Explanatory Memorandum to COM(2024)35 - Globalisation Fund application from Denmark - EGF/2023/004 DK Danish Crown - Main contents
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| dossier | COM(2024)35 - Globalisation Fund application from Denmark - EGF/2023/004 DK Danish Crown. |
|---|---|
| source | COM(2024)35  |
| date | 29-02-2024 |
1.The rules applicable to financial contributions from the European Globalisation Adjustment Fund for Displaced Workers (EGF) are laid down in Regulation (EU) 2021/691 of the European Parliament and of the Council of 28 April 2021 on the European Globalisation Adjustment Fund for Displaced Workers (EGF) and repealing Regulation (EU) No 1309/2013 1 .
2.On 6 December 2023, Denmark submitted an application EGF/2023/004 DK/Danish Crown for a financial contribution from the EGF, following displacements in Danish Crown 2 and 2 suppliers and dowstream producers in Denmark.
3.Following its assessment of this application, the Commission has concluded, in accordance with all applicable provisions of Regulation (EU) 2021/691, that the conditions for awarding a financial contribution from the EGF are met.
| EGF application | EGF/2023/004 DK/Danish Crown |
| Member State | Denmark |
| Region(s) concerned (NUTS 3 level 2) | Nordjylland (DK05) |
| Date of submission of the application | 6 December 2023 |
| Date of acknowledgement of receipt of the application | 20 December 2023 |
| Date of request for additional information | 20 December 2023 |
| Deadline for provision of the additional information | 15 January 2024 |
| Deadline for the completion of the assessment | 25 March 2024 |
| Intervention criterion | Article 4(2), point (a), of Regulation (EU) 2021/691 |
Primary enterprise | Danish Crown |
| Sector(s) of economic activity (NACE Revision 2 division) 4 | Division 10 (Manufacture of food products) |
Number of subsidiaries, suppliers and downstream producers | 2 |
| Reference period (four months): | 19 May 2023 – 19 September 2023 |
| Number of displacements during the reference period (a) | 692 |
| Number of displacements before or after the reference period (b) | 59 |
| Total number of displacements (a + b) | 751 |
| Total number of eligible beneficiaries | 751 |
| Total number of targeted beneficiaries | 390 |
| Budget for personalised services (EUR) | 2 878 001 |
| Budget for implementing EGF 5 (EUR) | 259 020 |
| Total budget (EUR) | 3 137 021 |
| EGF contribution (60 %) (EUR) | 1 882 212 |
Procedure
4.Denmark submitted application EGF/2023/004 DK/Danish Crown within 12 weeks of the date on which the intervention criteria set out in Article 4 (2), point (a), of Regulation (EU) 2021/691 were met, on 6 December 2023. The Commission acknowledged receipt of the application and requested additional information from Denmark on 20 December 2023. Such additional information was provided within 15 working days. The deadline of 50 working days of the receipt of the complete application within which the Commission should finalise its assessment of the application's compliance with the conditions for providing a financial contribution expires on 25 March 2024.
Enterprises and beneficiaries concerned
5.The application relates to 692 displaced workers whose activity has ceased in Danish Crown (Danish Crown A/S) and 2 suppliers and dowstream producers. The primary enterprise operates in the economic sector classified under the NACE Revision 2 division 10 (Manufacture of food products) The redundancies made by the primary enterprise are located in the NUTS 2 region of Nordjylland (DK05).
| Enterprises and number of displacements within the reference period | ||
| Danish Crown (Danish Crown A/S and DAT-Schaub A/S) | 651 | |
| TekniClean A/S | 37 | |
| Danish Veterinary and Food Administration | 4 | |
Total no. of enterprises: 3 | Total no. of displacements: | 692 |
6.Denmark submitted the application under the intervention criteria of Article 4(2), point (a), of Regulation (EU) 2021/691, which requires the cessation of activity of at least 200 displaced workers over a reference period of four months in an enterprise in a Member State, including workers displaced in suppliers and downstream producers and / or self-employed persons whose activity has ceased.
7.The reference period of four months for the application runs from 19 May 2023 to 19 September 2023.
