months in an enterprise in a Member State;

E. whereas the Commission acknowledged that the COVID-19 health crisis generated an economic crisis and pushed for a Next Generation EU recovery plan that underlines the key role played by the EGF in assisting redundant workers;

F. whereas the COVID-19 pandemic caused an immense shock to the aviation industry due to travel restrictions, leading to a drop in international air traffic by 98,9 % in April 2020 compared to April 2019, while 64 % of global aircraft was put in storage;

G. whereas international passenger demand has fallen by 75,6 % in 2020 compared to 2019 levels, whereas according to the global passenger forecast by the International Air Transport Association, it will take 3 to 4 years for the aviation industry to recover to its pre-crisis level;

H. whereas this is one of the first mobilisations of the EGF due to the COVID-19 crisis, following the adoption by the European Parliament of its resolution of 18 June 2020 on the proposal of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund (EGF/2020/000 TA 2020 – Technical Assistance at the initiative of the Commission), stating that the EGF could be mobilised to support permanently dismissed workers and the self-employed in the context of the global crisis caused by COVID-19 without amending Regulation (EU) No 1309/2013;

I. whereas before the pandemic started, the financial performance of KLM was increasing steadily between 2015 and 2019, its net profit rising from EUR 54 million in the financial year 2015 to EUR 449 million in the financial year 2019;

J. whereas the number of passengers carried by KLM dropped by 68 % and KLM’s revenue fell by 53,8 % in 2020 compared to 2019, leading KLM to accumulate an operating loss of EUR 1 154 million in 2020 compared to a profit of EUR 714 million in 2019[5], and its management to announce a restructuring plan reducing the workforce by around 5 000 full-time equivalents[6];

K. whereas the Commission declared that the health crisis resulted in an economic crisis, set out a recovery plan for the economy, and underlined the role of the EGF as an emergency tool[7];

1. Agrees with the Commission that the conditions set out in Article 4(1), point (a), of the EGF Regulation are met and that the Netherlands are entitled to a financial contribution of EUR 5 019 218 under that Regulation, which represents 60 % of the total cost of EUR 8 365 364, comprising expenditure for personalised services of EUR 8 030 750 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 334 614;

2. Notes that the Dutch authorities submitted the application on 22 December 2020, and that, following the provision of additional information by the Netherlands, the Commission finalised its assessment on 6 May 2021 and notified it to Parliament on the same day;

3. Regrets the lengthy process in such difficult circumstances and calls the Commission to accelerate the process of assessment, ensuring that the dismissed workers can benefit from the Union’s support in a timely manner;

4. Notes that the application relates in total to 1 851 workers made redundant in the company KLM Royal Dutch Airlines; takes note that the Netherlands expect that only  1 201 out of the total eligible beneficiaries will participate in the measures (‘targeted beneficiaries’);

5. Notes that the Netherlands has decided not to offer income support to the dismissed workers through the EGF; takes note that the Dutch government had launched a generic wage support grant for all companies whose turnover is affected by more than 20 % by the COVID-19 crisis and that KLM Group applied for NOW-grant (Noodmaatregel Overbrugging voorWerkgelegenheid); takes note that KLM Group applied for the entire period covered by the NOW grant and has already received advance payments of EUR 683 million and should receive an additional EUR 488 million;

6. Notes that it is for the Member State to decide how many of the eligible workers should be targeted to benefit of the support, calls on the Netherlands to guarantee the inclusion of the most vulnerable individuals, who are likely to face most difficulties on the job market, without any form of discrimination; stresses the benefit of allowing all workers made redundant, for whom this represents their best option, to be integrated and supported by the measures included in this EGF project;

7. Underlines that the social impact of the redundancies is expected to be considerable as KLM is the Netherlands’ second-largest private employer with over 33 000 employees[8] in 2019; recalls that these redundancies took place in a context of rising unemployment rates in Noord-Holland, which increased by 1,5 percentage points to reach 4,8 % in the fourth quarter of 2020 compared to the same quarter of 2019;

8. Notes that the Netherlands started providing personalised services to the targeted beneficiaries on 1 February 2021 and that the period of eligibility for a financial contribution from the EGF will therefore be from 1 February 2021 to 1 February 2023;

