[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 17.5.2005

SEC(2005) 632

COMMISSION STAFF WORKING DOCUMENT

Annex to the Communication from the Commission ”Third progress report on cohesion: Towards a new partnership for growth, jobs and cohesion” {COM(2005) 192 final}

LIST OF GRAPHS

Graph 1 GDP growth 1995-2003: productivity and employment

Graph 2 Regional disparities within Member States (Ratio between GDP share of wealthiest and least wealthy 20% of regional population) 1995-2002

Graph 3 GDP per head in PPS in 2003 (estimate)

Graph 4 GDP per capita (PPS) in 1995 and average annual growth 1995-2002

Graph 5 Productivity index and GDP per capita 2001

Graph 6 Annual average growth 1995-2001: productivity

Graph 7 Employment rate and GDP per capita 2001

Graph 8 Annual average growth 1995-2001: employment

Graph 9 Employment rate (15-64) by country and regional extremes, 2003

Graph 10 Increase in net structural expenditures (excluding EU funds) in 9 new Member States

Graph 11 Mid-term verification of additionality for EU-15

LIST OF TABLES

Table 1 Regional GDP per head 2000-2001-2002

Table 2 Regional disparities within Member States (1995-2002) - ratio between GDP shares of the wealthiest 20% of regional population and the least wealthy 20%

Table 3 Regional disparities – Underperforming regions in terms of employment and unemployment

Table 4 Urban Audit

Table 5 Allocation of the performance reserve (2000-2006 programming period)

Table 6 Proportion of ERDF and ESF commitments allocated to Lisbon objectives per Member State in the 2000-2006 programming period

Table 7 Key findings from the mid-term evaluations (2000-2006 programming period)

Table 8 Details on the main events on cohesion policy

Table 9 Summary of programmes in the New Member States

LIST OF MAPS

Map 1 GDP per head by region (PPS), 2002

Map 2 GDP growth, 1995-2002

Map 3 Employment rate, 2003

Map 4 Old-age dependency rate (effective), 2003

Map 5 Old-age dependency rate, 2003

Map 6 Population growth by NUTS 2 regions (1995-2002)

Map 7 R&D Expenditure (GERD) 2002

Map 8 Eligibility for structural funds support 2004-2006

Map 9 Provisional eligibility for structural funds support 2006-2013

GRAPHS

Graph 1 GDP growth 1995-2003: productivity and employment

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Graph 2 Regional disparities within Member States (ratio between GDP share of wealthiest and least wealthy 20% of regional population) 1995-2002

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Graph 3 GDP per head in PPS in 2003 (estimate)

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Graph 4[1] GDP per capita (PPS) in 1995 and average annual growth 1995-2002

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Graph 5 Productivity and GDP per capita 2001

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Graph 6 Annual average growth 1995-2001/2002: productivity

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Graph 7 Employment rate and GDP per capita 2001

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Graph 8 Annual average growth 1995-2001/2002: employment

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Graph 9 Employment rate (15-64) by country and regional extremes, 2003

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Graph 10 Increase in net structural expenditures (excluding EU funds) in 9 new Member States

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Graph 11 Mid-term verification of additionality for EU-15

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TABLES

Table 1 Regional GDP per head 2000-2001-2002

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Table 2 Regional disparities within Member States (1995-2002) - ratio between GDP shares of the wealthiest 20% of regional population and the least wealthy 20%.

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Table 3 Regional disparities – Underperforming regions in terms of employment and unemployment

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Table 4 Urban Audit

The latest edition of the Commission’s Urban Audit was published in 2004; it brings together a wide range of indicators for 258 large and medium-size cities across the 25 Member States as well as Romania and Bulgaria.

In general, urban residents seem to have a different profile to the population of the countries they live in. They are more likely to be single, of working age, have completed tertiary education and be a foreign citizens. The elderly and households with children under 18 less likely to be living in cities. This confirms the low dependency rates found for large urban regions.

Cities act as centres of employment for a widely-drawn population, with one in every three jobs being taken by someone commuting into the city. On the other hand, in 80% of cities surveyed, a lower share of residents was economically active than the population of their respective countries. In 65% of cities, a higher share of urban residents was unemployed than the population of their country. In some cities, unemployment rates were more than double the national rate such as for example in Rotterdam, Porto, Liverpool, Leipzig and Montpellier.

