In this issue:
• Restructuring support measures in focus: Public employment incentives
• Russian sanctions and company restructuring
• Case in focus: Lloyd’s Banking Group (UK

Eurofound

European Monitoring Centre on Change

European Restructuring Monitor

English

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1-2015 
ERM Quarterly, Quarter 4, January 2015 
Eurofound 
European Monitoring Centre on Change 
European Restructuring Monitor 
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ERM Quarterly, Quarter 4, January 2015 
Abstract 
In this issue: 
• Restructuring support measures in focus: Public employment incentives 
• Russian sanctions and company restructuring 
• Case in focus: Lloyd’s Banking Group (UK) 
Keywords 
European Union, public employment, sanctions, company restructuring 
Comments 
Suggested Citation 
European Foundation for the Improvement of Living and Working Conditions, European Monitoring Centre 
on Change, & European Restructuring Monitor (2015). ERM Quarterly: Quarter 4. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/intl/433 
ERM quarterly January 2015
   IN THIS ISSUE
•	 Restructuring	support	measures	in	focus:	Public	employment	incentives
•	 Russian	sanctions	and	company	restructuring	
•	 Case	in	focus:		Lloyd’s	Banking	Group	(UK)	
Macroeconomic trends and prospects
Dramatic recent oil price declines have seen deflation take hold in the EU. General price levels in December 2014 were 
0.2% lower than a year earlier. This is further evidence of a tentative European economic recovery that appears to be 
running out of steam. Growth forecasts for the EU have been trimmed to 1.1% in 2015 after growth failed to reach 
even 1% in 2014. The main causes have been a slowdown in the main euro zone economies of Germany and France as 
well as the third recession in Italy since the global crisis (there was negative growth in the second and third quarters of 
2014). External factors – notably events in Ukraine crisis and Russian sanctions, as well as civil war in Syria – may have 
contributed to the slowdown. 
On the labour market side, unemployment rates remained stable (10.0% in the EU28, 11.5% in the 19 countries in the 
euro zone) in the three months to November 2014 after falling for most of the previous year. All recent net employment 
growth in the EU has, however, been part-time. There were four million more part-time workers in 2014 Q3 than there 
were in 2008 Q3; in contrast, there were nine million fewer full-time workers.
Job creation and job loss at a glance 
The ERM recorded a total of 318 cases of restructuring between 1 October and 31 December 2014. Of these, 191 were 
cases of announced restructuring involving job loss and 120 were cases involving announced job creation; seven cases 
involved both job loss and job creation. These cases comprised a total of 76,495 job losses and 38,744 announced job 
gains. Internal restructuring accounted for 69% of the announced job losses – somewhat less than the previous quarter. 
The proportion of job losses attributable to closure (11%) substantially increased compared to the percentage reported 
in the previous quarter (6%). The opposite trend was noted for bankruptcy, going down from 13% in the previous quarter 
to 8% at the close of the year. Consistent with figures from the previous quarter, announced job losses continued to 
outweigh those relating to job creation, pointing to a slowdown in the still hesitant recovery of the EU labour market. In 
terms of geographical distribution, Germany continued to record the greatest number of announced job losses (17,931 
jobs), followed by the UK (17,467), France (13,423), Italy (4,549), and Spain (4,107). Meanwhile, the greatest numbers of 
announced new jobs were in the UK (6,410), followed by Poland (5,670), Romania (5,012), the Czech Republic (4,637) 
and Ireland (3,095). 
Note: * Comparing  the quarter to the four-quarter moving average; ++ = >100%; + = 
>50%; excludes country or sector if quarter average and 2014 Q4 <1,000 job losses/
gains.  Source: ERM, October–December 2014.
2014 Q4 Announced job loss Announced job gain
EU28 76,495 38,744
EU28 change 22% -34%
Big increases* by 
country
Denmark ++; Romania ++; 
Germany ++; France +
Greece +; Ireland +; Sweden ++
Big increases* by 
sector
Financial/insurance +
Professional services +
Financial/insurance +
Public administration++
Bankruptcy
8%
Closure
11%
Internal 
restructuring
69%
Merger / 
acquisition
9%
Oﬀshoring / 
relocation
3%
(Percentages refer to announced job losses.)
European Monitoring Centre on ChangeEMCC | 
ERM quarterly January 2015Page 2
Top 5 cases of job loss and job creation
Date Company Job losses Location Sector Type of restructuring
28/10/2014        Lloyds Banking Group 9,000 UK Financial services    Internal restructuring 
15/10/2014        Ministry of Defence    7,500 France Public administration Internal restructuring 
01/10/2014        Opel 2,835 Germany Auto manufacture Closure 
25/12/2014 City Link     2,356 UK Transportation and storage Bankruptcy 
24/10/2014 Karstadt 2,000  Germany Retail Internal restructuring 
 