9. Recalls that personalised services to be provided to the workers consist of the following actions: professional orientation, support to find work in dedicated sectors, training, coaching and/or education and financial advice; welcomes the focus of the authorities on reskilling workers to facilitate their move to sectors with labour shortages, such as education, healthcare, logistics, technologies and information management;

10. Notes that the Netherlands started incurring administrative expenditure to implement the EGF on 1 February 2021 and that expenditure on preparatory, management, information and publicity, control and reporting activities will therefore be eligible for a financial contribution from the EGF from 1 February 2021 to 1 August 2023;

11. Welcomes that the co-ordinated package of personalised services was drawn up by the Netherlands in consultation with stakeholders and social partners, including eight trade unions, and, in close cooperation with the relevant Works Councils, that a support group was set up to ensure that these services are coordinated;

12. Stresses that the Dutch authorities have confirmed that the eligible actions will not receive assistance from other Union funds or financial instruments[9];

13. Calls for continued reduction of administrative burden throughout the process;

14. Calls for further communication efforts with regard to the measures supported by the Union budget through the EGF; underlines the importance to disseminate information on the Union added value and the support to vulnerable sectors and workers, especially in the wake of the COVID-19 fallout;

15. Reiterates that assistance from the EGF must not replace actions which are the responsibility of companies, by virtue of national law or collective agreements;

16.  Notes that according to the Commission all the procedural requirements were met;

17.  Strongly supports that in 2021-2027 the EGF will continue to show solidarity while shifting the focus from the cause of restructuring to its impact; welcomes that under the new rules, decarbonisation will also be a reason for applicators to be eligible for support.

18. Approves the decision annexed to this resolution;

19. Instructs its President to sign the decision with the President of the Council and arrange for its publication in the Official Journal of the European Union;

20. Instructs its President to forward this resolution, including its Annex, to the Council and the Commission;

ANNEX: DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on the mobilisation of the European Globalisation Adjustment Fund following an
application from the Netherlands – EGF/2020/004 NL/KLM

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union,

 

Having regard to Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/2006[10], and in particular Article 15(4) thereof,

 

Having regard to the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources[11], and in particular point 9 thereof,

 

Having regard to the proposal from the European Commission,

 

Whereas:

(1) The European Globalisation Adjustment Fund (EGF) aims to provide support for workers made redundant and self-employed persons whose activity has ceased as a result of major structural changes in world trade patterns due to globalisation, as a result of a continuation of the global financial and economic crisis, or as a result of a new global financial and economic crisis, and to assist them with their reintegration into the labour market.

(2) The EGF is not to exceed a maximum annual amount of EUR 186 million (2018 prices), as laid down in Article 8(1) of Council Regulation (EU, Euratom) 2020/2093[12].

(3) On 22 December 2020, the Netherlands submitted an application to mobilise the EGF, in respect of redundancies in KLM Royal Dutch Airlines in the Netherlands. It was supplemented by additional information provided in accordance with Article 8(3) of Regulation (EU) No 1309/2013. That application complies with the requirements for determining a financial contribution from the EGF as laid down in Article 13 of Regulation (EU) No 1309/2013.

(4) The EGF should, therefore, be mobilised in order to provide a financial contribution of EUR 5 019 218 in respect of the application submitted by the Netherlands.

(5) In order to minimise the time taken to mobilise the EGF, this decision should apply from the date of its adoption,

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the Union for the financial year 2021, the European Globalisation Adjustment Fund shall be mobilised to provide the amount of EUR 5 019 218 in commitment and payment appropriations.

Article 2

This Decision shall enter into force on the day of its publication in the Official Journal of the European Union. It shall apply from [the date of its adoption].

Done at Brussels,

For the European Parliament For the Council

The President The President

EXPLANATORY STATEMENT

I. Background

The European Globalisation Adjustment Fund has been created in order to provide additional assistance to workers suffering from the consequences of major structural changes in world trade patterns.

According to the provisions of Article 8(1) of Council Regulation (EU, Euratom) No 2020/2093 laying down the multiannual financial framework for the years 2021-2027[13] and of Article 15 of Regulation (EU) No 1309/2013[14], the Fund may not exceed a maximum annual amount of EUR 186 million (2018 prices).

