EN Official Journal of the European Union C 302/41

Opinion of the European Economic and Social Committee on ‘Industrial change and economic, social and territorial cohesion’

(2004/C 302/11)

On 29 January 2004, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an opinion on ‘Industrial change and economic, social and territorial cohesion’.

The Consultative Commission on Industrial Change, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 7 June 2004. The rapporteur was Mr Leirião and the co-rapporteur was Mr Cué.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and Social Committee adopted the following opinion by 155 votes, with 13 abstentions.

Summary

The aim of this opinion is to check whether the instruments for fostering economic, social and territorial cohesion are adequate and whether or not the framework conditions are favourable to firms, allowing industrial change to be carried out in a way which is compatible with firms' competitiveness requirements.

Seventeen points are set out in the conclusions and recommendations section; these point to the need for improvement in terms of policies, instruments, criteria for determining regions' eligibility for Community funds, the implementation of good practices, and the search for synergies between policies and instruments, as well as general coordination in implementing the EU's structural strategies, such as the Lisbon Strategy, the Structural Reforms and Sustainable Development.

The thinking behind the above is based on the following ideas; these are set out in sequence and provide the main themes appearing throughout the opinion:

— regional development as a factor regulating globalisation, through the creation of regional clusters, as an effective way to attract firms to an area and encourage them to stay;

— corporate social responsibility and the implementation of ‘good practices’ as part of an approach involving preventive and other measures for anticipating and managing change;

— negotiations and social dialogue in firms to ensure that restructuring is tackled in a socially responsible fashion, with a firm's management and workers adopting a positive attitude to seeking solutions which are seen as successful by the firm, workers and community, thus striking a balance between social and economic aspects;

— action in partnership between businessmen, social partners, civil society (universities, research and innovation centres, associations, etc.) and local authorities, so as to create the right conditions for boosting productivity and improving regions' growth potential; and

— proposal to create the status of ‘most favoured region’ for those regions which have high levels of social and employment cohesion and suddenly lose skills because firms relocate, without having any alternative economic activities to sustain local employment levels; these regions would receive financial support, with the specific aim of regenerating the local economic fabric.

Introduction

In its own-initiative opinion entitled Industrial change: current situation and prospects - An overall approach (1), the EESC expressed the view that the CCIC's future work should aim to promote ‘a framework and conditions allowing industrial change to take place in a way compatible both with firms' need for competitiveness and with economic, social and territorial cohesion’, thus laying down the basis for this commission's work and outlining the type of contribution it should make and the kind of topic it should cover in its opinions. The decision to draw up this own-initiative opinion on Industrial change and economic, social and territorial cohesion is to be seen against this background.

1. Definitions

1.1 In order for this own-initiative opinion to be viewed in the right context and properly interpreted, ‘industrial change’ has been defined as ‘the normal and continuous process of an industrial sector pro-actively responding to the dynamic movements in its business environment in order to remain competitive and create growth opportunities’ (2). ‘Restructuring’ refers to ‘a particular form of industrial change and regularly is [viewed as] an ad hoc process of (often enforced) adaptation to the conditions in the business environment in order to regain competitiveness, leading to discontinuities in business activities’ (3). The idea of ‘anticipating’ change provides the key to good management of such change, because it means that problems can be avoided in the restructuring process. Anticipating change involves studying and forecasting future terms of competition and market requirements, allowing the necessary adjustments to be planned in good time, thus keeping a firm's social and productivity problems to a minimum.

1.2 Globalisation can be defined as efforts to step up and facilitate trade relations between countries, to which end trade barriers between countries are dismantled, import taxes cut back or abolished, and international groupings such as the EU and Mercosur are consolidated. As part of this process, governments in every country offer incentives to attract foreign firms to establish operations within their borders and facilitate the internationalisation of all aspects of their trade. Globalisation also calls for common, basic rules to be established and respected world-wide.

1.3 Economic, social and territorial cohesion policy aims to narrow current economic and social disparities between Member States and between regions, speed up growth and encourage more sustainable development, helping less-favoured regions adapt to the challenges of a knowledge-based economy, thus assisting all regions to achieve the objectives of the Lisbon strategy. More specifically, this policy has to target infrastructures, the environment, entrepreneurship, per capita income, access to employment and social security, steps to counter social exclusion, access to new information technologies, education and lifelong learning, better administration and a stronger role for economic and social operators.