In the last quarter of 2014, the largest-scale restructuring event reported was that of Lloyds	Banking	Group, which 
announced a new headcount reduction affecting 9,000 jobs across 150 branches over the next three years (see Case in 
focus on page 3). The second-largest restructuring in the quarter concerns the French	Ministry	of	Defence, which 
announced 7,500 job cuts to be made in 2015 in a bid to reduce its budget deficit. More job losses are envisaged up to 
2019 as part of a large cost-cutting programme. The other three restructuring cases of job losses are smaller in scale. 
German car maker Opel is to close its production site in Bochum, with the loss of up to 2,835 jobs. Recently, 99% of 
the affected employees approved a social collective agreement, which, among other things, provides for a transfer to a 
transitional company. Another 2,356 jobs have been reported lost in the UK with the collapse of parcel delivery firm 
City	Link. The headcount reduction does not include an estimated 1,000 self-employed drivers who were paid on the 
basis of the number of parcels delivered and would not be entitled to use the government-backed redundancy payments 
service when lodging their claims. Also sizeable is the restructuring of German retail chain Karstadt, which announced 
the closure of six stores with the loss of 2,000 jobs.
Date  Company   Job gains Location  Sector 
10/12/2014 Czech public administration 2,688  Czech Republic  Public administration 
08/12/2014 Faurecia Seating   1,500  Romania  (Valcea)  Manufacture transport equipment 
16/10/2014 Volvo Cars   1,300  Sweden   Manufacture transport equipment 
09/12/2014 Kromberg and Schubert Romania 1,000  Romania (Nadab)  Manufacture transport equipment 
02/11/2014 Alfa-Beta Vassilopoulos  1,000  Greece   Retail 
The largest case of job gains recorded in the quarter is that of the Czech public administration, which has announced 
the largest recruitment of recent years with the creation of 2,688 new jobs in 2015. This job creation forms part of 
an efficiency drive designed to improve tax collection and process EU payments. In Romania, car part manufacturers 
Faurecia Seating and Kromberg and Schubert announced the creation of respectively 1,500 and 1,000 new jobs. Another 
large instance of job creation was announced in Sweden by car maker Volvo Cars. The company, which had launched a 
cost cutting programme in 2013, is now set to employ 1,300 people in Torslanda, near Gothenburg.  
In Greece, Belgian-owned supermarket chain Alfa-Beta Vassilopoulos is creating 1,000 jobs with the opening of new 
stores across the country. 
Sectoral distribution of job losses and gains
-30,000 -25,000 -20,000 -15,000 -10,000 -5,000 0 5,000 10,000 15,000
Manufacturing
Retail
Information/communication
Public administration/social security
Administration/support services
Retail
Public administration/social security
Transportation/storage
Financial/insurance
Manufacturing
The figure below plots the top NACE Rev.2 one-digit sectors in terms of announced job loss and job creation, as 
reported to the ERM in the last quarter of 2014. Manufacturing experienced the most restructuring activity, accounting 
for 35% of total announced losses and 31% of total announced gains. The financial and insurance sector accounted for 
19% of announced job losses, while a sizeable number of new jobs were announced in retail (19% of total job gains).
Announced	job	losses	
Manufacturing   26,474
Financial/insurance  14,818
Transportation/storage  8,016
Public administration/social security 7,607
Retail     7,168
Announced	job	gains
Administration/support services   2,930
Public administration/social security  4,132 
Information/communication  4,355
Retail     7,550
Manufacturing   12,203
Source: ERM, October–December 2014
ERM-announced	job	losses/gains,	top	five	sectors	(one-digit),	2014	Q4
European Monitoring Centre on ChangeEMCC | 
ERM quarterly January 2015
Page 3
rESTrUcTUrINg SUpporT mEaSUrES IN focUS 
Public	employment	incentives
Several Member States have established employment 
incentives to foster the recruitment of workers in the 
framework of restructuring. 
In Austria, the Start-up	promotion	law targets business 
transfers (and hence, internal restructuring) as well 
as start-ups. The law exempts employers from certain 
administrative costs and incidental wage costs for their 
employees for a certain period of time. 
The French Tax	credit	for	competitiveness	
and	employment benefits companies employing 
workers, amounting to a reduction in companies’ social 
contributions. The law aims at funding companies’ efforts 
in terms of investment, research, innovation, training, 
recruitment, prospecting new markets and ecological or 
energy transition; thereby, it also has a clear restructuring 
objective. 
With a similar objective, the Croatian Subsidy	for	
justifiable	costs	of	creating	new	jobs	related	to	
investment provides grants for specific investment 
projects on the condition that new jobs are created by 
these investments. 
The Bulgarian Micro-credit	Guarantee	Fund links 
access to its loans to the creation of new permanent jobs 
by the beneficiary company, the number of jobs required 
depending on the amount of credit applied for. It should 
also be mentioned that in several countries employment 
subsidies (or reductions of social contributions) are made 
available if an employer hires people who have been long-
term unemployed (these people may have been made 
redundant in the framework of restructuring). 
More information on public measures, and measures 
involving the social partners, that support companies and 
employees in restructuring is available at Eurofound’s	
restructuring	support	instruments	database.
 
