Verbatim report of proceedings

Thursday, 13 March 2003 - Strasbourg

4. Closure of undertakings after receiving EU financial aid

  President. – The next item is the Commission statement on the closure of undertakings after receiving EU financial aid.

Commissioner Fischler has the floor.

  Fischler, Commission. – (DE) Mr President, honourable Members, newspaper headlines feature – with increasing frequency – the closure of undertakings to which financial aid had been granted by the European Union. Whilst this is not a new problem, it is true that the instances of closures, often followed by relocations, have recently been increasing in number. The Commission therefore understands very well why Parliament attaches great importance to this problem and has a considerable interest in it, and how our fellow-citizens are quite right to be perturbed by it.

My fellow Commissioners, Mrs Diamantopoulou and Mr Barnier, have asked me to put before you the Commission's position on this complex problem. This will obviously have to touch on several different aspects, the first being the policy of economic and social cohesion by means of co-finance from the Structural Funds; secondly, European social policy; but also, thirdly, the rules of the European internal market, which should enable our enterprises to build themselves up in a climate of fair competition.

I would like, in my statement, to focus on the issues I have just mentioned, but before doing so, there are two other points I would like to address. The first is that the problem of the closure of undertakings – even if the financial aid granted means that the Community is directly affected – is not a phenomenon exclusive to Europe, but one that must be considered in its international context.

It is unfortunate that our enterprises often succumb to the temptation to relocate their operations to countries where wages are low, sometimes disregarding all the requirements of social and environmental integration. This international dimension of the problem demands that we be consistent in finding international or global solutions to it, which will, above all, involve active cooperation with the poorest countries and the creation of a system of international law that is more rigorous and better applied.

Secondly, it is in the context of enlargement that the Commission gives this problem particular attention. My fellow Commissioner, Mr Verheugen, recently stressed that the forthcoming enlargement offers Europe great opportunities in the future despite the difficulties necessarily involved in the short term in integrating these countries, which, on average have a lower per capita gross national product.

In an internal market such as our own, the decision as to where to base a business operation rests solely with the management of the enterprise in question. As we know, investors base their decisions on the advantages of one site as compared with those of another, and these include labour costs, social conditions, the quality of the infrastructure, the legal framework applicable, but often aid from the public purse and favourable tax treatment as well. The subsidies granted to the investors are freely negotiated with the public authorities, within the limits of Community and domestic legislation on state aid.

Let me now turn to the subject of ‘closure of undertakings and Community aid’ and remind you that the European Union's regional policy has as its objective the promotion of economic and social cohesion by stimulating the development of the poorest regions. The regional aid granted for productive investment is therefore meant primarily to compensate for the disadvantages of the regions supported in this way, making them better able to hold their own in competition with regions that are better off. This is an area in which the Commission can ensure only the implementation of the general provisions on the Structural Funds laid down by the Council with Parliament's agreement. I might add that this corresponds to the practice within the Member States, in which every region endeavours to attract new enterprises and direct investment.

The Commission, however, also has the task of preventing unfair competition between states, business people and the social actors, for which, in the 2000-2006 programming period, the Structural Funds provide for a range of preventive measures, which I would like to rehearse briefly. The guidelines on national regional aid require the recipients of this aid to maintain their investments for a period of at least five years, a period beginning with the date of the initial investment in the enterprise in question.

The 1999 general Structural Fund Regulation takes the same approach, stating as it does that the Funds will continue their contribution to productive activities only if there is no change in the site at which these activities are carried on in the course of the five years following the Structural Funds' decision to contribute.

Finally, the new regulation on State aid for employment enacted in 2002 is rather more flexible, requiring that the jobs created be maintained for a period of three years in the case of large enterprises and for a period of two years for small and medium-sized enterprises.

All these provisions will have to be applied in the future Member States from the moment of their accession. I would like to observe, in order to give the full picture, that the five-year rule I have just mentioned applies only to the 2000-2006 programming period. It is possible to reduce or cancel Community aid in respect of the period from 1994 to 1999 if the conditions subject to which the measure is operated no longer apply. In all these instances, neither the Commission nor the Member States may refuse to grant a subsidy if the necessary conditions are complied with, but, if it becomes apparent that an enterprise has received support without complying with Community provisions regarding state aid, it shall reimburse the aid to which it is not entitled.