1.4 One good definition of ‘cluster’, as defined by Michael Porter (Professor at the Harvard Business School) in his book on ‘The Competitive Advantage of Nations’, is ‘a geographically proximate group of interconnected companies and associated institutions (universities, public agencies or trade associations) in a particular field, linked by competition and cooperation’.

2. The impact of globalisation and the inevitability of industrial change

2.1 Throughout European society, there is acceptance of the fact that industrial change is inevitable as a result of globalisation and lasting changes to the world economy; these are hallmarked by rapid, far-reaching developments in the markets and in behaviour, growing technical complexity and considerable consumer involvement in the design and production of goods, products and service delivery.

2.2 Globalisation is the driving force behind world-wide labour market and productivity competition. Multinational companies are redirecting investment to countries with low-cost labour, direct market access and technological skills.

2.3 Increased competition, an ageing population, and new consumer requirements and standards all come together to create an environment where there are, and will continue to be, major tensions and problems.

2.4 The European Union must face up to these tensions and problems with determination using measures which anticipate de-industrialisation in Europe, i.e. taking steps to prevent the following three problems from occurring at the same time: — the relocation of firms (4); — a fall in employment and production; and — a worsening trade balance. These three things are not yet occurring at the same time, but it is clear that there is a genuine deterioration in the employment and trade balance situation.

2.5 The EU will only be able to mount a successful response to these challenges if industrial policy is revamped in such a way as to make it more pro-active and provide comprehensive, systematic transparency regarding the particular, cumulative effects of any decision affecting the European industry's cost and efficiency structures – in terms of both horizontal aspects and specific industrial sectors, such as the steel and textile industries, all the while bearing in mind the impact of enlargement.

3. Regional development as a factor regulating globalisation: clusters

3.1 It is a paradox of our times that inequalities persist in an era when scientific and technical progress is such that everyone's hunger should be able to be satisfied and yet at the same time, there is a serious risk that the ‘new global economy’, because it is rooted in deregulated competition, may exacerbate these asymmetries. It is against this background that regional development is to be seen as a vital instrument for regulating globalisation itself, paying more attention to people's needs, irrespective of where they are located, giving them easier access to goods, services and opportunities.

3.2 Development has to come to the people, wherever they might be; it cannot be blithely assumed that the mobility available to some for boosting personal development is available to everyone, apart from anything else because those lacking most in means are also those who are least able to move around. Regions must mark out their ambitions regarding industrial change and restructuring, pinpoint the investments which need to be made and define the cooperation necessary between the public and private sectors, and more particularly infrastructure for education and vocational training.

3.3 The EESC deems the creation of regional ‘clusters’ to be the most effective way of attracting firms and encouraging them to stay; this is a key component of regional competitiveness and at the same time a driving force for economic, social and territorial cohesion, as well as a means to avoid the negative economic, social and territorial repercussions which might be triggered by industrial change and restructuring. The following factors are likely to ensure that the ‘cluster’ system makes it easier for firms to stay in an area and keep skills in a region: — stronger and better cooperation between firms; — opportunities for improving technological skills linked to the presence of R&D institutes associated with the ‘cluster’ process (e.g. the car industry ‘cluster’); — networking of clients, sub-contractors and suppliers, which fosters the establishment and development of closer ties between socio-economic operators, particularly between regions; — involvement of firms in trans-national networks giving access to new markets; and — development of workers' mobility experience within ‘clusters’.

3.4 Since firms in the present economic climate compete on a global basis, they gravitate towards ‘clusters’ relating to their area of business, and may gain competitive advantages from doing so. These advantages are rooted in generic factors such as: the qualifications and skills of the working population, the quality of governance, territorial infrastructure, local and regional innovation and development levels and generally the quality of life in the region (which might require, for example, public intervention to clean up derelict industrial areas). Regional ‘clusters’ may be key factors in boosting economic, social and territorial cohesion and provide a reason for firms to move to developing regions, as long as the EU and national governments carry out and fund programmes to provide back-up for the establishment of technology firms, promote development, innovation and vocational training and foster partnership between firms, universities, local authorities, social partners and civil society.

