EN Official Journal of the European Union C 115/27

Opinion of the Committee of the Regions on the Communication from the Commission on Restructuring and employment Anticipating and accompanying restructuring in order to develop employment: the role of the European Union

(2006/C 115/06)

THE COMMITTEE OF THE REGIONS,

Having regard to the Communication from the Commission on Restructuring and employment -Anticipating and accompanying restructuring in order to develop employment: the role of the European Union, COM(2005) 120 final,

Having regard to the decision of the European Commission of 31 March 2005 to consult it on the subject, under the first paragraph of Article 265 of the Treaty establishing the European Community,

Having regard to the decision of its Bureau of 12 April 2005 to instruct its Commission for Economic and Social Policy to draw up an opinion on this subject,

Having regard to its Opinion on the Integrated Guidelines for Growth and Jobs 2005 -2006 (CdR 147/2005 fin),

Having regard to its Opinion on the Revision of the Guidelines for Regional State Aids (CdR 77/2005 fin),

Having regard to its Opinion on the Communication from the Commission on the Social Agenda (CdR 80/2005 fin),

Having regard to its Opinion on the Communication from the Commission on the Social Dimension of Globalisation — the EU's policy contribution on extending the benefits to all (CdR 328/2004 fin),

Having regard to its Draft Opinion CdR 148/2005 rev. 2 adopted on 23 September 2005 by its Commission for Economic and Social Policy (Rapporteur: Mrs Irene Oldfather, Member of the Scottish Parliament) (UK/PES),

unanimously adopted the following opinion at its 62nd plenary session, held on 16/17 November 2005 (meeting of 16 November).

1. The Committee of the Regions' views

The Committee of the Regions

1.1 welcomes the Communication as a useful contribution to the key debate of the restructuring of enterprises and the effects on employment. Restructuring has become a response to market changes, the creation of the internal market and globalisation. It is seen by many companies as an important element in maintaining competitiveness, when viewed as an opportunity to create new activities with higher-added value and more sustainable jobs within the concerned territory;

1.2 is pleased that economic restructuring is discussed within the context of the Lisbon Strategy for growth and the European Social Model. The CoR wishes to emphasise the importance of the European Social Model in alleviating the detrimental effects of restructuring for both individuals and local communities, and recognizes the need to take preventative action in relation to this where possible;

1.3 agrees that it is necessary to ensure that restructuring is well-managed to meet a two-fold economic and social requirement and that it must form part of a long-term vision of the development of the European economy in order to ensure that the changes really are a way of strengthening its competitiveness;

1.4 notes that the Communication only examines the EU level. Given the important role played by local and regional government and Member States, the Committee of the Regions is disappointed that the Communication was not wider in scope and looked at the interaction between the different spheres of government and the roles of these different spheres of government. However, the EU has competencies in areas such as the development of the Single Market, trade and development policy and the Lisbon Agenda. It is important that the European Commission considers the effects of these policies on economic restructuring and vice versa;

1.5 agrees with the Communication that the cost of restructuring can be high not only for the workers concerned but also for its detrimental effects on the local and regional economy;

1.6 emphasises the important role of the European Monitoring Centre on Change for highlighting best practice, with a view to building a firmer foundation for the public debate on restructuring and relocation;

THE CURRENT CHALLENGES

The Committee of the Regions

1.7 agrees that the following reasons can result in restructuring at the enterprise level: — European single market and the opening-up of economies to international competition — Technological innovation — The development of the regulatory framework — Major changes in consumer demand

1.8 argues that the Communication should have looked in greater detail at globalisation and the relocation of a large number of jobs outside the European Union;

1.9 suggests that the changes in the sectoral patterns of employment and the quality of jobs are important considerations in the framing of employment, training, industrial and agricultural policy at EU level. The Communication states that between 1977 and 2002 around 30 million jobs were created in the EU. 44 million jobs were created in the service sector while 7 million jobs were lost in industry and 7.5 million jobs lost in agriculture. Employment rates have increased 25.1 % for high-skilled workers, 14.2 % for workers with intermediate skills and only 2.2 % for unskilled workers;

