2. Bad game in the European Globalisation
BSSB.BE bruegel.org 19.04.2018
Europe Balkans Ex-USSR
*Conventional wisdom holds that trade liberalisation benefits all countries, though not necessarily equally
Evaluation and recommendations
In Claeys and Sapir (2018), we find that the programme was highly politically visible, in the sense that EGF beneficiaries tended to work in large firms prior to their dismissal and that these dismissals were largely reported in the media.
But it is also essential that services financed by the EGF really do make it more likely beneficiaries will find another job. Unfortunately, the economic effectiveness of the EGF programme is more difficult to evaluate, mainly because the available data are insufficient.
Our estimates, however, suggest that only a small proportion of EU workers who lost their job because of globalisation received EGF financing. Sadly, it is impossible at this time to assess whether workers who received EGF assistance did better in their job search than those who did not receive EGF assistance.
We thus make three recommendations to improve the EGF programme.
- First, there is a need to improve the monitoring of the programme by collecting more and better data. The present situation is clearly unsatisfactory because it does not allow a proper evaluation of the EGF. The best approach would be to collect data at the individual level and not only at the case level. At the very least, reports on each EGF case should be made available and should be standardised in terms of measures undertaken and outcomes. This would have the additional advantage of making cases comparable so that member states could share good practices.
- Second, there is a need to revise the rules of the programme to increase its use, in three ways. First, one should envisage having no threshold (like the TAA) or at least a much lower threshold.
Obviously, this would imply that the amount of money needed for the programme would increase significantly (to around €800 million per year for globalisation cases only, according to our calculations), but it would also mean greater equity between workers of large establishments, who tend to be eligible, and those from relatively small companies who tend to be excluded, unless they are geographically concentrated.
Second, the co-funding rate could be changed and be made equal to the one used for programmes financed by the European Social Fund (ESF). This would remove the disincentive to use the EGF by low-income countries, where the national co-funding rate for the EGF is higher than for the ESF. Third, the European Commission could be more proactive in its management of the EGF. It could, for instance, use Eurofound’s European Restructuring Monitor database, which provides data on large-scale restructuring events reported by the media, to detect redundancy plans meeting EGF eligibility criteria and to suggest to national authorities that they could apply to EGF programmes for these cases.
- Finally, the scope of assistance should be enlarged from globalisation to other policy-induced sources of adjustment, including intra-EU trade and offshoring, and the phasing out of activities to reduce carbon emissions (Tagliapetra 2017).
Our findings suggest that increasing the scope to intra-EU offshoring and reducing the threshold to 100 redundancies could result in several hundred additional EGF cases. The EGF could therefore become the EAF, the European Adjustment Fund, with expanded resources. Ideally these resources should be included in the MFF through the creation of a specific budget line (which would also have the advantage of speeding up the procedure).
- The publication is not an editorial. It reflects solely the point of view and argumentation of the author. The publication is presented in the presentation. Start in the previous issue. The original is available at: org