As concerns the procedure, according to point 9 of the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management as well as on new own resources, including a roadmap towards the introduction of new own resources[15], in order to activate the Fund the Commission, in case of a positive assessment of an application, presents to the budgetary authority a proposal for mobilisation of the Fund and, at the same time, a corresponding request for transfer.

II. The Netherlands’ application and the Commission’s proposal

On 22 December 2020, the Netherlands submitted an application EGF/2020/004 NL/KLM for a financial contribution from the EGF, following 1 851 redundancies[16] in the company KLM Royal Dutch Airlines located in the NUTS level 2 region of Noord-Holland (NL32).

Following its assessment of this application, the Commission has concluded, in accordance with all applicable provisions of the EGF Regulation, that the conditions for awarding a financial contribution from the EGF are met.

On 6 May 2021, the Commission adopted a proposal for a decision on the mobilisation of the EGF in favour of the Netherlands to support the reintegration in the labour market of 1 201 targeted beneficiaries, i.e. workers made redundant in the economic sector classified under the NACE Revision 2, namely Division 51 (Air transport).

The Commission deemed the application admissible under the intervention criteria of Article 4(1)(a) of the EGF Regulation, which requires at least 500 workers being made redundant over a reference period of four months in an enterprise in a Member State, including workers made redundant by suppliers and downstream producers and/or self-employed persons whose activity has ceased.

This is the fifth application of 2020 and the fourth to be examined under the 2021 budget, including the new MFF (to Council Regulation (EU, Euratom) No 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027[17] and the IIA of 16 December 2020. The Budget 2021 has reserve budget lines for EGF payments (prior 2021) which will be used for payments mobilised under the EGF regulation 2014-2020. The successor EGF regulation for 2021-2027 (2018/0202(COD)) has been adopted by the European Parliament plenary on 28 April 2021, but will have no impact on this procedure nor any upcoming procedures for mobilisations under the old 2014-2020 programme.

The number of 1 851 redundant workers has been calculated by adding 650 workers made redundant during the reference period to 1 201 workers made redundant before or after the reference period of four months. These workers were all made redundant after the general announcement of the projected redundancies on 21 May 2020. A clear causal link can be established with the event which triggered the redundancies during the reference period.

The application concerns a targeted 1 201 workers made redundant and refers to the mobilisation of a total amount of EUR 5 019 218 from the EGF for the Netherlands representing 60 % of the total costs of the proposed actions.

In order to establish the link between the redundancies and major structural changes in world trade patterns due to globalisation, the Netherlands base the application on the declaration of the Commission that the global health crisis has resulted in a global economic crisis, which has been addressed by the Commission’s recovery plan and which expressively mentions the EGF as one of its tools[18].

The Covid-19 pandemic hit hard KLM, undermining its good results of recent years. In mid-March 2020, KLM operations have largely come to a standstill while their operating costs have remained at the same level[19]. In 2020, KLM’s revenues fell by 53,8 % to EUR 5 120 million, compared to a year before. On 31 July 2020, KLM management announced a restructuring plan in order to reduce costs. This led to the workforce being reduced by around 5 000 full-time equivalents (from 33 000 to 28 000 full-time equivalents)[20].

The four types of actions to be provided to redundant workers, for which EGF co-funding is requested consist of:

a. Professional orientation: during this phase, the participants will receive information about the support process, orientation and job search assistance. It also includes individual self-confidence coaching to help workers to move to new jobs.

b. Support to find work in dedicated sectors: this measure will provide professional assistance to move to sectors with labour shortages, such as education, healthcare, logistics, technologies and information management. For instance, people with a technical background (i.e. KLM engineering and maintenance) could be reskilled, enabling them to take a job in a technology related sector.

c. Training, coaching and/or education: this will include measures to develop skills needed in a new field of employment.

d. Financial advice: this measure will provide individual assessment and financial advice to ensure that an affected employee has a clear view on his/her financial situation and the outlook to make the right decision. In this assessment, the financial service expert will take into account personal circumstances, how a change in job affects income, housing situation (i.e. ability to fulfil mortgage obligations, rental fees, effect of possible relocation), and the effects of specific measures from collective labour agreements and of changing national fiscal regulations.