3.5 Metropolitan areas, as centres of culture and a variety of activities where public and private operators work together to seek solutions for change and modern developments, have a key role to play in successfully creating ‘clusters’, since these areas ‘are in the front line of technological change, affecting transport, construction and public works, information and communication technologies, infrastructure management, etc. This technological change is also at the root of industrial restructuring and the relocation of workforce activities and services with high added value. Economic specialisation also has a spatial manifestation: ‘clusters’ or groups of business working as part of a network with research and innovation centres and universities’ (5). The major challenge for metropolitan areas also relates to social cohesion problems such as exclusion and poverty, the solution to which clearly involves the harmonious, balanced and sustained development of the major metropolitan areas in Europe, including links to neighbouring areas. Nevertheless, the lack of consistent data makes it difficult to find suitable solutions.

4. The effects of industrial change and restructuring

The process of industrial change and restructuring entails repercussions of varying degrees in a variety of aspects as well as challenges at sectoral and regional level.

4.1 Social aspects

All economic operators acknowledge that restructuring and consolidation is a prerequisite for businesses to survive and improve their competitiveness.

Restructuring is a social problem when there are neither suitable employment alternatives available in the region concerned nor possibilities for mobility.

Moreover, firms should act in a genuinely socially responsible fashion, involving workers' representative bodies and also local and regional authorities early on in their approach to restructuring.

Industrial competitiveness must be achieved through social dialogue.

4.2 The challenges facing businesses

The major challenge facing businesses is to find a proper response to change, taking account of the need to improve competitiveness in a complex environment and particular social and institutional situation.

The repercussion for subcontracting SMEs of industrial change set in motion by big companies cannot be ignored. There should be a cooperation network allowing SMEs to make the necessary adjustments.

4.3 Impact on accession countries, in particular the impact on employment

Specific development and employment support policies must be devised to ensure that change management and industrial restructuring in the enlargement countries is seen as a major opportunity to be grasped for managing economic growth, improving quality of life and protecting the environment.

Foreign direct investment (FDI) comes chiefly from EU countries (more than 60 % in 1998) and is mainly channelled to the Czech Republic, Hungary and Poland. These three countries accounted for around 75 % of inward investment in the enlargement countries at the end of 2001. The case of Košice (Slovak Republic) provides one example of success in the steel sector, where FDI enabled the modernisation of local plants without any job losses, through agreements between local authorities, workforce mobility, incentives, innovation and competition. The impact of multinational strategies on employment depends on the type of investment involved.

THE IMPACT ON THE EMPLOYMENT: THREE POSSIBLE SCENARIOS

Multinational Strategy Employment impact FDI originating country FDI beneficiary country (1) Web extension: very local and not very exportable products or services – Energy – Transports – Banks – Trade – Food Industry - Tourism Low or non-existent in the short term. In the medium to long term: reorganisation of back office functions. More or less sizeable depending on the purchase of existing activities (with or without productivity gains) or creation ex-nihilo. (2) Horizontal capacity extension: re-exportable products or services - Cars - Chemicals - Iron and Steel Immediate indirect impact (no capacities created) and possible substitutional effects in medium term, cf: Seat/Škoda Major restructuring in the event of restarting previous activities. Job creation if ‘Greenfield’ enterprises. (3) Relocation to bring down costs: highly re-exportable products or services – Textile – Foundry - Car Components– large scale Electronics - Computer Services with low or medium added value Major short or medium-term impact (length of substitution varies time in line with activities) Major restructuring in the event of restarting previous activities. Job creation if ‘Greenfield’ enterprises. Risks in medium to long-term: relocation.

(1) & (2): These two scenarios cover a horizontal investment strategy adopted by multinationals. In the first scenario multinationals mainly seek to move into new markets and extend their services network, such as banking services and transport and energy networks. In the second, multinationals try to expand their production capacities for services or products which are easily re-exportable.

(3): This scenario covers a vertical delocalisation strategy which has a greater employment impact. This scenario covers firms whose activities are essentially labour intensive (for example, textile and car electronics).