caSE IN focUS 
Lloyds Banking Group and branch banking
At the end of October 2014, Lloyds Banking Group (UK) 
announced that it intended	to	cut	around	9,000	jobs, 
or around 10% of its workforce, and reduce the number 
of its branches by 150 (about 7% of its network of 2,250 
branches) over the coming three years. This announcement 
is the latest in a series of large job cuts at the group, which 
is reported to have lost up to 43,000 jobs since 2008. The 
group, in which the UK government retains a 25% stake 
following support given during the global financial crisis,  
states that these job cuts and branch closures are largely 
due to an increasing number of customers switching to 
online and mobile banking. This has been a common theme 
of much recent bank restructuring. Over the next three 
years, the group will invest GBP 1.6 billion (€2.09 billion as 
at 20 January 2014) in its automated and online offerings. 
It also envisages upskilling staff to offer advice on higher-
margin financial products (such as mortgages). 
Despite the latest round of job losses, Lloyds insists that it 
is performing strongly in financial terms: it reported pre-tax 
profits of GBP 1.61 billion (€2.1 billion) in the nine months 
to 30 September 2014.
Lloyds has to date maintained a policy of keeping one 
branch per town in the UK; it has stated that this will now 
no longer apply. It is reported, however, to be willing to 
consider a new commitment to keep open rural branches, 
according to reports from the BBC. Lloyds has also insisted 
that it does not want to abandon branch banking. 
The trade union Unite has called on the group to commit 
to not making any compulsory redundancies. The union 
has warned that the job losses could have ‘unknown 
consequences’ for customer service and has called 
for cuts in executive pay if the group goes ahead with 
compulsory redundancies and customer service suffers as a 
consequence.
Sources  
Financial Times (2014), UK	banks	axes	branches	in	
favour	of	digital	model, 24 October.
BBC News (2014), Lloyd’s	Bank	confirms	9,000	job	
losses	and	branch	closures, 28 October.
European Monitoring Centre on ChangeEMCC | 
ERM quarterly January 2015
Page 4
SITUaTIoN IN focUS 
Restructuring arising from Russian sanctions
A number of European firms have reported restructuring job losses as a direct result of EU sanctions against Russia 
following the annexation of Crimea in March 2014. The annexation resulted in sanctions being imposed on Russian 
individuals and businesses by the EU and US, among others. Initially, European and US sanctions targeted individuals close 
to the Kremlin. Later rounds of sanctions implemented in 2014 were more sectoral in nature, aimed primarily at the 
Russian financial, energy and defence sectors. 
Although Western sanctions have had a significant impact, limiting in particular financial support to Russian financial 
institutions, the Russian retaliation has in turn also had an impact on European firms. In August 2014., Russia imposed an 
embargo for one year on a wide range of agricultural products and foodstuffs. The impact of the Russian food embargo has 
been both direct (disrupting existing trade channels, Russia accounting for around 10% of EU food exports) and indirect 
(lower prices in EU markets as a result of sudden oversupply, especially of such perishables as fruit and dairy products. The 
trade ban has been felt across the supply chain – in production, logistics and retail. In Finland, for example, dairy	producer	
Valio has had to cut 100 jobs at its head office in Helsinki, while in Lithuania, international	logistics	company	Hofa 
has had to reduce its workforce by 210 people (out of a total of 274) who dealt mainly in transporting fruit and vegetables 
from the EU to Russia. In Finland, retailing	conglomerate	Kesko has had to restructure to cope with the negative 
