Opinion of the Economic and Social Committee on "The regions and the new economy: Guidelines for innovative actions under the ERDF in 2000-2006"

(2001/C 221/16)

On 24 and 25 January 2001, the Economic and Social Committee, acting under Rule 23(3) of its Rules of Procedure, decided to draw up an opinion on "The regions and the new economy: Guidelines for innovative actions under the ERDF in 2000-2006".

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 15 May 2001. The rapporteur was Mr Vinay.

At its 382nd plenary session (meeting of 30 May 2001), the Economic and Social Committee adopted the following opinion with 122 votes in favour, no dissenting votes and one abstention.

1. Introduction

1.1. The Committee, which represents many of those called upon to play a significant role in devising and implementing the new innovative actions, intends this opinion to be a practical contribution, looking in detail at the interconnections between the programme and policies on cohesion, employment and, obviously, innovation.

1.2. There are a number of changes in the approach taken for the new innovative actions with respect to previous priorities and arrangements for financial management. The strategic themes have been reduced from eight to three with an approach based no longer on individual projects but rather on programmes. These must tie in with Objective 1 and 2 programmes part-financed by the ERDF, while also complementing measures financed by the ESF under the same objectives.

1.2.1. The budget is 0,4 % of annual ERDF funding, which is equivalent to approximately EUR 400 million for 2000-2006, not including potential funding for the same period under the flexibility instrument.

1.3. The themes of the innovative actions in the 1994-1999 period centred on: the promotion of technological innovation (RIS - Regional Innovation Strategies); the information society (RISI - Regional Information Society Initiative); new sources of employment; culture and heritage; urban pilot projects; spatial planning (Terra); internal interregional cooperation (Recite); and external interregional cooperation (Ecos-Ouverture).

1.3.1. The new themes, reduced by the Commission to three for reasons of simplification and with a view to concentrating resources, are designed to promote innovative methods and practices in the fields of: regional economies based on knowledge and technological innovation: helping less-favoured regions to raise their technological level; e-EuropeRegio: the information society at the service of regional development; and regional identity and sustainable development: promoting regional cohesion and competitiveness through an integrated approach to economic, environmental, cultural and social activities.

1.4. The resources are divided among three strands: the part-financing of regional programmes of innovative actions and of the pilot projects deriving from them; accompanying measures to support exchange of experiences and the creation of interregional networks; and the organisation of competitions aimed at identifying and developing best practice.

2. The basic elements of the Commission's choices

2.1. The priority themes chosen tie in with the European Union's strategy as defined by the Lisbon European Council, the aim of which is to develop an economy based on knowledge, competitiveness, innovation and full employment. In the most under-privileged regions, promoting programmes that combine research and experimentation, especially in the sphere of the new economy with all its technological implications, can be crucial for sparking a virtuous circle of development, all the more so since these regions invest least in the three strategies chosen.

2.2. The Commission also stresses the importance for companies, especially SMEs, of knowledge, know-how, and the ability to anticipate or adjust to technological changes in the new economy. Investing in the human factor and promoting and supporting training and lifelong learning are indispensable for fuelling regional innovation and competitiveness and sustaining it in the longer term.

2.3. Although they are consistent and tie in with the programmes part-financed by the ERDF, the innovative actions should not duplicate those measures but rather influence them positively in a context of experimentation which, though in essence more risky, can be the way to identify new strategic markets in the regional economy. It is important to be aware that the programmes under the innovative actions could have a knock-on effect on the entire region, even in areas not covered by Objectives 1 and 2.

2.4. In the Commission's view, one fundamental aspect of the innovative actions is the creation of a stronger partnership involving the authorities responsible in the regions, the authorities responsible for the programmes under Objectives 1 and 2, the ERDF and the private sector.

2.5. When describing possible programmes for the first theme, the communication makes the point that, with increasingly strong demand for competitive development, in relation to the more advanced European regions and in the context of market globalisation, innovation can offer the competitive advantage so crucial to the more vulnerable regions.

