The European Globalisation Adjustment Fund: Easing the Pain from Trade?

Abstract

The European Union created the European Globalisation Adjustment Fund (EGF) in 2007 to assist workers negatively affected by globalisation in their search of a new job. The EGF was an acknowledgment that the EU, which has exclusive competence over trade policy, needed to assume some responsibility for the economic displacement due to globalisation. This article attempts to evaluate the EGF programme after 10 years of activity. Our evaluation addresses both its political visibility and its economic effectiveness. We find that the programme was visible in the sense that EGF beneficiaries tended to work in large firms and that their dismissals were reported in the media. The economic effectiveness of the programme is more difficult to evaluate because the available data is insufficient. Estimates, however, suggest that only a small proportion of EU workers who lost their job due to globalisation received EGF financing. Unfortunately, it is also impossible to assess whether workers who received EGF assistance did better in their job search than those who did not receive assistance. We make three recommendations to improve the programme: (1) collect more and better data to allow a proper evaluation of the programme; (2) revise the eligibility criteria to qualify for EGF assistance and the co-funding rate for the contribution by low-income regions; and (3) enlarge the scope of the programme beyond globalisation to also assist workers displaced by intra-EU trade and offshoring that result from the working of the single market, which is also an exclusive competence of the EU.