JOINT COMMITTEE ON EUROPEAN AFFAIRS díospóireacht -
Wednesday, 17 May 2006

Scrutiny of EU Proposals.

Chairman

No.1 is scrutiny of EU legislative proposal COM (2006) 91 concerning the establishment of a European globalisation adjustment fund. The proposal was referred by the Sub-Committee on European Scrutiny to the joint committee for further scrutiny.

I welcome Mr. Pat Hayden and Ms Deirdre O'Higgins. I understand Mr. Ward and Ms Burns are on their way.

I draw the attention of witnesses to the fact that members of the committee have absolute privilege but this same privilege does not apply to witnesses who appear before the committee. Members are reminded of the parliamentary practice that members should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. Members are also reminded that civil servants, while giving evidence to a committee, may not question or express an opinion on the merits of any Government policy or policy objectives — I am not sure I need to remind them of that — or produce or send to a committee any documents in which a civil servant questions or expresses an opinion on the merits of any Government policy or policy objectives.

Mr. Hayden's opening statement has been circulated. The committee would appreciate if Mr. Hayden would brief us on the proposal, following which I will open the discussion to questions. I thank the two witnesses for attending today.

Mr. Pat Hayden

I will deal first with the motivation for this proposal and its origins. Its main thrust is the recognition of the impact of globalisation on the European labour market, a recognition that the positive effects of globalisation take a long time to manifest themselves, while effects of a negative kind, particularly in terms of redundancies, can have an immediate and high profile effect.

The proposal to establish a European globalisation fund was tabled by Commission President José Manuel Barroso at the European Council last December. That Council gave general assent to the proposal. Agreement was informed by the fact that the fund will comprise savings on the overall Community budget in any given year. No detailed discussions had taken place in advance of the European Council in December. However, at the Council the Commission President confined his remarks to giving a general outline of what the European Commission had in mind.

In affirming the proposal, the December European Council decided to establish a fund to cushion workers whose employment is terminated as a consequence of globalisation being defined as industrial relocations to countries outside the European Union, increased market penetration of goods and services sourced from such countries, including Asian countries, or because of the loss of market share within the European Union. In March this year the Commission advanced a draft regulation to effect the establishment of the European globalisation fund and to define its purposes and governing processes. It is intended that the regulations will enter force in January 2007. Overall, the proposal was welcomed for its expression of solidarity with EU workers who lose their jobs because of trade related redundancies. However, in respect of the specifics of the proposal and, in particular, the numerical thresholds set out in Article 2, concerns were expressed that the number of redundancies required before member states could benefit were of an order that would preclude some states from accessing the fund.

In justifying the need to establish a European globalisation fund, the Commission referred to studies which conclude that workers made redundant as a result of major structural change in world trade patterns are likely to be older and less educated, to lose more in earnings and to face greater challenges in finding new employment. Up to €500 million per year will be made available to the European globalisation fund from savings realised elsewhere in the EU budget.

At least 1,000 redundancies must be made, either in an enterprise, including suppliers or downstream producers, in a region where unemployment is higher than the EU or national average or over a period of six months in one or more enterprises within a sector which, taken together, represent at least 1% of regional employment levels. Partial funding to a maximum of 50% of costs can be provided to workers affected by trade related redundancies to assist them in retraining and job searches or to support special work supplements for a specific time period. Workers in companies which relocate elsewhere within the EU will not be eligible for support. No funding supports will be made available to companies per se because the sole focus is on the eligible workers affected by redundancy.

From an Irish perspective, the provisions of the draft regulation will, if unchanged, potentially allow larger countries to benefit disproportionately, if not exclusively, from the European globalisation fund. While an emphasis is placed on addressing economic dislocation and its impact on local, regional and national economies, the provisions proposed potentially benefit countries in which large-scale regional concentrations of manufacturing industry are declining due to a loss of competitiveness in local markets, relocation of companies to third countries with lower production costs or import penetration of more keenly priced goods from such countries. Accordingly, there is concern that the European globalisation fund will only benefit areas which experience at least 1,000 redundancies in an enterprise, including workers made redundant in suppliers or downstream producers and confined to regions where unemployment levels are higher than the EU or national average. Alternatively, the fund can be used where at least 1,000 redundancies occur over a period of six months in one or more enterprises in a sector and which add up to at least 1% of related regional employment. There is a wide gap between the minimum 1,000 redundancies threshold and the typical level of collective redundancies arising in this country and others.

