Opinion on the White Paper on growth, competitiveness, employment: 'The challenges and ways forward into the 21st Century' (95/C 210/01)

THE COMMITTEE OF THE REGIONS

- Referring to the Committee's right, provided for in Article 198c of the Treaty establishing the European Community, at its third meeting on 18 May 1994 agreed to issue an Opinion on its own initiative concerning the White Paper on Growth, Competitiveness and Employment submitted by the Commission to the European Council in Brussels on 10 and 11 December 1993.

- Stressing the importance of the growth and competitiveness of the economies for strengthening the economic and social cohesion of the Union.

- Stressing the importance of an equal balance between economic and social development.

- In view of the serious problem of unemployment, the economy and society at large.

- With a view to countering this trend by the creation of 15 million jobs by the year 2000.

at its fourth plenary session on 27 September 1994 adopted the following Opinion by a majority of votes.

Introduction

In the White Paper, the Commission puts forward guidelines for improving growth, global competitiveness and for creating the highest employment possible; to this end it proposes the following general lines for action:

- making full use of the benefits of the Single Market by promoting durable development of economic activities;

- launching the information society and developing information networks both within Europe and externally;

- accelerating the implementation of transport and energy infrastructure networks;

- providing incentives for innovation and non-physical investment;

- developing cooperation between the Member States;

- obtaining fair rules for international competition.

In order to obtain higher employment in the Community, the Member States have to attain global competitiveness on the increasingly integrated sophisticated world market.

The economy is gradually evolving towards an economy of non-physical elements, and its development should be based on the creation, circulation and application of knowledge, where competitiveness factors will play a key role both in boosting growth and in the labour market generate jobs for skilled labour. The Committee of the Regions gives strong support to the new 'sustainable development' model as set out in the European Commission's White Paper.

Taking account of the problems raised in the Commission's White Paper, the European Council's meeting in Brussels on 10 and 11 December 1993 decided to implement a plan of action to combat unemployment. At its subsequent meeting at Corfu on 24 and 25 June 1994 it further examined progress made with the implementation of the White Paper proposals, and agreed to continue the effort at its meeting in Essen in December 1994.

THE THREE ASPECTS OF THE WHITE PAPER: GROWTH, COMPETITIVENESS AND EMPLOYMENT

Growth

THE COMMITTEE OF THE REGIONS

1. notes that the relevant analysis provided by the White Paper enables us to understand the detailed reasoning behind and the intrinsic coherence of the major macroeconomic balances and the economic and monetary policies which are to be implemented;

2. stresses that to achieve the goal of creating 15 million jobs by the year 2000 requires a concerted and sustained drive to

a) moderate the growth of consumption to the benefit of savings and investment,

b) introduce more flexibility into the labour markets,

c) step up research, development and innovation,

d) speed up investment in trans-European transport, energy and information networks, thereby helping to boost company productivity;

3. notes that increased growth will have an impact on the environment not only within the boundaries of the Union but elsewhere and care must be taken not to conflict with the environmental commitments of the Union and Member States;

4. notes that in order to meet this target, growth rate of per capita real incomes must be limited to a part only of overall productivity growth;

5. stresses that this implies curbing private and public consumption growth, boosting private and public investment, keeping inflation down and reducing public deficits.

Competitiveness

THE COMMITTEE OF THE REGIONS

6. endorses the general lines proposed by the Commission in its White Paper for improving the global competitiveness of Community firms in open, competitive markets;

7. agrees with the Commission's view that competitiveness should be attained by means of structural changes which reconcile solidarity and efficiency. To this end, full attention should be paid to the labour factor;

8. concurs with the assessment that the European Union has lost competitiveness as against its main competitors in the world market. To make up this gap the Committee calls first for a drastic increase in productivity in those sectors which are exposed to international competition and for accelerated development and marketing of new technology-based products and the extension of European Networks;

9. recognizes the need for increased R& D efforts as an important way of raising competitiveness and creating jobs, and calls on the Member States to strive for a sustained increase in the proportion of spending earmarked for R& D. The Committee stresses the need for the White Paper to be given a clear impetus via a coordinated European investment offensive, with incentives for private investment, e.g. tax advantages for R& D expenditure;

10. agrees that the Community measures in research and technological development should be stepped up to match the Japanese rate of 3 % GDP, that better coordination of R& D activities should be realized within the European Union, and that these measures should be aligned on the requirements of the European economy, more particularly the business sector;

11. stresses the importance of the Community ensuring the practical working of the single market, thereby taking advantage of potential for development and experience in this field and the dynamic effect on firms;

12. emphasizes that it is especially important to

a) develop Small and Medium-sized Enterprises (SMEs) and local development initiatives,

b) complete the full implementation of the four freedoms in the Internal Market, and

c) develop trans-European networks;

13. welcomes the Integrated Programme for SMEs, and notes the importance of the single market to be supportive to the competitiveness of SMEs and in particular very small firms and craft industries. The Committee calls on the Commission, the Council and Member States to implement the measures contained in the Integrated Programme with the full participation of the local authorities and regions, in view of their experience in planning, creating and developing industrial areas and setting up local back-up services for SMEs (e.g. dismantlement at all levels of administrative hindrances and financial disadvantages, introduction of tax-relief as compensation for size-related disadvantages, creation of a reliable and stable environment, facilitation of access to capital markets, encouragement of joint ventures and improvement of management quality) as quickly as possible so as to help SMEs boost their competitiveness and adjust to the requirements of the single market and international competition;

14. regards trans-European networks, the existence of efficient, low-cost infrastructures in the energy, transport and communication sectors as essential for developing the European economy and making a significant contribution to improving European firms' competitiveness, particularly SMEs, in view of their communication capability and access to markets;

15. believes that all regions should have equivalent access to the trans-European networks in order to draw the regions closer together, thus improving the competitiveness of their economies. This is particularly the case for island and peripheral regions of the Union which will not enjoy the full advantages of European integration unless transport and communications are improved;

16. welcomes the Bangemann report, which was presented at the meeting of the Council on 24 and 25 June in Corfu, as it considers the establishment of the information society vital for strengthening European firms' positions, particularly for SMEs, vis-à-vis international competition. Consequently, it is important that the European Union encourage action needed both to develop information technologies and to introduce them into the market. The local authorities and regions must be involved in selecting priority projects, so that full, efficient computerization can be achieved throughout Europe;

17. stresses that environmental considerations and environmental impact assessment must have considerable weight in the assessment prioritization and funding of common infrastructure projects, and regional and local authorities should be consulted at an early stage in the planning and implementation of common projects;

18. points out that it is incumbent on the European Union to facilitate the spread of new technologies by laying the foundations for these technologies to be geared to the needs of enterprises and in general to the requirements of European society in terms of competition rules; stresses that regional transfer centres can play a key role here for SMEs;

19. underlines that environmentally compatible production processes are of increasing importance for international competitiveness;

20. considers it vital for the growth and competitiveness of the European economy to pursue industrial and technological cooperation with non-member states, especially those with major growth potential. This is equally true for the countries of Central and Eastern Europe whose economies are in the throes of transformation. The economies of these countries should gradually but rapidly become part of the European Union's overall economic relations. A plan for establishing economic relations should be presented by the Commission as soon as possible.

Education

THE COMMITTEE OF THE REGIONS

21. welcomes the stress laid on education as a contributing factor to the maintenance of the competitiveness of the European economy, and believes that human labour and ability to innovate is the most important natural resource for the maintenance and further development of the economic strength of the European Union and that it therefore requires special support;

22. stresses that the content and structure of education are matters for the Member States and emphatically opposes any extension of the current responsibilities of the Union beyond what was set out in the EU Treaty in the field of general and vocational training;

23. points out that the proposals for closer coordination of school education and in-house vocational training by the firms and for the co-financing of this training by the private sector via the dual system of vocational training has existed for a long time in two Member States (Germany and Luxembourg) and has proved its worth as an important way of preventing youth unemployment;

24. notes that the educational systems of the various Member States differ considerably and that generalized conclusions are therefore not appropriate;

25. is convinced that a massive professional and financial commitment by firms to vocational training will be as economically necessary in the long term in the other Member States of the EU as in those Member States which already follow the twin-track system of vocational training;

26. stresses the importance of paying extra attention to the vulnerable groups of women re-entering the labour market, ethnic minorities, long-term unemployed and young unemployed people;

27. calls therefore on the Member States, including the local and regional authorities, by legislation and by an intensive strategy of motivation and information to persuade firms to become comprehensively and systematically involved in the training of young people, and to co-finance and take on full responsibility for the training of skilled workers;

28. stresses that, in order to meet the challenges of future vocational training, systems are needed covering broad basic training, sufficient specialization in a particular field and the integration of young people into the production process in the final stage of initial training. This will make a smooth transition from training to working life possible. Only in this way can steps be taken to counter the disturbing phenomenon whereby the high drop-out rate from education and vocational training in some countries, caused by a relatively low education and training level, leads to above average youth unemployment, which generates social tension, social alienation, and sharply antisocial behaviour, resulting in increased crime, drug abuse and so on;