The Commission is prepared, then, to discharge its responsibilities where an enterprise has, under an aid scheme co-financed by a Community programme, received subsidies without being entitled to them. This does, however, presuppose that the authorities in the country from which the enterprise has migrated have, in the first place, established that the points described above of the provisions have been breached.

Let me also briefly enlarge upon the social dimension of the problem of the closure of undertakings. Although there is no doubt that the closure of a plant is a matter for the management of the enterprise in question, we cannot, however, disregard the fact that the many restructurings currently in progress in Europe are not all comparable with each other. Some are the result of clear economic decisions and have been discussed frankly with the workers and their representatives, while others, regrettably, carried out without regard for labour law, force people, unprepared, into unemployment.

The Commission's position is clear; enterprises may well be free to come to their own economic decisions, but they must always be aware of the social dimension. If job losses appear to be inevitable, everything possible must be done to make the workers affected by them more employable. If this is to be done, the enterprises must have thought out a forward-looking policy and must also demonstrate social responsibility.

At this point, I really do want to particularly stress the point that nothing, indeed nothing, can justify the failure to inform and consult workers' representatives in the case of restructuring. Several Community directives lay down the framework within which such a dialogue must take place. The European Works Councils Directive, in particular, imposes on multinational groups of companies with bases in Europe precise duties as regards informing and consulting workers' representatives.

Social measures accompanying restructuring are, after all, also an important issue for the social partners and for the new European Observatory on Industrial Change. In this area, too, the Commission relies on the Member States, upon whom devolves the duty of ensuring compliance with Community labour law. What the Commission will do, however, is to exercise a comprehensive monitoring function, with the primary objective of ensuring that the directives on worker information and consultation are adequately transposed.

(Applause)

  Bastos (PPE-DE). – (PT) Mr President, Commissioner, ladies and gentlemen, I would like to congratulate Commissioner Fischler on the communication that he has just given this Parliament, but I cannot. I am unable to do so because of the lopsided thinking that has led to the belated approach to a problem that has been around for a considerable time, as in fact the Commissioner stated a few moments ago, and also because of the disappointing content of this Commission communication.

Today, at best, we will be attempting to limit the damage caused by the abuse of Community aid granted to multinational companies. Perhaps, if the Commission had shown greater foresight and been more vigilant, the situations involving the closure and restructuring of companies that have led to this Commission communication would not have occurred. On my own behalf and on behalf of the PPE-DE, I wish to express my total solidarity with all the workers, especially those in Portugal, affected by foreign companies’ decisions to close.

Job losses deal a devastating blow to the workers affected and their families. I shall highlight two cases with which I am very familiar: those of the Clark shoe factory and the Bawo clothing factory. Last January, the management of the Clark company decided, unexpectedly and without consulting anyone, to close their factory in Castelo de Paiva in Portugal, leaving 588 workers unemployed. Two years previously, acting in a similar way, they had shut down their factory at Arouca in the same region, leaving almost 500 people unemployed. Clark had benefited from enormous sums of Community, national and local aid. Despite this fact, the company claimed that the justification for these mass redundancies was their having to import shoe uppers from India and Romania in order to maintain a competitive price structure. I have just quoted verbatim from the press release issued by Clark on 10 January.

The other case is as follows. Last February, the management of the Bawo company proceeded to remove the machinery from its factory at Estarreja under the cover of night and entirely without the knowledge of its workers. By pure chance, one of them realised what was going on and alerted her colleagues. All the workers maintained a vigil at the factory gates, day and night, in the rain and cold, until the courts ordered the seizure of the equipment.

Both companies intend to relocate to enlargement countries and to third countries. These cases are models of a poor example to set and raise the following questions: where is the balance between economic interests and those of the companies and the rights of workers and of society? If this situation continues, what will become of the European social model?

Mr President, Commissioner, we are in favour of competitiveness, we are not enemies of globalisation, we understand the competitive nature of the world market, but we cannot accept the economy being considered to be an end in itself rather than something at the service of mankind. What we cannot tolerate is that the money from all European taxpayers should be used to reward companies that skip from country to country in the pursuit of greater profit and cheaper labour. Companies act in this way, moreover, without any social concern, either for their workers and their families, and even less for the economic effects on the regions affected. Subsidies that are granted must serve to create employment and not to fund relocations. It is not our intention to prevent companies from closing or relocating their factories, but to ensure that those benefiting from financial aid give commitments and provide guarantees for long-term employment.