2.6. The second theme focuses on promoting the widespread use of information technologies to serve companies, the public and administrations, using an approach that ties in with the strategy and objectives of the eEurope initiative. In short, this means providing on-line access for individuals, households, businesses, schools and administrations, introducing the digital culture, strengthening consumer confidence in on-line commerce, furthering social integration and boosting social cohesion.

2.7. The third priority is designed to encourage the regions to turn their strengths to account and develop a sustainable and competitive economy, by drawing on cultural, environmental and infrastructural features, or specific skills.

2.8. The various programmes will be submitted to the Commission with a strategy agreed in advance between the various regional operators, to provide the frame of reference for launching individual projects. They may be based on one of the three strategic lines or a combination of them. A region may present no more than two programmes in the 2000-2006 period, and the second only after the first has been completed.

2.8.1. The Commission will appraise the programmes for co-financing on the basis of ten specific elements:

- the quality of the proposal, in particular the clarity of the approach, the innovative nature of the work programme and the targeting of resources on a limited number of actions;

- the potential influence on programmes under Objectives 1 and 2 part-financed by the ERDF;

- the feasibility of the proposal and consistency between the goals set and the resources allocated;

- the expected impact in the Objective 1 and 2 areas;

- the private-sector contribution to the financing of the programme;

- the commitment and quality of the regional public-private partnership in preparing the regional programme of innovative actions and ability to enlist other regional and local agents, particularly small firms;

- arrangements for cooperation between the competent authorities in the region responsible for the preparation and implementation of the regional programmes of innovative actions and the managing authorities for programmes under Objectives 1 and 2 part-financed by the ERDF;

- expected sustainability of the actions when the regional programme of innovative actions has finished;

- transferability of the results to other regions;

- synergy and compatibility with the other Community policies such as research, the information society, enterprise, the environment, rural development (common agricultural policy), equal opportunities and competition; consistency with the Commission guidelines for programmes in 2000-2006.

2.9. From 2002, the Commission is to present an annual report on progress with innovative actions to the European Parliament, the Committee for the Development and Conversion of Regions, the Committee of the Regions and the Economic and Social Committee.

3. General comments

3.1. The Committee welcomes the latest proposals for a programme of innovative actions and fully agrees that programmes promoting the widespread introduction of innovative capacity and the technologies of the new economy to all sectors of production and society are crucial to regional development. Moreover, it stressed only recently(1) that the capacity to use information and communication technologies can determine the success of a possible development or the loss of further jobs in a particular area.

3.1.1. In addition, the best focus for innovative action programmes in the three main source areas of growth - entrepreneurship, training, and the proactive involvement of public bodies, cultural and research institutes and the social partners - is the local level, especially in disadvantaged regions. Geographical proximity, closer understanding of the difficulties inherent in the social and productive fabric, and the increased responsibility of local authorities arising from the decentralisation policies being applied in all EU countries, are all factors that contribute directly to forms of effective participation. The Commission's innovative action programme provides another major opportunity for such participation.

3.1.2. Participation is invaluable in basic organisational terms and also economically and socially: it expands the resources available, increases the flow of ideas, and fuels social cohesion.

3.2. The new requirement of consistency with the other forms of ERDF action in the same areas and complementarity with programmes part-financed by the ESF acts as a further stimulus rather than a restriction. It provides an opportunity, on the one hand, to take on the risk factor always inherent in an experiment and, on the other, to put an idea into practice with faster results, while fitting in with other local development initiatives.

3.3. The Commission states that it was largely if not totally successful in its innovative actions during the 1994-1999 period. However, a complete, in-depth evaluation of their impact or of the durability of their results would be useful. The communication gives details, as mentioned above, of the programme appraisal criteria, but there are no indications of a similarly detailed final evaluation. This is one point on which the Committee intends to make a few proposals.

3.4. Although reducing the number of strategic themes is beneficial in ensuring the various pilot actions are not too thinly spread and in linking up very closely with EU technological innovation, information society, and research and development policies, it has meant giving less than due attention to a theme which is now mentioned just briefly in one of the programme appraisal criteria: "expected impact in the Objective 1 and 2 areas ... creation of long-term quality jobs ...".

