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EGF: €3.6 million to help redundant workers in Romania

The European Commission has proposed to provide Romania with €3.6 million from the European Globalisation Adjustment Fund (EGF) to help 1 000 former workers of the steel products manufacturer SC Mechel Campia Turzii SA and the downstream producer SC Mechel Reparatii Targoviste SRL to find new jobs.

The proposal now goes to the European Parliament and the EU’s Council of Ministers for approval.

Romania applied for support from the EGF following the dismissal of more than 1 500 workers in Mechel Campia Turzii and in Mechel Reparatii Targoviste in the Cluj region of Romania. The dismissals were the result of increased competition from steel products manufacturers elsewhere in the world.

The measures co-financed by the EGF would help 1 000 workers in finding new jobs by providing them with career guidance and skills assessment, training, support to entrepreneurship and a variety of allowances. One of the flagship measures will be to help 250 of the workers to set up a cooperative enterprise that will manufacture sports equipment.

The total estimated cost of the package is €7.14 million, of which the EGF would provide half.

The EU has recorded a substantial increase of imports of finished and semi-finished steel products in recent years, as well as a relative decline of exports of such products, all of which has put the competiveness of the EU steel industry under pressure at international level and jobs have been lost due to restructuring in the steel sector in Europe.

Both affected companies belonged to Mechel, a Russian steelmaking group. At the end of 2011, Mechel’s operations in Romania started to experience financial difficulties due to losses incurred because of unfavourable prices in European steel markets, linked to rising ferrous scrap prices and weak demand for finished products. Mechel Campia Turzii put in place a number of measures to reduce staff costs. However, these measures did not remedy the financial difficulties of the enterprise, which decided to initiate collective redundancies.

The redundancies mainly affect the municipality of Câmpia Turzii and its surrounding area, in the south-east of Cluj County, in north-west Romania. From the socioeconomic point of view, the Câmpia Turzii area is characterised by low income levels and a weak diversification of economic activities. Around half of the working age population in Câmpia Turzii is employed in the industrial sector. Mechel Campia Turzii was the largest employer in the area with 1 837 employees (in June 2012), accounting for around a third of the total number of employees in the area.

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’s 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 132 applications. Some €500 million has been requested to help more than 106,000 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.

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 workers made redundant because of the economic crisis, as well as fixed-term workers, the self-employed, and young people not in employment, education or training in regions of high youth unemployment.

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