The draft regulation emphasises that the purpose of the European globalisation fund is to complement rather than replace the efforts of member states to provide for those affected by trade related redundancies. However, if the EU is to achieve its objective of demonstrating EU solidarity with workers in all member states by actively addressing employment issues and thereby retaining popular support from EU citizens for the positive benefits of globalisation and free trade flows, provisions must be agreed which will support all countries, including those lacking regional concentrations of industry.

The European Council's social questions group is currently conducting a first reading of this proposal but substantive progress is unlikely during the current Austrian Presidency, although a progress report will probably be given to the Employment, Social Policy, Consumer Affairs and Health Council in early June. The preliminary reactions of member state representatives to the first reading of the draft regulation have been similar in a number of respects. A general welcome was given to the rationale underlying the Commission's decision to bring forward this proposal and the intention that all countries, irrespective of size or overall level of wealth, should have the possibility of support from the European globalisation fund. In that context, the redundancy thresholds and related considerations indicated in Article 2 were unacceptable to representatives and will have to be altered significantly if they are to reflect recent experiences in member states. Some representatives resisted the proposal for the payment of temporary wage supplements by the European globalisation fund to workers above the age of 50 who stand to earn less than they did prior to being made redundant. Concerns have been expressed that the proposed compliance procedures and processes could be burdensome and potentially limit the level of recourse to the fund.

The overall expectation is that, if the objectives agreed last year at the European Council are to be achieved, fundamental changes will be required to the central articles of the draft regulation. For its part, the European Commission has been engaging openly and the ultimate legal instrument will probably differ in significant respects from the original proposal.

The Commission's proposal envisages that the European globalisation fund will be operational by the beginning of 2007. Given the substantive issues to be resolved and the fact that eventual agreement on this proposal will be reached through the time consuming process of co-decision-making between the European Parliament and the European Council, that commencement date may be difficult to realise.

Senator Quinn

I thank Mr. Hayden for outlining this interesting proposal. I am delighted he dealt with the primary issues from an Irish perspective. As there are few occasions in Ireland in which 1,000 people are made redundant, the proposal appears to be more relevant to larger countries. The second provision pertains to 1,000 redundancies in various companies over a six-month period. I assume this can mean dozens of companies, as well as their suppliers. That rather upset me.

I am also unsure on the following stipulation: "Alternatively the fund can be used where at least 1,000 redundancies occur over a period of six months in one or more enterprises in a sector and which sum up to at least 1% of related regional employment." I am not sure I understand what that means. Earlier the document specifies "a region where unemployment is higher than the EU average". Does that mean if unemployment in this region is not higher than the EU average it will not apply to us?

My last query is on the consideration to date within the European Council. I am not sure I understand the fourth paragraph, which refers to "resistance on the part of some representatives to the proposal that temporary wage supplements be supported through the EGS for workers of 50 years of age and over who re-enter the labour market at lower wage levels than they had in advance of being made redundant". I am not sure I understand the objective of this.

Mr. Hayden

The general threshold of 1,000 is a source of serious concern from an Irish perspective and in terms of the discussions to date. That kind of concern is primary because if one has not the potential to benefit, the making available of this initial €500 million per annum does not have much meaning. As the Senator said, the thresholds are not the only factor. The first case refers to where a level of 1,000 redundancies in an enterprise and downstream suppliers, including retailers, in a region where unemployment is measured at NUTS level 3, which is a low geographic or population sized level, is higher than the EU or national average. One is looking at significantly depressed regions by reference to the national or EU employment levels. Here in the Border and midlands region and the south and eastern region level 2 applies. They are large regions in population terms and do not have high concentrations of unemployment. This fund is being established with no end date in sight, although some member states want it to be coterminous with the end of the Structural Funds in 2013. As the Commission wants to retain it beyond that date, it may be there indefinitely and there may be movements in the meantime.

The second consideration is the requirement of at least 1,000 redundancies over six months, which is a matter of concern. The accumulation of that number of redundancies in a country like Ireland, and many others that have expressed reservations over that period, would be exceptional, in some cases unheard of. NACE levels are the statistical office breakdown of industrial classification. In one or more enterprises in a sector measured at NACE level III the trigger is where those redundancies represent at least 1% of regional unemployment measured at NUTS level 2. Ireland has NUTS level 2, but the possibility of arriving at unemployment figures that constitute 1% or being able to measure the relationship they have to national or European unemployment in the timescale for applying for funding is another source of concern. These are highly complicated barriers that need to be radically altered, as a number of representatives and I have said, before we would have a realistic possibility of benefiting.