3.4.1. The employment issue is mainstreamed into all EU policies and is in essence the final objective of every development initiative, whether creating employed work or supporting entrepreneurial initiatives. Therefore, although the new approach has done away with the previous strategic theme "new sources of employment", the theme of creating new job opportunities through the innovative actions nonetheless deserves fuller attention than is given in the communication. Moreover, the Commission recently stated that it wanted to promote pilot measures to integrate the employment dimension into all local policies, and to assess their value added in terms of jobs created(2).

3.4.2. This is even more important for regions and areas that are largely cut off from the new technologies and the new economy, regions where there is sometimes the fear that the end of the old system of work organisation may mean the end of work full-stop.

3.5. The decision to favour an approach that supports programmes rather than projects and to entrust responsibility for managing the innovative actions to the same bodies managing ERDF and ESF funding is justifiable from an organisational point of view. Politically, however, it does away with the minimal opportunity for a direct link between the public and the European institutions that was one of the advantages of past practice.

3.6. When the last programme of innovative actions was launched, the Committee welcomed the initiative but felt that the appropriation of MECU 270(3) was too low. The Commission, which financed 350 projects in around 40 regions during the funding period, has stated unofficially that from 2001 to 2006 it intends to finance programmes in approximately 100/150 regions. The current overall appropriation is, as mentioned above, EUR 400 million and the various programmes will be granted support ranging from EUR 0,3 to 3 million.

3.6.1. On this occasion too, given the potential importance of innovative actions for trying out new approaches to development in a context that is by definition critical, this sum seems somewhat inadequate; and the danger is that the lack of resources allocated and the complementarity with other structural measures (though justifiable), will mean in practice that these innovative actions will be treated as a mere accessory to the other programmes.

4. Specific comments

4.1. On the subject of innovation, the Commission stresses that SMEs form the basis of the regions' productive fabric and that their chance of success is determined largely by their capacity for innovation. Later, on the subject of the potential generated by the information society, it states that companies, and SMEs in particular, must be able to harness that potential in order to grow more competitive.

4.1.1. Obviously, no one would argue with those statements, but the generic definition of SMEs conceals one of the basic features of the Union's entrepreneurial make-up. Approximately 98 % of private non-agricultural companies are small enterprises and 93 % of them are micro-companies (fewer than 10 employees)(4). Together they employ approximately two thirds of the entire EU work force and every year they create between 60 and 80 % of new jobs. In the communication, micro-companies are just one possible objective of the programmes under the third theme, but in the ESC's view it is unacceptable to side-line them in this way.

4.1.2. In June 2000, the European Council meeting in Santa Maria da Feira adopted the European Charter for Small Enterprises, implicitly signalling an end to the catch-all concept of the SME. In past years, the Committee has issued several opinions on the strong, vital and specific role of small companies that do not fit neatly into the pattern traced by policy initiatives for companies jumbled together by a generic definition of SMEs(5).

4.1.3. As it is often the more structured companies, and medium-sized companies in particular, that exploit Community funding, special and more focused practical attention on small companies would be useful, especially under the innovative action programmes. More specifically, the Committee has already proposed that business and entrepreneurship policies should make explicit reference to the European Charter for Small Enterprises(6). The communication meanwhile includes consistency with Commission guidelines for programmes in 2000-2006 among the criteria for evaluating programmes for selection.

4.2. Among the players to involve, the communication mentions the public sector, bodies responsible for RTDI, businesses, universities, advisory services, financial markets and other technology partners. Throughout the text, the term "private sector" is used to indicate the business sector. It is not clear whether this definition is intended to include what is commonly known as the social economy, which not only is very dynamic in pinpointing and offering new additional, alternative or accompanying services alongside those provided by the public sector, but is also specifically active in fields that have a major impact on social cohesion and are often linked to the information society and new technologies, as well as environmental sustainability(7).

4.3. The poorest sections of the public in the various EU countries (without going deeper into the commonly accepted technical definition of poverty) are oppressed by problems linked to the employment situation, demography and housing. However, as the recent report on economic and social cohesion(8) points out, in the information society revolution it is likely that low levels of education, i.e. a lack of training in the use of ICTs, will become a more critical factor than poverty measured in economic terms.