8.The cessation of activity during the reference period occurred as follows:
–651 displaced workers in Danish Crown, and
–41 displaced workers in two suppliers and dowstream producers of Danish Crown.
9.Pursuant to Article 6, first paragraph, point (a), in conjunction with Article 5, first paragraph, point (c), of Regulation (EU) 2021/691, the cessation of activities of the displaced workers during the reference period has been calculated as follows:
–651 from the date of the de facto termination of the contract of employment or its expiry,
–41 from the date of the end of the assignment to the user undertaking.
10.In addition to the workers already referred to, the eligible beneficiaries include 59 displaced worker whose activity ceased before or after the reference period of four months. These workers ceased activity within the six months before the start of the reference period on 19 May 2023 and/or between the end of the reference period and the day before of the adoption of this proposal, pursuant to Article 6, first paragraph, point (b), of Regulation (EU) 2021/691, as required by Article 6, second paragraph, of Regulation (EU) 2021/691. A clear causal link can be established with the event that triggered the cessations of activity of the displaced workers during the reference period as required by Article 6, second paragraph, of Regulation (EU) 2021/691..
11.The total number of eligible beneficiaries is 751.
12.Danish Crown is a group of Danish food companies engaged in the butchery, processing and sale of primarily pork and beef. The event giving rise to these displacements is the closure of Danish Crown's slaughterhouse in Sæby in Frederikshavn Municipality following the decline of pig available for slaughtering.
13.The Danish slaughterhouse sector is in a structural crisis. Since 2005, the number of pigs slaughtered in Denmark has decreased by 4,4 million (20 %). The decline is largely due to the shift from raising pigs for slaughter to raising piglets for export. Exporting piglets is more profitable for Danish farmers than fattening pigs for slaughter due to low pork prices.
14.The number of pigs slaughtered has been decreasing in parallel with the increase in piglets exported. Denmark exported 13,8 million piglets in 2022, 380 % more than in 2005 (3,65 million piglets). Most exports went to Germany (41,3 %) and Poland (45 %). Germany and Poland have been plagued by African swine fever for several years, so they have not been able to raise enough pigs to meet their domestic demand.
15.Local demand drives Danish production of pork only to a limited extent. Danish Crown exports 90 % of its production to the European, Chinese and US markets.
Expected impact of the displacements as regards the local, regional or national economy and employment
16.North Jutland's economic strength, which was based on manufacturing, today develops around smart ICT and digitalisation, energy and the green transition, maritime economy and fisheries, and tourism. In Northern Jutland 67% of jobs are in the private sector and 33 % in the public sector in line with the country average 6 .
17.Since the financial crisis of 2008, the number of industrial and production jobs in the municipality of Frederikshavn has decreased by 2,026 units (36 %). Although this decrease is part of a trend seen across Denmark, where 35,388 (11 %) industrial and production jobs were lost in the period 2008-2023, in the municipality of Frederikshavn the decline has been three times as steep. The net decrease of jobs available in the region is 664 (2 ‰) during the period 2011-2021. Therefore, the employment lost due to the closure of the Danish Crown’s slaughterhouse is a cause for deep concern.
18.The employment rate in Northern Jutland (76,5 %) is 1,1 percentage point lower than the national average. Although unemployment in North Jutland is low (3,1 % in August 2023), it is slightly higher than the national average (2,8 %). In addition, the number of unemployed people in the region increased by 10 % in 2023 compared to 2022 7 . No municipality was spared. Unemployment growth has a gender bias: while men's unemployment increased by 20 %, the number of unemployed women remained the same.
19.Gender imbalances in the regional labour market add difficulties when hiring. Men work mainly in the private sector and are overrepresented in agriculture, industry and crafts, while women are overrepresented in public administration, education, health, culture and leisure 8 . The gender breakdown of Danish Crown displaced workers illustrates this imbalance (86 % men and 14 % women).