The European Union’s priority is employment. The Lisbon strategy set the objective of achieving full employment within the decade. This Parliament is increasingly apprehensive about the progress that has been made in the European Union with regard to the Lisbon ambition. This phenomenon of factory relocating is spreading in several Member States, creating unemployment and endangering the economic and social development of the regions. The consequence of this will be greater pressure on social security systems, which will have to bear the costs of social assistance for these unemployed citizens and we are, of course, moving even further away from the vision laid down in Lisbon.

Something must be done urgently. We therefore call on the Commission to draw up a legislative framework that will attach a moral component to granting companies Community funds. Clear rules must be established, which prevent and punish abuses by companies that receive subsidies from the European Union. The Commission must refuse to grant aid to companies that fail to respect the commitments they have given to the Member States and must force them to pay such aid back. As an immediate measure, we urge the Commission to monitor closures currently underway and to draw up a list of companies that fail to comply. I wish to use my final words to welcome the support of the other political groups in this Parliament, in particular that of our socialist colleagues, who have understood the reach of the serious consequences of these company relocations in the Community area.

  Lage (PSE). – (PT) Mr President, Commissioner, ladies and gentlemen, if I may, I shall fulminate and also express a demand and a regret. I shall begin with the fulmination: company closures, brutal and inhumane restructurings, mass redundancies, sudden relocations; these are the unexpected and, I hope, incidental aspect of Europe’s somewhat savage capitalism. This is what happens, Mr President, ladies and gentlemen, when books are written and proclamations are read about a new business culture and when there is so much discussion of business and entrepreneurial ethics. People even talk about the social ethics of companies, about ecological ethics and I have even read, heaven preserve us, about the Kantian ethics of businessmen, when in fact many of them appear to be more set on disproving the ideas of the 19th Century thinker, Karl Marx. Some businessmen behave like real predators, indifferent to the social crises they cause, to the tragedies that they create for individuals and families and to the crises they produce in local economies. There is even a new specialised area of business, which consists of obtaining the maximum subsidies possible from European Funds only then, at the first opportunity, to leave the companies, which have been subsidised with European funds, on the brink of bankruptcy or even bankrupt. We have to react against this ignominious scenario, which is not in keeping with the modern business market and with the type of prosperous and social economy that we have in Europe.

My demand is this: since this is a European phenomenon and, therefore, one that must be combated on a European scale, we must emphasise the special dimension that the phenomenon of company relocation and closure has taken on in recent months in Portugal, where various companies, most of them multinationals, have announced their intention to shut down operations and to transfer their activity to other places. Some of them have received substantial financial aid to set up in regions such as Aveiro, Coimbra and Leiria, and to that end signed contracts with local authorities committing them to maintain activity there for a certain number of years. All of this represents a huge disaster for these Portuguese cities, towns and regions, where hope abounded when the initial investment was made and has now been painfully dashed.

My regret echoes the words of Mrs Bastos concerning the delay in the Commission’s response to this phenomenon, which was announced a long time ago in various European countries. I also agree that the Commission should have acted more swiftly, not only by ensuring that its legislative machinery and the various directives in force were implemented, but also by drawing up a programme of action for a crisis situation such as this.

Nevertheless, to conclude, I also wish to offer my congratulations, on the fact that the Commissioner has defined a doctrine and a strategy that in principle warrant support, for responding to situations of this type, at the legislative, financial and social levels. I also wish to congratulate this Parliament and all the political groups on having united over this serious situation, thereby demonstrating that the European Parliament is not turning its back on the citizens’ problems and that it can put this communication to the benefit of society and of Europe’s citizens. Such action also ennobles and dignifies the European Parliament. I therefore hope, Commissioner, that we will still be able to provide encouragement for those workers who are today without hope and that we can provide a practical response and an alternative to these situations. And on that note, Mr President, I shall obey your gavel.

  Figueiredo (GUE/NGL). – (PT) Mr President, two initial comments: the first is to say that Commissioner Fischler has not disappointed me because I no longer have any illusions about his actions. The second concerns my colleague, Regina Bastos, whose words were in total contrast to what the Portuguese Government is doing, presided over by the senior leader of her party, the PSD. I congratulate her on this, however, although I feel bound to note the contradiction.