4.3.1. Lifelong learning is extremely important and valuable for employment, both in the new economy and in the economy as a whole, but great care must be taken to ensure that the information society does not effectively marginalise older people who no longer work and therefore miss out on the opportunities offered by school and employment. The Committee has already recommended developing methods and strategies to promote digital literacy among specific age groups(9).

4.3.2. Furthermore, the partnerships needed for regional information society development strategies are broader than those indicated in the communication. Discussing the RISI innovative actions under way at the time, the Commission itself once stressed(10) that the most innovative aspect was the institutional mechanisms through which the strategy was developed, i.e. the partnership between regional and local institutions and the associations most representative in the sphere of training and education bodies, unions, chambers of commerce, cooperative movements and the voluntary sector.

4.3.3. In the same communication, in relation to the development of practical applications of information technologies and other information and training activities, the Commission stated that new forms of work organisation should be developed, which, accompanied by training and retraining measures, were vital steps in the process of ushering in the information society.

4.3.4. In another recent document(11), on the subject of education for an entrepreneurial society and high-quality new jobs, it pointed out that training and continuous training programmes should be custom made, in cooperation with the social partners, especially where SMEs are concerned.

4.3.5. Nowhere in the Commission communication are the social partners given a part to play. The promotion of equal opportunities (incidentally, always mentioned alongside competition), in-company training, and new forms of work organisation are seemingly areas void of consultation or negotiation. The Committee clearly hopes that the practical application will differ from the letter of the provision. In the above-mentioned report on cohesion(12), the Commission emphasised the active role of the social partners in lifelong training and social integration policies, but now that role is completely ignored. Since the success of this initiative will depend largely on the breadth and quality of partnerships at local level, this mistake will have to be put right when the schemes are implemented.

4.4. Obviously, innovation is at the core of the objectives set by the provision. It is also central to the kind of EU development outlined by the Lisbon European Council and is all the more crucial for under-developed regions, be the reason for their situation economic, geographical or other.

4.4.1. It is useful to note that the official definition of innovation comprises "the renewal and enlargement of the range of products and services and the associated markets; the establishment of new methods of production, supply and distribution; the introduction of changes in management, work organisation, and the working conditions and skills of the workforce(13)". Once again, the social partners have a fundamental role to play, but it is necessary to analyse how the innovative actions financed by the ERDF tie in with the EU's overall policy on innovation.

4.4.2. The fifth RTD framework programme, which closes at the end of this year, named innovation as its basic objective and included a horizontal programme specifically designed to promote innovation in SMEs. The recent Commission communication "Innovation in a knowledge-driven economy(14)" states that a broad strategy is required with firm links to other Commission initiatives, notably regional policies and, in the light of the recently approved European charter, it calls for the best possible environment for small companies and entrepreneurship. Lastly, it states that on average only 13 % of companies cooperate with universities or research institutes.

4.4.3. In response to these communications, the Committee hopes that the programme evaluations will pay attention to the potential link with innovation policy as a whole. Furthermore, in view of the objectives and given the rareness of interactions between academic centres and companies, the scale of the overall financing for innovative actions at regional level appears very limited and restrictive.

5. Proposals and recommendations

5.1. In the light of the limited resources available, there is a danger that extending access to funds for innovative actions to all regions could weaken the impact of the measures.

5.1.1. In the Committee's view it is therefore especially important to define final quantitative and qualitative assessment criteria for all the programmes financed, analysing success stories but also the negative results that may be inevitable given the risk margin but that can also stem from management and organisational limitations.

5.1.2. In addition to including an analysis of the impact in terms of increased competitiveness in the ex post evaluation criteria, it would be useful to conduct a second evaluation, at a later point, of the lasting nature of the results and their locomotive effect in relation to the amount of funds earmarked.

5.2. The Commission lists many factors relating to regions' specific characteristics, but the development of skill centres should be based on social, health and environmental considerations in addition to economic, cultural and social potential.

5.3. In the area of sustainable development, reference to Agenda 21 would have been appropriate. Of course, sustainability is not just an environmental issue: "social sustainability" is another factor that has a major impact on development prospects. However, it is equally important always to reaffirm commitments and obligations to counter environmental decline.