 

According to the Commission, the described measures constitute active labour market measures within the eligible actions set out in Article 7 of the EGF Regulation and do not substitute passive social protection measures.

The Netherlands provided the required information on actions that are mandatory for the enterprises concerned by virtue of national law or pursuant to collective agreements. They confirmed that a financial contribution from the EGF will not replace such actions.

Procedure

In order to mobilise the Fund, the Commission has submitted to the Budgetary Authority a request to transfer a global amount of EUR 5 019 218 from the EGF reserve (30 04 02) to the EGF (prior 2021) budget line (16 02 99 01). The trilogue procedure shall be initiated in the event of disagreement, as provided for in Article 15(4) of the EGF Regulation.

According to an internal agreement, the Employment and Social Affairs Committee should be associated to the process, in order to provide constructive support and contribute to the assessment of the applications from the Fund.

 

 

LETTER OF THE COMMITTEE ON EMPLOYMENT AND SOCIAL AFFAIRS

Mr Johan Van Overtveldt

Chair

Committee on Budgets

BRUSSELS

Subject: Opinion on mobilisation of the European Globalisation Adjustment Fund – EGF/2020/004 NL/KLM – Netherlands (2021/0115(BUD))

Dear Mr Chair,

Under the procedure referred to above, the Committee on Employment and Social Affairs has been asked to submit an opinion to your committee. At its meeting of 18 May 2021, the committee decided to send the opinion in the form of a letter.

The Committee on Employment and Social Affairs considered the matter at its meeting of 27 May 2021. At that meeting, it decided to call on the Committee on Budgets, as the committee responsible, to incorporate the following suggestions into its motion for a resolution.

Yours sincerely,

Lucia Ďuriš Nicholsonová

 

SUGGESTIONS

The deliberations of the EMPL committee are based on the following considerations:

A. Whereas on 22 December 2020, the Netherlands submitted an application EGF/2020/004 NL/KLM for a financial contribution from the EGF, following 1 851 redundancies in the company KLM Royal Dutch Airlines located in the NUTS level 2 region of Noord-Holland (NL32);

B. Whereas the Commission deemed the application admissible under the intervention criteria of Article 4(1)(a) of the EGF Regulation, which requires at least 500 workers being made redundant over a reference period of four months in an enterprise in a Member State, including workers made redundant by suppliers and downstream producers and/or self-employed persons whose activity has ceased;

C. Whereas on 6 May 2021, the Commission adopted a proposal for a decision on the mobilisation of the EGF in favour of the Netherlands to support the reintegration in the labour market of 1 201 targeted beneficiaries, i.e. workers made redundant in the economic sector classified under the NACE Revision 2, namely Division 51 (Air transport);

D. Whereas the COVID-19 pandemic caused an immense shock to the aviation industry due to travel restrictions with international passenger demand falling by 75,6 % in 2020 compared to 2019 levels. Whereas according to the global passenger forecast by the International Air Transport Association, it will take 3 to 4 years for the aviation industry to recover to its pre-crisis level;

E. Whereas this had a huge negative impact on KLM, undermining its good results of recent years and, therefore, on 31 July 2020, KLM management announced a restructuring plan in order to reduce costs. This led to the workforce being reduced by around 5 000 full-time equivalents (from 33 000 to 28 000 full-time equivalents);

F. Whereas the Commission declared that the health crisis resulted in an economic crisis, set out a recovery plan for the economy, and underlined the role of the EGF as an emergency tool.

Therefore, the Committee on Employment and Social Affairs calls on the Committee on Budgets, as the committee responsible, to integrate the following suggestions in its motion for a resolution:

1.  Agrees with the Commission that the conditions set out in point (a) of Article 4(1) of the EGF Regulation are met and that the Netherlands are entitled to a financial contribution of EUR 5 019 218 under that Regulation, which represents 60 % of the total cost of EUR 8 365 364, comprising expenditure for personalised services of EUR 8 030 750 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 334 614;

2.  Notes that according to the Commission all the procedural requirements were met;

3.  Underlines that the social impact of the redundancies is expected to be considerable; reminds that as KLM is the Netherlands’ second-largest private employer with over 33 000 employees in 2019; recalls that these redundancies took place in a context of rising unemployment rates in Noord-Holland, which increased by 1,5 percentage points to reach 4,8 % in the fourth quarter of 2020 compared to the same quarter of 2019;