In the new Member States and Romania, unemployment has a different geographical distribution. The differences between cities in these countries is greater than in the old Member States, for example in Romania, the city of Arad has an unemployment rate of only 5% compared to 24% in Calarasi. The unemployed are also more often likely to live outside the city. Whereas in the old Member States unemployment rates tend to be higher within the cities than in its suburbs. In the new Member States and Romania, the region surrounding the city has a (far) higher unemployment rate.

Table 5 Allocation of the performance reserve

Member State | Total amount of performance reserve[2] | Areas/activities |

Austria | Objective 1: € 12 million Objective 2: € 31 million Objective 3: € 23.787.600 | € 952.331 on Obj. 1 “Research, technology and development” and € 4.277.690 on Obj. 1 “Commercial and industrial activities” Obj. 2 Lower Austria: more than half of performance reserve on mobilising endogenous potential for regional development Obj. 2 Steiermark, nearly half of performance reserve on information society |

Belgium | Objective 1: € 28 million Objective 2: € 19 million Objective 3: € 33.203.600 | € 2 million on new technology infrastructure as part of the knowledge economy priority axis. € 9.8 million on expanding the productive base (stimulating economic growth and creating employment) in Objective 1 areas |

Denmark | Objective 2: € 8 million Objective 3: € 16.444.200 | € 5.310.133 on equal access to the labour market; and € 4.918.302 on entrepreneurship and innovation |

Finland | Objective 1: € 41 million Objective 2: € 23 million Objective 3: € 18.156.100 | € 5.304.700 (promotion of employability); € 4.420.600 (equal opportunities); € 4.420.600 (development of human capital to support entrepreneurship) in Obj. 3 |

France | Objective 1: € 171 million Objective 2: € 273 million Objective 3: € 204.537.800 | Performance reserve in France directed primarily to the areas of information technology, R&D, and environment (water/waster management and natural risk prevention). € 100 million, part of the performance reserve allocated to broadband networks |

Germany | Objective 1: € 899 million Objective 2: € 159 million Objective 3: € 206.385.000 | € 8.443.000 of total performance reserve of € 16.840.000 in Obj. 2 West Berlin to promoting the competitiveness of the industrial economy, particularly SMEs; € 42.464.000 (entire performance reserve) of Obj. 2 Nord-Rhein Westfalen to "innovation and knowledge development". |

Greece | Objective 1: € 867 million | National reserve used to increase the effort in favour of human resources from around 19% to around 24% following the MTR. € 126.565.971 to be spent on employment promotion and vocational training; € 166.481.293 on education and vocational training Performance reserve to include more state aids to business through OP Competitiveness (€ 79.068.216) including important reforms in the delivery system, using banks rather than the public administration to manage state aid applications. Bulk of performance reserve spent on traditional infrastructure projects (€ 287.297.399) |

Ireland | Objective 1: € 134 million | Entire performance reserve on Economic and social infrastructure OP, primarily infrastructure. |

Italy | Objective 1: € 996 million Objective 2: € 113 million Objective 3: € 168.676.100 | € 71.150.000 on Objective 1 Research OP; € 34.100.000 on Objective 1 Education OP; |

Luxembourg | Objective 2 : € 3 million Objective 3: € 1.712.000 |

Netherlands | Objective 1: € 6 million Objective 2: € 36 million Objective 3: 75.958.300 | Objective 2 Noord-Nederland; performance reserve of € 14.7 million was allocated essentially to “Reinforcement of the market sector”, in particular SME support; a second measure was added focusing on ‘knowledge, innovation and sustainability’ and by re-allocating the bulk of the 59 M€ priority budget to this new measure |

Portugal | Objective 1: € 855 million | € 52.206.965 on Health OP (Obj. 1); € 80.083.221 on Employment, training and social development OP (Obj. 1); € 17.208.843 on OP “Science, Technology, Innovation” |