1.10 supports the Communication about the benefits for growth and employment in terms of the deepening of the internal market and the opening up of the economy to trade. The CoR also welcomes the recognition in the Communication on the regional impacts of these policies and the need for social justice in these policy areas;

1.11 supports the Communication's view that the effects of restructuring can be influenced by policies to improve the functioning of the labour market, strengthening active employment policies, anticipating change, and providing mechanisms to facilitate the transition to other employment. The CoR would also like to stress the importance of effective local and regional economic development strategies which assist in the growth of the economy and the diversification of the economic base. Restructuring of enterprises in these sorts of economies is far easier to manage;

1.12 notes that the example of the United States 2002 Trade Adjustment Assistance Reform Act is cited as a positive example of opening the economy up to trade and providing assistance to companies and workers. However, the CoR believes that there are many examples in the EU of public agencies successfully responding to restructuring that can be used as a model;

RESPONSES AT THE EUROPEAN COMMUNITY LEVEL

i. General approach

The Committee of the Regions

1.13 supports the need for greater coordination of Community policies which affect restructuring and, in particular, welcomes the creation of a task force involving the Commission departments which have an effect on restructuring;

1.14 agrees with the examination of Community policies that affect restructuring so that the appropriate policy changes can be made.

ii. Reform of the European Employment Strategy (EES)

The Committee of the Regions

1.15 calls upon Member States to ensure that measures agreed under the European Employment Strategy are implemented effectively and promptly;

1.16 welcomes the important links that the Communication makes between the Lisbon Strategy, the European Employment Strategy and the EU Structural Funds. The CoR emphasises the importance of measures to support adaptation and restructuring which are proposed by the European Commission in the European Social Fund (ESF). The CoR also emphasises the need for high quality management training, geared to local needs and based on a broad partnership, so that employers and employees have the skills to manage change effectively and, thus, welcomes the proposals for training ‘change managers’;

1.17 wholeheartedly agrees with the conclusion of the Communication which states that that ‘it is, after all, at local level that anticipating change is most effective’ and that ‘the European Union's regional and cohesion policy must act as a catalyst’ (1);

1.18 calls upon Member States to adequately finance regional and cohesion policy so that it can act as a catalyst for change.

1.19 recalls that there are still regions, in countries that were already Members of the Union before the recent enlargement, which, in order to be able to converge with the other regions of the Community, are dependent on a continuation of regional development policies, through the Structural and Cohesion Funds, at least during a transitional period;

iii. Reform of Community financial instruments for better anticipation and management of restructuring

The Committee of the Regions

1.20 agrees with the Communication that, as well as the European Employment Strategy and EU structural funds, that the Seventh Framework Programme and EU education and training programmes can assist in the development of a competitive knowledge-based economy, that encourages mobility;

1.21 proposes an increase in the assistance provided for research, development and innovation (R+D+I), based on the significant benefits this type of activity brings to the restructuring of companies and to alleviating the negative impact that this can have on some local and regional economies;

1.22 notes that no consideration has been given to the different impact of restructuring on men and women; this hinders the adoption of measures specifically adapted to each issue;

1.23 expresses concern about the low levels of finance allocated in EU Member States negotiations to the Competition Objective. Restructuring will still continue in these areas and many areas need support to fully modernise regional economies and create a knowledge economy;

1.24 reiterates its support for the Commission's proposals for a Growth Adjustment Fund in the EU Structural Fund negotiations for the period 2007 — 2013;

1.25 welcomes the new impetus given by the proposal of establishing a Globalisation Adjustment Fund, which would aim at addressing significant economic and social shocks on local and regional level resulting from globalisation-related restructuring, which local and regional authorities could not have anticipated;