Ladies and gentlemen, Commissioner, the increase in relocations by multinationals involving the partial or total closure of their factories in the countries of the EU in which they have been based, especially Portugal, is aggravating unemployment, stifling the development of regions lacking alternative forms of employment and increasing poverty and social exclusion.

In the majority of cases, these companies relocate in the sole aim of maximising their profits, since their productivity, efficiency or economic viability are not at stake. Furthermore, they sometimes undertake such action after receiving substantial Community, national and local aid, failing even to meet the commitments they have given and ignoring the extremely serious social and economic damage they cause, which is what happened in the case of C & J Clark in Arouca and Castelo de Paiva and in many other cases in Portugal.

This is an unacceptable situation that is underpinned by the existence of a roving form of investment for which ethics and social responsibility do not exist, and whose sole aim is to obtain the maximum profit possible, always in the pursuit of more incentives and more financial and fiscal aid and of cheap labour with few rights, ready to change location when the prospect of greater profits or greater community aid for them to set up appears elsewhere.

This situation is particularly serious in countries that are weaker in economic and social terms. The case of Portugal cannot be compared with that of other countries, although this entire issue warrants attention throughout the EU. In Portugal we have seen various examples of this phenomenon, of which I shall only refer to a few, involving closures of companies and parts of companies, new threats, and job cuts in multinational companies. I would highlight several examples of this: Eres, Bawo, Schuh-Union, Scottwool, Rhode, Ecco'let, Yasaki Saltano, Philips, Alcoa, Dhelphy, Alcatel. To sum up, this is a very long list, which needs to be closely examined. There are several thousand workers who are under threat, mainly women – and this is worth noting – in the textile, clothing, shoemaking and electric and electronic goods sectors. Measures must therefore be adopted to regulate this type of investment and to protect employment and local and regional development.

Hence our proposals for the urgent creation of a regulatory legal framework – which must not be confined to what Commissioner Fischler stated a few moments ago – that makes Community investment aid conditional on companies’ meeting contractual obligations that ensure the protection of the interests of communities and regions affected and in this way ensure respect for sustained economic and social development accompanied by the full guarantee of information and intervention for workers’ organisations throughout the process, including the right of veto.

It is particularly important that all aid is made conditional on long-term agreements in the fields of employment and local development, that no aid is granted under Community programmes to companies that do not respect these commitments or that misuse aid. Nor must aid be granted to companies that, having received aid in one Member State, transfer their operations to another without having fully met their commitments. Otherwise the aid they have received in the first country must be repaid.

Consequently, the Commission must make a rigorous assessment of all recent and current cases. Companies that have received Community financial aid must also all be audited, and these actions must be accompanied by an exhaustive study of the closure of companies that have received Community financial aid and into the relocations now underway, at a time, like this, when enlargement is close and when this situation is even more worrying.

  Isler Béguin (Verts/ALE). – (FR) Mr President, Commissioner, I hope it is not because we are discussing industrial desertification that Mr Fischler is here. I do not agree with his analysis, because I consider that the Union possesses substantial levers to influence the businesses subsidised by Europe that are now delocalising left, right and centre. I also think that we cannot constantly leave globalisation on the sidelines because, ultimately, this debate concerns the socio-economic development of the Community as a whole. It raises the issue of European policy, the legal framework adopted in response to the groundswell of globalisation and unprincipled, uncontrolled liberalism.

The Union is still the most significant interlocutor and player we have to respond to these global phenomena. This needs to be said and we must not doubt it. What you are proposing will no longer suffice. Many legislative frameworks still remain to be established in order to provide investors in Europe with minimum guarantees, and thus provide millions of our fellow citizens with guarantees of job security and lasting employment.

In view of the recent industrial upheavals that have devastated many regions of our Member States, from Portugal to my own region of Lorraine, and that are now affecting the candidate countries themselves, we need to make a clean sweep of this situation of economic non-law and establish a new order between Community bodies and private investors. Having been elected by these specific regions, we can no longer allow the European Union to remain a kind of Wild West for Community bounty hunters who receive public funds in order to increase investment in employment areas and are now shredding our entire industrial fabric by delocalising.

Metalworking and textiles are not the only industries affected by industrial desertification. The tertiary sector, businesses with a high added value such as Daewoo and Philips, are also affected. What will be left in future if the European Union fails to tackle its investment flow, if it proves unable to implement a code of rights and duties each time subsidies are negotiated. Once these industrial crises are over, we must learn from them in order to establish clear employment obligations in the area of quality, quantity and durability in proportion with each Community subsidy.

