Opinion of the Economic and Social Committee on 'Territorial employment pacts` (98/C 407/13)

On 11 December 1997 the Economic and Social Committee decided, in accordance with its Rule 23(c), to draw up an opinion on 'Territorial employment pacts`.

The Section for Regional Development and Town and Country Planning, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 17 July 1998. The rapporteur was Mr Masucci.

At its 357th plenary session (meeting of 9 September 1998) the Economic and Social Committee adopted the following opinion by 108 votes to two, with four abstentions.

1. Introduction

1.1. The Commission initiative to promote Territorial Employment Pacts (TEPs) was launched in 1997. It was widely welcomed and the Member States committed themselves to take part.

1.1.1. With the selection of the ten British projects, all countries have now made their submissions. In all, 89 TEPs will receive ECU 200 000 of Community funding for technical back-up and will be subject to monitoring.

1.1.2. In order to highlight the exemplary, experimental character of the initiative, the Commission, rather than merely providing funding, has decided to follow up the launch of the TEPs with a search for the instruments which can best combat unemployment and allow optimum use of the Structural Funds over the next few years.

1.2. As part of this ambitious programme, the Commission has asked the Committee to play an active part in promoting the pacts, within the framework of an inter-institutional Forum, which remains to be launched.

1.2.1. The Committee has already drafted and debated an information report, which aimed 'to promote the pacts by providing information on the methodology for framing the pacts and on the implementing procedures`.

1.2.2. The report stated that 'territorial development is set to become an increasingly important factor in the life and competitiveness of the EU, as its key features are democratic participation, involvement of the social partners, the training of new managers, involvement of ordinary people in the development of their areas and in the organization of production and commerce, and social solidarity.`

1.2.3. The Committee also emphasized that the decision to follow closely and monitor the TEPs 'should form part of a wider employment strategy encompassing macroeconomic and employment policies, the operation of the labour market and regional employment growth.

This strategy must coordinate the national, regional and local levels, with a view to encouraging and training new businessmen and women, especially young people; making the best possible use of financial resources; creating new products and services, both for business and for individuals; and generating real, additional lasting jobs.`

'Coordinating these resources and combining them with private ones can maximize their impact and produce a multiplier effect. The pacts must represent a quantum jump in project planning and implementation, in effective use of resources, and results as measured by the number of new jobs.`

'The pacts must be genuinely and realistically geared to the creation of new jobs. Genuinely, in the sense that they do not simply create favourable conditions but actually provide practical job opportunities; realistically, in the sense that their objectives must be commensurate with the resources available, in the light of the specific circumstances of the area concerned.`

'Monitoring and the dissemination of good practice will not produce the perfect template for a pact, but they can help the work of those framing the pacts because they will provide a better idea of the challenges, opportunities and limitations of participation, innovation and the "bottom-up" approach.`

1.2.3.1. The report paid particular attention to partnership, as the natural vehicle for the social partners which the Committee represents.

1.2.3.2. It also recommended that Committee activities - both pre- and post-Forum - should focus on three objectives in particular:

- extensive information and promotion of TEP strategy, as providing the ideal opportunity for a partnership for economic and social development;

- specific monitoring of the implementation of the partnership;

- assessment of ways of harnessing innovative actions to create real, lasting jobs, by drawing on the potential offered by the 'new sources of employment` resulting from local development.

1.3. The present opinion aims to add to the debate on these objectives, and identify positive actions which the Committee could implement in the run-up to the Forum, and throughout the back-up stage envisaged for the pilot pacts.

2. Initial monitoring of TEP content

2.1. Last November, the Commission presented some of the contents of the selected TEPs (), which involve a variety of particularly interesting, concrete measures.

2.1.1. Several projects focus on diversification of the local production system, creating SMEs and promoting regional and local products (the Molise and Alto Belice pacts in Italy, which aim to create new firms and a quality seal to raise the profile of local agricultural produce; the Clabecq pact in Belgium, with a support fund providing venture capital for SMEs).

2.1.2. In the fields of vocational training and getting people into work, the trend is towards a tailor-made route (Schirmeck pact in Alsace, Westmeath pact in Ireland, Flevoland pact in the Netherlands, with individualized training and measures to get the unemployed into work). The Marinha Grande pact, in Portugal, focuses on quality in the traditional glass-making industry.

2.1.3. Several projects aim to promote new types of job, such as the Pointe des Ardennes, Roubaix and St Herblain pacts in France, which focus on tourist industry services and raising the profile of their cultural heritage; whilst the Lahti pact in Finland plans to set up a specialized centre to provide services to the elderly and disabled.