1.26 stresses the importance of CAP reform and rural development policy in reducing the detrimental effects of restructuring on agricultural employees and rural communities and particularly underlines the usefulness of endogenous development policies;

iv. Industrial and enterprise policy

The Committee of the Regions

1.27 supports the approach adopted by the EU in April 2004 when industrial and enterprise policy was revised. In this revision, the regulatory framework for companies was improved, greater competitiveness and innovation was supported and co-ordinated action established at sectoral level;

1.28 supports the suggestion in the Communication that the European Commission identifies sectors subject to rapid and far-reaching change and through high-level groups involving all stakeholders, the Commission will concentrate on analysing the development of competitiveness, environmental threats and opportunities, consequences at the regional level and measures that could be taken at the Community level to anticipate and manage change.

v. Competition policy

The Committee of the Regions

1.29 notes that the current guidelines for rescuing and restructuring firms in difficulty were introduced in October 2004 without consulting with the Committee of the Regions or the European Parliament;

1.30 notes that the Commission has published the State Aid Action Plan (2) (SAAP) in June 2005 and this will be the subject of a separate CoR Opinion. The CoR further notes that the SAAP announces an assessment and modification of the rescue and restructuring aid guidelines in 2007/2008 and emphasises the need to consult with the Committee if the Regions before new guidelines are introduced in 2009;

1.31 emphasises the importance of draft Regulation laying down general provisions for the European Regional Development Fund, European Social Fund and Cohesion Fund (COM(2004) 492) that if companies benefiting from the funds cease a productive activity and a possible loss of jobs within seven years of the financing decision, they must repay the sums received (Article 56).

vi. External policy

The Committee of the Regions

1.32 welcomes the statement in the Communication that the Social Agenda applies to external measures and makes provision for the promotion of employment, social policy and decent working conditions for everyone. The Communication goes on to state that the objectives of the social agenda includes the promotion of fundamental social rights, development of the social dialogue, corporate social responsibility, and the proactive management of change at a global level. These objectives will guide the EU its dealings with international organisations such as the ILO, OECD, UN, IMF, World Bank and WTO.

vii. Strengthening the partnership for change

The Committee of the Regions

1.33 supports comments in the Communication that the Commission will pursue change partnerships through strengthening the social dialogue, a Communication on Corporate Social Responsibility and the creation of a ‘Restructuring Forum’;

1.34 believes that the first Restructuring Forum held in June 2005 was a great success and looks forward to the establishment of the Forum as a regular event. In particular, the CoR welcomes the intention to concentrate on the local and regional level at a future Forum;

1.35 agrees that the proposed Communication on Corporate Social Responsibility should focus on the best practices used by firms and stakeholders to address restructuring. The Communication states that evidence shows that companies which are better able to handle restructuring in a socially responsible manner are often those with better track records in terms of market competitiveness and resilience. The CoR welcomes these conclusions;

1.36 welcomes the proposal in the Communication that the European Monitoring Centre on Change will be asked to monitor restructuring and provide a quantitative and qualitative analysis if restructuring that will assist the public debate.

viii. Adapting the framework of regulation and agreement

1.37 welcomes proposals in this section for regulatory, modernisation, and simplification measures provided for under the Lisbon Action Programme and the proposal for a Green Paper on Labour Law which will look at new models of work organisation and the role of labour law in coping with restructuring. This would provide an opportunity to look at the encouragement of ‘reflexive restructuring’. These measures include training breaks, sabbaticals, job-sharing, remote and part-time working and are less disruptive than the compulsory redundancies associated with more aggressive restructuring.

ix. The second phase of consultation of the European social partners on company restructuring and European works councils

1.38 agrees with the Communication that the social partners need to be more involved in anticipating and managing change and restructuring;

1.39 welcomes the approach of the Commission in respect to the revision of the Works Council Directive began in April 2004. The Commission has outlined four areas for agreement to Works Councils' role in anticipating and managing change and restructuring. These areas of agreement include the adoption of best practice and common approaches to restructuring.