4.4 Regional and local effects

4.4.1 In the event of industrial restructuring or a firm's relocation elsewhere, infrastructure, equipment and human resources assets must be assessed and measures taken to attract new businesses into the area. In some cases, it is vital to clean up the soil and sub-soil when a firm leaves a region so that the area can be put to another use. Investors receiving public funding must bear more responsibility locally and this must be monitored. Cooperation agreements between all parties is necessary to breathe new life into regions badly hit by industrial change.

4.5 Impact on human resources

All parties must be committed in their approach to ensuring that less qualified workers have access to training. This is one condition for ensuring that local businesses remain viable.

In managing workers' skills, firms should consider entering into agreements and adopting joint approaches with employees as regards requirements for training, skills and qualifications.

4.6 Impact on the European Social Model

It is a fundamental for the sustainability of the European Social Model to reach a high level of economic, social, environmental and territorial cohesion.

Industrial restructuring within the European Social Model will be successful if everyone involved benefits from it.

4.7 Aspects of interaction between industrial and services sectors

4.7.1 Since the 1970s, economic growth has been hallmarked by the services sector becoming predominant over the manufacturing industrial sector. Nevertheless, it is vital that there be a certain interdependence and interaction between the two sectors in order to increase productivity, boost innovation and improve the quality of products and services. As far as industrial restructuring and change is concerned, this interaction is crucial, since firms providing services (such as R&D) for industrial firms generally follow the latter if they relocate.

5. Corporate social responsibility and economic and social cohesion

5.1 The EESC Opinion on Industrial change: current situation and prospects — An overall approach (6) states that Europe needs to apply ‘a new paradigm focused on ’industrial change with a human face‘ which is based on competitiveness, sustainable development and social and territorial cohesion.’ The Lisbon strategy objectives provide the backdrop to this statement; to this end, the EU has made a special appeal to firms' sense of social responsibility, bearing in mind vocational training requirements and best practices for life in general, work organisation, equal opportunities, social inclusion and sustainable development.

5.2 It is generally acknowledged that corporate social responsibility, based on an ethical approach, can be applied in two key spheres: — working conditions and employment; and — living conditions in the area where the businesses concerned are operating, i.e. a business's involvement in boosting the local economy and promoting acceptable environmental practices in the local community. Firms are generally asked to involve the social partners, local authorities, consumers and suppliers, each at their own level of responsibility.

5.3 This exercise in corporate social responsibility (in relation to the above-mentioned aspects) may be valuable as a tool for helping achieve economic, social and territorial cohesion, if a proactive, preventive approach is adopted to managing change and restructuring; this will benefit all the parties involved.

6. ‘Good practices’ in restructuring, in terms of social and local responsibility

6.1 The European Social Fund is encouraging and supporting ‘good practice’ as regards ways to manage industrial change. The European Monitoring Centre on Change (EMCC), at the Dublin-based European Foundation for the Improvement of Living and Working Conditions, regularly reflects such good practice in its moves to promote local and regional corporate social responsibility. Moreover, the first phase of consultation launched by the Commission, entitled ‘Anticipating and managing change: a dynamic approach to the social aspects of corporate restructuring’, has also made it possible to pinpoint a series of good practices in this connection. Generally such good practice involves: — the need to anticipate employment problems entailed in possible restructuring and deal with these upstream of the process; — the need to study the direct and indirect impact on the region concerned; — action by, and the mobilisation of, operators in the field (firms, trade unions, regional and local public authorities, associations and civil society, etc); — the promotion of collective bargaining and the requirement for ‘social dialogue’ between firms, worker representatives, and local and regional authorities — these are vital in the search for solutions and alternatives to firms' strategic relocation decisions; — social support measures accompanying change (retraining, training, skills promotion amongst workers, careers guidance and steps to renew employment bases, development of the industrial fabric; workers setting up businesses, etc.); — commitments by firms to do business with workers who have had to leave because of activity outsourcing and who now provide services as sub-contractors; — the emergence of innovative solutions by developing an entrepreneurial spirit; and — timely information for the whole network of subcontracting SMEs, public services and authorities, universities and business associations on locally based multinationals' restructuring plans; this is more difficult to implement when multinational firms are involved which have a decision-making centre located outside the region, country or even Europe.