29. stresses that the social partners should be involved to a greater extent that hitherto in the definition of education and training policy in order to facilitate the transition from training to work and to bring the scope of qualifications more into line with the jobs of the future;

30. stresses that, in addition to reform of the structuring of initial training, further training, in the sense of life-long learning, must also become the subject of social dialogue and also an integral part of every business strategy. Every firm should be required, by staff development planning and its systematic implementation, to offer every worker maximum personal career development opportunities and to ensure continuous adaptation to technological change. Universities and other institutes of higher education too, should develop their organizational structures and teaching methods in order to provide effective life-long further education. Appropriate work experience outside the academic institution but during the period of study may be an important part of any higher education course, if these work experiences are substantial and relevant to future job possibilities. To this end cross-frontier distance learning should be expanded and more widely applied;

31. points out that the systematic planning of higher and further training is not primarily a matter for Government; it must, rather, be shaped by the social partners and the local and regional authorities, and co-financed by firms. Public authorities and institutions should in particular aid SMEs by means of support for advice on further training and incentives;

32. endorses the European Commission's pilot scheme for reinforcing inter-regional cooperation within the EU between those responsible for education at local level. The scheme focuses in particular on the assessment of vocational training needs. This pilot scheme is only operating in 10 (), and the COR would like to see the similar initiatives taken in other regions;

33. calls on the Member States to ensure, if necessary by legislation, that periods of unemployment can be used by workers, without prejudice to their benefits, for obtaining additional qualifications which will facilitate their reintegration into the labour market;

34. endorses the Commission's call for sufficient funding for universities and other institutes of higher learning and advocates closer cooperation between such establishments and business;

35. calls on the Member States to offer equality of training opportunity with regard to non-academic vocational training and make suitable funding available;

36. supports the initiatives for EU activities to intensify the exchange of experience and information between the Member States and to support the mobility of teachers and apprentices as a contribution to the ultimate objective of a European training and labour market. In this context foreign language acquisition is a vital factor in the creation of a citizen's Europe and completion of the Internal Market;

37. opposes unnecessary standardization of new decentralized instruments of multi-media training in order not to impede the current rapid developments in this area, and feels that they should, rather, be left to the market forces. The Committee assumes that the rapid development of the supply of compatible systems and converters will mean that this problem will gradually disappear;

38. acknowledges the EU's financial commitment in the field of general education and vocational training, particularly via the European Social Fund and the European Regional Development Fund, and expects that in future these resources will be purposefully and efficiently used, above all to reduce educational and training discrepancies in Objective 1 regions.

Employment

THE COMMITTEE OF THE REGIONS

39. shares the view expressed in the White Paper that the main aim of economic policy in the EU must be a tangible reduction of unemployment in the foreseeable future, as the unacceptably high level of unemployment is socially and politically explosive, and threatens to undermine the confidence of the population in the process of European integration;

40. points out that the direct and indirect impact of unemployment weigh particularly heavily on regional and local authorities and endanger the local provision of services to the population;

41. stresses the need to give equal priority to the achievement of the highest possible level of welfare and social security and to a tangible reduction in unemployment;

42. believes that a sustained reduction of real wages and deep cuts in the social security system are not a suitable way of surmounting the employment crisis in Europe and are likely to lead, rather, to a long-term stagnation and loss of growth. In this connection the Committee of the Regions welcomes the realism recently shown by the parties to wage negotiations in several Member States (e.g. Belgium, Germany, Greece, Italy, Ireland and the Netherlands), as an effective contribution to more growth and employment;

43. believes that a switch from an influx social security policy to an outflow policy improves the opportunities for creating jobs;

44. welcomes the White Paper's call for a shift of political emphasis to creating more jobs rather than cutting the unemployment rate. This means giving priority to the creation of jobs in the regular (primary) labour market. Publicly supported employment schemes should function as a bridge for the primary labour market;

45. points out that it is better to stimulate the creation of jobs (the second labour market) than to finance unemployment and particularly welcomes in this context many and various regional and local employment initiatives. Promotion of local action should be first and foremost based on local initiatives supported by regional and national authorities. The Committee emphasizes the positive role for the structural funds in promoting local initiatives;

46. points out that, in addition to high unit costs, technological and management shortcomings are often the cause of the deteriorating competitiveness of European firms, and urges the Commission, the Council and the Member States to examine and implement the measures required to improve technological awareness within the Union;

47. believes that deregulation may at times be a suitable way of eliminating labour market rigidities. But this must be considered case-by-case with due consideration for national and regional structures and with the full involvement of employees' representatives. Deregulation, e.g. by vastly loosening the rules on termination of employment, is per se no panacea;

48. shares the view expressed in the White Paper that flexible arrangements on working time, including flexibility on hours worked, are desirable in overall economic terms, if this reflects the wishes of workers and is compatible with the economic requirements of firms. The Committee agrees that this should only be done via support measures and incentives, and by agreement between the social partners;

49. considers it necessary to point out the many ways in which shorter working hours help promote or preserve jobs, as long as they do not endanger the competitiveness of industry or economy, and stresses the positive effects of encouraging part-time work, with due attention to the equality in social protection of full-time and part-time work. Specific incentives for part-time work contracts are needed. Local and regional authorities in the European Union have helped to develop new patterns of working, e.g. part-time work, job sharing etc., and are well placed to exchange experience with other employers in the Union on these issues. National, regional and local authorities should set a good example here via their recruitment policies;

50. stresses the role of environmental protection and services, e.g. in the area of media/telecommunications, but above all in the areas of local domestic and caring services, leisure and cultural activities, in the creation of new jobs. It shares the view that in these areas more than three million jobs can be created in the medium term. Alongside private investment, regional and local authorities have a leading role to play here. The Committee therefore expects these authorities and other local actors to be given the necessary powers and funds;

51. stresses the importance of a dialogue-orientated economic policy at all levels of the Union, to include job creation, since a basic social consensus between political authorities, firms and trade unions is a prerequisite for tackling the strategic questions of future European economic development. The European tradition of action based on solidarity must remain the foundation of labour-market and employment policy. Given the economic, political and legal differences between the Member States, the necessary measures must be adopted primarily in the Member States;

52. welcomes the comments in the White Paper made on decentralization and the moves towards a decentralized economy. The Committee feels that local and regional Government has an important role to play in implementing the parts of the White Paper built around this theme, particularly in relation to the training aspects associated with the creation of local partnership to stimulate growth and development of SMEs, the introduction of new technologies and the development of training which is linked to the demands of the local and regional labour market. The Committee expects the regional and local authorities and the various other partners to be given appropriate powers and funding.

New development model

THE COMMITTEE OF THE REGIONS

53. greatly welcomes the White Paper's discussion of a new development model;

54. shares the view that in the European Union the cost of the labour factor of production is generally too high and the cost of the environment factor too low. Reducing the burden of costs on the use of labour (without reducing wages) whilst simultaneously imposing a cost on use of the environment would create incentives for both more employment and more environmental protection;

55. shares the view expressed in the White Paper that a reduction of the burden of social levies on employers is of considerable importance for the creation of new jobs and the maintenance of existing ones. The Committee agrees that employers' social security contributions have to be reduced;

56. points out that the new sustainable development model demands for an active role by regional and local Government since these authorities are the key actors in the existing environmental programmes for which sustainability is the goal. In this process, it is regrettable that when dealing with assessment of the economic consequences of the new development model external costs are not considered an economic component. The Committee of the Regions recommends to the European Commission to bring about an increased use of the products of clean technology. In this respect it is necessary for the Union to increase substantially and coordinate R& D efforts in the field of clean technology. This requires a wide-ranging green audit and a firm procurement policy.

57. stresses the need for fiscal measures to compensate for the reduction of employers' social levies to be based mainly on taxes on respectively energy - CO2 - and natural resources and uniform taxation of income from capital in the EU, and points out that an ecologically orientated tax policy must not be allowed to increase the total government tax take as a proportion of GDP;

58. recognizes the need in this connection for the development and introduction of new integrated technologies, the raising of energy efficiency and the establishment of an environment-friendly infrastructure, particularly in the areas of transport, supply and disposal.

Concluding remarks

THE COMMITTEE OF THE REGIONS

59. regrets the absence of sectoral or local and regional analysis in the White Paper, for instance in relation to the likely effect on growth, competitiveness and employment of opening up EU and world service sectors markets, which currently account for more than two thirds of employment. It advocates a strengthened dialogue within the Committee of the Regions itself and in other European bodies, particularly in respect of regional and local-level services mentioned in point 49 above;

60. regrets that the White Paper merely skims over the ways in which regional and local authorities can help to create growth and employment. Indeed, it is very largely the regional and local authorities which create the conditions for development in the private sector by setting up the technical and social infrastructure. The European Commission and Member States should seize every opportunity to press the case for the sustainable development model which should become accepted outside of the European Union. As a precondition of funding from EU programmes for infrastructure development, the Commission should issue guidelines requiring the Contractor as much as possible to use green products, recycled materials and alternatives to natural resources, e.g. secondary aggregates;

61. stresses that local and regional authorities, especially in urban areas, can be called on to play a role in the following main areas;

- support for economic initiative,

- an efficient local labour market,

- research and innovation policy,

- transport networks,

- information and communications technology,

- the environment and quality of life,

- general and professional education.