2. The Committee of the Regions' recommendations

The Committee of the Regions

2.1 feels that economic restructuring at enterprise level is an inevitable part of the modernisation process in the creation of a forward looking knowledge based economy but emphasises the need to strengthen the European Social Model to alleviate the problems that restructuring can cause for individuals and local communities;

2.2 agrees with the European Commission that the ‘Restructuring Forum’ has a valuable role to play and that a future Forum should examine the role played in restructuring at the local and regional level;

2.3 calls for more research on the responses of government to the restructuring of enterprises, particularly the roles and interaction of the EU, national, regional and local spheres of government and also for more research on the causes of restructuring, particularly globalisation;

2.4 calls for EU, national and local policies to be built round employment security rather than job security. This would move away from the concept of a job for life (job security) and move to a situation where employees learned the skills to move more easily from job-to-job (employment security);

2.5 emphasises the role of the European Monitoring Centre on Change and its role in providing up-to-date information on economic restructuring which will inform the debate on anticipating and managing changes;

2.6 stresses the need for the greater co-ordination of EU policies to adapt to and manage change, and in line with the Commission recommendations suggests the need to include educational and training policy in the list of policies to be further coordinated;

2.7 wishes to see a well-functioning European Employment Strategy which plays a key role in the adaptation and management of change and the creation of employment in growth sectors;

2.8 emphasises the fact that restructuring at enterprise level is easier to manage where local and regional agencies have devised economic development strategies that promote growth and diversify the economy This makes it easier for former employees to find alternative employment;

2.9 acknowledges the key role that the EU Structural Funds and European Social Fund play in restructuring and the management of change. The CoR calls upon Member States to agree an EU budget that allows local and regional authorities to modernise their economies and, thus, reduce the detrimental effects of restructuring at the level of the individual enterprise, considering that this is a horizontal problem that affects all kinds of regions;

2.10 recommends the re-consideration by EU Member States of a growth or globalisation adjustment fund through the EU structural funds which would allow the EU to intervene if a crisis hit a local or regional economy due to restructuring; the CoR considers that this fund could only intervene if a regional threshold is reached, defined in terms of the proportion of workers hit by the restructuring shock which could not be anticipated, the regional unemployment rate and the impact on regional GNI. It agrees that the Fund should cover measures for absorbing the shock in terms of human capital, i.e. through training and relocation of workers and recommends that this fund should be established within the EU budget as a permanent independent fund with its own fixed annual budget. The CoR supports an allocation to that fund of EUR 1 billion per year.

2.11 recommends that the European Union looks at actions to diversify rural economies and improve their competitiveness so that the severe effects of agricultural restructuring can be reduced; it particularly emphasises the important role that endogenous development policies can play in this;

2.12 while welcoming the proposals on industrial and enterprise policy, the CoR recommends that the European Commission works closely with local and regional authorities to identify sectors experiencing rapid change;

2.13 wishes to be consulted when the rescue and restructuring guidelines are reviewed in 2007/2008;

2.14 recommends that Social Agenda considerations play a key role in negotiations with international organisations and in the Doha Development Round;

2.15 stresses the need for the responsible management of change and restructuring at the level of enterprises and different spheres of government and the need to ensure that employers are aware of their obligations. The CoR recommends that this can be achieved in a number of ways at the EU Level through the strengthening of the Social Dialogue, the Communication on Corporate Social Responsibility and negotiations surrounding the Works Council Directive;

2.16 recommends that enterprises look first at the encouragement of ‘reflexive restructuring’. These measures include training breaks, sabbaticals, job-sharing, remote and part-time working and are less disruptive than the compulsory redundancies associated with more aggressive restructuring through branch closures.

Brussels, 16 November 2005. The President of the Committee of the Regions Peter STRAUB

(1) COM(2005) 120 final page 12, footnote.

(2) COM (2005) 107 final – CdR 225/2005.