6.2 Negotiation and social dialogue are crucial if restructuring is to be implemented in a socially responsible manner; it is therefore very important that both firms and trade unions are positive in their approach to seeking successful restructuring formulas which are good for firms, workers and local communities. The Commission gave a boost to these good practices in directives 98/59/EC, 2001/23/EC, 94/45/EC, and 2002/12/EC, which lay down certain guidelines and requirements. The 2002 European-level initiative advocating ‘socially responsible’ restructuring is to be noted here, on the basis of which a series of guidelines were issued in June 2003. Every alternative to laying off workers should be explored.

6.3 There are many positive instances good practice in this field, of European firms adopting socially responsible practices as part of industrial change and restructuring strategies. One such case — among many — is the Arcelor steel group, the result of a merger between Arbed, Aceralia and Usinor; it decided — against a backdrop of structural overcapacity in steel flat production and with a view to improving synergies — progressively to close the Liège steelworks and scale down production in Bremen and Eisenhüttenstadt. In the light of the job losses these measures would entail, Arcelor undertook to assist all those concerned, rehabilitate all the sites affected and contribute to the reindustrialisation of the local economic fabric, with the help of all the parties involved. On the other hand, an example of what happens when such good practices are not adopted can be seen in the restructuring process in the car industry in Mezzogiorno (Italy), where the company involved was planning to transfer part of its sub-contracting business abroad without envisaging or organising any adequate back-up measures or solutions to the problems thus created.

6.4 The industrial change needed for firms to remain competitive should be backed up by the authorities; this should include funding for education and training for the work-force, and against this background, steps should be taken to promote new technologies. Moreover, it is necessary to work towards increased corporate social responsibility, the social benefits of creating more and better jobs and environmental sustainability in regions where these businesses are located.

7. Industrial change and economic, social and territorial cohesion as instruments of sustainable development

7.1 The aim of sustainable development is central to the EU. The main trans-European projects such as transport networks and other infrastructures in the pipeline at EU level are not enough to promote sustainable development or to launch development in general in the least favoured regions. Persistent disparities between countries and regions in production, productivity and access to employment are rooted in shortcomings in key areas of competitiveness, namely human and physical capital, environmental aspects, innovation capacity and regional governance.

7.2 Opportunities created by industrial change — due to its impact on the economic fabric, social and scientific issues and civil society and local authority involvement, through the combined use of social cohesion instruments and policies and Community structural policies — may significantly assist the process of sustainable, balanced development. Change does in fact require certain adjustment, research, innovation and new attitudes, both on the part of businessmen and the social partners and civil society acting in partnership. Here the aim is to help regions maintain and improve their economic and social structures in a balanced fashion.

8. The proposals for reform set out in the Third Report on Economic and Social Cohesion

8.1 The Commission is proposing a new design for EU economic, social and territorial cohesion policy, built up around three priorities:

Convergence

The aim is to foster growth and job creation in the Member States and less-developed regions.

Regional competitiveness and employment: anticipating and fostering change

This priority is welcomed by the EESC in relation to the topic of this opinion, because it links industrial change with cohesion policy, through national and regional programmes which are specifically geared to certain related effects, prevention, anticipation and adjustment to economic developments. All this ties in with the political priorities of the European strategy for employment and for the promotion of labour quality and productivity, together with social inclusion.

European regional cooperation

The aim here is to encourage smooth, balanced harmonisation throughout the European Union by means of measures which foster cross-border and transnational cooperation.

9. Comments on the Third Cohesion Report's proposals on industrial change and restructuring

9.1 The EESC welcomes the fact that the Third Report on Economic and Social Cohesion, published on 17 February, has specifically and objectively tackled the subject of industrial and economic change in general.