2.1.4. There are also attempts to galvanize unemployment and social welfare benefits by transforming them into 'welfare to work` schemes, as in the Jämtland pact in Sweden, and the Barnsley pact in Britain.

2.1.5. Gender equality is another important objective for many pacts, such as the Spanish Asturias pact, which includes measures for businesswomen. Meanwhile, in Austria, the Vienna pact provides help in getting people back to work after parental or maternity leave.

2.1.6. Finally, working practices and working time are also being given close attention, for instance by the Bremen pact in Germany and several French pacts, including those in Ussel and Albertville, which aim to provide seasonal workers with employment throughout the year.

2.2. As the Commissioner responsible for regional policy, Mrs Wulf-Mathies, has pointed out, all the projects pursue the two fundamental objectives of the TEPs: 'attacking the roots of the problem, i.e. creating real employment opportunities at local level, and generating new ideas by sharing experience` ().

2.3. During the first months of this year, the action plans for almost all the TEPs were finalized. The Commission is now studying the details prior to giving its final approval and releasing funds.

2.3.1. Interim expert reports () provide some encouragement and show that welcome progress has been made. However, there are also many shortcomings and inadequacies, owing to the lack of a 'cooperation culture`, the sheer novelty of the initiative for some countries, and organizational, management and financial problems.

2.3.2. The positive features are:

- a sound diagnosis of the socio-economic background and the jobs crisis; the real boost for innovation triggered by the TEPs, in terms of content and planned action;

- the strong emphasis on human resources and training;

- healthy interest from SMEs, cooperatives and the non-profit sector.

2.3.3. The experts point out:

a) regarding content, that:

- TEP employment objectives are not quantified;

- many of the proposed actions are insufficiently developed;

- there are no results indication systems and intervention is not quantified;

- the action plans are not sufficiently detailed;

- there is no indication of available funding or of which funding sources must be activated; similarly, there is a general reference to co-funding, but no indication of the sums involved;

- there are no timetables for the measures and actions;

- there is no reference to the type of workforce needed;

- the section on training measures does not say how students will be selected.

b) regarding the partnership, that:

- the partnership is weak, owing to the lack of a culture of cooperation and joint-initiative;

- there is no culture of negotiation and consultation;

- there is no local development culture;

- there is a lack of information and experience regarding the potential benefits of the TEPs at local level;

- the partnership is heavily skewed towards the national and local authorities;

- in some cases, even where private initiative is included, it is low-profile, and in some countries, there are almost no private players involved in setting up the TEPs;

- while SMEs are included, major industry is completely absent;

- university research departments are involved to a small degree only.

c) regarding funding, that:

- there is a lack of information regarding funding and national, public and private backers.

d) regarding procedures, that:

- there is no definition of the legal status of the partnership signatories' obligations;

- it is difficult to achieve a 'bottom-up` approach;

- local political wrangling has led to repeated delays, with the content of the TEP being sent back to the drawing board.

2.4. These difficulties and shortcomings have considerably delayed the TEPs in some countries, and many are still seeking funding. Experts believe that several TEPs will be unable to solve these problems before next year.

3. Improved information and promotion

3.1. In the run-up to the conference - which will present the experience of the 'template` TEPs to the outside world - and in anticipation of the new Structural Funds regime which includes the option to channel funding through the TEPs, the pacts are increasingly the subject of studies, analysis and debate in the Member States. This is also in response to requests from the Commission, governments, national Economic and Social Councils and the social partners.

3.2. There is no doubt that the Commission's initiative has sparked particular interest in the territorial pacts, and the debate now extends beyond the confines of specialist discussion, spilling over to include the institutions, political and economic life, and civil society.

Extension of the horizontal partnership - one of the main objectives underpinning the territorial pacts - has been instrumental in informing and involving the latter.

3.3. There are, however, several reasons to believe that information and promotion efforts should be more intensive, more systematic and better targeted.

3.3.1. For example, the Commission's dedicated website () has not yet produced satisfactory results.

The electronic Forum is underused, in qualitative terms at least: the exchange of experience and information which is one of its objectives is still not under way. The key players, i.e. the TEPs, are notable by their absence: it seems many of them have still to understand the importance of pooling experience, problems and good practice.

3.3.2. The factsheets which the Commission has compiled to explain the 89 pacts vary in scope and depth. Some give accurate details of the content and objectives of the Pact, the partners involved and funding arrangements. Moreover, it is possible to link up with the Pact via a dedicated website. Others, however, are summed up in a just a few lines of general information.