You may recall, for example, that, from 1988 to 1995, the Longwy employment area in Lorraine was so badly damaged by the heavy industry crisis that it did not require any guarantees before welcoming Daewoo, even though the company was strongly backed by Community aid. Daewoo is now quite simply and unabashedly abandoning its workforce without any kind of restriction. Although the framework for such aid has since been reinforced, it is clearly not yet sufficient, and neither are your proposals, Commissioner, to restore the confidence of our fellow citizens in European Union social policy and increase control under Community legislation, in order to guarantee social and working conditions in this area we are creating.

The European Union must no longer be simply a source of cash, but must now insist, as others have done in the past, ‘I want my money back’, to those who would swindle the Community out of its funding. The sustainable development of our continent, which is its only long-term prospect, must be achieved through the threefold social policy of progress, respect for the environment and a regulated, fraternal economic policy. We must put an end to the poor practice of the past, and that is what you are failing to do, Commissioner. Let us now force businesses that have failed to fulfil detailed commitments to reimburse their subsidies. That will be the price paid by Europe, but if Europe is to have a future, it will be at that price.

  Ribeiro e Castro (UEN). – (PT) Mr President, Commissioner, ladies and gentlemen, I must unfortunately start on a note of difference between fellow Members, because I wish to express my regret that Mrs Figueiredo has been unable to resist giving priority to side issues rather than to the main one. The side issue in this case is the petty quibbling of the national opposition. On top of that, what Mrs Figueiredo is saying is not true, because the Prime Minister, the government and the local authorities have been persistent and tireless in this matter. Their actions in fact match the consensual way in which the Portuguese Members in this House have behaved, and this explains to a large extent the direction this debate has taken and much of the success achieved in terms of the compromise resolution, on which we will shortly be voting.

Let us hope that, especially where this Portuguese case is concerned, that of C & J Clark, which has upset everyone in Portugal, the Commission will finally draw the conclusions necessary to bring an end to a problem that has been around for such a long time: that of companies chasing Community subsidies. I still remember an example that was renowned in Portugal ten years ago: that of Thierry Rousell, who successfully prospected – or so he said – in the Brejão region, sowed hope and then stole many millions of escudos. Even today the case has still not fully come to light or been brought to justice. These are longstanding problems, to which solutions will one day have to be found.

Industrial relocation and restructuring and companies closing down once they have received financial aid from the European Union are not new phenomena, but their scale and context has changed considerably. We know that companies’ motives for closing and then relocating are many and various. We are also aware, however, of the damaging effects of relocations, especially when they take jobs away from regions that have no alternatives. The recent case of C & J Clark in Castelo de Paiva speaks for itself.

These decisions lead to high numbers of redundancies, thousands of jobs are threatened by the far-from-distant prospect of the mass redundancy of workers – those, that is, who have survived previous rounds of redundancies -, with extremely serious repercussions for the regional economy. To these consequences we can add all the indirect effects of the fall in jobs and orders for subcontracting companies, most of which are fragile small and medium-sized enterprises created as offshoots of the main project and dependent on them. Consequently, we cannot remain indifferent. We cannot ignore, or pretend to be unaware of the fact that in most cases, these businesses, especially in Objective I regions, benefit from Community financial aid and from direct or indirect financial aid from the Member States. Nor can we ignore, or pretend to be unaware of the fact, that most of the companies that close, relocate or seek to relocate are not companies that are suffering, and are instead success stories with high productivity rates and with acknowledged product quality. The decision to close is, therefore, a cruel one in social terms and is dictated purely by external economic reasons.

We must fully shoulder our responsibilities, bearing in mind that the European Union is the most significant player in the world in this field and in particular has to ensure that there is internal discipline in company relocations within the internal market itself. We therefore wish to express our solidarity with workers who are directly or indirectly affected. We feel it is unacceptable that a multinational company that has benefited from Community financial aid in the Member State in which it has decided to set up could breach the obligations inherent in this aid. We call on the Commission and the Member States to urge Community-wide companies to refrain from taking decisions that will harm employment unless due consideration has been given to all possible alternative solutions. We ask the Commission to look into the support mechanisms, at both national and Community level, from which the companies in question have benefited and which it distributes. We must all know what is happening in this area and that public opinion can also exert control and impose its own sanctions.