Spain | Objective 1: € 1,717 million Objective 2: € 119 million Objective 3: € 96.412.100 | € 151.230.673 on OP Employment Development; € 78.700.108 on improving competitiveness and developing production structures; € 71.490.496 on research, development and innovation in Objective 1 areas Strengthening public-private partnerships in research now form 15% of all Obj. 2 programmes |

Sweden | Objective 1: € 32 million Objective 2: € 17 million Objective 3: € 32.437.800 | Most of the performance reserve allocated to: measures for infrastructure and business development infrastructure: important amounts to the support of broadband in the outer regions and in the sparsely populated areas. Emphasis on sustainable development and environmentally sound living. |

UK | Objective 1: € 236 million Objective 2: € 212 million Objective 3: € 205.799.300 | Objective 1 Northern Ireland OP; € 25 million for Economic Growth and Competitiveness Obj 3: € 49.436.433 towards active labour policies in England; € 48.812.555 (England) and € 5.737.685 (Wales) towards equal opportunities and social inclusion |

Table 6 Proportion of ERDF and ESF commitments allocated to Lisbon objectives per Member State in the 2000-2006 programming period[3]

ERDF and ESF to Objective 1 |

Total (excl. TA) | More and better jobs* | Environment | Transport | Other** |

Austria | 223.637.894 | 66% | 4% | 0% | 30% |

Belgium | 596.293.876 | 81% | 8% | 1% | 9% |

Finland | 732.906.000 | 88% | 2% | 2% | 8% |

France | 3.181.548.512 | 51% | 15% | 14% | 20% |

Germany | 17.062.458.862 | 62% | 15% | 19% | 5% |

Greece | 18.455.620.203 | 40% | 8% | 36% | 16% |

Hungary | 1.063.778.301 | 43% | 18% | 27% | 13% |

Ireland | 2.814.337.000 | 52% | 9% | 35% | 4% |

Italy | 17.724.308.679 | 51% | 14% | 17% | 17% |

Latvia | 492.947.000 | 56% | 10% | 19% | 15% |

Netherlands | 106.780.000 | 64% | 18% | 2% | 16% |

Portugal | 16.515.287.240 | 45% | 14% | 20% | 22% |

Slovenia | 201.914.506 | 67% | 8% | 4% | 20% |

Spain | 33.030.812.111 | 42% | 19% | 28% | 11% |

Sweden | 612.607.999 | 81% | 1% | 6% | 13% |

UK | 5.665.263.300 | 68% | 12% | 17% | 3% |

Totals | 118.480.501.483 | 49% | 14% | 24% | 13% |

ERDF and ESF to Objective 2 |

Total (excl. TA) | More and better jobs* | Environment | Transport | Other** |

Austria | 716.185.300 | 55% | 5% | 1% | 39% |

Belgium | 433.831.982 | 56% | 14% | 4% | 25% |

Cyprus | 26.902.087 | 43% | 5% | 7% | 45% |

Denmark | 186.678.555 | 72% | 5% | 2% | 21% |

Finland | 494.149.840 | 75% | 12% | 5% | 7% |

France | 5.931.211.261 | 48% | 19% | 9% | 24% |

Germany | 3.529.017.278 | 63% | 17% | 3% | 18% |

Italy | 2.403.247.593 | 45% | 25% | 9% | 21% |

Luxembourg | 39.770.000 | 40% | 39% | 3% | 18% |

Netherlands | 801.137.787 | 46% | 25% | 4% | 25% |

Spain | 2.798.639.657 | 60% | 19% | 11% | 10% |

Sweden | 422.193.645 | 67% | 8% | 9% | 16% |

UK | 4.754.709.900 | 75% | 10% | 2% | 14% |

Totals | 22.537.674.885 | #REF! | #REF! | #REF! | #REF! |

* More and better jobs: knowledge economy, innovation, ICT, R&D |

** Other: eg. tourism, social and health infrastructure, rural development |

Table 7 Key findings from the mid-term evaluations (2000-2006 programming period)

- Measures promoting economic growth and competitiveness seem to have been reinforced particularly in Objective 2 areas; in some instances, the entire performance reserve for a particular programme has been directed towards competitiveness.