62. calls for an analysis by the Commission of the impact of the cyclical economic and structural economic changes on the different types of regions in the European Union (e.g. backward agricultural regions and declining industrial regions in relation to the other regions of the Union). Account should also be taken here of expected developments in relations with neighbouring Central and Eastern European countries so that clear development trends can be laid bare and discussed as soon as possible;

63. regrets that there is no analysis of workers' profit sharing and share incentive schemes, e.g. in the form of investment wage models. The Committee stresses the importance in terms of social policy of workers having a stake in productive facilities and the extent to which this can make it easier for companies to raise capital. The Committee calls on the European Union to continue with comparative studies of the development of existing national worker incentive schemes;

64. regrets that the subject of the new development model is dealt with in isolation in a single chapter and is reflected either inadequately or not at all in other chapters which ought to pick up and apply the idea, e.g. the chapters on research and technology policy and trans-European infrastructure networks. A positive example on the other hand is the treatment of environmental problems in connection with the improvement of the competitiveness of European industry;

65. rejects an extension of the Community's funding margins and the creation of new financing instruments. The principle to be followed on funding is that, as far as possible, private capital should be mobilized, and in general is to have priority. Insofar as public money is required, funding is primarily a matter for the authorities responsible for planning and implementation of projects. If it is needed at all, the EU's financial contribution should as far as possible come from the Cohesion Fund and the other existing budgetary resources and would presuppose a contribution from the organization responsible for each project. Only in exceptional cases should the specific Community subsidies for trans-European networks be tapped. The European Investment Bank should also play a supporting role through its existing loan facilities.

Done at Brussels, 27 September 1994.

The Chairman

of the Committee of the Regions

Jacques BLANC

() Greater Copenhagen (Denmark), Sachsen-Anhalt (Germany), Western Greece, Community of Valencia (Spain), Pays de la Loire (France), Liguria (Italy), Greater Dublin (Ireland), Limburg (Netherlands), Central Portugal, East Anglia (UK).

() OJ No L 126, 18. 5. 1994.

() See also the concluding remarks in the Opinion.

() See also the concluding remarks in the Opinion.

() The European Investment Fund (EIF), which was established on 14 June 1994 has a total authorized capital of ECU 2 billion, provided by private banks (30 %), the EIB (40 %) and the European Commission (30 %). It will provide loan guarantees (up to 50 % of project cost) of ECU 6-16 billion, especially for major infrastructure projects, thus promoting investments totalling around ECU 30 billion, see OJ No L 173, 7. 7. 1994). By May 1994, the EIB had also granted loans totalling ECU 5.8 billion, out of the total ECU 8 billion provided for under the Edinburgh facilities. These cover 75 % (as against 50 %) of investment in infrastructure (transport and environment) and in SMEs.

() Cf. Council Decision of 19 April 1994 (OJ No L 107, 28. 4. 1994).

() Integrated Programme in favour of SMEs and the craft sector (Doc. COM(94) 207), see also the Commission Recommendation of 25 May 1994 concerning the taxation of small and medium-sized enterprises (OJ No L 177, 9. 7. 1994) and the Communication from the Commission on the improvement of the fiscal environment of small and medium-sized enterprises (OJ No C 187, 9. 7. 1994).

() Greater Copenhagen (Denmark), Sachsen-Anhalt (Germany), Western Greece, Community of Valencia (Spain), Pays de la Loire (France), Liguria (Italy), Greater Dublin (Ireland), Limburg (Netherlands), Central Portugal, East Anglia (UK).

() ESC Opinion CES 564/94 on the Socrates programme, and ESC Opinion CES 381/94 on the 'Youth for Europe III' programme.

APPENDIX I to the opinion of the Committee of the Regions

1. Background

The seriousness of the recession and the scale of unemployment led the EU's Heads of State or Government to take an initial series of decisions (the 'Edinburgh facilities') at the European Council held in Edinburgh on 10 and 11 December 1992. Following a dramatic speech by the President, Mr Jacques Delors, the European Council in Copenhagen on 21 and 22 June 1993 instructed the Commission to undertake a detailed analysis of the causes of the recession and to put forward proposals for overcoming it. The Commission duly submitted its White Paper to the Summit held in Brussels on 10 and 11 December 1993 (eleven priority transport network schemes). The first concrete decisions were taken at the European Council in Corfu on 24 and 25 June 1994. By this time all the Member States had already begun to take measures in line with the White Paper.

2. Analysis

2.1. The facts

Seventeen million people are currently out of work in the European Union, i.e. 11 % of the workforce. In April this year, over 18.5 million people were registered as unemployed. Almost half of those out of work have been so for more than 12 months and the unemployment rate amongst the under 25s now stands at 20 %. Besides the economic waste of this human potential, unemployment is also a human and social disease which is at the root of a good many of modern society's ills, such as crime, drugs and racism.

This downward trend is at first astonishing.

First, because from 1986 to 1990, doubtless in anticipation of the completion of the Single Market on 1 January 1993, the annual EU growth rate was 3.2 %, employment rose annually by 1.3 %, and unemployment therefore fell from 10.8 % in 1985 to 8.3 % in 1990. The actual achievement of the Single Market and the prospect of attaining economic and monetary union by the end of the century might have fostered the belief that Europe would be able to keep up this momentum, sustain a growth rate in excess of 3 %, create new jobs and continue to bring down unemployment. But just as the Internal Market was becoming a reality, exactly the opposite happened (see graph appended).

Secondly, the United States and Japan have much lower unemployment rates than the European Union (6.1 % in the United States and 2.5 % in Japan in 1993). The White Paper points out that between 1973 and 1990, the United States achieved an annual average GDP growth rate of 2.3 %, while labour productivity grew by only 0.4 %, yielding an average 1.9 % increase in employment over the 17 year period. This growth practically matched growth in the US labour supply, which was much higher than in Europe, and kept unemployment at an almost constant cyclical average of 5.5 % over the same period. Meanwhile, however, real per capita wages in the United States grew by only 0.4 % per year, as against 1.5 % in the Community.

Is the European model undergoing a crisis ?

2.2. The causes

When something goes wrong, the tendency is always to put the blame on someone else. This is what has happened here: the causes are said to be external. In fact the root causes of the recession can be largely attributed to the Community itself.

2.2.1. Competition from third countries

The net loss of three million jobs in 1992 and 1993 has been blamed on unfair competition from the countries of South-East Asia (Taiwan, South Korea, Singapore and Hong Kong, followed by Malaysia and Indonesia, and soon also Vietnam and the Peoples' Republic of China). The very low wages in Central and Eastern European countries are also alleged to be a factor in unfair competition and even company relocation. These are doubtless valid arguments for certain sectors and in particular cases, but it should be stressed that the South-East Asian countries in question accounted for only 14 % of total EU imports in 1993, as against 12 % of EU exports; Central and Eastern European countries accounted for only 4 % of EU imports as against 5 % of EU exports. Imports from low-wage countries account for only 1.5 % of total expenditure on goods and services in OECD countries. Moreover, the Commission makes full use of the powers at its disposal if it finds evidence of dumping. It should not be forgotten either that the European Union cannot overlook these extremely buoyant countries and new markets they offer for its future exports.

2.2.2. Labour costs

Labour costs are too high in Europe. First, inabsolute terms. We have, in fact, reached the stage in certain countries where, given an average gross wage of 100, the worker receives only 65 net and the employer pays out a total of 150. European statutory tax deductions and equivalent charges are obviously excessive; in some counties, they even exceed the net wage. Other ways must therefore be found to finance public spending, and social security in particular, or capital will continue to replace labour, thereby encouraging changes in production processes rather than new products. Labour costs in Europe are also too high in relative terms, i.e. compared to third countries (around four times as high as those of the South-East Asian dragons and around ten times those of Eastern Europe). Although labour productivity in Europe is extremely high, it leaves companies little room for manoeuvre in ensuring their competitiveness and breaking into new markets.

2.2.3. The loss of market shares

Despite the recession and high labour costs, Europe has managed more or less to maintain its international market shares. Unfortunately, it has specialized in the export of traditional products, neglecting high technology sectors which generate growth and employment, and to which our own markets are open mainly to American and Japanese firms.

2.2.4. The inflexibility of the labour market

Europe has reason to be proud of its social legislation. That said, this legislation often leads to excessively inflexible labour markets and sometimes, in turn, to the non-creation, or even destruction of jobs, and often a certain reluctance on the part of employers to take on labour in boom periods. Greater flexibility is therefore called for. The basic rules of social protection must remain intact but over-regulation, which impedes job creation, must be abolished.