  Sacrédeus (PPE-DE). (SV) Mr President, Gislaved, Bengtsfors and Skövde are among the Swedish localities in which many people have seen their lives shattered when large numbers of jobs have been transferred to other EU countries. Through dubious and, in some cases, illegal state aid, tax revenue has been used to move jobs around within the European Union.

One way of defending fair ground rules would be for the Commission – and I am therefore addressing, in particular, Commissioner Fischler, who is present here – to punish the Member States more severely if they infringe Article 87(1) of the EC Treaty. At present, the options for imposing sanctions under this article amount to nothing worse than the possibility of industries’ and Member States’ becoming liable for repaying the illegal aid. They do not, however, have to repay more than the amount of the aid plus interest. The punishment is therefore mild in relation to what has happened. These limited consequences, together with the fact that few infringements of Article 87(1) of the EC Treaty are discovered, have a damaging effect upon the common EC market. The idea of the internal market is damaged through the distortion of competition that occurs when certain companies and certain forms of production are given unwarranted support.

Small localities in Sweden have so far been the losers in the dishonest job trading conducted in Europe. For Bengtsfors and the province of Dalsland in western Sweden, for example, the effects have been disastrous. The Member States must abide not only by the letter of the EC Treaty, but also by its spirit. Naturally, cases such as Bengtsfors lead to people’s confidence in the EU’s internal market being undermined.

I want now specifically to address two questions to Commissioner Fischler. The first concerns whether he considers current penalties to be adequate and sufficiently severe in cases where state aid is given to companies, as a result of which jobs are transferred from one European Union country to another. In such cases, no new jobs are created. Instead, a social mechanism for providing security is swept away.

My second question to Commissioner Fischler relates to the answer previously given by the Commission to a question concerning the transfer of jobs in Bengtsfors in Dalsland to Portugal. Does the Commission believe that structural aid must in the future be redesigned in such a way that new undertakings and new jobs are given priority instead of jobs being transferred from one place to another?

  Santos (PSE). – (PT) (without microphone) ... as a result of affirming my culture and language, unfortunately represents at this time the observation that the main social problems caused by the phenomenon of relocation are being seen in Portugal. They are being seen in Portugal without the Commission having taken the due precautions in good time – I agree with my fellow Members who have said this already – but above all, as a result of the rules in Portugal being subordinated to an entirely excessive form of financial fundamentalism, which takes no account of the real economy and people.

Mr President, Commissioner, strengthening the collective and individual rights of workers, especially in the context of mass redundancies, company transfers and insolvencies as a result of industrial change, is enshrined in directives that the Member States must respect, by transposing them swiftly and effectively into national legislation, which does not always happen, and on which the Commission must take special action. All of this legislative discipline and harmonisation is becoming all the more necessary now that we are – fortunately – seeing a phenomenon of integration of the European economies which has led to a high degree of foreign investment in production. The benefit to the development of the various European regions is undeniably extremely positive, with the emergence of many success stories of one type or another that have contributed to the economic and social development of regions which, without this investment, might be condemned to stagnation and to falling behind.

Unfortunately, we are also seeing frequent cases of unfair advantage being taken of the material gains achieved without any concern to contribute to strengthening the chain of value produced in the region and, in particular, which fail to demonstrate any social concern. Much of the responsibility clearly lies with the Member States themselves, who facilitate the start-up and operation of some production units to unimaginable levels, attaching priority only to the immediate interests.

The increase in industrial relocation that we are seeing in some European countries and, if we can generalise, particularly in the less developed economies such as Portugal’s, is truly unacceptable. Nothing, not even the current climate of economic stagnation in Europe, justifies the illegal and immoral behaviour in Portugal of some companies backed by foreign capital. They have made their investments freely, the companies have been welcomed in good faith and with high expectations, and the aid granted is normally generous and funded partially from the public purse. The ongoing contempt for the interests of regional communities, for individuals and for the European Union itself is, therefore, completely unacceptable.

This aid must be conditional on long-term agreements in the field of employment and local development, which means that aid must not be granted to companies that do not respect these commitments. It is also becoming necessary, as we stated in the motion for a resolution, to draw up a code of conduct regulating the conditions for relocating jobs and which also enables us to monitor the virtual practices of companies that fail to comply. This is why a special role has been given to the European Monitoring Centre for Industrial Change, which can assist in defining alternative policies for cases of relocation. It is also becoming necessary to increase and improve use of the European Social Fund, by focusing it in particular on the training and professional retraining of the workers involved.

