Employment: Commission proposes €960,000 from Globalisation Fund to help redundant bar and restaurant workers in Spain

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European Commission - IP/14/825   11/07/2014

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European Commission

Press release

Brussels, 11 July 2014

Employment: Commission proposes €960,000 from Globalisation Fund to help redundant bar and restaurant workers in Spain

The European Commission has proposed to mobilise the European Globalisation Adjustment Fund (EGF) to help 280 workers made redundant in the food and beverage service sector in Aragón (Spain) to find new jobs. The funds requested by the Spanish authorities, amounting to €960,000, would help former workers from small and medium-sized businesses. The proposal now goes to the European Parliament and the EU's Council of Ministers for approval.

EU Commissioner for Employment, Social Affairs and Inclusion László Andor commented: "Workers in the Spanish away-from-home food sector have been hard hit by the economic crisis. The Spanish labour market is particularly difficult, but the proposed support from Europe's Globalisation Adjustment Fund would help the workers who lost their jobs to find new opportunities".

Spain applied for support from the EGF following the dismissal of 904 workers in 661 small and medium sized businesses operating in the food and beverage service sector in the region of Aragón. The dismissals were the result of reduced spending on away-from-home food (bars, cafes, restaurants, takeaways and ready meals) in the wake of the economic and financial crisis. The decline in activity and the closure of many businesses resulted in a large number of redundancies.

The measures co-financed by the EGF would help the 280 workers facing the greatest difficulties in finding new jobs by providing them with intensive job-search assistance, counselling and guidance; general training and re-training; individual vocational training; and a variety of allowances and incentives.

The total estimated cost of the package is €1.6 million, of which the EGF would provide €960,000.

Background

The global financial and economic crisis severely affected the Spanish economy, resulting in reductions in income and a decrease in household consumption. This decline resulted in shrinking demand for food and beverage services, given the strong linkage of household expenditure levels with food and beverage consumption away from home. Expenditure on such services has been declining since the beginning of the financial and economic crisis. It decreased by 12.1 % between 2009 and 2012.

The index of business activity for food and beverage services declined by 8.26 % between 2010 and 2012 and the number of businesses operating in this sector fell by 11 % in Aragón between 2009 and 2011, as a consequence of decreased expenditure on away-from-home food.

Employment in Aragón has been severely affected by the crisis. The unemployment rate in the region has increased rapidly from 4.2 % in December 2007 to 18.4 % in December 2013.

Since the food and beverage service sector has traditionally been considered as a safety net at times of scarce employment, the redundancies covered by this application have an adverse impact on the regional economy. The region was also affected by three other mass redundancy cases in the automotive (IP/09/223), retail (IP/10/1452) and construction sectors (IP/12/616) for which applications were submitted to the Commission and which received EGF support.

More open trade with the rest of the world leads to overall benefits for growth and employment, but it can also cost some jobs, particularly in vulnerable sectors and affecting 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 the start of its operations in 2007, the EGF has received 124 applications. Some €500 million has been requested to help more than 108,000 workers. EGF applications are being presented to help in a growing number of sectors, and by an increasing number of Member States. In 2013 alone, it provided more than €53.5 million.

In June 2009, the EGF rules were revised to strengthen the role of the EGF as an early intervention instrument forming part of Europe's response to the financial and economic crisis. The revised EGF Regulation entered into force on 2 July 2009 and the crisis criterion applied to all applications received from 1 May 2009 to 30 December 2011.

Building on this experience and the value added by the EGF for the assisted workers and affected regions, the Fund continues during the 2014-2020 period as an expression of EU solidarity, with further improvements to its functioning. Its scope has been expanded to include again 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 in regions of high youth unemployment.

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