2.2.5. Research and development

The quality of and expenditure on research are lower in Europe than in the United States and Japan (over 3 % of GDP in Japan, 2.8 % in the US, as against 2 % in the European Union). Europe also lacks the coordination needed to avoid researching the same thing twelve times over. The Union could concentrate on a handful of joint projects - the Fourth Framework Programme of 26 April 1994 which earmarks ECU 11 billion for 1994-1998 for four types of activities () (in addition to the ECU 1.25 billion set aside for Euratom research over the same period), is a step in this direction. The Union could also, and above all, minimize the lead time between discovery, prototype development and the marketing of new products.

3. The remedies

To tackle unemployment and create more jobs, large-scale action backed by the social partners, must be implemented at European, national, regional and municipal level. According to the White Paper, a distinction should however be drawn between the true and the false remedies, though it has to be remembered that no remedy is wholly 'true' or wholly 'false'.

3.1. The false remedies

These include:

3.1.1. Protectionism

To cut out unfair competition from third countries, the EU could either close its borders or at least levy customs duties and similar charges on imports. With the conclusion of the GATT negotiations at Marrakesh on 15 April 1994, the European Union, the world's leading trading bloc, must respect the treaties signed and do everything in its power to give the most propitious start to the World Trade Organization on 1 January 1995. Moreover, experts' estimates point to an immediate 1 % annual rise in world GDP, following the liberalization in world trade in the wake of the Uruguay Round. Given the current recession, this would be of enormous benefit to the European Union, whose exports of goods account for 9 % of GDP. This is therefore not the right time to advocate protectionism, especially since this increase in international trade will generate an increasing number of jobs in Europe.

The European Union should, however, be on its guard with regard to GATT and protect itself where necessary, as do the United States and Japan. It should intervene radically to curb imports linked to excessively low wages in third countries (i.e. dumping) and considerable care should be exercised when dealing with imports from countries violating human rights (including the rights of children). The Union can and must incorporate social clauses into the trade agreements that it concludes with third countries.

3.1.2. Deficit spending

Turning on the tap of national and Community spending on consumer items is no longer seen as a suitable way of getting the economy moving, especially since most EU Member States do not have the necessary budgetary leeway. Such a cure would be worse than the disease; the lax economic policies pursued during the second half of the 80s were too disruptive to the balanced development of economies for this avenue to be seriously explored.

3.1.3. Social dumping

Some parties claim that to stem competition from third countries, the EU should reduce its wages or radically review its social security systems, which are becoming impossible to fund because of Europe's demographic changes. This type of deflationary policy would also do more harm than good; the drop in Europeans' spending power would have a catastrophic effect on the supply of goods and services within the single market, which continue to account for 90 % of EU sales. However, decisions will obviously have to be taken, especially with regard to real wage growth and social benefits, and social security schemes will have to be more selective so that benefits are focused on those who need them most.

3.1.4. General reduction in working hours ()

A mandatory across-the-board cut in working hours (for example, via the introduction of the 32-hour week), even if wages were reduced in tandem is, in the final analysis, only a makeshift solution, even though it is not a bad solution in itself, given the large number of needs which cannot be satisfied. Such arrangements would place the least skilled and most poorly paid members of society in an even more precarious position. This does not of course mean that companies cannot introduce transitional job-sharing schemes to stave off redundancies, or that part-time working arrangements cannot be encouraged by tax incentives or bonuses. Furthermore, the long-term downward trend of working hours will doubtless continue.

3.2. The real remedies

The White Paper first stresses that it is incorrect to claim that unemployment is the result of insufficient demand, as the needs of our society are enormous. Some 50 million EU citizens (15 % of the population) have a precarious standard of living i.e. a real income 50 % below the national average. The requirements are vast in the fields of: housing, including refurbishment, public transport and environmental protection, (waste water treatment, upkeep of natural and public amenities and monitoring of quality standards); local services (home help for the elderly, child minding, assistance for young people and security in blocks of flats), leisure and cultural facilities (audiovisual or otherwise). These needs go largely unmet, either because there is too much red tape, or because there is not enough effective demand, because those concerned have insufficient incomes, or because the market prices for services are too high. Efforts will have to focus on meeting these needs.

In addition to domestic demand, export markets are now wide open to EU businesses, provided they are competitive and innovative.

The main ways to improve competitiveness and reduce unemployment are:

3.2.1. Major investment projects ()

Employment can be stimulated by the accelerated implementation of a number of public works projects (networks), which Europe badly needs if it is to strengthen its competitive position with regard to third countries. These include:

- transport infrastructure (motorways, high-speed trains, airports and waterways);

- broadband information highways (multi-media world: sound, text and image);

- trans-European energy networks (gas and electricity); and

- major environmental projects.

Priority will have to be given to building those networks whose absence impedes the smooth operation of the Internal Market and which therefore would have the highest rate of return at European level. Total investment costs from now until the year 2000 are estimated at around ECU 500 billion, of which 120 billion will be earmarked for priority projects. Some 10 % of the total costs could be met by the European Union, in the form of grants, loans or loan guarantees (European Investment Fund) (). The cost of the proposed investment is equivalent to around 1 % of EU GDP (ECU 5,500 billion in 1994).

The EU budgetary forward planning for 1994-1999 agreed upon in Edinburgh will clearly not be revised. EU subsidies will therefore have to come from existing budget lines, such as the Structural Funds and the Cohesion Fund.

The Corfu European Council outlined 11 priority projects for trans-European transport networks (chiefly high-speed train links), for which the financial requirements are put at ECU 68 billion, including ECU 32 billion for 1994-1999. Funding will be examined on a case-by-case basis. Altogether, 38 transport infrastructure projects and 8 energy projects have been identified.

3.2.2. Development of small and medium-sized enterprises (SMEs)

According to the European definition (up to 500 employees), SMEs provide 75 % of EU private-sector jobs, a quarter of which are held by self-employed workers (one third of jobs being in SMEs with under ten employees). SMEs are also the most active in generating employment (three-quarters of new jobs created over the last three years). Their activity must therefore be stimulated by:

- reducing administrative regulations as far as possible;

- giving them financial incentives to create jobs, including:

- interest rebates (of two percentage points over five years) on global loans up to a total of ECU 1 billion (a maximum of ECU 30,000 per job created) granted by the European Investment Bank (EIB) (); and

- EIF loan guarantees.

The Commission launched an integrated programme on 3 June this year to assist SMEs ().

3.2.3. Improvement of vocational training and education

Adequate general and specialist training is fundamental to effective work organization in today's society, which is hallmarked by an increasing reliance on technology. Machines have taken over much of man's work, but it is up to individuals to use them as efficiently as possible and to research and develop new products. The unemployed can be helped to find work by being given adequate vocational training. Despite its advances made in this field, compared, for example, with the United States, Europe still has a great deal of ground to cover.

3.2.4. The macroeconomic framework

In its White Paper, the Commission sets the target of creating 15 million new jobs by the end of the century, thereby more than halving the current unemployment rate by the year 2000.

At first sight, this objective seems too ambitious, but we should not forget that the European Union created 9 million jobs between 1984 and 1990. Moreover, simulations reveal that an ambitious project of this nature is feasible if everyone pulls their weight in creating the essential macroeconomic conditions.

The Commission presented a number of scenarios including No 1 (low growth and non-convergence) and No 4 (high growth accompanied by structural measures) are tabulated below:

>TABLE>

In this scenario, growth remains low (only slightly higher than 2 % p.a.), labour productivity and consequently unemployment (12.2 % in the year 2000) are high and there is a large public deficit (-5.0 % by the year 2000). Despite the increase in real wages, there is only a slight increase in private consumption.

In the high-growth scenario (3.5 % p.a.), however, unemployment drops to 4.5 % by the year 2000.

>TABLE>

In order to meet the target of creating 15 million jobs by the year 2000, we must:

- limit the growth rate of per capita real wages to 50 % of the labour productivity growth rate;

- curb private and public consumption growth;

- boost private and public investment (from 19 % to 24 % of GDP);

- keep inflation down to around 2.6 %;

- reduce public deficits from 6 % of GDP in 1994 to under 1 % by the year 2000, without making any substantial increases in taxes and equivalent charges which would remain at around 44 % of GDP.

Although the Member State governments and social partners more or less agree on the general thrust of this macroeconomic framework, the White Paper itself points out a potential danger: 'the most serious challenge facing policy-makers will be to maintain the awareness of the need to implement appropriate macroeconomic and structural policies even when the recession is overcome' (p. 63).

According to the latest Commission economic forecasts (mid-May), Europe is emerging from recession. The following growth rate figures are forecast for 1995: 2.5 % growth in GDP, 4.9 % in investments, 0.3 % in employment; unemployment is to steady at 11.5 %. Faced with these rather encouraging figures (apart from the unemployment rate), politicians will be sorely tempted to drop the reins and postpone the streamlining of public finances, which is however a prerequisite for bringing down long-term interest rates and making the necessary public investment.

It was with this in mind that the European Council, meeting in Corfu on 24 and 25 June 1994, declared 'it essential that the improvement in the economic situation should not lead to a slackening of efforts to promote structural adjustment in Europe but should instead be exploited to speed up essential reforms, particularly in the field of employment, where the situation is still very worrying'.

