EU to help members deal with globalization

By DONNA BORAK, UPI Business Correspondent

WASHINGTON, April 5 (UPI) -- Faced with a future of intense global competition, the European Commission announced this week that it would allocate $14.1 billion (11 billion euros) to regions in order to help EU countries with the costs of necessary economic changes while promoting the European social model.

The funds will be focused on increasing adaptability of workers and enterprises, while preventing unemployment and promoting partnership, the commission said.


"Our aim is clear: we want to help workers adjust to change and provide new opportunities so that the road to prosperity is open to all," said Vladimir Spidla, EU Commissioner for Employment, Social Affairs and Equal Opportunities. "We want to support regions suffering most from the effects of globalization, we want to invest in regions so they can meet the economic challenges of the future."


The proposed 'growth adjustment fund' would be distributed in allotments of $1.2 billion (1 billion euros) annually in order to provide support to areas affected by restructuring. The fund will also hold a reserve for the 25-member state bloc in case of emergency restructuring. The reserve would pay up to 1 percent of the convergence and 3 percent of the competitiveness budgets, which would be around $3.3 billion (2.6 billion euros) and $2.1 billion (1.7 billion euros), respectively.

"The commission is urging the European social partners to be more proactive in tackling restructuring," said the commission. "Its communication asks them to focus on adopting, applying and developing their best practice guidelines on restructuring and to look further at how the European Works Councils can improve their effectiveness and take a lead role in managing restructuring changes."

The EWC covers 1,400 companies throughout the European Union, however 7 million workers still do not have representation. The EWC plays a transitional role in promoting social dialogue among the unions and the employers by drafting codes of conduct and agreements on health, safety, training and mergers.

The commission recommended improvements in three areas: more focused cooperation between EU policies in employment, enterprise, trade and competition polices, adapting a regulatory business framework, and developing partnerships through the European 'Reconstructing Forum.'


Under the proposed fund, the five-year period of productive investment will be extended to seven years to include any substantial changes that will need to be made on part of every member state. Both the European Parliament and the European Council will have to approve growth adjustment funds and budgets before they are allocated.

Although this is the first-ever fund created by the commission to help businesses adapt to globalization, several pieces of legislation are already in the works to deal with company closures or changes in ownership, including a collective redundancy directive, which ensures that employers must notify trade unions before reducing their workforce.

"Europe must be seen as a 'business-friendly' location for investments and industrial activities," said the commission. "In particular, this commission is committed to improving the regulatory framework in which industry operates through all the actions carried out under the framework of better regulation."

Although some of the proposals to regulate the business framework are out of the hands of the commission, like taxation and training, the commission said it was committed to making the necessary changes to its industrial policy in order to realize its full potential.

Overall economic recovery between the EU states has shown signs of improvement, but doesn't match progress compared to countries like the United States and Japan. Employment growth in 2003 was 0.2 percent, while in the U.S. it grew by 0.9 percent. While the employment performance among the 25 member states was mixed, half of the countries saw negative annual employment growth.


In its executive summary of employment in Europe report for 2004, the commission found that it had to tap into its human potential and step up efforts to create an efficient labor market in order to achieve the goals set by the Lisbon Agenda in 2000.

The report also said that it was important to target member states with their specific strengths and weaknesses, offering recommendations and financial support in order to get things back on track.

"The EU can be an effective lever to support progress at (the) national level, and to harness globalization to serve its economic, social and environmental objectives," said the commission in its report.

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