Opinion of the Committee of the Regions on 'The Commission Communication on Community structural assistance and employment` () (97/C 42/03)

THE COMMITTEE OF THE REGIONS,

Having regard to the White Paper on Growth, competitiveness and employment: The challenges and ways forward into the 21st century (COM(93) 700 final);

Having regard to the Communication from the Commission to the Council on the Follow-up to the Essen European Council on employment (COM(95) 74 final of 8 March 1995);

Having regard to the Communication from the Commission on the European employment strategy: trends and developments in employment systems in the European Union (COM(95) 465 final of 11 October 1995);

Having regard to the report of the congress of local and regional authorities of Europe on unemployment and employment, new activities and professions, challenges and prospects for the local dimension (International Conference held in Florence on 9 and 10 May 1996);

Having regard to the paper entitled Action for employment in Europe: A confidence pact (CSE (96) 1 final of 5 June 1996);

Having regard to the conclusions of the tripartite conference on growth and employment, held in Rome on 14 and 15 June 1996;

Having regard to the Presidency conclusions of the Florence European Council of 21 and 22 June 1996 (SN 300/96);

Having regard to its decision of 8 March 1996, pursuant to the fourth paragraph of Article 198c of the Treaty establishing the European Community, to issue an Opinion on the subject and to direct Commission 8 'Economic and social cohesion, social policy and public health` to carry out the preparatory work;

Having regard to the Draft Opinion (CdR 306/96 rev.) adopted by Commission 8 on 7 October 1996 (Rapporteur: Mr Sanz);

- whereas 18 million people in the European Union are now officially unemployed;

- whereas the Maastricht convergence criteria were devised with a view to facilitating Economic and Monetary Union rather than fighting unemployment and poverty;

- whereas local and regional authorities have a duty to step in, with the support not only of civil society but also of the Member States and EU institutions, when the social causes of unemployment threaten fundamental social rights;

- desirous to highlight the key role of employment in reducing regional disparities within the EU;

- desirous to highlight the importance of improving the balance between the measures needed to improve the macro economic climate and those geared to creating and preserving jobs;

- with a view to placing EU structural assistance and employment in a local and regional perspective, and to recalling the key role which directly elected local and regional authorities must play in employment;

- given the worryingly high level of unemployment,

adopted the following Opinion at its 15th Plenary Session on 13-14 November 1996 (meeting of 14 November).

INTRODUCTION

1. The Commission Communication analyses and assesses the impact of Community structural assistance on employment, and suggests adjustments which could improve the employment impact of existing programming.

The COR would point to the need, pending an evaluation of the impact of structural assistance on employment, to try out new ways of promoting sustainable job openings. The aim is not to replace but to supplement structural assistance. Territorial employment pacts - a concept propounded by the Commission - would seem an appropriate testing ground for trying out new, less conventional job creation ideas. The COR is firmly of the view that local and regional partnerships must be given a key role in planning and implementing pilot projects. For this trial activity to have the requisite breadth, adequate financial resources, along with co-financing at national level in the Member States, are prerequisites.

EU, national, regional and local authorities all agree that the Commission is right to be concerned that the measures financed by the Structural Funds should contribute significantly, as a matter of Community priority, to the creation and preservation of jobs.

2. The Florence European Council of 21 and 22 June 1996 marked a milestone as the European Commission sought political backing for its proposals for sharpening the focus on employment.

The COR considers that the stance adopted at the European Council () can be of only limited political value if it is not backed by budget adjustments to reapportion funds specifically for that purpose. Hence, alongside other initiatives which it warmly supports, the COR calls for greater efforts to secure a balance of measures both to create long-term jobs and resolve the most pressing problems.

3. The COR considers that in order to create lasting jobs, a greater role must be given to local and regional authorities, since they are most closely involved in tackling unemployment and are in the best position to assess the impact of EU regional policy measures designed to create and preserve jobs.

4. The COR endorses the general thrust of the analysis and proposals set out in the Commission Communication, and encourages the Commission to continue its work in this area.

I. ANALYSIS AND ASSESSMENT OF THE EMPLOYMENT IMPACT OF STRUCTURAL ASSISTANCE

5. The COR agrees with the Commission that the structuring work of the Funds is essential for the creation and preservation of lasting jobs, on both the supply and demand side.

6. The COR emphasizes how important it is that support for infrastructure in the regions should create and preserve direct, quantifiable and, where possible, lasting jobs for local unemployed people.

7. The COR agrees that when granting direct aid to businesses, there must be careful scrutiny of compliance with job-creation and preservation requirements.

8. The COR stresses the need to improve the efficiency of indirect assistance for the supply of business services, especially for SMEs, as this helps them to adapt more flexibly to changing demand. Assistance should also be offered for the consolidation of the new SMEs set up in response to socio-economic and technological change, and for SMEs which help to promote innovation, as they can do much to raise the quality of employment.

