AEIP Newsletter • Week 31

09 – 13 August 2010

Table of Contents

EU SOCIAL AFFAIRS......................................................................................................................................... 2
I. EUROPEAN UNION TO SPEND 10 MILLION EUROS BY REQUEST OF DENMARK TO HELP 1149 WORKERS BACK TO
WORK .................................................................................................................................................................. 2
II. UNION DECRIES 'LYNCH MOB' MENTALITY ON PUBLIC SECTOR PENSIONS ........................................................ 2
III. EU/SOCIAL.................................................................................................................................................. 3
IV. €1.7BN DUTCH FUND LOSES TWO-THIRDS OF RETURN TO INTEREST HEDGE ................................................... 3
V. LUXEMBOURG FUND PARTNERS TO LAUNCH HIGH-TECH FUND FOR CEE REGION .......................................... 3
ECONOMY ........................................................................................................................................................... 4
I. EU/ECONOMY .............................................................................................................................................. 4
EVENTS AND COURT OF DE JUSTICE CALENDAR ................................................................................. 4
I. NO UPCOMING EVENTS .................................................................................................................................... 4
III. COURT OF JUSTICE CALENDAR ...................................................................................................................... 4

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EU Social Affairs

EU Social Affairs
I. European Union to spend 10 million euros by request of Denmark to
help 1149 workers back to work
On Monday 2 August, the European Commission approved two applications from
Denmark for assistance from the EU Globalisation Adjustment Fund (EGF). The
10,106,844 euros requested by the Danish authorities will help 1,149 redundant workers
back into employment. The workers lost their jobs in the engineering sector after the
economic slowdown exacerbated an already difficult situation for Linak A/S and the
Danfoss Group. The applications will now go to the European Parliament and EU Ministers
for agreement. “The impact of the recession has meant companies in the engineering
sector have been hit hard by the sudden drop in demand for mechanical and electronic
machinery”, said the Commissioner for Employment, Social Affairs and inclusion, László
Andor, who added: “The redundant workers are finding it hard to find new opportunities
with many having to move to other sectors. I am confident that the support and training
the EGF can provide to the Danish workers will make the transition to a new job easier”.
The two Danish applications relate to 1,641 redundancies in total, of which 1,443 were in
three companies in the Danfoss Group and 198 in Linak A/S. The dismissals were a
consequence of the rapid decline in demand for mechanical and electronic machinery and
financial pressures that left some companies with no alternative but to let workers go and
transfer production to places with lower costs. All the companies affected are located in
Sønderborg, a municipality in a relatively isolated part of Denmark where the iron and
metal industry represents around 25% of all employment and where the engineering
sector was the largest single sector. The impact of these redundancies at local level is
huge and will push up the unemployment rate in an area where it is already higher than
the national average. The package of EGF assistance for the former workers of Danfoss
Group and Linak A/S will help 1,149 of the most disadvantaged of these dismissed
workers back into employment. It includes training in tourism and energy technology,
education and training in business management and remedial education; employment
incentives (such as incentives for people who wish to change careers) and also several
incentives for business start-ups. The total estimated cost of the package of is €15.5
million, of which the European Union has been asked to provide EGF assistance of €10.1
million. Since the EGF was created in January 2007, 64 applications for assistance have
been made, for a total amount of 365.3 million euros which has been used to help more
than 68,500 workers. (02/08/2010 Agence Europe)

II. Union decries 'lynch mob' mentality on public sector pensions

Unite, the largest union in the UK, has attacked the UK government, the media, the
private sector and so-called pensions experts for "acting like a lynch mob" on the issue of
public sector pension reform. The union argued this "coalition of vested interests" had
created a "climate of hysteria" in order to "manipulate the facts". Derek Simpson, joint
general secretary at Unite, said: "This unholy alliance, embracing Confederation of British
Industry leaders and deputy prime minister Nick Clegg, already have good pension nest
eggs, which the average private and public sector employees can only dream about." He
claimed the "vested interests" had already come to the conclusion that public sector
pensions should be cut, notwithstanding ongoing consultation on the issue. The Hutton
commission – headed by former Labour cabinet minister John Hutton – is due to make an
interim report on public sector pensions in September, submitting full proposals in time
for the 2011 Budget. Simpson questioned the independence of the commission and its
ability to resist lobbyists wishing to "drastically erode the modest pensions of millions of

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public sector workers". He added that the Trades Union Congress last year estimated the
majority of public sector pensioners receive a pension of less than £5,000 a year, and
that half the women on NHS pensions receive less than £3,500 a year. "We are not
talking about great riches here," he said. (IPE.com 03/08/2010)