9.2 In particular, it fully endorses the principles underlying the strategies of the Third Cohesion Report, and the link between the Lisbon Strategy and the future regional policy with regard to knowledge-oriented programmes and national and regional programmes, with a view to driving forward the economic development of the more disadvantaged regions. It nevertheless deems these measures to be inadequate and would raise a number of concerns regarding the following points: — the lack of quantified objectives for implementing the cohesion measures, either at Member State or regional level, indicating a slackening of the requirements for achieving these objectives from the outset; — the absence of guarantees that, during the upcoming 2007-2013 programme, there will be greater cohesion between regions and not just between Member States as was the case with the previous 1994-1999 and 2000-2006 programmes; if this does not change, it will indicate poor policy implementation and a failure on the part of the EU to implement its economic, social and territorial cohesion policy to assist the less developed regions; — the lack of a specific monitoring process to ensure that the necessary financial resources are earmarked for the development of the less favoured regions, bearing in mind that, as in the past, the more favoured regions may benefit more than the less favoured ones because they have better production infrastructures and service provision; — the absence of proposals for incentives to encourage businesses to pursue a policy of social responsibility with a positive impact on economic, social and territorial cohesion; — the lack of an effective method for coordinating the outcome of cohesion policies, entailing penalties for Member States which do not achieve the cohesion policy objectives; — the fact that industrial change has not been recognised as a factor which may generate and fuel regional imbalances because of the possibility that businesses might relocate, causing huge upsets at various levels; indeed, the regions concerned run the risk that their cohesion position, which may have been strong, might be adversely affected, jeopardising their medium and long-term capacity to recover; the report does not make any specific proposals as to how to prevent this from occurring.

10. Conclusions and recommendations

10.1 The EESC considers that the proposals for cohesion policy reform presented by the Commission are inadequate, and that the opportunity to manage change has not been fully grasped; such change is not only unavoidable, but it is also a crucial element for securing a dynamic economy and a lever for attaining sustainable development. All this is because not enough steps have been taken to obtain maximum benefit from the situation and to combine the opportunities created by the Lisbon strategy, its positive approach to change, competitiveness and cohesion, the Social Policy Agenda — a key objective of which is to pinpoint and anticipate the management of change — and the European employment strategy, in particular its focus on adaptability.

10.2 The EESC feels that it is necessary to strike a balance between economic and social aspects and to manage industrial change with the two-fold aim of a) securing and promoting comprehensive social objectives (training, employment, opportunities and social protection) and b) ensuring the survival of businesses by means of specific support policies which guarantee restructuring and consolidation as a condition of their survival and increased competitiveness, through integrated, complementary actions involving the main operators, i.e. the state (at national, regional and local level) and the businesses concerned.

10.3 The EESC deems it vital to the success of economic, social and territorial cohesion policy that there be better coordination in implementing the EU's current development policies, involving: existing directives governing workers' participation in firms; social dialogue covering all the industrial sectors; regular consultation of the EESC's Consultative Commission on Industrial Change (CCIC); the European Monitoring Centre on Change (EMCC); structural fund deployment; competition policy; and steps to promote implementation of corporate social responsibility. To this end, it is crucial that all the parties concerned demonstrate compromise and commitment.

10.4 The EESC considers it necessary to draw up a series of principles for situations where restructuring is needed; these principles should provide a basis and back-up for good practice, involving the requirement that firms' competitiveness be boosted and other requirements pertaining to the consolidation of economic, social and territorial cohesion.

10.5 The EESC feels that the continued deterioration in Europe's competitiveness compared to that of the USA is due to the fact that there is no obligation on Member States to meet the deadlines for implementing the EU's basic strategies and instruments such as the Lisbon strategy, structural reforms and sustainable development. If this trend continues, the EU runs the risk that it will slip back from second to third place in terms of world power (Japan, China and India are waiting in the wings); this must be avoided. The EESC therefore concludes that the Commission has to impose stricter requirements and take on a more active role in coordinating and monitoring effective implementation of the aforementioned strategies. A key coordination measure might entail appointing a commissioner responsible for monitoring industrial change and relocation; this would allow a better link-up between industrial policy and environmental protection.

In this own-initiative opinion, the EESC recommends the following:

a) It is necessary to revisit the strategic vision for cohesion in view of the current challenges facing the EU, by devising a new, stronger concept of cohesion, which is not limited just to the financial aspects of the Structural and Cohesion Funds, but which bears in mind the following three-fold aim: — to strengthen European economic cohesion; — to promote a ‘community spirit’ in Europe; and — to boost solidarity between the countries and regions of the EU.

b) The absolute criterion of per capita GDP for determining eligibility should be altered, given that this is a source of injustice as regards implementation of the structural policies. As is well known, relative wealth is not only reflected in cold statistics such as per capita GDP. Workers' skill levels, infrastructure shortcomings, distance from the hub of the European economy and demographic structure — these are all factors relevant to a region's eligibility.