3.3.3. Details of the thematic seminars held on education and training (Östersund, Sweden), on services to persons and in urban and rural areas (Oporto, Portugal), and on culture, the environment and tourism (Viareggio, Italy), can, however, be accessed via the website.

3.3.4. There is ample, detailed information on the seminars held in Rome (May 1997) and Bremen (January 1998) on Good Practice, attended by locally-appointed project coordinators.

3.3.5. On the other hand, the website lacks any reference to the opinions and proposals drawn up in recent years by the Committee (and by other Community institutions), which has produced a large body of work on the pacts, the partnership, the role of the public authorities and local development schemes.

3.4. The Committee urges the Commission to publish - as a matter of urgency - a document covering all the TEPs which are receiving funding, and to update the website to provide - for all approved pacts - a detailed, thorough picture of project strategy, measures envisaged, social groups concerned, partnership and technical back-up, and anticipated results.

3.5. However, the Commission has announced a very welcome initiative for October 1998. An Exchange Mart will be set up at the Turku (Finland) seminar, both to raise the profile of tried and tested, quality projects which can be replicated elsewhere; and to enable TEP leaders to compare experience on a bilateral basis.

3.6. Commission departments are selecting some 20 'template` pacts, from a shortlist drawn up by experts on the basis of the extent to which they can be 'transferred` and applied elsewhere. The projects cover a dozen job-creation schemes, and have been tested in European and national programmes.

3.7. The seminar heralds what will become an increasingly intense and widespread process: the transfer of tried and tested methods to the TEPs. Coordinators will be able to make a direct comparison of real projects and actual experience, and discuss any hitches, achievements, and good practice they wish to promote.

4. Strengthening the partnership

4.1. One of the main objectives of monitoring the 89 pacts must be to strengthen the partnership, identify any shortcomings and offer solutions.

This is no easy task, as there is no single partnership model.

As was amply demonstrated at the Rome seminar, and has been reiterated in several Committee opinions, different models are appropriate to different situations and are the result of different local needs ().

The differences concern the way the partnership is launched and developed, its membership, local representation, and the reasons why the various partners participate, in terms of expected benefits and value added.

4.2. Special attention should be paid to involving private partners in developing a local area through the creation of sustainable, non-subsidized jobs.

4.2.1. There are several reasons why it is important to involve private partners ():

- to provide funding

- to determine skilled labour requirements;

- to suggest the best type of public support for firms;

- to offer new ideas and original views on how the public and private sectors can create new firms and new jobs;

- finally, the very fact that they are a legitimate part of the process gives the partnership an authority it would not have if made up of public partners only.

4.2.2. Private firms are increasingly keen to take part in local development initiative partnerships, as they have understood the need - both in their own interest and for more general economic reasons - to create opportunities for upskilling and boosting support for firms.

4.3. In addition to the public and private partners, there is also the 'non-profit` sector, whose role and effectiveness within the TEPs will be discussed below. It is important to highlight, here, how important the sector has become to the local economy, creating new jobs in response to the specific needs of the inhabitants of a certain area. This is why the non-profit sector must be part and parcel of the TEPs.

4.4. Universities and institutes of higher education have also linked up successfully with public administrations, the social partners, and the private sector. As part of the TEP in the industrial area of Hennuyer in Belgium, three universities have carried out a forward study of the pact's objectives. All told, however, only nine TEPs (excluding the British pacts, whose partnership details were not available at the time of writing) have involved the universities.

4.4.1. As in Hennuyer, the aim is not to add to the already considerable archives of studies and statistics research into unemployment or employment policy, but to harness academic skills in the creation of a coherent blueprint for action.

4.5. The more time and effort is devoted to the preparatory phase of the TEP, the greater the chances of success.

The TEP partnership poses new problems for all the partners, including the public authorities, private-sector companies, the social partners and the non-profit sector.

The public authorities are faced with new problems, and a modus operandi which is foreign to them; the social partners must build on their cooperation role, to become genuine partners in the development process; research and training institutes are obliged to test their theories in the field.

This heightens the need for adequate preparation in the preliminary phase, and for continuous support - including information and training - for the TEP partners.

4.5.1. Further thought should be given to the completely new approach which firms (usually SMEs) and employers' associations on the one hand, and the unions on the other, will have to adopt with regard to the TEPs.

The present corporate and union culture could be affected, and very positively at that: instead of the natural response of thinking solely of the interests of his firm, the employer will get used to communicating and operating in the wider interest of the development of a whole local area; unions will show their sense of responsibility by taking part in managerial-type and cost benefit-driven decisions.