20.According to FremKom4 9 analysis, there is shortage of qualified labour in North Jutland, both in the technical field (the green transition) and in care, health and pedagogy (social welfare). The deficit is estimated to increase to 1 906 qualified workers in the technical field and 946 qualified workers in the care, health and pedagogy fields by 2026. FremKom4 analysis 10 has been used to draw the package of measures to be offered to former Danish Crown workers.
21.Denmark has described how the recommendations set out in the EU Quality Framework for anticipation of change and restructuring have been taken into account: Danish Crown complied with Danish law on collective redundancies, which establishes a mandatory procedure for informing and consulting workers representatives. The procedure makes it possible to explore any possibility of avoiding or reducing the number of redundancies. Directly after the decision to close down the Sæby site, the management of the enterprise and employee representatives started negotiations of a social plan, which includes offers for outplacement in other Danish Crown sites, individual counselling, job and training interviews, and relocation allowances for those outplaced at another Danish Crown slaughterhouse. An internal career fair, focusing on approximately 400 internal jobs at Danish Crown, was held in May 2023, followed by a bus tour to other Danish Crown slaughterhouses in Denmark.
22.Danish Crown also contributes one million Danish krone (approximately EUR 134 050) to the national co-financing share of the cost of the measures.
23.Regarding the activities undertaken to assist the displaced workers, Denmark has reported that the support to the workers started shortly after the redundancies, in October 2023. Job fairs and education fairs were organised. The redundant workers were also offered competence assessments (realkompetencevurdering-RKV) and job-search training.
24.Denmark has confirmed that the measures described below receiving a financial contribution from the EGF will not also receive financial contributions from other Union financial instruments.
25.The coordinated package of personalised services complements the standard support provided by the public employment offices funded by other national or EU funds.
Procedures for consulting the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities
26.Denmark has indicated that the co-ordinated package of personalised services has been drawn up in consultation with the trade union NNF, in compliance with Article 7 i of Regulation (EU) 2021/691. The suite of measures was agreed in the meeting held on 23 October 2023.
27.The application was prepared in close collaboration with the municipality of Frederikshavn, the Danish Agency for Labour Market and Recruitment and the Labour Market Council North Denmark. The municipality of Frederikshavn held a meeting with relevant educational institutions that could be involved in the upskilling/reskilling training to align offer to needs and expectations.
Targeted beneficiaries
28.The estimated number of displaced workers expected to participate in the measures is 390. Pursuant to Article 8(7), point (f), of Regulation (EU) 2021/691, the provided breakdown of these workers by gender, age group and educational level is as follows:
| Category | Number of expected beneficiaries | ||
| Gender: | Men: | 335 | (85,90 %) |
| Women: | 55 | (14,10 %) | |
| Non-binary | 0 | (0,0 %) | |
| Age group: | Below 30 years: | 39 | (10,00 %) |
| 30-54 years: | 275 | (70,51 %) | |
| Over 54 years: | 76 | (19,49 %) | |
| Educational level | Lower secondary education or less 11 | 156 | (40,00 %) |
| Upper secondary 12 or post-secondary education 13 | 214 | (54,87 %) | |
| Tertiary education 14 | 20 | (5,13 %) |
29.Pursuant to Article 8(7), point (h) of Regulation (EU) 2021/691, the personalised coordinated package to be provided to displaced workers consists of the following measures:
–Motivation: This first measure is a combination of information, motivation, and counselling, along with workers’ profiling. The main goal of the motivation process is to develop participants’ confidence in their own abilities, make them realise that improving their skills will help them obtain a new job, discuss possible barriers that could hinder their skill improvement and together find solutions to remove these barriers.
–Retention: The objective of this measure is to maintain motivation to participate in educational and upskilling pathways by supporting redundant workers through individual mentoring and advice, helping them resolve challenges and minimize barriers.
–Training on general competences: The Danish Act on Active Employment Efforts sets that redundant workers must be offered training in reading, writing, arithmetic and dyslexia training, if necessary. Therefore, the training offer part of the EGF package reinforces the basic training provided for by law and focuses on general adult education that allows improving one or more subjects at primary school level, as well as language skills in Danish. Training in Danish is particularly relevant, since 41 % of the redundant workers have a migrant background 15 and are not fluent in Danish. Training in digital skills and ad-hoc training tailored for Danish Crown former workers is also foreseen. The adapted training is a combination of language training and employment-oriented support (including job-search) to help participants meet labour law requirements and reconnect with the labour market.