Lastly, effective programmes focusing on research and development that make the best use of human resources and improve reception conditions for the reception economies must be promoted and developed, especially by the national authorities of countries under threat. Commissioner, I wish to take this opportunity to convey our concern at the deterioration of the current social situation that the behaviour of some companies subsidised by the Commission is causing in Portugal. Despite everything, I am fully convinced that the Commission is sensitive to the situation and will find the appropriate measures to remedy the situation, whilst taking the laws and the interests of the Union into account.

  Laguiller (GUE/NGL). – (FR) Mr President, this resolution takes it for granted that the European institutions grant public aid to private enterprises, even if they want to have a certain amount of control over the use of this aid. I personally am against the use of public funds to increase private profits. Public money, whether it belongs to the Member States or to the European institutions, should be reserved for public services. Naturally, at the very least, we should demand that companies which do not fulfil their obligations, and in particular those which implement redundancies after receiving public money, reimburse the subsidies they have received. Just as, at the very least, we should refuse to grant subsidies to businesses which, having received aid in one Member State, transfer production to another State.

The real problem, however, is not even that. The problem lies in the current exponential increase in mass redundancies. It is unacceptable for an employer or board of executives to be able to decide to make workers redundant simply to increase company profits. It is unacceptable for lives to be destroyed and regions ruined in order to pay higher dividends to shareholders.

Mr Fischler, I would ask you this: what use are the European institutions if they are powerless in the face of this fundamental problem? What power do they have if they cannot or do not want to force at least the major profit-making companies to keep on their employees, by forbidding them from implementing mass redundancies?

  Harbour (PPE-DE). – Mr President, it is very interesting that our Portuguese colleagues have brought this to our attention and we have had many contributions from them. I want to approach this from a very different perspective.

I must emphasise that I do not defend managements that behave irresponsibly or take state aids and then do not deliver the jobs. If one looks at the state aid conditions – and I have seen some of the applications for my own region – there are plenty of procedures in place for clawing them back. The Portuguese authorities had plenty of ways of doing that. I say to almost all colleagues that have spoken in this debate that they are walking away from the problem. That is why I want to contribute.

I could tell this House every month about cases involving more job losses than we are talking about today: companies that need to restructure, companies that are working in a global market. We have not heard the word 'market' from anyone. I remind you that we work in a market place. Companies have to produce goods that customers can afford to buy, at a profit, otherwise they cannot continue to employ people. We are now living in a global market where companies have to be competitive. It is entirely wrong to claim – as a number of colleagues on the left side of this House have – that every single closure is because a company 'wants to add to its bottom line'. The closures I have seen are because the company wants to survive in business, to continue employing people in high-quality jobs.

I have been into businesses where I have been told, 'This is the component we are making today and this is the one we can now find in China or Indonesia. They are the same quality, but I can buy this fully finished product for the price I paid for the raw material in the United Kingdom.' That is the reality. What are we going to do about it?

Industries that are facing that sort of competition have to look at the ways they can restructure, invest, change the process, introduce research and development. Mr Santos was the first person to mention that. We have funds from the sixth framework programme. We have research funds to put into industries for the complete redesign and reconfiguration of processes. Industries and vulnerable sectors have to start working much better together.

I should like you to pass on to Commissioner Monti, who I believe should be here, the message that we need to encourage industries to work together on reconfiguring their processes in order to make better quality products more competitively and at a better price. I was amazed to see the reference to producing at a lower cost in my resolution had been taken out. Producing goods at a lower cost is crucial

I come from a region where we have a traditional industry, the ceramics industry, that is facing this kind of pressure. That industry is starting to reconfigure and to work together with support from the British Government, using European funds, to tackle these issues.

I went to see a company the other day that makes ceramics in competition with lower cost Portuguese producers. That company has invested EUR 55 million to reconfigure its process. It has had to lose jobs as a result, but it has worked with its trade union to do that. That is the sort of fundamental change we want. That is what the Commission has to encourage. We do not want to have any more tedious debates in this House about state intervention, about criticising managements. If we walk away from the issue and do not make European industry competitive we will continue to have this sort of problem.