A useful overlap of roles thus results, with a very positive impact on cooperation regarding all other problems concerning the regional economy, and on industrial relations per se.

4.6. Another feature of the partnership which could be enhanced is cooperation between the stronger and weaker regions of a country.

This would be a new partnership, investing the existing, horizontal partnership not just with a measure of regional solidarity, but also with economic and social common sense.

4.6.1. Almost all Member States have areas with virtually full employment, and others with unemployment black-spots, particularly as regards young people and the long-term unemployed.

The TEPs could provide partnership models for the social partners in the stronger and weaker areas, supported by central government and the regional and local authorities, which, rather than transferring workers to employment-rich areas, would bring work to the labour force.

This should be done within a framework of close cooperation, and include funding for firms which agree to take part, intensive training courses for workers - in part with a view to developing a new kind of enterprise - and exchanges of skills and experience between the public authorities.

5. A new labour market

5.1. The TEP projects aim to create a wide range of new jobs in sectors where there is new scope for employment. This was also one of the aims of the interim review of the Objective 2 programmes in 1996, and the assessment of the programmes under 'B2-605 - pilot projects for the benefit of the long-term unemployed`.

National, regional and local authorities are showing increasing interest in local development initiatives. However, the new climate the initiatives are beginning to reflect - or at least provide a blueprint for - clashes with entrenched practices, legal complications and existing organizations. This is true of the labour market.

5.2. The combination of local development schemes - targeting sources of employment in the non-profit and public/private sectors - and employment measures, including financial measures, ends up creating a parallel labour market.

5.3. If the main aim of the TEPs is to boost development and create sustainable employment, it is fair to ask whether the type of jobs created actually correspond to this objective.

Objections are often made on the grounds that local development schemes, owing to the way the jobs are created and to the sectors where they are created, simply prop up the local economy rather than create real growth.

5.3.1. It is true, of course, that local development schemes need public funding in the start-up phase. But it is also true that they can plug niche market gaps, and become financially independent.

The initial results of the pilot projects under Article 10 of the ERDF - 'New sources of employment` - would seem to confirm this positive view ().

First of all, this type of intervention meets needs which are not met - or at least satisfactorily met - by anyone else. As such, they correspond to real demand.

Moreover, since they are created in response to these needs, they are able to adapt to them perfectly: the jobs thus created are 'tailor-made`, to use a handy expression found increasingly in the literature.

5.3.2. The 19 employment fields which have been identified in recent years - and which can obviously be added to as new demands appear - truly reflect the emerging needs of local communities; the jobs created must satisfy these needs, providing job profiles and organizational arrangements which are tailored to local circumstances.

These features can help make the schemes self-sufficient and capable of holding their own.

5.4. Another positive aspect should be taken into account: local development schemes stimulate local participation.

5.4.1. For instance, helping to run a small cooperative can be a far better training than filling some temporary public service post, and undoubtedly more valuable for both the worker and the community, than claiming unemployment benefit.

5.4.2. Local development schemes and, more generally, the TEPs, can thus help the labour market adapt to local conditions and alter the relationship between the unemployed and welfare.

5.5. Alongside the traditional labour market is what is known as the 'intermediate labour market` (), i.e. schemes providing the unemployed with jobs which, although initially subsidized, will eventually provide them with a livelihood or inculcate marketable skills.

5.5.1. This second labour market - which, being both transparent and supported, cannot be equated with the black economy - is only acceptable providing it really is just an 'intermediate` stage; in other words, either it must provide the worker who has acquired new employment skills with a bridge to the traditional labour market, or ensure the new economic activity can hold its own on the market.

If this is not to lead to a new form of exploitation and deregulation, then it is vital the process be policed and regulated in liaison with the social partners and the public authorities, through collective bargaining and social legislation.

5.5.2. It follows that employment offices and training schemes will need a thorough overhaul. The TEPs could provide a forum for discussion, analysis and intervention in this area.

6. The role of the Economic and Social Committee in the TEPs

6.1. In accordance with a request from President Santer, the Committee should monitor the way the TEP partnerships operate.

This cannot be done continuously, given the limited human and financial resources currently at the Committee's disposal.

6.1.1. However, the Committee must take up the challenge. We must identify the best way for the Committee to contribute to monitoring, whilst confining this contribution to an interim report and an audit.

This could be done by taking oral evidence on macro-regions, from the social partners, the public authorities and all other TEP partners.

6.1.2. The process could culminate in a 'European Partnership Forum`, to be attended by all signatories to the pilot pacts.

The forum could look at the difficulties experienced in launching the partnership; the quality of participation; any bureaucratic, political or cultural obstacles which affect the partnership; the relationship between the public and private partners; the role of the public authorities, etc.