- Education and vocational training continues to be an important dimension in the majority of Objective 1 and 2 programmes and the performance reserve in several Member States was targeting at reinforcing these programmes as a way of creating employment.

- The environment was a horizontal priority for the Structural Funds and the evaluations provide insights into how to enhance the practical integration of the priority and how the concept of sustainable development can be made real in the programmes. The Structural Funds also support direct environmental actions including the revitalisation of industrial sites, the development of renewable energy sources and the development of facilities for fresh water supply or waste disposal, as well as the development of protected areas. In general, the more traditional types of projects are proceeding according to plan with more innovative measures taking longer to start up.

- Objective 1 programmes continue to orient their programmes towards traditional Structural Funds-type projects such as transport and infrastructure. Thus, the allocation of performance reserve in these areas continues to focus on the development of large road and rail projects as well as ports, airports and local transport initiatives. Nevertheless, in some Member States with large Objective 1 areas, more emphasis seems to have been placed on research and innovation.

- In nearly all cases the evaluators concluded that the programme strategies were still appropriate. For the ESF, the evaluations recommended greater investment in lifelong learning and training for those at work, greater targeting of youth, reinforcement of social inclusion and the strengthening of active employment policies.

- It was likewise too early to measure impact, although evaluations did in some cases recommend the revision of targets based on the experience of the early years of implementation. Macro economic modelling undertaken for large CSFs suggests that programmes are on course to achieve their global objectives. The impact of EU funding on the level of GDP is estimated 3.13% in Spain, 3.12% in Eastern Germany, 3% in Greece, 2.85% in Italy, 1.9% in Portugal and 1.4% in Ireland[4].

- Efficiency was more often defined as financial absorption rather than the cost per output or result achieved. Financial absorption is clearly improved compared to the past, driven by the requirements of the N+2 rule.

- Implementation systems were found to fulfil the regulatory requirements and to be significantly improved on the past.

Table 8 Details on the main events on cohesion policy

In the context of the mid-term review of the Structural Funds, a seminar was held in Brussels on 29-30 January 2004 on the implementation of the ESF and its contribution to Cohesion policy and to the European Employment Strategy (EES). Representatives from current and acceding Member States, as well as candidate countries, discussed the ESF achievements and prospects for the current programming period and that after 2006. Participants underlined the importance of the links established in the current programming period between ESF interventions and the objectives and guidelines of the EES, within the framework of the Lisbon strategy in particular the ESF’s focus on investing in people and its contribution to competitiveness and employment within a coherent EU framework: the European Employment Strategy (EES).

More than 1,500 regional policy stakeholders participated in the Third Cohesion Forum on 10 and 11 May 2004 in Brussels. This major debate brought together the contributions of a wide range of key players on the reform of the cohesion policy in the context of an enlarged Europe. The discussions were organised around two round-tables : “Setting a new agenda: future priorities for cohesion policy” and “Reforming the delivery system: simplification and decentralisation” which referred to the proposals made by the Commission in the conclusions of the Third Cohesion Report. The various contributions revealed strong support for cohesion policy in the Member States, regions and cities. Two major conclusions emerged from the Forum:

1. Cohesion is at the heart of the Union’s efforts to improve the economic performance and the competitiveness of the European economy. This will require mobilisation of all the resources and all the regions. And in this context, enlargement is an opportunity because the economic growth of the new Member States is stronger than that of the 15 old Member States.

2. The cohesion policy could be more targeted, more decentralised and simpler than it is at present.

The OPEN DAYS 2004, an event jointly organised by the Committee of the Regions, the European Commission’s Regional Policy DG and offices of Europe’s regions and cities in Brussels, brought together more than 2,000 regional policy experts between 27 and 30 September. Over 100 regions and cities took part in the initiative, which comprised more than 70 debates, workshops and seminars. The major issue of the event concerned the exchange of best practices in managing regional development policies and the future of cohesion policy and the Structural Funds. Many participating regions organised on this occasion a series of decentralised events dedicated to citizens, such as guided tours to projects funded by the Structural Funds in their region or debates in schools or universities.