–Upskilling/reskilling training. The profiles of the displaced workers do not correspond to the skills sought in the labour market. Most of the workers have low levels of formal qualifications (46 %) or rather outdated qualifications and skills (40 %). Most workers with only primary education belong to the age group of 30-39 years, while most of the workers with vocational education or training (VET) as the highest educational level belong to the age group of 50-59 years. The training offer includes shorter pathways for skills improvement (AMU-training) and vocational training based on competency assessment (RKV) that certifies any competency obtained in the formal educational system, at work or in continuing training. AMU focuses on training low-skilled adults and covers most of trades, industries, and services. AMU's offer ranges from introductory to highly specialised courses. Training is delivered in workshops that resemble enterprises' work environment.
–Training/job-seach allowance. Workers will receive an allowance while engaged in training or job-search.
30.The training offer was drawn considering several studies such as Jobbarometer 2023 (an analysis of local labour needs in Frederikshavn, Hjørring, Jammerbugt and Brønderslev Municipality), the Biennial Labour Market Balance that provides an overview of possible job openings, and FremKom4 analysis on skills. It aims to raise general competencies (including language and numeracy), digital competencies and skills improvement for jobs with skills shortages. Thus, the content of the training offer addresses the dissemination of the skills required in the digital industrial age and in a resource-efficient economy, as required by Article 7(2) of Regulation (EU) 2021/691.
31.The proposed actions, here described, constitute active labour market policy measures within the eligible actions set out in Article 7 of Regulation (EU) 2021/691. These actions do not substitute passive social protection measures.
32.Denmark has provided the required information on measures that are mandatory for the enterprise concerned by virtue of national law or pursuant to collective agreements. In accordance with Article 9(1) of Regulation (EU) 2021/691, Denmark has confirmed that a financial contribution from the EGF will not replace such measures.
33.The estimated total costs are EUR 3 137 021, comprising expenditure for personalised services of EUR 2 878 001 and expenditure for preparatory, management, information and publicity, control and reporting activities of EUR 259 020.
34.The total financial contribution requested from the EGF is EUR 1 882 212 (60 % of total costs).
35.Pursuant to Article 8(7), point (m), of Regulation (EU) 2021/691, Denmark has specified that the national pre-financing and co-funding is provided by The Danish Business Authority, along with the municipalities of Frederikshavn, Aalborg, Hjørring and Brønderslev and Danish Crown.
| Measures | Estimated number of participants | Estimated cost per participant (EUR) 16 | Estimated total costs (EUR) 17 |
| Personalised services (measures under Article 7(2), second subparagraph, point (a), of Regulation (EU) 2021/691) | |||
| Motivation | 75 | 3 200 | 240 000 |
| Retention | 75 | 1 200 | 90 000 |
| Training on general competences | 85 | 10 667 | 906 667 |
| Upskilling/reskilling training | 170 | 3 733 | 634 667 |
| Sub-total (a): Percentage of the package of personalised services | – | 1 871 334 | |
| (65,02 %) | |||
| Allowances and incentives (measures under Article 7(2), second subparagraph, point (b), of Regulation (EU) 2021/691) | |||
| Training/job-seach allowance | 390 | 2 581 | 1 006 667 |
| Sub-total (b): Percentage of the package of personalised services: | – | 1 006 667 | |
| (34,98 %) | |||
| Activities under Article 7 i of Regulation (EU) 2021/691 | |||
| 1. Preparatory activities | – | 38 853 | |
| 2. Management | – | 129 510 | |
| 3. Information and publicity | – | 51 804 | |
| 4. Control and reporting | – | 38 853 | |
| Sub-total (c): Percentage of the total costs : | – | 259 020 | |
| (8,26 %) | |||
| Total costs (a + b + c): | – | 3 137 021 | |
| EGF contribution (60 % of total costs) | – | 1 882 212 |
36.The costs of the measures identified in the table above as measures under Article 7(2), second subparagraph, point (b), of Regulation (EU) 2021/691 do not exceed 35 % of the total costs for the coordinated package of personalised services. Denmark confirmed that these measures are conditional on the active participation of the targeted beneficiaries in job-search or training activities.
