To extend the temporary crisis-related derogation that allows European Globalisation Fund (EGF) to be used for workers as a result of the current financial and economic crisis in addition to those losing their job because of changes in global trade patterns, has been proposed by the European Commission.

The proposal reflects the fact that a large number of workers across the EU have been badly affected by the consequences of the current crisis. The aim is to improve the use of the EGF by offering job support measures. The Commission proposal will be submitted to the EU's Council of Ministers and the European Parliament for approval. This derogation is currently due to expire on 30 December 2011, but the Commission's proposal would extend it until 31 December 2013.

The latest Commission Economic Forecast (spring 2011) indicates that the prospects for economic and especially labour market recovery for 2011 and 2012 are worse than those broadly expected in autumn 2008. While the European economy is recovering, Gross Domestic Product (GDP) growth is not having a proportionate effect on job creation. This demonstrates that structural adjustment continues to take place across sectors and enterprises and consequently further job losses due to closure of enterprises should be expected to continue for a certain time as a result of the crisis. The proposal would make it possible for Member States to continue to present applications for EGF support in favour of workers still made redundant as a consequence of the financial and economic crisis and to benefit from an EGF co-funding rate of 65%.

In resume, according to the Commission the proposed extension of the crisis-related EGF derogation is necessary because the expected continued impact of the crisis on company closures and the need for fiscal consolidation in Member States.