On the initiative of the European Commission and the Dutch Presidency, more than 600 city representatives, including 60 mayors and 6 Ministers or State Secretaries from all the Member States of the EU, met at the European City Summit on 18-19 October 2004 in Noordwijk and Leiden in the Netherlands. Based on previous city summits in London in 2002 and Milan in 2003, this one represented a key opportunity for mayors and elected representatives from local authorities to discuss the ‘urban dimension’ of the Commission’s regulations proposals.Apart from this, lessons and good practice from the URBAN programmes as well as from URBACT network were drawn and the results of the Urban Audit 2004 were presented.

On 3 March 2005, the Commission organised a conference in Brussels entitled “Cohesion and the Lisbon Agenda: The Role of the Regions”. More than 500 participants - among them the elected leaders of many EU regions, regional policy stakeholders and experts, representing more than 180 regions from 25 Member States and 4 accession/candidate countries (Romania, Bulgaria, Croatia and Turkey) - met to discuss how regions can contribute towards a more competitive EU economy and the objectives of the Commission’s growth and jobs agenda. The main conclusion of the conference was that “Lisbon needs the regions as much as the regions need Lisbon”. In his opening remarks at the conference, President Barroso spoke of the need for “Lisbon Ambassadors” at the regional and local levels, a point reinforced over the course of the conference with discussion on how regions can contribute to better economic governance and to ownership of the Lisbon strategy.

Table 9 Summary of programmes in the new Member States

In the Czech Republic (except the Prague region), the Community Support Framework (EUR 1.45 billion) will be channelled through five Operational Programmes: industry and enterprise, infrastructure, human resources development, rural development and multifunctional agriculture, and a joint regional programme. For the Prague region, one programme (EUR 71 million) will concentrate on improving the urban environment and the other (EUR 59 million) on human resource development.

In Cyprus , one programme (EUR 28 million) is aimed at sustainable rural development and the development of urban areas in difficulty. A second programme (EUR 22 million) will seek to revitalise the labour market and promote continuous training and education. Cyprus also receives EUR 3.4 million under a programme to support its fisheries sector.

In Estonia (EUR 371 million), the structural instruments will pursue four priorities: human resources development, competitiveness, agriculture, fisheries and rural development, infrastructures and local development.

The programmes for Hungary (EUR 1 995 million) will concentrate on employment and human resources, economic competitiveness, transport infrastructures and environmental protection, agriculture and rural development, regional development.

Latvia will implement a programme (EUR 626 million) based on four priorities: territorial cohesion, enterprises and innovation, promotion of employment, rural development and fisheries.

The programme for Lithuania (EUR 895 million) will concentrate on improving social and economic infrastructures, human resources development, productive sector development, rural and fisheries development.

Malta (EUR 63.2 million) will pursue a policy of strategic investments and measures to improve business competitiveness, promote rural development and fisheries – plus a specific support for the island of Gozo.

The framework programme for Poland (EUR 8 276 million) will be channelled through programmes for competitiveness, human resources development, transport infrastructure, modernising the food sector and rural development, fisheries and fish processing, and regional development – plus a programme for technical assistance.

Slovenia will focus Community funding (EUR 237.5 million) on three priorities: boosting competitiveness in the production sector, developing human resources and employment, and restructuring agriculture, forestry and fishing.

Slovakia (except the Bratislava region) will devote four programmes (EUR 1 041 million) to industry and services, human resources, basic infrastructures, agriculture and rural development. The Bratislava region has a programme (EUR 37 million) for investment support and another programme (EUR 45 million) for human resources development.

Maps

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[1] Graphs 4-8 are scatter graphs, where each region is represented by one dot on the graph, which summarises its relative position with respect to two variables.

[2] Commission Decision 2004/344/EC of 23 March 2004 fixing the allocation of performance reserve by Member States for Community Structural Funds assistance under Objectives 1, 2 and 3 and the Financial Instrument for Fisheries Guidance outside Objective 1 (OJ L 111 17.4.004) and Corrigenda OJ L 258 5.8.2004 and OJ L 300 25.9.2004.

[3] At February 2005, not all revised programme complements have been adopted.

[4] Comparisons should not be made between these figures, given the different methodologies and time horizons used in the models.