37.Denmark started providing the personalised services to the targeted beneficiaries on 16 October 2023. The expenditure on the measures will therefore be eligible for a financial contribution from the EGF from 16 October 2023 until 24 months after the date of the entry into force of the Financing Decision.
38.Denmark started incurring the administrative expenditure to implement the EGF on 1 June 2023. The expenditure for preparatory, management, information and publicity, control and reporting activities shall therefore be eligible for a financial contribution from the EGF from 1 June 2023 until 31 months after the date of the entry into force of the Financing Decision.
39.The application contains a description of the management and control system required under Article 23 of Regulation (EU) 2021/691, which specifies the responsibilities of the bodies involved. Denmark has notified the Commission that the financial contribution will be managed and controlled by the same bodies as the European Social Fund Plus, which also has the Danish Business Authority as Managing Authority. The Auditing Authority will be the Danish Business Authority’s audit authority for the European Regional Fund and the European Social Fund Plus. Frederikshavn Municipality will be responsible for the implementation of measures. In this regard, the Danish authorities will conclude a commitment agreement with Frederikshavn Municipality.
40.Denmark has provided all necessary assurances regarding the following:
–the principles of equality of treatment and non-discrimination will be respected in access to the proposed measures and their implementation,
–the requirements laid down in national and EU legislation concerning collective redundancies have been complied with,
–Danish Crown, which has continued its activities after the lay-offs, has complied with its legal obligations and provided for its workers accordingly,
–any double financing will be prevented,
–the financial contribution from the EGF will comply with the procedural and material Union rules on State aid.
Contents
- BUDGETARY IMPLICATION
- SUMMARY OF THE APPLICATION
- ASSESSMENT OF THE APPLICATION
- Eligibility of the application
- Intervention criteria
- Calculation of displacements and of cessation of activity
- Eligible beneficiaries
- Description of the events that led to the displacements and cessation of activity
- Expected impact of the displacements as regards the local, regional or national economy and employment
- Application of the EU Quality Framework for anticipation of change and restructuring (QFR)
- Complementarity with actions funded by national or Union funds
- Procedures for consulting the targeted beneficiaries or their representatives or the social partners as well as local and regional authorities
- Targeted beneficiaries and proposed measures
- Proposed measures
- Estimated budget
- Period of eligibility of expenditure
- Management and control systems
- Commitments provided by the Member State concerned
- Budgetary proposal
- Related acts
41.The EGF shall not exceed a maximum annual amount of EUR 186 million (in 2018 prices), as laid down in Article 8 of Council Regulation (EU, Euratom) No 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027 18 .
42.Having examined the application in respect of the conditions set out in Article 13(1) and (2) of Regulation (EU) 2021/691, and having taken into account the number of targeted beneficiaries, the proposed measures and the estimated costs, the Commission proposes to mobilise the EGF for the amount of EUR 1 882 212, representing 60 % of the total costs of the proposed measures, in order to provide a financial contribution for the application.
43.The proposed decision to mobilise the EGF will be taken jointly by the European Parliament and the Council pursuant to Article 15(1), first subparagraph, second sentence, of Regulation (EU) 2021/691 and, as laid down in point 9 of 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 19 .
44.At the same time as it presents this proposal for a decision to mobilise the EGF, the Commission will present to the European Parliament and to the Council a proposal to transfer to the relevant budgetary line the amount of EUR 1 882 212.
45.At the same time as it adopted this proposal for a decision to mobilise the EGF, the Commission adopted a decision on a financial contribution that constitutes a financing decision within the meaning of Article 110 of Regulation (EU, Euratom) 2018/1046 20 . That financing decision will enter into force on the date on which the Commission is notified of the approval of the budgetary transfer by the European Parliament and the Council pursuant to Article 15(2), first subparagraph, of Regulation (EU) 2021/691.