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Aid for the unemployed - 16/12/2008

Cars on assembly line in factory © EC

Workers who lose jobs because of economic crisis to get help from EU fund.

With the financial crisis taking a growing toll on the economy, the EU wants to relax rules on assistance for laid-off workers.

The commission has tabled a proposal to expand the scope of the European globalisation fund and make it easier for countries to qualify for aid.

The fund has an annual budget of €500m that can be used to help the unemployed find jobs. Typically countries use it to fund training and job-search allowances.

EU countries can apply for support when changes in world trade patterns force a company to restructure or relocate, leading to 1 000 job losses or more.

The commission is now proposing to lower that threshold to 500 and include workers laid off because of other economic troubles, not just global trade. It wants to double the duration of the assistance from one year to two and require fewer matching funds from EU governments.

Currently governments must put up an amount equal to that received from the fund. The new rules would let them receive up to three times the amount they contribute.

The commission has approved the release of about €68m from the fund since it was launched in 2007. About 15 000 workers have received help, including 1 600 who lost their jobs this year when the auto parts maker Delphi closed its factory in Cádiz, Spain, and increased production at an existing plant in Morocco.

The EU economy is beginning to feel the effects of the worst financial crisis since the 1930s Great Depression. European manufacturing is contracting and unemployment is rising.

The number of jobless in the EU rose by 290 000 in October (the latest figures available) and the unemployment rate was 7.1%, up from 7.0% in September. It was 6.9% in October 2007.

In the euro area, unemployment rose to 7.7% in October, compared with 7.6% in September. It was 7.3% in October 2007.

The proposed rules are just one part of the EU’s strategy for dealing with the crisis. To save and create jobs in the near-term, the commission proposes adapting the use of regional funding to the EU’s economic recovery plan. To help people into jobs the strategy also includes plans for more coordination between EU countries on education and training. All the measures aim to reinforce the Lisbon Growth and Jobs Strategy.

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