9. The COR underscores the importance of developing human resources, given their wide-ranging effects on competitiveness, growth and employment. In this connection, the COR thinks that steps are needed to improve links between the education system (especially vocational training) and the world of work, in order to match labour supply to demand.

II. IMPACT ON EMPLOYMENT VARIES DEPENDING ON OBJECTIVE

10. The COR regrets that despite the efforts made with structural assistance, regional disparities in job opportunities persist. It calls for determined action to iron out these disparities, and to see that employment and competitiveness go hand in hand. However, it draws attention to the danger of Structural Fund support pursuing too many equally important goals, as this may lead to dissipation of resources.

11. The COR is mindful that the aim of structural support is to improve basic economic conditions in the regions, thereby producing conditions in which firms can create lasting jobs.

However, it thinks that, in the interests of sustainable economic development, the Structural Fund resources should not be used solely for consumption-related expenditure which only creates temporary employment.

12. The COR calls for EU and national support for the generalized establishment of regional labour market strategy groups in those countries where no mechanism exists for bringing together private and public sector partners. These groups should steer programmes in the desired direction, drawing on experience in different regions.

Objective 1 regions

13. The COR sees job creation as the top priority in these regions. It has been shown that in periods of economic recession, unemployment rises particularly fast in these areas, demonstrating the fragility of their economic base.

The COR points out that reduction of the differences in per capita GNP must produce a more marked increase in overall employment and the convergence of regional unemployment rates.

The COR thinks that the establishment of a strong economic base for sustainable, job-creating development over the long term requires a judicious blend of modernization measures, infrastructure investment and non-material investment, as part of a wider plan involving all the relevant public and private players.

14. The COR stresses the need to strengthen local development strategies by bringing in a wide range of parties from the public and private sectors. In this context the COR recommends strengthening partnerships and global grants for the management of programmes or sub-programmes, especially those in the field of social and employment integration.

Objective 2 regions

15. The COR views the new 1997-1999 programming period as an opportunity to promote measures with an immediate impact on employment, provided that genuine priority is given to diversification and that it encourages the creation of new corporate structures capable of holding their own on a sustainable basis.

16. The COR urges the Commission to adopt uniform criteria for the inclusion of declining industrial areas in regional incentives, complementing structural assistance, so as to establish a consistent business promotion policy that creates jobs.

17. The COR welcomes the growing importance paid to the local dimension which provides an interface for all strands of policy intervention. It highlights the importance of cooperation between all the socio-economic players when drawing up and implementing programmes in Objective 2 regions.

18. The COR considers that local players have proved particularly effective in Objective 2 regions in:

- mobilizing human and financial resources to help business start-ups and development, and to create and preserve jobs in existing companies;

- tackling the unemployment caused by structural change (long-term unemployed, young people, women, the disabled);

- sectoral development of new employment sources.

Objective 5 and 6 regions

19. The COR notes the priority which the Structural Funds accord to rural development, and is concerned at the situation of Objective 5a, 5b and 6 regions. These regions cannot remain isolated from the world economy, but their socio-economic features make it difficult for them to enter the mainstream.

Here the aim must be to promote productive investment tailored to the special features of rural areas.

20. The COR highlights the need for overall strategies that mesh Structural Fund assistance with the measures adopted under the CAP, which has to juggle the conflicting objectives of promoting overall competitiveness and of keeping people in rural areas.

The COR further notes that the aims and measures related to Objective 6 are not dealt with in the same way as the other Objectives. Objective 6 is equivalent to Objective 1 according to EU regulations and practice. Objective 6 does not apply only to rural regions.

Objective 5a regions

21. The COR considers it necessary to modernize farm structures and the processing and distribution sectors, and calls for more measures to encourage crop diversification, together with training schemes for young people to encourage them to take up alternative activities in rural areas.

22. The COR asks the Commission to support international fairs to promote high-quality foods and similar initiatives for products whose special origin keeps them free of international competition.

Objective 5b and 6 regions

23. The COR endorses the Commission's support for diversification of activities in other sectors, such as the environment, services, culture and tourism. The promotion of rural tourism has led to the development of a variety of related activities.

Objective 3 and 4 regions

24. The COR lays particular emphasis on Objective 3 and 4 measures, as these are the most closely tied to employment. It notes that Fund assistance in Objective 3 and 4 regions is hampered by the persistence of mass long-term unemployment and the quickening pace of economic restructuring, the main victims of which are those least able to compete on the labour market.

25. The COR considers it important that national employment policies are consistent with Structural Fund assistance.

III. POSSIBLE ADJUSTMENTS: DOING MORE FOR EMPLOYMENT WITHIN EXISTING PROGRAMMING AND DOING IT BETTER

Providing the conditions for long-term economic growth

26. The COR is a firm believer in non-material investment as a way of boosting employment. It also supports more dynamic organization of work, where this is directly linked to an increase in employment.