Senator Quinn

I do not understand the proposal on workers of 50 years of age and over who re-enter the labour market.

Mr. Hayden

The Commission's research shows that the people affected by redundancies as a consequence of relocation or globalisation are typically older and less educated, less mobile and less skilled. Article 3 proposes that such workers who are recruited after being made redundant could be given a wage supplement from this fund to make up the gap between their pre-redundancy wage levels and what is often a lower wage level when they are employed at that age.

Senator Quinn

It seems that all the talk in Europe about the future being in small and medium enterprises, SMEs, goes contrary to that on the basis of the 1,000. It seems to benefit large companies but not those from which the growth is likely to come, those entrepreneurial people who start a business and fail due to globalisation.

Mr. Hayden

From an individual company point of view that is true. However, Article 2 (a) and (b) incorporates not just an individual company but an amalgam of companies in different geographic and unemployment level sectors. Nonetheless the point has been echoed in Brussels that the focus is on growing small and medium enterprises. The notion of larger companies is foreign to some countries. As they are in the minority and have made this case, we expect that these kinds of considerations will be altered. However, as I said, because of state aid considerations the benefits of the fund will not go to companies but to individuals and that has not been contested anywhere.

Chairman

As a number of members wish to speak, I ask that they be as succinct as possible.

Senator Bradford

My colleague Senator Quinn has pursued the issue I wished to raise, the question of the 1,000 job limit, and I appreciate Mr. Hayden's response. Being parochial, in north Cork and around Mallow people have seen the sugar industry jobs lost as a result of a globalisation-type impact but although the scale of the job losses is significant in the region, it would not qualify within the terms of reference. This must be revisited.

I welcome the concept and hope it will allow us to move on from the negative attitude to globalisation. The word "globalisation" has negative connotations. People march against it and use it to explain all the ailments facing Europe. Nevertheless we must concede that without globalisation, extra trade and extra economic activity between countries, Europe will shut down. I hope this little fund will remove some of the negative connotations that surround the word because globalisation is a good thing.

Although there was a time when we would have been impressed by the figure of €500 million, from a European perspective it is modest and indicates that this is largely a token measure. During the ongoing negotiation we must examine the issue of jobs per region. That figure must be readjusted and if it is to have a meaningful impact, the question of funding must be examined and increased. Senator Quinn's questions were mine and I trust that the Irish attitude will be one of trying to fine-tune that figure to make it more realistic to all regions of Europe, in order that this fund will not be used only by the biggest and strongest but might be as effective in the west of Ireland as it would be in Berlin.

Deputy Costello

I did not think the Chair would allow speeches.

Chairman

I allow short speeches.

Deputy Costello

I thank Mr. Hayden for the presentation. The proposal seems to bear the fingerprints of the larger EU member states. Germany and France figure highly in the EU table for unemployment and have large, outdated manufacturing and industrial sectors. Where did this proposal originate? It was suggested by the European Commission President, Mr. José Manuel Durão Barroso, but was the EU Council of Ministers involved? How can he argue that it will save on the overall EU budget? What is the basis for that assertion?

Senator Bradford made the point that Mallow was the centre of an enterprise which employed, at the factory and downstream, more than 1,000 people. Is it possible to backdate the proposal? The people who seem not to have benefited from the closure of the plant are the workforce. Workers who lose their jobs will undoubtedly sustain a reduction in wages after retraining, which raises the question of wage supplement. Can Mr. Hayden elaborate on the discussions that have taken place on that subject? Somebody starting afresh in a new job would already be coming from a relatively unskilled job. If they are in their fifties, the fact that they have to learn new skills will exclude them from the top of the pay scale. What is the estimate of the numbers that would be retrained out of the €500 million fund proposed?

Mr. Hayden

A representative from the French Embassy is in the Visitors Gallery as an observer. His country might claim some of the kudos for originating the proposal. However, officially it comes from a presentation made by the European Commission President to the European Council last December. The presentation set out the principle of such an approach and political concern about the negative press coverage that globalisation received in some member states. It was designed to redress that and recognised that the positive effects of globalisation were understated and took longer to materialise. The negative effects, such as the relocation of companies outside the EU and the resulting job losses, are high profile and apparent to all.

