Murco: could affected workers get more help from the EU?

21 November 2014

Article by Robin Wilkinson, National Assembly for Wales Research Service

Image from Flikr by Sam Whitfield Licensed under the Creative Commons

Image from Flikr by Sam Whitfield Licensed under the Creative Commons

On 5 November it was reported that efforts to sell the Murco oil refinery in Milford Haven as a going concern had failed. The refinery is set to be converted to a storage and distribution facility, with the expected resultant loss of about 340 out of 400 jobs.

There have been calls for the UK Government to apply to the EU for funding from the European Globalisation Adjustment Fund (EGF) to help affected workers, though it remains unclear whether the UK Government – which has to make the application as the relevant Member State – will do this.

The Welsh Government has responded to the news of job losses by announcing (in Cabinet Statements on 5 November and 12 November) a package of measures intended to help former employees directly and to stimulate the local economy. Key points of the Welsh Government’s response include:

  • Continuing the work of the Murco task force – which was initially established in April to try and secure the long-term future of the site – under the new chairmanship of Roger Evans MBE;
  • Supporting workers facing redundancy with the Welsh Government’s ReAct scheme, and considering using the Welsh Government’s ProAct scheme;
  • Working with business leaders to explore opportunities to match employers with prospective employees. This work includes a “Jobs Fayre” event planned for 10 December at the Bridge Innovation Centre;
  • Making further funding available for businesses in Pembrokeshire through a Pembrokeshire SME Small Capital Investment Grant scheme and a special round of the Wales Economic Growth Fund.

The Minister also stated that she will be “exploring the use of European monies to meet our goals and be working with the UK Government to consider the use of the EU’s Globalisation Adjustment Fund.” Jill Evans MEP has separately called on the UK Government to apply to the EGF, and has written to both Edwina Hart AM and Stephen Crabb MP, Secretary of State for Wales, on this matter.

The European Globalisation Adjustment Fund is an EU fund designed to provide support to people losing their jobs because of major structural changes in world trade patterns due to globalisation. Funding could be made available when a large company shuts down or production is moved outside the EU, or when jobs are lost as a result of the global economic and financial crisis.

Details about eligibility criteria for bids into the fund are available in the EGF Regulation for 2014-2020. The Regulation states that redundancies must be of the following nature for grants to be awarded:

a) at least 500 workers being made redundant or self-employed persons’ activity ceasing, over a reference period of four months, in an enterprise in a Member State, including workers made redundant and self-employed persons’ activity ceasing in its suppliers or downstream producers;

b) at least 500 workers being made redundant or self-employed persons’ activity ceasing, over a reference period of nine months, particularly in SMEs, all operating in the same economic sector defined at NACE Revision 2 division level and located in one region or two contiguous regions defined at NUTS 2 level, or in more than two contiguous regions defined at NUTS 2 level provided that there are more than 500 workers or self-employed persons affected in two of the regions combined.

2. In small labour markets or in exceptional circumstances, in particular with regard to collective applications involving SMEs, where duly substantiated by the applicant Member State, an application for a financial contribution under this Article may be considered admissible even if the criteria laid down in points (a) or (b) of paragraph 1 are not entirely met, when the redundancies have a serious impact on employment and the local, regional or national economy. The applicant Member State shall specify which of the intervention criteria set out in points (a) and (b) of paragraph 1 are not entirely met. The aggregated amount of contributions in exceptional circumstances may not exceed 15 % of the annual maximum amount of the EGF.

Although initial press reports state that approximately 360 people will lose their jobs at the Murco site, it is not clear what assessment has been made of the number of job losses its suppliers or downstream producers in the area might suffer. If these are taken into account the number of total job losses may well be above the “500 workers” threshold mentioned in clauses a) and b) above.

Furthermore, paragraph 2 states that there is a certain amount of leeway as to how the Commission applies this threshold, depending on the likely economic impact of the job losses in question.

To this end, it is worth noting that the European Commission website includes details of previous grants that have been proposed under the EGF. One of these involved the Commission proposing to award €1.5 million to support jobs following the closure of a jewellery firm in Ireland that resulted in 171 job losses.

There appears to be at least a possibility that the job losses at Murco could result in a successful application to the EGF, if such a bid were made. However, responsibility here lies with the UK Government, as applications must be made by the relevant Member State.

The UK Government does not appear to have previously made an application to the Fund. Eight Member States had not yet applied for EGF support by the end of 2013: Estonia, Cyprus, Latvia, Luxembourg, Hungary, Slovakia, and Croatia (which only joined the EU on 1 July 2013) as well as the UK.

Jill Evans MEP has suggested that the UK’s reluctance to make use of the Fund is because doing so could result in a reduction to the UK’s EU rebate – the amount of money the UK receives back annually from its net contribution to the funding of the EU – something the UK Government is unwilling to risk.

There is clearly appetite from some in Wales for those affected by the Murco refinery’s change of use to receive help from the EGF. The Minister for the Economy, Science and Transport recently told Plenary that “we are going to have to put a lot of pressure on to make sure that the bid goes forward”. The outcome of this bid, or even if one will be made, remains to be seen.