4.  Notes that the application relates in total to 1 851 workers made redundant in the company KLM Royal Dutch Airlines; takes note that the Netherlands expect that only 1 201 out of the total eligible beneficiaries will participate in the measures (targeted beneficiaries);

5.  Welcomes the four types of actions foreseen under the package of personalised services to be provided to redundant workers (professional orientation; support to find work in dedicated sector; training, coaching and/or education; financial advice), for which EGF co-funding is requested;

6.  Recalls that assistance from the EGF and other Union funds must not replace actions which are the responsibility of the employers, be it by virtue of national law or collective agreements;

7.  Strongly supports that in 2021-2027 the EGF will continue to show solidarity while shifting the focus from the cause of restructuring to its impact; welcomes that under the new rules, decarbonisation will also be a reason for applicators to be eligible for support.

LETTER OF THE COMMITTEE ON REGIONAL DEVELOPMENT

Mr Johan VAN OVERTVELDT

Chair of the Committee on Budgets

WIE 05U012

 

 

Subject: Mobilisation of the European Globalisation Adjustment Fund following an application from the Netherlands – EGF/2020/004 NL/KLM

 

Dear Mr Van Overtveldt,

 

The European Commission has transmitted to the European Parliament its proposal for a decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund following an application from the Netherlands (COM(2021)0226), following redundancies in KLM Royal Dutch Airlines.

I understand that it is intended that a report on this proposal will be soon adopted in the Committee on Budgets.

 

The application relates to 1 851 workers made redundant in KLM Royal Dutch Airlines of which 1 201 are expected to participate in EGF measures. The events giving rise to these redundancies are a result of the unexpected global economic crisis caused by the COVID-19 crisis. The redundancies in KLM have a serious impact on the national economy as the KLM is the Netherlands’ second-largest private employer.

 

The personalised services to be provided to redundant workers consist of the following actions that constitute active labour market measures within the eligible actions set out in Article 7 of the EGF Regulation: Professional orientation, Support to find work in dedicated sectors, Training, coaching and/or education and Financial advice.

 

The estimated total costs are EUR 8 365 364, comprising expenditure for personalised services of EUR 8 030 750 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 334 614. The total financial contribution requested from the EGF is EUR 5 019 218 (60 % of total costs).

 

The rules applicable to financial contributions from the European Globalisation Adjustment Fund (EGF) are laid down in Regulation (EU) No 1309/2013 of the European Parliament and of the Council of 17 December 2013 on the European Globalisation Adjustment Fund (2014-2020) and repealing Regulation (EC) No 1927/20061 (the ‘EGF Regulation’)

 

The committee coordinators have assessed this proposal, and asked me to write to you reporting that the majority of this committee has no objection to this mobilisation of the EGF to allocate the above-mentioned amount as proposed by the Commission.

 

Yours sincerely,

 

 

Younous OMARJEE

INFORMATION ON ADOPTION IN COMMITTEE RESPONSIBLE

Date adopted

31.5.2021

 

 

 

Result of final vote

+:

–:

0:

39

2

0

Members present for the final vote

Rasmus Andresen, Robert Biedroń, Anna Bonfrisco, Olivier Chastel, Lefteris Christoforou, David Cormand, Paolo De Castro, José Manuel Fernandes, Eider Gardiazabal Rubial, Vlad Gheorghe, Valentino Grant, Elisabetta Gualmini, Francisco Guerreiro, Valérie Hayer, Eero Heinäluoma, Niclas Herbst, Monika Hohlmeier, Moritz Körner, Joachim Kuhs, Zbigniew Kuźmiuk, Ioannis Lagos, Hélène Laporte, Pierre Larrouturou, Janusz Lewandowski, Silvia Modig, Siegfried Mureşan, Victor Negrescu, Andrey Novakov, Jan Olbrycht, Dimitrios Papadimoulis, Karlo Ressler, Bogdan Rzońca, Nicolae Ştefănuță, Nils Torvalds, Nils Ušakovs, Johan Van Overtveldt, Rainer Wieland, Angelika Winzig

Substitutes present for the final vote

Mario Furore, Jens Geier, Henrike Hahn

 

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