The motivation was to demonstrate EU solidarity with workers, and it is irrelevant whether its tabling at the European Council was prompted by one member state or another. The conclusion to which the Deputy has come on its origins has exercised the minds of several colleagues, the Dutch in particular, who are anxious that a geographically small country such as theirs, with a relatively small population, should have the opportunity to benefit.

The Austrians raised the question of the sugar industry at an early discussion because two companies closed down in their country. They said that, even if the fund had been in place when the companies closed down, they would not have benefited, because one of the principles underlying the proposal is that the benefit should be sourced from the most appropriate fund. A European globalisation fund for sugar would not be as appropriate as the agricultural mechanisms in place to address such issues. I hope the Deputy does not expect me to elaborate on those agricultural mechanisms.

Deputy Costello

The factory workers will not benefit from the agricultural mechanisms.

Mr. Hayden

The point is made that even if this fund had been in operation, they would not have benefited.

There are concerns in a number of member states at the notion of introducing a wage supplement for a discrete section of workers who become redundant because of globalisation, and at the distorting effect it could have on social security schemes and employment support schemes already in place. It has not been the subject of much detailed discussion, though a significant number of member states have put down markers of their serious concerns about it. It is in the initial stages of discussion and most countries have entered a general reserve across the board.

On the adequacy of €500 million, the Commission is proposing it be let run for a year, after which it would take stock and consider how many applications it had received. That would have a dislocating effect in terms of establishing the machinery necessary to operate such a fund and there are views for and against.

Deputy Andrews

Senator Quinn and others predicted what I was going to say. If Intel were to close, to outsource to Pakistan, it would satisfy the first requirement of 1,000 employees but would it satisfy the requirement that it represented 1% of regional employment? What would the region be for that purpose? Would it be the greater Dublin region, in which case it would not amount to 1%? We might take this as a concrete example.

I have my doubts about the proposal, although I can see a lot of positives. Mr. Hayden's first sentences, on the way the proposal was conceived and the fact that certain countries seem to have had a greater interest in it, suggest it is a political rather than a logical, economic response. It seems to have arisen out of concerns expressed in the French and Dutch referenda on the EU constitution. It also appears to reward the more inefficient and unproductive industries as opposed to businesses that are managed efficiently and remain competitive.

Mr. Hayden states that €2.5 billion was saved on the 2005 budget, which is a surprise to me. Some €15 billion was saved from the 2001 budget, which is a huge amount of money. I know it is not his area of expertise, but what is normally done with such funds?

Senator Bradford made the good point that to call it the "European globalisation fund" is slightly inaccurate. It suggests it is to help countries outside the EU rather than within. Perhaps it is a product of the translation but it should be reviewed. I have seen it referred to elsewhere as the European globalisation adjustment fund, which is a great European phrase.

Mr. Hayden

Where in excess of 1,000 redundancies arose in a particular enterprise, and heretofore there had been a zero level of unemployment, benefits would be debarred. That is one of the issues which must be resolved. The Commission, in its thinking, has brought forward a proposal that is big and dramatic.

Deputy Andrews

That is not my understanding of it. It refers to at least 1,000 redundancies in a region where unemployment is higher than in the EU or 1,000 redundancies over a period of six months.

Mr. Hayden

No.

Deputy Andrews

That is not the case?

Mr. Hayden

The Deputy takes an individual company with 1,000 redundancies. Over a period of six months, it is envisaging a number of enterprises. If, for example, an entity has over 1,000 redundancies and is not in a region which has the prescribed level of unemployment, by reference to national or European Union statistics, there is an ambiguity in the current wording. That is one of the issues at the core of the discussions.

The main articles which are giving rise to concern in discussing this proposal are Articles 2 and 3. I understand the intention is to go into these in some detail at the next meeting of the working group, which happens in a week or two.

Deputy Andrews

I asked some questions with regard to the saving.

Mr. Hayden

With regard to the underspends, the statistics I have provided have been supplied to me by the Department of Finance. The surplus carryover from last year to this is €2.4 billion, which seems to be low in terms of the overall experience of carryover funds. To a significant extent those funds are made up of commitments made through the Structural Funds which are not expended in a particular year. The commitment persists and there is a possibility of drawing them in subsequent years. It is a rolling accounting process.