Since the early '80s, Community employment has only begun to rise when GDP growth exceeds 2 % (in the early 70s GDP growth was as high as 4 %). There is no reason to believe that this gap could not be narrowed in the years to come (to 1.5 % or even 1 %, for example), if relative labour costs develop more favourably than capital costs. In the United States, the gap is only 0.5 %.

The simulations produced by the Commission which are outlined in the tables above - set out possible macroeconomic frameworks, and show that the unemployment problem cannot be solved without structural measures.

>REFERENCE TO A FILM>

APPENDIX II

Supplementary opinion on the urban aspects of the White Paper on growth, competitiveness, employment

On 26 July 1994, the Committee of the Regions, acting under the first paragraph of Rule 9 of the Rules of Procedure, decided to draw up a Supplementary Opinion on the urban aspects of the above-mentioned White Paper.

Commission 4 on Urban Policies, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 29 July 1994. The Rapporteur was Mr V. Castellani.

The Opinion was forwarded to Commission 1, to which the main referral was made, and was considered at its meeting on 9 September.

At its fourth plenary session (meeting of 27 September 1994) the Committee of the Regions adopted the following Opinion.

1. The white Paper urges the Member States to consider how to lay the foundations for a sustainable long-term economic development which will enable them to withstand international competition and create the millions of jobs that are needed. The structural changes envisaged are not to be achieved by State diktat, but through constant attention to research and to the role of the major players in society. Special emphasis is laid on the importance of systematic cooperation between the public and private sectors. Only a few sections of the White Paper make explicit mention of the role which might be played by local authorities - particularly urban authorities - in this joint venture, but a close reading reveals that much of this venture requires a contribution from local authorities. It is clearly part of the Paper's message that these authorities should have specific responsibilities.

1.1. It is important to point out that towns can be a major force for structural change and that crucial synergies between the public and private sectors can be identified and harnessed. The present Opinion sets out to indicate some of the main sectors where the role of urban areas is of primary importance, and argues that this role must be openly recognized if opportunities for action are to be seized.

2. More specifically, towns can be called on to play a role in the following main areas:

- support for economic initiative;

- an efficient local labour market;

- research and innovation policy;

- transport networks;

- information and communications technology;

- the environment and quality of life.

2.1. Support for economic initiative

2.1.1. The economic role of cities has recently been shifting from the direct production of goods and services to stimulation and support of private-sector initiatives, and of cooperation between private-sector operators.

2.1.2. Cities and towns are in a position to promote planning by groups of companies at local level: only groups of companies - often with the help of Community or national authorities - can cover the ground needed to achieve trans-national development. The incentives are obvious: sharing costs, reducing risks, and setting in motion synergies by bringing together certain skills or approaches at different project stages.

2.1.3. The unfettered spontaneity of the private sector and traditional public sector initiative no longer suffice: a combination of the former's more decisive way of operating with the latter's longer time horizon must be brought to bear on schemes which will only show an economic return in the long term and where social values are at stake.

2.1.4. The municipal framework is frequently inadequate to the decisions and implementation entailed in such schemes which are often of a scale requiring organization across a larger area. The 'supra-municipal' dimension provided by the major conurbations is the most appropriate, although this must not be taken to mean that the smaller municipalities can be excluded from economic and spatial planning decisions.

Solutions should however be sought at the most suitable territorial level - which will not necessarily be the same for all types of action.

2.1.5. It should be borne in mind when planning development that cities which are purely financial, organizational and management centres tend to aggravate inequalities, while cities retaining a sub-stratum of small- to medium-scale trade and industry are able to conserve a more varied social fabric with openings and niches allowing social and economic mobility. Judicious urban planning, combined with the applications offered by the new technologies and an efficient training system, can maintain the prerequisites for an open, pluralist society.

2.1.6. Smaller companies are in many places generators of wealth and, in particular, of new jobs, but they are highly vulnerable to market uncertainties: they need resources, which alone they cannot produce, if they are to strengthen their position and come up with new forms of organization. Even countries which in the past tended to direct policy towards large-scale industry today generally accept the need to support SME growth. The role of local bodies is of great significance here. As a rule, small businesses flourish where the right conditions for them are nurtured and renewed locally. Local public action to maintain such conditions is essential. A stable regulatory framework and swift, efficient administration are the primary elements in this.

2.2. An efficient local labour market

2.2.1. An efficient labour market is one permitting all citizens to earn their livelihood in a setting where their productive skills are best used.

2.2.2. For this purpose (i) entry into the labour force must be free of barriers, and (ii) potential workers and the employed must know precisely where they stand in the market.

Barriers to entry and shortcomings in the circulation of information inevitably create inefficient labour markets. Barriers can, however, be dismantled and circulation of information can be facilitated by well-aimed action devised and executed by local bodies: the powers and scope for action of local authorities in the area of labour market policy should be considered. Such action might include:

- measures to prevent the young labour force being dissipated in low-grade activities because of under-qualification. Secondary school drop-outs engaged in unskilled work represent a loss of potential productivity which no economic and social system can tolerate;

- training at all levels (school, vocational institutions, universities) able to keep step with the constant evolution in skill requirements. This would avert the paradoxical situation which has arisen in several parts of Europe, where widespread unemployment coexists with skills shortages;

- establishment of an efficient, non-bureaucratic public employment service which operates as an information clearing-house;

- there is a risk of the structural problems characteristic of the employment market being aggravated by difficulties connected with the presence of ethnic-minority communities which are already well-established in a number of European cities. The interests of the members of these communities are often not sufficiently safeguarded, even when they are equally - or even more highly - skilled.

2.3. Research and innovation policy

2.3.1. Studies under the FAST programme have revealed the existence of urban centres of innovation which provide a cultural, institutional, infrastructural and economic/financial environment particularly favourable to research and its innovatory applications, and dissemination throughout the business world and society. It may therefore be concluded that a European research policy, if it is to be effective, must be flanked by an urban policy.

2.3.2. It is worth bearing in mind that the main bodies concerned with research policy (universities, major hospitals, public and private-sector research laboratories, etc.) are typically 'urban' either because they have such close links with towns that they cannot function elsewhere, or because the scientific and practical contributions they can make at national, European or world level depend to a large degree on qualitative and quantitative interaction with other elements of local and regional urban society.

Policies at different levels aimed at strengthening urban innovatory and cultural centres and integrating them into networks can therefore have a significant impact on the quality of research results, investment and other general conditions being equal.

It should however be borne in mind that the new programmes often require skilled workers who mainly have to be recruited from outside the major cities. Research and innovation policies should therefore be backed up by training/re-training initiatives for the unemployed and those at risk of redundancy.

2.4. Transport networks

2.4.1. Major flows of goods and people, and the relevant infrastructure networks, focus on cities. The spatial and functional structure of these networks reflects a division of labour which is not only urban but, to an even greater extent, regional. This means that cities act as an interface between the spatially diffused local-regional level and the major national and European transport networks.

2.4.2. Striking a fair balance between these two levels is an objective of urban policy. Transport policy objectives should be geared to this end. More specifically, cities and city networks should be allowed to make proposals and take an active part in the establishment of European infrastructure networks, since they receive, redistribute and, in part, generate major traffic flows.

2.4.3. Indeed, European infrastructure networks are essential if cities are to fulfil a double function as centres of excellence capable of ensuring that Europe is competitive, and as a link with the geographical and regional units to which they belong.

2.4.4. European transport policy will need to take account of exactly how these functions can best be performed in terms of existing and potential local specialization, the role of cities in post-industrial transformation and geographical location. High-speed rail links, for example, might effectively bring about a closer integration of cities closest to the 'core area' such as Milan and Berlin (and their surrounding regions). But these rail links, alone, cannot resolve - indeed, they would worsen - the difficulties of more peripheral cities and regions. Special action on the air transport system is required if such cities and regions are to strengthen their European role.

2.5. Information and communications technology (ICT)

2.5.1. Cities have always played the leading part in gathering, collating and broadcasting information. Since information is today the key resource for the development and control of all economic and social sectors, the role of European cities is set to grow in line with the progress of Europe's information system. In particular, European cities already have a strategic function as a hub for information flows and thus for the telecommunications networks.

2.5.2. Over the last twenty years, the highest-level economic and political functions (company management, finance, R& S, culture and other 'rare' services) have been increasingly concentrated in urban areas. This trend has, however, been mirrored by a trend, driven by relocation of productive activities towards greater decentralization of intermediate-level services.

2.5.3. These two opposing trends are part of a single process which is reshaping information networks and flows directed towards major urban centres, and extending them to regions and countries formerly considered peripheral.

Within the Community's new 'common information area', cities should be seen first and foremost as the driving force behind this double trend and hence as the fulcrum of the great structural transformations from which the Europe of the 21st century will emerge.

2.5.4. Since demand for telecommunications is at its most concentrated in cities, they will increasingly attract the main ICT infrastructures (information highway, teleports, etc.), particularly since - as the White Paper predicts - their funding and management will increasingly rely on the private sector.

2.5.5. All this is highly relevant to urban policy. Locally, ICT must be able to count on infrastructural, regulatory and management support allowing real participation by all members of society in the city's role as information centre.

