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Policy Contribution

The European Globalisation Adjustment Fund: Easing the pain from trade?

With the European Globalisation Adjustment Fund (EGF), the EU now has an instrument to help workers negatively affected by trade find new jobs. However, only a small proportion of EU workers affected by globalisation receive EGF financing. How to improve the EGF? Revising the eligibility criteria to qualify for EGF assistance, enlarging the scope of the programme beyond globalisation and collecting more and better data to enable a proper evaluation of the programme.

By: and Date: March 22, 2018 Topic: European Macroeconomics & Governance

The European Union created the European Globalisation Adjustment Fund (EGF) in 2007 to co-fund, together with EU member states, policies to help workers negatively affected by globalisation find new jobs.

The EGF was a political acknowledgment that the EU, which has exclusive competence over trade policy, needed to assume some budgetary responsibility for the economic displacement arising from globalisation.
This policy contribution attempts to evaluate the EGF programme after ten years of implementation and in the context of the negotiations on the EU’s 2021-27 Multiannual Financial Framework.

The EGF programme is relatively modest in size. During the decade from 2007 to 2016, it financed 147 cases (involving either large firms or regionally-concentrated groups of small firms), covering 140,000 dismissed workers. But only about half of the cases and job losses were related to globalisation. The other half were related to the economic and financial crisis, which became eligible for EGF assistance in 2009.

Our evaluation addresses both the political visibility of the EGF programme and its economic effectiveness, and concentrates on cases and dismissed workers related to globalisation.

The authors find the programme was highly politically visible in the sense that EGF beneficiaries tended to work for large firms prior to their redundancies and these job losses were widely reported in the media.

The economic effectiveness of the EGF programme is more difficult to evaluate, mainly because the available data is insufficient. Estimates, however, suggest that only a small proportion of EU workers who lost their jobs because of globalisation received EGF financing. Unfortunately it is impossible at this time to assess whether workers who received EGF assistance did better in their job searches than those who did not receive EGF assistance.

Three main recommendations are made to improve the EGF programme: 1) collect more and better data on EGF cases and assisted workers to enable a proper evaluation of the programme; 2) revise the eligibility criteria to qualify for EGF assistance and the co-funding rate for the contribution from low-income countries or regions; and 3) enlarge the scope of the EGF programme beyond globalisation to also assist workers displaced by intra-EU trade and offshoring that result from the working of the single market, which like international trade is also an exclusive competence of the EU.

Corrections regarding Lawrence (2014) and Cernat and Mustilli (2017) have been implemented on this publication on 23 March 2018.

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Blog Post

Ukraine: trade reorientation from Russia to the EU

Over the past five years conflict has led to a deterioration of Russo-Ukrainian economic relations while ties with the EU have been deepened. This shift is evident in trade flows: the European Union has become Ukraine’s biggest trading partner, while China is poised to overtake Russia as its second. Natural gas imports from Russia, Ukraine’s prior Achilles heel, have been partially replaced by reverse deliveries from the EU and reduced as result of reform of the gas sector.

By: Marek Dabrowski, Marta Domínguez-Jiménez and Georg Zachmann Topic: European Macroeconomics & Governance Date: July 13, 2020
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Past Event

Past Event

An EU budget for Europe's future with Johannes Hahn

How do we make the EU fit for future?

Speakers: Zsolt Darvas, Johannes Hahn and Mehreen Khan Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 7, 2020
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External Publication

EU-China trade and investment relations in challenging times

In this report, we have focused on trade and investment relations and have not attempted to define the many other policy instruments that the EU can and should pursue to increase its leverage towards China, and to protect its domestic economy while boosting domestic investment and trade.

By: Alicia García-Herrero, Guntram B. Wolff, Jianwei Xu, Niclas Poitiers, Gabriel Felbermayr, Rolf J. Langhammer, Wan-Hsin Liu and Alexander Sandkamp Topic: Global Economics & Governance Date: June 4, 2020
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Blog Post

An uncompromising budget

Apart from decisive European Central Bank measures, the EU-wide response to the COVID crisis had been rather weak until the Commission put on the table a drastically new proposal: the creation of a new recovery facility, ‘Next Generation EU’, that would borrow money in the name of the EU to finance EU-wide expenditures. The changes to the proposed standard seven-year budget that primarily focuses on long-term structural issues are however generally small, and funding reductions are compensated by new funds from the recovery instrument, suggesting that an opportunity is missed to reform the EU budget.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: May 29, 2020
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Past Event

Past Event

The new EU budget: from COVID-19 remedies to green goals

Can we rescue the economy after COVID-19 and reach the environmental goals?

Speakers: Zsolt Darvas, Maria Demertzis, Karolina Ekholm and Miguel Otero-Iglesias Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 29, 2020
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Opinion

COVID-19 and India: economic impact and response

This piece was published the day before India imposed one of the world's strictest lockdowns in its response to the COVID-19 response. It remains relevant in assessing the government's actions in the ten weeks that have since passed.

By: Suman Bery Topic: Global Economics & Governance Date: May 27, 2020
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External Publication

European Parliament

A Just Transition Fund – How the EU budget can help with the transition

On 14 January 2020, the European Commission published its proposal for a Just Transition Mechanism, intended to provide support to territories facing serious socioeconomic challenges related to the transition towards climate neutrality. This report provides a comprehensive analysis of how the EU can best ensure a ‘just transition’ in all its territories and for all its citizens with the tools at its disposal. It provides an overview and a critical assessment of the Commission's proposal, and suggests possible amendments based on best practices from other just-transition initiatives.

By: Aliénor Cameron, Grégory Claeys, Catarina Midões and Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance, European Parliament Date: May 26, 2020
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Past Event

Past Event

Rationale and limitations of SURE

This event will discuss SURE, a new European Union instrument for temporary ‘Support to mitigate Unemployment Risks in an Emergency'

Speakers: Roel Beetsma, Elena Carletti, Grégory Claeys and Gilles Mourre Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 15, 2020
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Past Event

Past Event

Keeping trade open during and after Covid-19

This event examines the impact of the Covid-19 crisis on open markets and connected supply chains globally.

Speakers: Maria Demertzis, André Sapir, Senator the Hon Simon Birmingham and Rebecca Fatima Sta Maria Topic: Global Economics & Governance Date: April 30, 2020
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Blog Post

How COVID-19 is laying bare inequality

COVID-19 is laying bare socio-economic inequalities and could exacerbate them in the near future. The virus is a risk factor particularly for those at the lower end of the income distribution, who are vulnerable to the interaction of the shock with income, socio-economic and urban inequalities.

By: Enrico Bergamini Topic: Global Economics & Governance Date: March 31, 2020
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Blog Post

What the EU should do and not do on trade in medical equipment

The European Union has introduced export controls on some medical supplies. This was a mistake. It should announce that it is withdrawing the measure, and call on other countries to do the same.

By: André Sapir Topic: European Macroeconomics & Governance Date: March 25, 2020
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Opinion

Only the coronavirus can convince Trump of the virtues of international cooperation

Given how badly the coronavirus outbreak in the US is affecting Trump’s chances to be reelected, let’s hope he comes to its senses and see the advantages of leading a coordinated effort to save the global economy. For once since he came to power, he may see the positive angle of global cooperation and multilateralism, of course, for his own sake.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: March 13, 2020
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