With regard to the title of the fund, the Deputy's point is clear. Having started off as the European globalisation adjustment fund, it is now the European globalisation fund. There is the imputation of something extra-European about it.

Senator Dardis

I have a technical matter before I go on to other questions. Is it correct that when we use the term "regions", we are speaking of the formal definition of region as defined by the EU rather than north Cork, Dublin or the west of Ireland, for example? In other words, Ireland is one region.

Mr. Hayden

Yes.

Senator Dardis

That goes back to Mr. Hayden's earlier point on size. What is the differential in size between regions generally? What is an indicative figure? Would it be of the order of 5:1 or 10:1?

Mr. Hayden

With regard to Ireland, it is a categorisation which is drawn up by the statistical office of the European Commission. NUTS level 0 is what determines a country, the definition for the region or land mass of the country. A NUTS level 1 region has a population size of between 3 million and 7 million. A NUTS level 2 region has a population size of between 800,000 and 3 million. A NUTS level 3 region has a population size of between 150,000 and 800,000.

Senator Dardis

There are clearly big differences. That is why applying the absolute figure of 1,000 is a very crude method, rather than carrying out the process on a proportional basis.

Globalisation is beneficial from an Irish point of view. Operating as a small open economy, we need to be able to trade with the world, so it is to be welcomed. There will clearly be casualties, although the general thrust of what is being proposed here is reasonable. It strikes me that this is to an extent a smoke and mirrors exercise. In other words, the fund is there until it is looked for. I suspect then that the rigour which will be applied, in terms of qualification, will be very severe. It will be difficult to get into the net.

I will refer to a wider aspect than the sugar beet issue. One of the most vulnerable sectors here is likely to be agriculture if one takes factors such as South African beef, for example, into account. Would primary producers, people leaving farming, be eligible or would workers need to be in formal employment in a defined industry? I understand the Department of Agriculture and Food has its own responsibilities and Mr. Hayden's Department has its own, which are separate. One could argue that primary producers could be the single biggest category of casualties from globalisation, and that they should therefore be eligible, with all the others, for some degree of alleviation.

Another point is funding this from savings. Mr. Hayden made the point that the savings are very large and have been of the order of billions. If we got to the point where we spent the entire amount allocated in the budget, there would be no money for this fund, which has to come from other savings.

I see there is another piece of European jargon. The term "flexicurity" can be added to all the others. I was fortunate enough to attend a presentation by Commissioner McCreevy in which he spoke for 20 minutes and answered questions for an hour. Not once did he use any European jargon. Everybody in the audience could understand what was said. If we got rid of the term "flexicurity", we would be going some way to making these issues understandable.

Chairman

Did the Commissioner mention decentralisation?

Senator Dardis

Perhaps Mr. Hayden will deal with the issue of whether primary producers might be eligible.

Mr. Hayden

With regard to globalisation, the context of our trade policy and our approach within the WTO, our emphasis has been for a long time on free trade as an underpinning of increasing exports. The point made regarding bureaucracy, difficulty in assessment and the timescales has been fully appreciated, not just by our own representatives at these meetings in Brussels but across a number of member states.

We have discussed the 1,000 redundancy threshold both within meetings and bilaterally with the European Commission. Our understanding is that it is not immutable. There are possibilities for changing it, and there is an extent to which this can be done. The criteria applied to arriving at a level, or a new figure, will be of particular significance.

I will speak on the primary producers in the agriculture sector and analogous issues relating to how people not directly employed in traditional types of manufacturing might be allowed to benefit. The Commission has been quite unequivocal in stating that where there are funds in place currently which are more naturally allied to assisting the population affected, these will be the first resort. If there are funds in place currently that assist primary producers in agriculture or people affected by closures in sugar beet, for example, the general position is that those funds will be the first port of call. The Commission would rule out access to this globalisation fund where these other facilities are available.

On the other hand, the Commission has stated that all sectors could potentially gain from this fund. The issue is there to be clarified. One of the requests we have made is that a list be provided of the particular types of occupation which will be assisted. We will pursue the request.

Senator Dardis

I am more uncomfortable now that I can envisage a person approaching the Common Agricultural Policy fund and being told that he is not under the auspices of the fund because he received compensation already and it has nothing to do with globalisation. He might then try the globalisation fund where he will be told to go back to the CAP fund. I can see many people falling through the net.