The information function of the urban system should, at regional, national and Community level, be spread out geographically, in order to avoid over-concentration in major metropolitan centres and to ensure network synergies with the important potential asset represented by small and medium-sized cities.

2.6. The environment and urban quality of life

2.6.1. 80 % of the EC's population lives in cities: quality of life depends to a very large extent on urban environmental conditions. The European Community is demonstrating its particular concern with this aspect of urban policy through programmes such as LIFE, Sustainable City, Civitas and so on.

2.6.2. Environmental problems are at their worst in urban areas, with their concentrations of population, economic activity, consumption, materials and energy: pollution levels tend to be particularly high, waste disposal and rehabilitation of environmental resources are at their most costly. But urban areas are also the birthplace of environmental movements, new 'clean technologies' and strategies for sustainable development.

2.6.3. At the same time, cities are the main historic-cultural and architectural sites, repositories of collective memories and symbolic values. Many, such as the città d'arte, possessing as they do an outstandingly rich cultural environment and hosting important events, represent a heritage in terms of the environment and values which constitutes the foundation of not only local, but also national and European collective identities.

2.6.4. Lastly, as well as being fundamental to the quality of life of their inhabitants, city environments are an important competitive factor because they are a magnet for high-grade economic activities. In particular, innovatory urban settings - the combination of local conditions capable of boosting European competitiveness - are closely associated with outstanding cultural settings and attractive environmental surroundings.

3. In all the areas listed above, cities are already involved in provincial and regional functions. Their capacity to act could, however, be boosted, in line with the thinking of the White Paper, so that they become economic and social entrepreneurial centres and major forces for innovation on the national and international scene. This is, of course, already occurring in many cases. The challenge is to acknowledge this fact, and create an institutional reference framework to make it universal.

3.1. One important point needs to be clarified: here, 'city' does not mean only the city authority but rather the whole range of its interacting separate and associated components - private individuals, families, associations, organizations, businesses. In contemporary society and economies, these components have more and more outside contacts, and may even be highly mobile, moving around as it suits them. The crucial problem facing today's cities is how to forestall opportunistic behaviour by interests which exploit local resources without any intention of putting anything back or adding anything for the common good, only consuming them and then moving on. Cities can best promote themselves by creating conditions in which local players are motivated to invest in two-way relationships, and adopt joint long-term strategies covering economics, politics and culture.

3.2. In this way cities can preserve and develop their assets - mutual trust, codes of interaction, institutions, business and infrastructure investments, shared know-how and a guaranteed quality of life. Municipalities have an important institutional role to play in facilitating this sort of fruitful cooperation and - without dictating - articulating the views of local interest groups and the city as a whole. This is, in any case, a joint venture with many different players, private and public.

3.3. Only cities of this kind, capable of stimulating development, can contribute to provincial and regional government. At the same time, only cities with a capacity for integration and development strategy have the means of involving their entire community in their projects and of averting the risk of a two-tier society. The new gulf between those with a stake in society and those on the outside is at its most evident in cities, and they are at the forefront of attempting to bridge it. If a sense of common social responsibility is to be brought to bear effectively on this problem, cities must be strong, recognized institutional players.

The towns of Europe - for a plethora of reasons, but in the interests of all - want a place in the Europe of nation-states and regions.

Done at Brussels, 27 September 1994.

The Chairman

of the Committee of the Regions

Jacques BLANC

APPENDIX III

Complementary opinion on the European Commission's White Paper growth, competitiveness, employment: 'The challenges and ways forward into the 21st century (1993)'

COMMISSION 5 OF THE COMMITTEE OF THE REGIONS

Whereas Article 198 A of the Treaty on European Union 1992 enables regional and local bodies to participate, via the Committee of the Regions, in the decision-making process of the European Union;

Whereas Articles 100A and 130R, S and T of the Single European Act 1987 stress that the Commission will aim at a high level of environmental protection, set out the objectives of the Community's actions in the environmental field, and establish a number of principles as the basis for Community action;

Whereas the Treaty on European Union 1992 reaffirms the objectives and principles underlying Community action in the environmental field, as set out in the Single European Act 1987, and elevates the actions to the status of policies;

Whereas Agenda 21, signed at the UNCED Earth Summit in Rio in 1992, stresses the importance of sustainable development strategies;

Whereas the Treaty on European Union 1992 introduces the concept of sustainability (Article 2), promotes sustainable and non-inflationary growth respecting the environment, and introduces the possibility of the European Council adopting measures concerning town and country planning, land use with the exception of waste management and measures of a general nature, and the management of water resources;

Whereas the Fifth Environment Action Programme (Towards sustainability: a European Community programme of policy and action in relation to the environment and sustainable development, March 1992) gives priority to achieving improvements and changes in sustainable management of natural resources, efforts to bring about a reduction in the consumption of non-renewable energy, environmental quality in urban areas, mobility management (through rational decisions on transport structures), and integrated pollution control and prevention of waste;

Whereas the Europe 2000 report, the Green Paper on the Urban Environment, and the Fifth Environment Action Programme stress that all Community policies should be reviewed in the light of the sustainable development principle and that Commission initiatives should adhere to this principle,

THE FOLLOWING OPINION IS DRAWN UP BY ITS RAPPORTEUR: Lady Elizabeth Anson.

1. General comments

1.1. The Committee of the Regions gives strong support to the new 'sustainable development' model set out in the European Commission's White Paper, i.e. to promote economic development in a sustainable way which contributes to a higher intensity of employment and a lower intensity of energy and natural resources consumption. As the report states, 'attacking the sources of the present unemployment problems requires a clean break from the past': there will be a need to take fresh initiatives within the context of the European Union acting as a laboratory for change.

TEXT CONTINUED UNDER DOC.NUM: 594IR0171.1

1.2. There is a need positively to recognize and to act upon the complementarity between growth-competitiveness-employment and the environment-quality of life. It is accepted that the European Union must be economically powerful but it must also be environmentally robust: a successful economy and a successful environment go hand in hand. We believe that a principal aim of the new sustainable development model should be to maintain and enhance Europe's environment in its widest sense, encompassing town and countryside, to seek reductions in pollution, congestion and dereliction, and to conserve attractive buildings, important habitats and beautiful landscapes.

1.3. At the same time, there is an increasing need for the efficient use of non-renewable forms of energy and a more positive approach to energy conservation. Wherever possible, public authorities should give priority to renewable sources of energy such as the sun, wind, and small-scale gas production with biogas, and should adopt a positive approach to such development proposals in exercising control through the statutory planning process. Over time, spatial planning has the potential to influence travel patterns and energy consumption, e.g. by resisting low density urban development on the periphery of towns, and by creating conditions for the regeneration of inner city areas, the retention of traditional shopping centres, and greater use of mass transit.

1.4. The new sustainable development model supported in Chapter 10 of the White Paper crucially requires an active role for government at the regional and local level if it is to be implemented. The EU's Fifth Action Programme on the Environment identifies local government as a key actor and about 40 % of the Programme's measures are identified as the responsibility of regional and local authorities. In addition, local government was identified as a major group in the Agenda 21 action programme for global sustainability at the Earth Summit in Rio. In developing their own Local Agendas 21, local and regional bodies in Europe are making an important contribution to the achievement of sustainability which deserves recognition in the White Paper.

1.5. It is important explicitly to acknowledge that, whilst the new development model stresses the complementarity of economic growth and environmental protection and emphasizes the positive nature of the economic-ecological relationship, there are many circumstances in which tension can exist between them and in which difficult choices and trade-offs will have to be made. The development of clean technology enables economic development to take place, in many cases without environmental damage or even with improvements in sustainability, but it cannot resolve all of these tensions and it must be recognized that there are some circumstances in which the protection of the environment for future generations will have to take priority. Sustainable development means accepting that the 'carrying capacity' of ecosystems sets limits to the ability of the environment to accommodate certain human activities, however desirable they may be on other grounds.

1.6. We regard as unacceptable the fact that current economic accounting does not reflect external costs. We consider that there is a need for transparency in overcoming the inefficiencies of the current development model by identifying hidden welfare costs notably as regards the environment, fossil fuel, nuclear energy and transportation. To that end, and as a matter of some urgency, the Community should initiate research into green accounting.

1.7. The implementation of the new development model will require a partnership among a number of actors. It will require policy adjustments on the part of authorities at all levels, i.e. European, national, regional and local, and cooperation and a positive response from industry and the consumer. We share the view that the transitional phase would be facilitated if countries were to act together.

1.8. There are uncertainties surrounding the implementation of the new development model and there will be a need for cohesion to ensure that groups of citizens and regions of the Community (notably peripheral areas and islands) do not suffer undue disadvantage.

1.9. The introduction of the new sustainable development model will require the development of a working partnership between different tiers of government (from local and regional to national and European) and between government and the citizen. It is important that ownership of the strategy is diffused throughout the Community to secure the active participation of all key actors. Local Agenda 21 is a Europe-wide initiative to develop local policies for sustainable development by building partnerships between local and regional bodies and other sectors thereby ensuring implementation. We commend this model of cooperative working and co-decision-making for implementing the development strategy set out in the White Paper.