5.4. Training initiatives too can be innovative, not only in the area of the new economy but also in traditional production. The piloting of new training arrangements in micro-enterprises can provide a particular opportunity for organisational innovations. Developing the professional identity of workers and certifying new skills are basic means of promoting positive flexibility and adaptability, both subjectively and objectively. This requirement is all the more important in the areas that fall under Objectives 1 and 2 and it would be useful to include specific training measures among the possible innovative actions.

5.5. The previous innovative actions financed interesting teleworking projects in various regions. There is a trend towards on-line working, either from home or from telecentres, but its development is affected by various elements, the first being the level of use of the new technologies, which still differs enormously from one Member State to another. Another crucial point is the establishment of criteria for governing on-line employment at a distance from company headquarters.

5.5.1. In addition to the technological and economic connotations, teleworking also has other significant social and environmental effects that should be highlighted with regard to the innovative actions. It can contribute to sustainable transport policies and promote regional cohesion by halting the trend towards depopulation in less privileged areas. Furthermore, it is proving to be of major use in increasing employment levels among women and young people.

5.5.2. The Commission is obviously well aware of these factors, but specific reference to teleworking as a potentially innovative element would have been a useful addition to the indicative selection criteria for which the regions are responsible, not least in the light of the procedural changes introduced (programmes as opposed to projects).

5.6. The Committee believes that interregional networks for the dissemination of good practice are highly valuable, but it would also have liked to see the possibility for joint programmes spanning several regions, potentially generating synergy between regions at differing levels of development. At all events, care must be taken to ensure that the best practice gleaned from the innovative actions is circulated as widely as possible, so that new and effective methods do not remain the preserve of the few.

5.7. In view of the different regional structures in the various Member States, a more precise definition of the authority responsible would have been useful. The Commission should publish and disseminate the precise list of authorities responsible in the various regions. In addition, as the emphasis on programmes means that the authority responsible has to assess and select individual projects, the initiative must be widely publicised, not only at institutional level but also among business, scientific and civil society associations.

5.8. In the management of the innovative actions, the Committee recommends that the Commission keep a constant watch on their consistency with basic mainstreaming policies, especially as regards employment and equal opportunities, which must be integral elements in all EU initiatives.

5.9. Lastly, the innovative actions should also be weighed up in the light of the preaccession policies and special attention paid to the launch of programmes in the island and peripheral regions of the Member States.

Brussels, 30 May 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) Opinion on the Commission Communication "Acting locally for employment - A local dimension for the European Employment Strategy", OJ C 14, 16.1.2001.

(2) Communication from the Commission on the implementation of Innovative Measures under Article 6 of the European Social Fund Regulation for the programming period 2000-2006, COM(2000) 894 final.

(3) Opinion on local development initiatives and regional policy, OJ C 18, 22.1.1996.

(4) Commission Communication "Acting locally for employment - A local dimension for the European Employment Strategy", COM(2000) 196 final.

(5) Additional own-initiative opinion on "SMEs and craft businesses in Europe".

(6) Opinion on the "Communication from the Commission - Challenges for enterprise policy in the knowledge-driven economy - Proposal for a Council decision on a Multiannual Programme for Enterprise and Entrepreneurship (2001-2005)", OJ C 116, 20.4.2001.

(7) Commission Communication "Acting locally for employment - A local dimension for the European Employment Strategy", COM(2000) 196 final.

(8) Second report on economic and social cohesion. January 2001, COM(2001) 24 final.

(9) Opinion on "eEurope 2002 - An information society for all - Draft Action Plan", OJ C 123, 25.4.2001.

(10) Communication from the Commission on "Cohesion in the information society", COM(97) 7 final.

(11) Commission Staff Working Paper "Report on the implementation of the Action Plan to promote Entrepreneurship and Competitiveness" SEC(2000) 1825 vol. I.

(12) Second report on economic and social cohesion. January 2001, COM(2001) 24 final.

(13) Bulletin of the EU, supplement 5/95.

(14) COM(2000) 567 final.