Mr. Hayden

The kind of bell ringer that they give for this fund is the Solidarity Fund which provides assistance in cases of natural disaster, flooding, tornados and so on. This is the context in which it is seen.

Senator Dardis

One must try three funds for support now instead of two — from natural disasters to agriculture to enterprise and employment. It is getting worse.

Mr. Hayden

That is the parallel that they are making. They are not conventional funds at the moment.

Senator Ormonde

Talk of the numerical threshold caused alarm bells to ring for me. The public in the Nice referendum showed its fear of diktats from larger countries. I am glad that the issue of the numerical threshold is to be reconsidered. The concept is welcome and we must express solidarity with those who may lose their jobs because of relocation of industries. Part funding, to a maximum of 50% of costs, can be provided to assist workers affected by trade related redundancies with retraining and in searching for a job. Is it the case that this would not come into play before the question of the numbers threshold had been clarified or is it ongoing? If we had redundancies up to 600 or 700 at a time how would it come into effect?

Mr. Hayden

: Whatever the influence of larger countries initially, this is now a Commission proposal for a regulation that would be universally applicable in law across all member states. Agreement will be arrived at through a co-decision-making process which involves the European Parliament and the Council jointly agreeing. The impact a country, large or small, may have had when this proposal was instigated does not necessarily reflect what the final product will be. It is up to all the member states that are shaping it to have their particular concerns allayed before it is finalised.

A level of 50% support is a recommendation within the confines of this proposal. There is already support for people at risk of becoming redundant in the kind of undertakings at issue here. Apart from Exchequer supports there is, under the present structural funding instrument from the European Social Fund, support for such people. Agencies such as FÁS have a proactive role in identifying people for retraining and placing them in employment. The proposal outlined in this instrument would not become operational until the entire instrument is agreed and implemented.

Deputy Kirk

I take it from Mr. Hayden's reply that the fund is largely intended to assist employees rather than employers, depending on the size of the undertaking. There has been phenomenal change in the agriculture industry which some believe is only the beginning. The number of people directly employed in agriculture is rapidly diminishing in Ireland either through part-time farming or complete disengagement from the sector. A serious economic relocation process is occurring. Agricultural industry is, in many ways, following the textile and footwear industries. It is labour intensive, issues of competitiveness are to the fore and it is simply relocating elsewhere.

Take, for example, a large company in the north east with around 1,000 employees that closes down over a period. There would be a significant number of suppliers to that company, perhaps small operators supplying goods and services. Will such suppliers be factored into consideration for eligibility under the fund?

This regulation will apply to all members of the European Union but how will it apply to proposed new member states such as Romania and Bulgaria? Will there be any provision for variation of the universal application of this proposal to take account of exceptional local issues, whether it be Ireland, the UK, France or anywhere else?

Mr. Hayden

: Redundancies occurring in downstream suppliers would be reckonable in line with the provisions of Article 2.1 of this regulation. The timing of such redundancies is a problem because one can have a primary manufacturing business that sheds workers and closes down over a drawn out period. The impact downstream on suppliers and retailers may take far longer to materialise. However, in principle, such people would be incorporated and it is a question of how that is written in a legal text to provide for timing and to ensure they can be part of any claim that is made.

This fund will apply to the existing 25 member states. For applicant countries, access to any fund will depend upon the accession terms on which they join and the level of compliance with the community that they can demonstrate. Given that all the representatives of the new member states are discussing this proposal they will all benefit. Were new member states to join in the near future clearly they would anticipate the same level of treatment, although I cannot say definitively one way or the other. I do not understand Deputy Kirk's point on the variation of the universal application of this.

Deputy Kirk

This is a proposal but it will eventually become a regulation. In Ireland, due to unusual circumstances, a particular industry might have a greater volume of suppliers. The economic impact of the demise of this industry would be disproportionate to the demise of an industry in another region. Take the Louth-Meath region, the Cooley Peninsula or perhaps a cross-Border area in south Armagh or south Down. The demise of an industry in this area would have a disproportionate economic impact, because of the influence of the industry on salaries and spending, compared to the impact of the demise of a similar industry located in the south of France or south of England. Will the disbursement of funds under the proposed regulation take account of such variation?