1.10. We believe that the current institutional framework of the European Commission needs to be reviewed to give impetus to sustainable development. We agree that the transition towards a new development model will require 'a systematic review of existing macro and sectoral policies with as a basic guideline that market prices have to incorporate all external effects'. Such a review would cut across the whole range of the Commission's business and will require horizontal integration among Directorates-General dealing, amongst other things, with energy, transport, environment, agriculture and regional development. Horizontal integration might best be achieved if a Commissioner for Sustainable Development were appointed.

1.11. Given that European firms face global competition, we believe that the European Commission and Member States should seize every opportunity to press the case for the sustainable development model to become accepted outside of the European Union.

2. Specific comments

2.1. Chapter 3 (trans-European networks): we support the preparation of master plans of trans-European transport and telecommunications networks. It is noted that under Article 129 of the Treaty on European Union the Community is not empowered to make the construction and development of trans-European networks a direct legal obligation on Member States. In view of this fact and in line with the principles of subsidiarity and transparency, Member States, local and regional bodies and the citizen should be involved during the consultation phases.

2.2. Whilst we accept that unnecessary delay in the implementation of large infrastructure projects as a result of administrative procedures (authorization and evaluation) is unwarranted, we regard some intervention by local and regional bodies on behalf of the community as fully justified. Transport and energy infrastructure can have an impact over a wide area and for a considerable number of years: some delay whilst the likely impact on amenity and the quality of life is being assessed must be accepted. In this regard, we strongly support the view expressed in the White Paper that 'only projects that have passed the environmental impact scrutiny will be eligible' for inclusion in the Community's initial list of projects. The Committee notes that neither the European Parliament nor the Committee of the Regions have been asked for their views in the selection of the eleven projects confirmed at the Corfu Summit and feels that both the COR and the Parliament should be given an opportunity to participate in the selection process.

2.3. Chapter 10 (a new development model for the Community): we fully support the goal of reversing the negative relationship between environment-quality of life and economic prosperity, but we recognize that there will need to be a transitional phase. Indeed, we endorse the view that the Community should increase substantially and coordinate R& D efforts in the field of clean technology and develop economic incentives to support the diffusion of R& D results into products and processes.

2.4. We consider that the European Commission should lead by example in bringing about an increased use of the products of clean technology: this, in our view, requires a wide-ranging green audit and a firm procurement policy. Moreover, and as a precondition of funding from EU programmes for infrastructure development, the Commission should issue guidelines requiring the Contractor to use green products, recycled materials and alternatives to natural resources, e.g. secondary aggregates.

2.5. Local and regional bodies throughout Europe have already achieved a great deal in maintaining and improving the physical environment by way of a well developed system of spatial planning and control. The White Paper's reference to improving the quality of life in terms of the amenity of the landscape, better integration of new buildings and transport infrastructure into historical urban centres or the availability of parks and other green zones in urban areas, does not overtly recognize what has already been achieved.

2.6. We consider that spatial planning and local and regional develpment are two of the essential motors in the quest for employment. The problems of spatial planning have increasingly assumed a Community dimension. There is a need for the European Commission to base its new Europe 2010 report on the new sustainability model and to urge all local and regional bodies in reviewing their spatial development plans to do likewise. This would contribute to the creation of methods for the inter-active energization of agents of local development, research and development networks, exchanges of technology, productivity gains and job creation. Indeed, it is considered that Europe 2010 should be extended: a Community spatial planning policy should be prepared with regional and local operators directly affected by such a policy being taken into partnership. Spatial planning programmes, involving concerted action by local and regional bodies, should be drawn up. Such an approach should increasingly result in an easing of pressure on natural resources, a reduction in pollution levels and in the impact on the ecological system, and the maintenance of biodiversity.

2.7. Whilst the spatial planning system can now require a high standard of restoration, the European Commission should investigate ways of accelerating clean-up operations and making good the legacy of past dereliction arising from an outdated development model and previously inadequate control mechanisms. It should be recognized that land is also a scarce resource: in certain circumstances, it may need to be recycled (as a result of mineral workings) or decontaminated (as a result of industrial use), and it may suffer from negative equity values which hamper regeneration.

2.8. The way that scarce and finite resources are consumed, e.g. when generating energy, is central to the new sustainable development model. We note proposals such as a Carbon/Energy Tax. We strongly support the principle of shifting general taxation from social goods, such as labour and capital, towards environmental 'bads' such as the consumption of natural resources and waste. Such changes to the system of taxation should seek to avoid inequity, e.g. by increasing travel costs in rural areas where there are few or no alternative means of transport, while retaining their progressive elements.

3. Conclusion

3.1. The White Paper is a significant milestone in recognizing that economic growth does not necessarily equate with an increase in jobs. It also makes an important step forward in accepting that the relationship both between actors of local development and economic and environmental objectives needs to be refashioned. The transition from the present to the new development model will be highly challenging but this is a challenge which must be met in the interests of future generations. If met successfully, it will bring into place a Europe in which more jobs will be created by a 'rediscovery' of the value of labour relative to capital which, in turn, will help to reduce the over-exploitation of environmental resources (energy and raw materials), enhance the quality of life, and provide a more sustainable future.

Brussels, 27 September 1994.

The Chairman

of the Committee of the Regions

Jacques BLANC

APPENDIX IV

Supplementary opinion on the Educational and training aspects of the White Paper on growth, competitiveness, employment

On 20 June 1994 the Committee of the Regions, acting under Article 9(1) of the Rules of Procedure, decided to draw up an Opinion on Educational and training aspects of the above-mentioned White Paper.

The Commission on Education and Training, which was responsible for preparing the Committee's work on the subject, adopted its Supplementary Opinion on 20 July 1994. The Rapporteur was Mr Efstathiadis.

At its ... plenary session (meeting of ), the Committee of the Regions adopted the following Opinion by ...

1. Introduction

1.1. The White Paper places a number of problems in their context of high unemployment, increasing competition pressures, and the new technologies which are radically reshaping numerous aspects of social and economic activity.

1.1.1. In the field of 'growth, employment, competitiveness', priority should be given to:

- tackling unemployment

- supporting SMEs, and

- creating trans-European networks.

Efforts should be concentrated on boosting employment.

1.1.2. Acquisition and dissemination of knowledge is an investment by the Member States in a viable social future.

1.2. The Treaty on European Union charges the Community to contribute to the development of quality education and vocational training by supplementing Member States' action, while fully respecting their responsibility for curriculum content, the organization of educational systems and their cultural and linguistic diversity and the content and organization of vocational training. (Articles 126 and 127 of the EC Treaty as amended by the EU Treaty).

1.3. Although it is up to the Member States to overhaul their education and vocational training systems, the Community should provide support through programmes to promote such reform and through the financial instruments at its disposal. This kind of action today has a greater impact on the Member State economies.

1.4. No policy on competitiveness, employment and growth can be complete or fully effective unless it is consensual, which means that local and regional authorities must be involved, not only because of their democratic responsibilities but also because of their role in the delivery of education and training.

1.5. It is the duty of the Committee of the Regions to monitor the relevant programmes, and harness its expertise and resources to the enhancement of competitiveness in fields which affect economic and social cohesion in the various regions.

1.6. Firstly, it is necessary to reduce disparities between the different parts of the Community and between regions in Member States. The concentration of investment and human resources in some areas has resulted in the potential for wealth creation in other regions being left untapped.

1.7. Growth based exclusively on economic scale, without a balanced reinforcement of the other aspects of social and cultural life will be distorted and, in the long term, unproductive. Resources must be transferred in order to offset social and regional disparities by providing equal opportunities in housing, education, training and employment.

2. Analysis of the vocational training aspects of the White Paper

2.1. Unemployment is a particular problem for people with inadequate skills. This diagnosis by the White Paper confirms the key role of education and vocational training in growth, employment and the competitiveness of the European Union. It should be added that this role must reflect the multifarious needs of society.

2.2. The diagnosis of weaknesses by the Employment section (chapter 7.3) prompts an important observation which should be of particular concern to us and which should be the focus of our efforts.

2.3. The relatively low level of training in some states of the Community, and especially the fact that too many young people leave school without essential basic training, is worrying. It leads to marginalization and social exclusion, and from there to the ranks of the unemployed. Some regions of the Union suffer from especially low levels of training, which is of particular concern.

2.3.1. The White Paper reports that in the Community only 42 % of school-leavers have a secondary qualification, as against 75 % in the USA and 90 % in Japan. It also states that in the Community 25 % to 30 % of young people, betrayed by the failure of the education system, leave it without adequate preparation for the labour market. The Committee adds that the education system is in particular unable to meet the requirements of children with special needs, such as EU migrant workers' children.

2.3.2. The Committee points out that whilst there are considerable difficulties in making accurate statistical comparisons between EU Member States and third countries and whilst there are wide differences in figures between and within the Member States themselves, it is nevertheless clear that skill levels in the EU need to be raised.