economic consequences of the Russian import ban, cutting 227 jobs since November 2014 in its hardware and grocery 
operations. 
The decline in sales has also been strongly felt in the manufacturing sector. In Sweden, agricultural	machinery	
producer	Väderstad has made 100 employees redundant (Russia and Ukraine previously accounting for 20% of its sales). 
Similarly, Czech automotive	parts	producer	Motorpal has announced that it is to cut 340 positions in its four plants 
in the Czech Republic, citing the sanctions as the principal cause. In  Slovakia, air-conditioning	systems	producer	ABC	
Klima announced the loss in late July 2014 of 100 jobs as it entered bankruptcy. Following the sanctions, the company lost 
an €8.5 million subcontract for a healthcare facility being developed in Russia.  
The loss of business confidence and trade disruptions have thus contributed to business restructuring and job losses, 
mainly but not exclusively in eastern European countries. The issue has been raised in the European Parliament as MEPs 
have sought to protect or compensate certain industries with the support of EU funds. They have asked, for instance, 
whether the European Globalisation Adjustment Fund (EGF) might be used to support companies that have been 
experiencing difficulties as a result of a loss of sales following the Crimean crisis. At present, the specific mandate of the 
EGF – to offer support to individuals made redundant as a result of structural changes in global trade or as a result of the 
global financial crisis – does not foresee interventions as a result of trade disruptions caused by temporary international 
sanctions. Also, as the European Parliament briefing indicates, the structure of agricultural employment makes it likely that, 
in the vast majority of cases, the threshold for EGF assistance of 500 cases in one single company would not be met.
Sources:	
European External Action Service (2014), Restrictive	measures	in	force	(1.25	MB	PDF).
European Parliament (2014), The	Russian	embargo:	impact	on	the	economic	and	employment	situation	in	the	
EU	(725	KB	PDF). 
About the ERM 
The European Restructuring Monitor (ERM) is a unique EU-wide dataset on larger-scale restructuring events. It monitors 
the announced employment effects of restructuring in the EU28 and Norway.  The ERM is updated on a daily basis 
and data can be used for statistical analysis. It relies on reports in selected media titles (three to five per country). 
All announcements involving the reduction or creation of at least 100 jobs, or affecting 10% of the workforce in sites 
employing 250 people or more, are taken into account. Given that the ERM relies on selected media titles, its coverage 
of restructuring activity in each Member State is indicative and cannot be considered representative. Nevertheless, ERM 
data do generate a good picture of labour market restructuring, which is broadly consistent with data coming from more 
representative sources such as the European Union Labour Force Survey.  The data for this report were extracted on 7 
January 2014.  As the ERM continually updates cases in light of new information on recent cases, data reported here may 
not correspond exactly to later extractions. For previous editions of the quarterly, more details of ERM data collection 
and other ERM-related publications, please refer to the website at: 	
http://eurofound.europa.eu/observatories/emcc/erm
This issue is based on contributions from Sara Riso, Charlotte Ruitinga, John Hurley, Irene Mandl and Andrea Broughton (ERM EU-level correspondent).
EF/15/05
European Monitoring Centre on ChangeEMCC | 


ERM Quarterly, Quarter 4, January 2015

In this issue: • Restructuring support measures in focus: Public employment incentives • Russian sanctions and company restructuring • Case in focus: Lloyd’s Banking Group (UK)EF_ERM_Quarterly.pdf: 47 downloads, before Oct. 1, 2020

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