Mr. Hayden

There will not be any allocation to individual member states. They will make their own applications by dint of their experience and they will stand alone. The Commission will examine individually and on its own merits each proposal submitted by member states. Clearly, if there are comparative implications between similar happenings in other member states, that would feature in the justification for advancing the claim but the onus is on individual member states to make and justify their own applications. Cross-country similarities, implications or knock-on effects, while interesting, will not necessarily advance or retard a national application.

Senator McDowell

This is essentially a political gesture and we should view it as that. It is not a bad idea. It is a useful gesture of solidarity with workers in industries that have been negatively affected by globalisation, but we should not waste too much time on it, nor should Mr. Hayden. The bottom line is that even if we share the fund on a per capita basis, with our comprising 1.5 % or less of the total population of the Union, our fair share of the fund would be €67 million a year, a tiny fraction of what we get from the European Union through other supports.

Mr. Hayden has responded to a question I intended to ask in his comments in response to a point raised by Senator Dardis. Much of what it is intended this fund will achieve is already being done by us and already supported by European Social Fund, ESF, through FÁS. Training and retraining are already supported through the ESF and provided by FÁS. Is it not likely that serious duplication will occur, even if we take this proposal at face value?

Mr. Hayden

There is potential for duplication. However this fund progresses or whatever shape it takes, a judgment will have to made as to what way we will approach matters. As the Senator said, there are mechanisms in place to cover much that is proposed by this draft regulation. If the thresholds were to remain unrealistically high from the point of view of an Irish experience, and even bearing in mind that this fund may be in place for a long time down the road, a judgment would have to be made on whether it represents the best use of resources to go through the machinery that will apply or whether support for a particular activity might be more easily accessed through another channel.

Senator McDowell

If the thresholds do not change, it might well not be worth our while using it.

Mr. Hayden

From an Irish point of view, that is the case. The thresholds currently are beyond our experience.

Senator McDowell

Even if a particular industry were to qualify, it might not be worth our while even applying for money under this fund given that the supports are provided elsewhere and we can access support through the ESF. Is that basically the position?

Mr. Hayden

Unless the conditions currently proposed to govern the fund alter radically, one could come to a conclusion that it might be more than it is worth to apply for moneys under it.

Senator McDowell

Mr. Hayden could——

Mr. Hayden

The Senator might, but I could not.

Chairman

In many and perhaps all circumstances, it is irrelevant at this point.

Deputy D. Wallace

The concept of a proposal for a regulation establishing a European globalisation adjustment fund is good but in its current form, I do not believe it will benefit Ireland. Most of the questions I had in mind have already been asked. The proposal covers an enterprise suffering 1,000 redundancies which can include suppliers, but there would not be many such cases. The textile industry in Donegal and in other areas is a case in point. They would be the real beneficiaries under this proposal. Taking account of the small print in the proposal, I do not envisage it benefiting Ireland, unless a particular case is made to provide for that. We have many industries and many of the relevant questions in that context have already been asked. I do not see this proposal, it is current format, benefiting areas that have been affected by such losses. As the negotiations progress on this proposal in the coming months, I hope the points raised here will be articulated to ensure we will benefit.

When I attended the two-day reflections in Europe, globalisation was very much on the agenda. Representatives of each area expressed their concerns about their countries, particularly the ten new accession states. It is a big issue and it will have major implications. It is important that our case is articulated because it can be quickly forgotten. We have a strong economy and low unemployment but down the road, depending on what happens here and what is finally agreed, we may need to benefit from this fund in the future.

Chairman

I will conclude on that point. I thank the delegates for attending.

Having considered this proposal the committee wishes to be kept informed by the Department of developments on it, particularly with respect to decisions by relevant bodies concerning changes to the reporting mechanism for redundancies and consequently Ireland's ability to access any agreed globalisation fund. In addition, the committee would welcome an update on progress in advancing amendments to the proposal that would address concerns expressed with respect to the apparently disproportionate focus of the current proposal on the needs of larger countries. Is that agreed? Agreed.

The Joint Committee on European Affairs has completed its consideration of EU legislative proposal COM (2006) 91. In accordance with Standing Order 81(4), a report will be laid before both Houses of the Oireachtas and the copy of the report will be sent to the Sub-Committee on European Scrutiny and to the Department of Enterprise, Trade and Employment.

The joint committee went into private session at 3.10 p.m. and adjourned at 3.15 p.m. until 2 p.m. on Wednesday, 31 May 2006.