c) A new matrix of criteria for assessing the regions should be drawn up so as to produce a new map of European cohesion requirements.

d) As far as territorial cohesion is concerned, the way that the Community's territory is managed should be revamped so as to allow multi-centred, harmonious, balanced and sustained development to take place. Such spatial planning should bear in mind inter-regional physical and economic cohesion, involving local, regional national and European authorities in the construction of a European territorial development model leading to new economic strategies (investment, R&D and social (employment) strategies).

e) A more speedy approach has to be adopted to formulating structural policies for economic, social and territorial cohesion, as a way of anticipating economic change in general and industrial change in particular. The current ceiling on financial resources (1.2 %) — which might even be lowered in the 2007-2013 financial perspectives — is too low to cover needs and it limits the scope for action, which prevents the cohesion objectives being attained more quickly.

f) It is important to focus on human resources, channelling resources to vocational courses at school and colleges and vocational training per se, but adopting a flexible approach which can be adapted to the various problems facing Member States and regions.

g) Special assistance must be provided to regions where the industrial production structures are undergoing dramatic restructuring, by pinpointing those sectors and regions where there is a high risk that competitiveness may be lost; specific proposals for support must be made, taking account of the particular features of each sector. Particular attention should be paid to the impact of industrial restructuring on the new Member States.

h) In this connection, a ‘most favoured region principle’ must be established, whereby it would be possible to provide specific financial support aimed at fostering regional conversion. Social dialogue has a key role to play here, as well as does civil dialogue, involving all the local protagonists (firms, universities, research centres, local authorities, associations, trade unions, etc.). It would thus be possible to breathe new life into the economic fabric of a region by creating new alternatives for economic activity.

i) It is necessary to encourage the development of regional ‘clusters’ by fostering the expansion of information and communication technology sectors, creative industries, and industries with a strong technological base so that they boost regional potential and skills, promoting region's capacity to attract firms and encourage them to stay. This would help ensure that industrial change and restructuring generates stronger regional competitiveness, greater economic, social and territorial cohesion and more employment. It is vital that regional studies be carried out and that steps be taken together with national and regional governments to plan how to make full use of a region's potential in building up a ‘cluster’.

j) Account should be taken of positive, previous experience with sectoral programmes such as Rechar, Resider and Retext in formulating policies for the industrial modernisation of regions in order to make full use of their potential for development.

k) The Commission must continue to modernise and revitalise industrial policy with a view to aligning its rules on the new world context. Here the EESC welcomes the recent proposal to revisit industrial policy, which was presented on 20 April 2004. (7) It is particularly important to ensure that industrial policy is coordinated with other Community policies, especially environmental policy.

l) Europe must comply strictly with, and enforce, the ILO rules; if nothing is done to put a stop to ‘social and tax dumping’ in other areas which do not apply market rules equally, it could slide into an economic crisis because of a lack of competitiveness on the part of European firms.

m) Europe must operate on the world stage by displaying high levels of technical, technological and human skills, but to do so it has to revisit its policy for supporting research, and particularly human capital. Of the approximately 14,000 European researchers who leave to study in the USA, only around 3,000 intend to return to Europe. This is a most serious situation requiring immediate measures. One step in the right direction is the ‘Regions for Knowledge’ initiative (KnowREG) under which it was decided on 27 April 2004 to set up 14 pilot projects promoting the knowledge economy at local and regional level.

n) The European Council must establish a clear link between the competitiveness and knowledge objectives on the one hand, and the future regional policy on the other.

Brussels, 30 June 2004. The President of the European Economic and Social Committee Roger BRIESCH

(1) OJ C 10 of 14.1.2004, pp 105 et seq.

(2) EESC own-initiative opinion on ‘The repercussions of trade policy on industrial change, with special reference to the steel sector’ (CESE 668/2004).

(3) Ibidem.

(4) In September 2004, the EESC will adopt an own-initiative opinion on ‘The scope and effects of company relocations’ (CCMI/014).

(5) EESC own-initiative opinion on ‘European Metropolitan Areas: socio-economic implications for Europe's future’ (CESE 968/2004).

(6) OJ C 10 of 14.1.2004, pp. 105 et seq.

(7) Communication from the Commission: ‘Fostering structural change: an industrial policy for an enlarged Europe’ (COM(2004) 274).