2.4. What needs to be re-examined is the role of education and vocational training in our social system.

2.4.1. Young people discover immediately on leaving school that there are no jobs for them. This generates social tension, social alienation, and sharply antisocial behaviour, resulting in increased crime, drug abuse and so on. (At the end of the Belgian Presidency, Foreign Affairs Minister Claes, speculated on the millions of criminals who might 'graduate' in coming years from the ranks of the Community unemployed.)

2.5. The traditional teaching model is not so useful in lifelong training, because learning must be combined with experience.

2.5.1. Further and higher education establishments must adapt to the demands of today's rapidly evolving and changing world.

2.5.2. Proper education based on willing cooperation from the outset, ensures that people want to learn and acquire the skills and know-how which are fundamental to a competitive market.

2.6. Lifelong education, as a means of acquiring knowledge and of personal development, is the main aim of society, and must become the subject of social dialogue.

2.6.1. This is where further and higher education establishments should play a role, namely by inculcating the skills which their students will need if they are to continue their educational development on their own. These institutions must diversify their organizational structures and teaching methods, in order to provide a basis for strong, effective lifelong training. The available budgetary facilities will not allow for substantial increases in funding for both initial and continuing training. Given that the mass of knowledge doubles every seven years, more attention should be focused on continuing training. The duration of initial training should not therefore be lengthened and measures supporting continuing training should be reinforced.

2.6.2. In higher education establishments, the emphasis is often on theory which can be an important preparation for the academic world and for researchapter However, for those wishing to enter the non academic labour market, such an approach may be less useful and higher education institutions need to ensure that all students have access to courses providing a basis for acquiring additional vocational skills. Appropriate work experience outside the academic institution but during the period of study must be an important part of any higher education course.

2.6.3. Distance learning is important for all the reasons set out in the ESC's Opinions - provided it does not preclude human contact and training networks are properly structured.

2.7. Presentation of university development initiatives is of interest not only to the participating university staff, teachers and students: it is also of direct interest to firms, especially smaller firms.

2.7.1. Hitherto vocational training has usually reflected company activities.

2.7.2. The White Paper states that new technologies and training of relevant research workers are of assistance in vocational training.

2.7.3. Firms have urgent education and training needs. Universities and research centres should take suitable measures to meet these needs. A system of training credits should be developed to allow trainees or students to amalgamate the qualifications of training courses or study programmes that could lead to the obtaining of a certificate, diploma or degree.

2.7.4. Electronic image transmission, electronic access to data and electronic mail are helping small and medium-sized firms to become more competitive.

2.7.5. Telework, telematics and telemanagement require specialized staff.

2.8. Increasing the competitiveness of small and medium-sized firms boosts their contribution to the dynamism of the Internal Market.

3. Description of the sectors where measures have been taken, and of current programmes

3.1. The Leonardo and Socrates programmes set general objectives and deploy various methods of funding.

3.2. Specifically, the Leonardo programme establishes a common set of aims for Community action to promote coherent, well-defined development of vocational training throughout the sector. It comprises a package of Community measures, geared to the common aims, which support and supplement the action taken by the Member States.

3.3. The Socrates programme seeks to develop the European dimension in education at all levels, so as to establish a European awareness based on:

- the cultural heritage of the Member States;

- steps to promote foreign language teaching, so as to encourage solidarity and understanding between nations;

- greater mobility for students;

- closer cooperation among educational establishments at every level in all the Member States, in order to make full use of intellectual potential by enhancing teacher mobility;

- promotion of mutual recognition of academic qualifications;

- greater use of communication and information technologies in education;

- development of distance learning;

- promotion of exchanges of information and experience.

3.4. The two programmes cover the educational aspects and needs addressed in the White Paper on growth, competitiveness, employment.

3.5. Similarly, the problems raised in the White Paper are vigorously addressed by a range of Community initiatives under the European Social Fund (ESF): Employment (incorporating Horizon, Now, Youthstart), Adapt (industrial change) and the SME initiative.

4. Specific comments on the White Paper and proposals for practical measures

4.1. The Committee of the Regions endorses the European Union's action to further the European dimension of education and training and to improve the quality of education at all levels, but believes the primary educational objective must be to ensure a sound basic education for all.

4.1.1. To this end, it would be desirable that each Member State set up a body to provide information on the development of the European dimension in schools.

4.1.2. Training for teachers and administrative staff should also have a European dimension.

4.2. It is necessary to start by looking at the first level of basic education, which must be slanted more to the quality rather than the quantity of knowledge. Pupils need to be convinced that learning and education are essential components of their life in society.

4.3. If they are to cope with the working environment of tomorrow, today's workers need continuing training and education, to become flexible to cope with changing skills and new technologies. Training should form an integral part of every person's career.

4.4. The plans which have been implemented so far concern certain groups in a community and do not cover all the interested parties in a region.

4.5. Local and regional authorities can do much to promote partnership schemes, through appropriate machinery, by acting as catalysts and coordinators and by helping the partners to reach agreement. The problems cannot be solved unilaterally or at a sectoral level, but solutions can be worked out with the participation of the entire community.

4.6. Local and regional authorities and universities can offer each other a great deal. Local and regional authorities must also play an important role in promoting cooperation between the labour market and education authorities.

4.6.1. Universities must not be cut off from the day-to-day problems of their local regions. They have both a teaching and a research function.

4.6.2. It is necessary to formulate complementary measures for the training of employees in the small/medium business sector, which makes a significant contribution to consolidation of the Internal Market and to the competitiveness of its products. Small and medium-sized firms - apart from those producing hi-tech products - seem to be unaware of their needs and unable to adapt to new organizational methods and new technologies. Businesses in the private sector should therefore be more involved in the area of education and training, in particular by promoting training for their employees as part of their personnel strategy.

4.7. The COR endorses the European Commission's pilot scheme for reinforcing interregional cooperation within the EU between those responsible for education at local level. The scheme focuses in particular on the assessment of vocational training needs.

4.7.1. This pilot scheme is only operating in 10 regions (), and the COR would like to see similar initiatives taken in other regions.

4.7.2. The COR endorses the recent EC Commission initiative under the Arion Community action, which will enable 950 education specialists to visit another Member State in 1994-1995 to familiarize themselves with different education systems at first hand.

4.7.3. Such exchanges have also been called for by ESC Opinions () and the COR Opinion on the Socrates programme (CdR 43/94).

4.8. Foreign language acquisition is a vital factor in the creation of a Citizens' Europe and completion of the Internal Market. But foreign languages should not be learned at the expense of regional languages and dialects.

4.9. The political, economic and social completion of the European Union will require a quantitative and qualitative increase, in information on educational matters and on specific issues relating to the development of educational establishments. This need is served by the Eurydice network.

4.9.1. It would be a helpful to extend Eurydice to cover vocational training. The European Centre for the Development of Vocational Training (CEDEFOP) will make a significant contribution in this field.

4.10. Commission programmes have hitherto focused on promoting individual sectors of education and vocational training.

4.10.1. A cooperation network should be set up to coordinate the action taken. At the same time, equipment and infrastructure should be guaranteed through funding from the Structural Funds, and efforts should be focused on disadvantaged regions in order to avoid multi-speed development. The COR recalls that for the first time financial support is available for developing education infrastructure (premises, building etc.) within the new regulation for the European Regional Funds. The Committee argues that this possible funding for the period of 1994-1999 should be used effectively and sufficiently allocated in order to offset education disparities in the Objective 1 regions.

4.11. Present activities under the programmes lack synergy which would integrate them with the social structure. The COR therefore calls for adoption of a multiannual Community programme of studies and networking which will bring together regional and local authorities in a region with the economic, social and educational groups with a view to making full use of human capital throughout the working lives of the workers concerned.

4.11.1. This initiative will link the other programmes together, integrate them with society and the real world, and ensure assessment of their regional impact. A principal catalyst for the activities will be the regional and local authorities, which will

- address horizontal aspects of education, training and policies;

- assess and pursue Community programmes and plans;

- compile and provide information.

4.11.2. Partnership between the local and regional authorities, the universities and firms will create links between:

- education/training and industry/economic life;

- education/training and policies to combat unemployment;

- education/training and efforts to integrate migrant children;

- education/training and measures to combat social exclusion;

- education/training and concern for regional development;

- education/training and needs.

4.11.3. The initiative would set up a two-way channel of communication between local and regional authorities, research and teaching bodies and industry.

4.11.4. The Community's aim would be to narrow the education and infrastructure gap between Objective 1 countries and the developed North.

4.11.5. Full use must be made of experience gained in cooperation between universities, in student exchanges, and in cooperation between industry and university bodies under the Leonardo and Socrates programmes, etc.

4.11.6. Local and regional authorities should encourage firms to familiarize themselves with and promote the individual cultural, vocational and social interests of their employees. The aim would be to ensure that employees are socially and occupationally well-informed and integrated, which is to the advantage of their employers.

4.11.7. There should be vocational guidance from local centres supported by partnership schemes.

4.11.8. Knowledge should be continually updated, and extended by flexible, open training systems, so that individuals can adjust to the technological innovations which are so es