  De Keyser (PSE). – (FR) Mr President, Commissioner, during the last Strasbourg part-session, the metalworkers came to demonstrate their dismay at the restructuring of Arcelor. They left Parliament in disbelief, disgusted at not having been heard, and some said that they would come back, but only to cause damage. The dockers were here this week, and they almost did destroy everything.

If Europe continues to ignore the social impact of the liberalisation policies it is implementing, there will be further explosions. Of course, Europe is not responsible for uncontrolled restructuring, but, at the very least, we could try to regulate it. For now, however, there is total refusal to do so. The Commissioner for Employment and Social Affairs, Mrs Diamantopoulou, has already stated that there will not be a directive on the matter. Nor will there be a European code of good conduct for companies. Nothing. But when there is nothing, and no political outlet for despair, violence becomes the last resort. Today, whatever Mr Harbour thinks, the restructuring of large companies has become proactive, in other words, far from just fulfilling the need to adapt to market fluctuations, they are responding to financial calculations alone. These calculations are based on share price and anticipate the very short-term profits to be gained from a mass reduction in personnel costs. Ultimately, even where expensive social plans are implemented, the calculations are viable and there is a return on investment within two years on average. These stock market transactions, however, completely disregard the men and women whose lives they are destroying and the increased stress and workload they create for those described as survivors. They also ignore externalised costs such as public aid and unemployment benefit.

You might ask what Europe’s role is in this internal scheming within the Member States. Perhaps none, except that the vast market and the rules on free competition that it supports create areas where, apparently, anything goes. The Portuguese example of delocalising businesses is just a drop in the ocean, but it is representative. Europe must, at last, provide genuine answers to this trend, which is not an economic accident, but a result of financial plans in action, which can only lead to violence.

(Applause)

  Fischler, Commission. – (DE) Mr President, honourable Members, I would first like to make the fundamental observation that the Commission, too, very much welcomes and supports your initiative in taking up this very difficult issue. We can also accept most of the points made and endorse those contained in the motion for a resolution.

I would like, though, to set out under three separate headings my response to the questions that have been raised in the various speeches, for all of which I am grateful, as they have led to a very rounded debate. Firstly, I believe that, despite our structural and support policies, we must not ignore the fact we are in a market economy system and that the primary task must be to ensure that the market economy system works. That has nothing to do with Manchester liberalism, but rather with adherence to, for example, our European rules on competition, for failure to ensure that competition works would utterly contradict the whole of our support policy and the entire cohesion and structural policy. I believe that to be something that we must not permit. The consequence is that evidence indicating the importance of our having a working market economy is very important and must not be allowed to be disregarded.

The second is to ask what we can do to ensure that aid is not misused, but applied to the purpose for which it was granted.

It was in relation to this that I set out in my first speech the elements of the current rules, and it goes without saying that, in this area, the Commission has to ensure that, where one rule or another is not complied with – where, for example, a firm, contrary to what was laid down in its agreement with the Member State in question or with the Community, moves the business to another location before the permitted date – then, reimbursement is required.

To the assertion made by some of you that there is, over and above that, the need for sanctions, I can only say that, at present, repayment is the sanction. No additional sanctions at present exist. That is an issue that perhaps ought to be discussed in the Convention, for if additional sanctions, for example of a financial nature, were sought, provision would have to be made for them in the Treaty. Such a possibility does not at present exist in the Treaty.

The third thing I would like to address is the issue of whether new firms are given preferential treatment. For a start, it does not make much sense in this context to insist that a firm be newly established. What is much more interesting is to focus consideration on how many new jobs will result from a project being supported. That is the decisive factor. What this is about is increasing the level of employment in these regions.

You have made a number of suggestions with the future in mind, and to these I want to say one thing. One of the items in your motion for a resolution is a demand that the Commission should draw up a list of those firms that have been found guilty by a court of law. We can see difficulties in this as regards data protection. That is a fact, and we have to live with it.

Apart from that, this debate comes just at the right time, as we will today have the opportunity to discuss future structural policy in the context of the new cohesion report. It is therefore appropriate the proposals should be made as to how the rules on the grant of structural funding might be improved.

  President. – Thank you, Commissioner Fischler.

I have received five motions for resolutions in accordance with Rule 37(2) of the Rules of Procedure.⁽¹⁾

The vote will take place today at 5.30 p.m.

(1) See Minutes.