By IPS Correspondents
BRUSSELS, Mar 1 2006 (IPS)

The European Union has announced details of how it will allocate 500 million euros (600 million dollars) to combat the effects of globalisation.

The European Globalisation Fund (EGF) presented Wednesday (Mar. 1) by the European Commission, the European Union (EU) executive, aims to help up to 50,000 workers adapt to the restructuring of key industries in those regions most affected by changes in world trade.

The fund will be used to complement assistance offered to workers made redundant at national, regional and local level.

Under the plans, the money could be used in cases where the dismantling of a major company or industry sector affects at least 1,000 people or one percent of workers within a certain region.

The fund could be put towards the training of employees to prepare them for other jobs, as well as for helping them out financially for up to 18 months before they are laid off, in the form of income support allowances or complementary wage allowances for workers over 50.

It is estimated that the resources could help around 35,000 to 50,000 people working in the textile or automobile industry or any other sectors that may decline due to global pressures.

“The globalisation adjustment fund will express the Union’s solidarity towards those severely and personally affected by trade-adjustment redundancies. In this way, it will provide a stimulus to respond appropriately and effectively to the adverse impact of market opening. The fund will help workers made redundant back to work because we want a competitive, but also a fair EU,” he said.

“This fund is about people,” said Vladimír Spidla, EU commissioner for employment, social affairs and equal opportunities. “In a globalised economy, some workers in particular sectors regrettably lose their jobs. As the EU takes external trade decisions, it is logical that it takes responsibility through this new fund, to ensure workers who lose their jobs due to such trade changes are neither forgotten nor ignored in a changing economic environment.”

The Commission came up with the idea of the EGF in response to calls for action after U.S. company Hewlett Packard’s decision to cut around 6,000 jobs in Europe, mostly in France in September last year.

European leaders approved the measures in December as part of an overall agreement on the bloc’s next seven-year budget.

The Commission says the fund is needed to combat the effects of more open trade with other countries.

“More open trade leads to overall benefits for growth and employment, but it can cost some jobs. All member states, large and small, new and old, can be affected by these changes and will all therefore be eligible for EGF assistance,” the Commission said in a statement Wednesday.

“The new fund will provide one-off, time limited individual support geared to helping workers who are severely and personally affected by trade-adjustment redundancies,” it added.

But critics of the fund say that the EGF is not the right solution to unemployment and other social problems in Europe.

Eurochambres, the Association of European Chambers of Commerce and Industry says the fund is a “mistake” and will send the wrong message to European entrepreneurs.

“Globalisation should be presented and perceived as an opportunity for Europe to generate growth and to create jobs in future-oriented sectors,” Arnaldo Abruzzini, secretary-general of Eurochambres told IPS Wednesday. “Instead, this fund may give the impression that we can protect Europe from the rest of the world, which we cannot.”

Eurochambres is also concerned about the implementation mechanism of the fund, which it says remains unsettled.

“It is likely that in response to local pressures, the money will go into job subsidisation which may offer short-term social gains, but in the longer run will not stimulate the necessary change in the economy. Eurochambres also questions the risk of overlap with the European Social Fund, which is already available to combat unemployment and enhance social cohesion,” said Abruzzini.

“In any case, it is remarkable to have identified 500 million euros which were never spent. If such funds are available, they should be allocated to positive measures which encourage entrepreneurship, promote European businesses on the global market, and support research and development,” he added.

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