6.2. Another issue is assessment of the jobs created.

6.2.1. Detailed job creation figures are vital to any adequate assessment of TEP effectiveness.

It will be difficult - or even impossible - for the Committee to make a first-hand assessment of the real, sustainable jobs created by the TEPs.

This is true primarily for the reasons outlined above, i.e. the lack of human and financial resources - which are even more important when surveying and assessing such a large number of projects in so many different areas.

Another reason is that even the Commission's own departments will have trouble carrying out an assessment of this type.

6.2.2. Papers produced by the Forward Studies Unit () refer time and again to the difficulty of establishing a statistical criterion for the job-creation impact of local development schemes in sectors such as cultural heritage or the environment.

This is confirmed by Commission documents on the Structural Funds, as the Committee pointed out in its Opinion on the Communication on the new regional programmes (1997-1999) under Objective 2 ().

There are no easy solutions. Experience with the Structural Funds has shown that assessment procedures differ, or are even non-existent.

6.2.3. The Commission should fine-tune its calculation methods and compile an annual TEP report which provides a thorough analysis of employment creation, particularly in terms of sustainable jobs.

This would enable the Committee to carry out an in-depth analysis, which would be even more useful if combined with the findings of the 'Partnership Forum`.

7. Conclusions

7.1. The advantages of current endeavours to turn the TEPs into a regular programme instrument emerge clearly from an analysis of the action plans and their shortcomings - including delays in implementation. They are making it possible to identify the major hurdles which must be cleared to pave the way for the next generation of TEPs (2000-2006).

7.1.1. As already stated, the ESC reiterates that the pacts will clearly provide 'a valuable opportunity to coordinate and intermesh the various public and private forms of Community, national, regional and local support, focusing them on a coherent strategy for job creation.`

7.2. First of all, it must be said that the tight deadlines initially set for selection, and the need to comply with the Commission's criteria for effective pilot projects, have not allowed for a truly 'bottom-up` approach.

7.2.1. Many applications were rejected at national level, but once the TEPs have become regular programme instruments, this hurdle should be easier to clear.

7.2.2. This is perhaps why the initial partnership-building and content selection phase has become all the more important. However, it is - and will remain - an awkward, difficult stage.

7.2.3. Its significance varies from pact to pact, just as there can be considerable differences in the size and complexity of the areas, number of inhabitants and the content of the action plans.

7.2.4. Accordingly, the fixed amount of ECU 200 000 for technical assistance no longer seems appropriate: it should be decided on a case-by-case basis.

7.3. In the Committee's view, it is vital to establish sustainable communication and partnership structures so that local players can discover and optimize economic and employment potential. The schemes promoted under this procedure should take precedence over short-term projects when allocating EU funds.

7.4. Because of their role as a local development instrument, the TEPs must be consistent with regional and national development strategies, and in particular with employment policies. It is therefore desirable to ensure that they are not isolated, by allowing pact coordinators to participate in monitoring committees and by promoting regular meetings and exchange of information.

7.5. The Committee endorses the Commission's decision to hold a seminar in October to act as an Exchange Mart for the TEPs, and promote successful projects. The Committee feels that such seminars should be held regularly, and declares its willingness to bring an input of analysis and suggestions - particularly concerning the partnership and employment - to the proceedings.

7.6. In view of the interest sparked by President Santer's initiative, the Committee believes that the TEPs' employment creation potential is much greater than initially thought, and that local and regional authorities, the social partners and other interest groups should be provided with more information on a regular basis.

Brussels, 9 September 1998.

The President of the Economic and Social Committee

Tom JENKINS

() IP/97/984 of 13 November 1997, press release of the press conference held by Commissioner Wulf-Mathies to present an overview of initial progress on the 89 TEPs.

() This information is taken from the interim reports submitted to 'Europe Innovation 2000`, which the Commission instructed to provide technical back-up for the TEPs.

() Http://europa.eu.int/comm/pacts

() Seminar on Good Practice, Rome, May 1997.

() Seminar on Good Practice, Bremen, January 1998.

() Second report on LDEIs, SEC(98) 25 of 8 January 1998, p. 9.

() The findings of the Wise Group are particularly interesting here; the group promoted the idea of the intermediate labour market as a temporary solution for the long-term unemployed and unskilled workers, to enable them to ease themselves back into the labour market. (cf. 'Second Report on LDEIs`, op. cit.).

() Cf. Second Report on LDEIs, SEC(98) 25 of 8 January 1998.

() OJ C 235, 27.7.1998.