27. The COR notes that improvement of training and/or skills calls for the active participation of the individual in vocational training and the creation of a new reference framework in which regional and local authorities have an essential role to play.

28. The COR thinks that EU, national, regional and local authorities should strengthen business support services. It endorses the Commission's idea of using Structural Fund aid to support the demand for quality services by small firms.

29. The COR considers that overall quality is crucial for business competitiveness, and that the regional and local bodies delivering business services should adopt quality criteria which encourage client take-up.

30. The COR considers it vital that SME advisory and support structures also cover financial services, so as to encourage maximum growth and boost employment over the medium term.

31. The COR views innovation as a key element in regional development. It therefore welcomes the Commission's proposed measures for supporting technological innovation. The COR thinks that the measures set out in the Green Paper on Innovation should be stepped up. In particular, more should be done to encourage cooperation between companies and to publicize successes so that they can be replicated elsewhere. The COR calls on the Commission to launch measures to reduce the thresholds needed to receive assistance for developing technological innovations, so that the unemployed and persons in employment have an opportunity to carry out innovative work independently.

Increasing the job-intensity of economic growth

32. The COR agrees that the Commission should give the maximum possible weight to employment as a criterion when financing infrastructure and productive investment.

33. The COR points out that regional and local authorities are ideally placed to step up measures to accompany infrastructure work and investment aid in order to maximize the impact on local employment, as they can incorporate these aspects in their development strategies.

The launch of the territorial employment pacts provides an opportunity, where appropriate, to set up a network of regional employment strategy groups which could provide a framework for regional cooperation, helping to anticipate manpower needs (number and type of job vacancies) and to frame an overall action plan that exploits regional and local potential.

34. The COR agrees that more should be done to establish 'innovative economic areas`. It asks the Commission to strengthen measures designed to support cooperation among SMEs and between SMEs and large firms, and to encourage firms to switch to new areas of employment.

35. The COR thinks that, wherever possible, local and regional authorities should lead the way in encouraging a dynamic reorganization of work and working time, provided this is accompanied by an increase in employment.

The COR asks the Commission to take steps to encourage schemes for reorganizing and redistributing work, with a view to dispelling the prejudice that exists in this area and creating new opportunities.

Fostering environmentally sound growth

36. The COR's Opinion on the Commission Communication on Cohesion Policy and the Environment () looks at the links between structural assistance and employment.

37. Here it is worth stressing that environment-related activities tend to be labour intensive and can thus do much for employment. However, as the abovementioned COR Opinion notes, 'some major transport infrastructure works among the trans-European networks are not backed up by the most accurate possible assessment of the external effects from either the environmental or socio-economic point of view`. Regional eco-audits should be stepped up with a view to gaining a clear picture of the environmental situation in each region so that the environmental and job-creation/preservation impact of future projects can be analysed.

38. The COR highlights the importance of the 'eco-sector` in job creation. However, the regional and local authorities which make up a large part of the market for this sector are unable to shoulder its financial costs unaided.

This, combined with the fact that some environmental jobs do not produce an immediate economic return but may still be necessary for the future growth of the eco-sector (e.g. jobs created in environmental control), leads the COR to stress that local authorities cannot bear the full cost of creating new environment-related jobs.

39. The COR points out that some industrial conversion schemes in Objective 2 regions seek to diversify the productive fabric into services, tourism or other sectors new to the area. This brings a need for other measures to improve general conditions in the region. Hence part-financing should also be available for schemes to improve basic environmental infrastructure and enhance the natural heritage and landscape.

IV. PROMOTING A MORE ACTIVE APPROACH TO ECONOMIC AND SOCIAL SOLIDARITY, INCLUDING EQUAL OPPORTUNITIES

40. The COR supports a more active approach to economic and social integration, including equal opportunities, as rising unemployment has particularly affected the most vulnerable groups.

41. The COR welcomes the idea that active policies should have priority over merely handing out benefits. Access to employment benefits should be connected to a greater extent to training schemes and acquisition of new skills in order to prevent long-term unemployment and exclusion.

42. The COR points out that, pursuant to the principle of 'mainstreaming`, projects also have to be analysed in terms of the distribution of work between women and men. In many Member States, the employment situation of women remains extremely uncertain. There is thus an urgent need to devote special attention to women's employment. Particular efforts are needed to create job openings for women in rural areas.

V. DEVELOPING AND ENRICHING THE PARTNERSHIP IN THE CONTEXT OF STRUCTURAL ASSISTANCE

43. As Structural Fund investment has an important direct effect on public infrastructure and thus produces a knock-on effect on businesses, the COR considers it vital that the socio-economic players be fully acquainted with Structural Fund measures and participate in discussions and analyses of them. The COR thinks that to increase the involvement of the socio-economic partners, they must be given an effective role on the Monitoring Committees.