III. EU/SOCIAL
A new European directive strengthening the social protection of self-employed workers
and their assisting spouses took effect on Wednesday 4 August. Member states have two
years until 5 August 2012 in which to adopt texts allowing compliance with these new
rules. Self-employed workers make up 16% of the active population of Europe, i.e. over
32 million people. Some 10% of these are assisted by their spouses or partners, who
work on an informal basis. The new directive, which is intended to ensure equal
treatment for both men and women who are self-employed, gives assisting spouses
social protection as well as maternity leave (05/08/2010 (gence Europe)

IV. €1.7bn Dutch fund loses two-thirds of return to interest hedge

The €1.7bn pension fund for the Dutch food products industry returned 14.4% on
investments, but lost 9.6 percentage points due to a 115% hedge of the interest risk on
its liabilities. The scheme's hedge against currency risks also dragged on returns due to
the rise of the British pound against the euro, according to its annual report for 2009. At
year-end, its coverage ratio was 117% – including 4.5 percentage points for increased
longevity. However, Bart Onkenhout, the scheme's director, said the coverage ratio had
dropped to 110% at the end of June due to decreasing interest rates. The scheme was
able to grant an indexation of 1.35% to its 74,665 active participants and 0.22% to its
171,160 deferred members and 8,185 pensioners, respectively, last year. Given the
result of last year's interest hedge, the board of the Stichting Pensioenfonds voor het
Levensmiddelenbedrijf said it lowered its interest hedge to 90%. Onkenhout added: "The
extensive interest hedge has contributed positively to our results during previous years,
but it has been counter-productive during rising interest rates." The pension fund
indicated it was also taking rising interest rates and inflation into account and aimed to
increase its allocation to inflation-linked bonds. Following a self-evaluation, the board
said it appointed an external expert in the scheme's investment committee and had
decided to commission future asset-liability management studies to a third party. It also
said it had started exploring options for co-operation with similar pension funds.
Onkenhout said the scheme discontinued its tactical asset allocation (TAA) after losing "a
couple of million euro" through its TAA policy, which ran for a year and a half.
"Moreover," he added, "we didn't have sufficient faith in the investment philosophy of our
manager." The pension fund said it replaced its TAA with a "completion policy", aligning
its portfolio with a floating benchmark on a monthly basis. The scheme reported a 3%
return during the first six months of 2010. However, during this period, it lost 2.5%
through its currency hedge, following a falling euro. (IPE.com 04/08/2010)

V. Luxembourg Fund Partners to launch high-tech fund for CEE region

Luxembourg Fund Partners is set to launch a fund focusing on high-tech real estate in
central and eastern Europe (CEE). The Augustan Opportunity Fund Sicav will invest in
commercial and technology facilities that service local demand, incorporate "eco-
friendliness" and adhere to strict financial criteria. Its target fund raising is €100m, which
will be invested across five projects in developing industrial zones throughout the CEE
region. Luc Leleux, founder of Luxembourg Fund Partners, said the fund would focus on
energy-efficient technology, office parks, infrastructure, medical centres and housing
replenishment projects. The fund's first investment will be in Stara Zagora, Bulgaria –
eastern Europe's top region for foreign direct investment. It will focus on acquiring
discounted assets that require developing or restructuring, aiming to take advantage of

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global demand for development projects. Augustan said investors could expect to see an
increase in underlying values of approximately 20% a year during the construction phase
and that the region's property market was expected to grow by 5-8% a year. The fund
will be open to direct investment, self-invested personal pensions and institutional
investors, offering sterling and euro share classes. The annual management charge will
be 1.5%, while redemption charges will apply up to the fifth year of investment, after 12
months' holding. The launch date is set for 30 August. (IPE.com 05/08/2010)
Economy

Economy
I. EU/ECONOMY
Seasonally-adjusted unemployment in the eurozone stood at 10.0% in June 2010,
unchanged on May 2010. It was 9.5% in June 2009. In the EU27, unemployment stood
at 9.6% in June 2010, unchanged on May 2010, and up from 9.0% in June 2009.
According to Eurostat forecasts published on Friday 30 July 2010, the lowest
unemployment was in Austria (3.9%) and the Netherlands (4.4%) and the highest in
Spain (20.0%), Latvia (20.0% in Q110) and Estonia (19.0% in Q110). Annually, four
member states saw a drop in unemployment, including Austria (from 5.1% to 3.9%),
Malta (from 7.2% to 6.5%) and Germany (from 7.7% to 7.0%). (30/07/2010 Agence
Europe)
Events and Court of de Justice Calendar

Events and Court Cases

I. No Upcoming Events

III. Court of Justice Calendar

No hearings are planned for the following period: 19/7/2010 - 23/7/2010