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European Globalisation Fund set to help workers in the furniture manufacturing and clothing industries in Lithuania

29/01/2010 European Globalisation Fund set to help workers in the furniture manufacturing and clothing industries in Lithuania

The European Commission has approved applications from Lithuania for assistance under the European Globalisation Adjustment Fund (EGF). The Commission will now make proposals to the European Parliament and the Council to mobilise the budgetary resources.

If approved, the total of € 1 185 569 requested will help 491 redundant workers in the clothing sector and 636 workers in the furniture manufacturing sector to get back into employment.

Furniture-manufacturing sector

The Lithuanian application relates to 1 469 redundancies in 49 enterprises operating in the furniture manufacturing sector, one of the first sectors to be affected by the economic and financial crisis as a direct consequence of the slow-down in construction activity, both in Lithuania and elsewhere.

The Lithuanian furniture industry exported over 50% of its production in 2008, but exports dropped by 20.1% in value terms during the first half of 2009. The volume of furniture production in Lithuania also decreased during the first and second quarters of 2009 compared with the previous quarter by 17.33% and 7.23% respectively, with redundancies as a consequence.

These redundancies have a serious impact on the country because unemployment in Lithuania is amongst the highest in the EU, and has risen sharply since the start of the economic and financial crisis. Although the furniture manufacturing industry is largely based in rural areas, the redundancies have an effect on the country as a whole.

The package of EGF assistance for the former workers of the furniture manufacturing industry will help 636 of the most disadvantaged back into employment by offering them employment incentives, career guidance and retraining. The total estimated cost of the package is almost €1 018 597, of which the European Union has been asked to provide EGF assistance of €662 088.

Clothing sector

The Lithuanian application relates to 1 154 redundancies in 45 enterprises operating in the clothing or wearing apparel sector. Unemployment in Lithuania is amongst the highest in the EU and has risen sharply since the start of the economic and financial crisis, increasing by 10.9% in a 12 month period to reach 16.7% in July 2009. The wearing apparel industry has been badly affected, losing 21.1% of its jobs in Lithuania between the second half of 2007 and the second half of 2008 alone. The economic crisis has exacerbated this tendency, and because of the concentration of women in the sector, has contributed to a doubling of the female rate of unemployment in Lithuania during the year to July 2009.

For the EU as a whole, the decline in textile production already registered in the second half of 2008 accelerated in 2009. In the first quarter of 2009, the production fell by more than 20% for the textiles and clothing industry, compared to the first quarter of the previous year. The trade deficit in the first quarter of 2009 showed a sharp increase of 19%, mainly due to a strong reduction in exports, in particular to the most important partners, such as the USA, Japan, Russia and Turkey. Those countries represent 45% of the total EU exports of textiles and clothing products.

This effect was seen strongly in Lithuania where the volume of wearing apparel production decreased more than 85% in 2008 and around 70% the first half of 2009, compared with the equivalent period in the previous year with the redundancies as a consequence.

The package of EGF assistance for the ex-workers of the wearing apparel industry will help 491 of the most disadvantaged back into employment by offering them employment incentives, career guidance and retraining. The total estimated cost of the package is almost €805 355, of which the European Union has been asked to provide EGF assistance of €523 481.


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