44. The COR notes that the local and regional authorities' involvement and responsibility in evaluation vary greatly, generally reflecting the institutional system of the Member State and the nature of the 'forms of assistance` () financed from the Funds.

The regional authorities are more closely involved in evaluation in Member States whose political system gives regional government a leading role. These authorities call for more financial and human resources to meet the costs of the evaluation, so that they can improve the evaluation procedures and thus carry out their responsibilities more effectively.

In cases where responsibilities are shared by national and regional authorities, the regional administrations ask to be more closely involved so that the evaluation is more effective.

In cases where the regional authorities have no say in Fund programming and management, greater involvement of the local and regional authority in decision-making and evaluation would be desirable.

VI. NEW PROSPECTS

The COR, being concerned that structural assistance should be as effective as possible in creating jobs:

45. With regard to the conclusions of the Florence European Council:

- asks that the Intergovernmental Conference consider enshrining the creation and preservation of jobs in Article 130a of the EC Treaty, without prejudice to the employment policy responsibility of the Member States, on the same footing as the other Structural Fund aims;

- asks the Council to adopt a wider and more concrete interpretation of the subsidiarity principle by altering the Regulations so as to ensure full involvement of regional and local representatives in the application and allocation procedures for Structural Fund assistance;

- hopes that the recommendations of the Florence European Council will be taken up, subscribing to the priorities for the use of available margins for the support of small and medium-sized enterprises;

- calls for a regional assessment of compliance with the impact-sheet forecasts regarding the creation and preservation of direct and indirect employment, and whether the jobs are short, medium or long term, for the new Objective 1 projects (reprogramming and the deflator margin) and the second stage of Objective 2 (1997-1999);

- welcomes the European Council's mention of support for local employment initiatives which, by helping to pinpoint local strengths and weaknesses, can make Community and national job-creation programmes more effective.

46. With regard to the territorial employment pacts:

- The COR considers that the territorial employment pacts presented by the European Commission at the Florence European Council provide an ideal opportunity to encourage the local and regional players to use the Structural Funds in support of employment;

- The local and regional authorities are ready to take up the Commission's idea of framing such pacts; these authorities should discuss, negotiate and formulate the details of the pacts in full independence; the COR supports the Commission's moves to promote the pacts and to organize experience-swapping between the EU's local and regional authorities;

- The COR therefore proposes additional financing, within the framework of the overall funds available, to make the measures more effective by involving all the public authorities and social partners;

- The COR will submit a detailed Opinion on territorial employment pacts to the Dublin European Council, and awaits the verification of support for their launch in 1997.

47. With regard to quantifying the employment impact of structural assistance:

It is difficult to assess the precise nature and scale of structural assistance, and far more difficult to anticipate the impact. The COR therefore considers it essential to identify the various mechanisms by which the Structural Funds can create jobs and the reasons why the total might be over- or under-estimated.

The COR regrets that this area lacks an established scientific methodology. It considers that the institutional and organizational peculiarities of each country make it necessary to seek flexible pragmatic solutions.

The COR stresses the importance of meticulous, regular, comparative statistics to measure the types of job created by project and region. It therefore calls for an improvement in data collection methods and standardization of the criteria used by each government. This means first and foremost making use of data already available.

The COR supports the Commission's intention to make evaluation methods more suited to regional diversity, as this will give a better picture of the quantified targets for creating and safeguarding jobs. The monitoring of operations would also be facilitated by the establishment of instruments for evaluating the interim results of a measure already being implemented (especially to ascertain which measures are most effective at creating jobs).

The COR asks the Commission to use all the resources provided for by the Regulations to carry out pilot projects under Article 10 of the ERDF Regulation and Article 6 of the ESF Regulation, and to make employment a prime selection criterion.

Lastly, the COR asks the Commission to use the Funds to finance exchanges of experience and expertise, for instance through seminars, written documentation and informatics, so that local and regional authorities can draw on existing experience when devising local and regional programmes related to the Structural Funds.

Brussels, 14 November 1996.

The Chairman of the Committee of the Regions

Pasqual MARAGALL i MIRA

() COM(96) 109 final.

() 'The European Council notes the possibility to focus structural policies more on job creation as the Commission recommends, without jeopardizing the basic principles, the existing legal framework and the amounts of the structural funds. It subscribes notably to the priorities for the use of available margins for the support of small and medium-sized enterprises in partnership with the EIB and for the support of local employment initiatives. It notes that the Commission will report on the application of these principles before the European Council in Dublin.`

() COM(95) 509 final.

() National, sectoral, regional or subregional programmes.