Opinion of the Committee of the Regions on "Territorial pacts for employment, and the link between them and the European Union's structural policies"

(1999/C 293/01)

THE COMMITTEE OF THE REGIONS,

having regard to the decision of its Bureau of 7 May 1999, under the fourth paragraph of Article 198c of the Treaty establishing the European Community, to draw up an opinion on the subject and to direct Commission 6 - Employment, Economic Policy, Single Market, Industry, SMEs,- to undertake the preparatory work;

having regard to the draft opinion (CdR 91/99 rev. 2) adopted by Commission 6 on 11 May 1999 (rapporteurs: Mr Efstathiadis and Mr Virtanen);

whereas the committee of the regions has recently drawn attention to the importance of local actions for employment in for example, the following opinions and reports:

- The implementation of territorial employment pacts in the European Union, Rapporteur: Mr Behrendt (CdR 379/96 fin) ,

- Proposal for a Council Decision on measures of financial assistance for innovative and job-creating small and medium-sized enterprises (SMEs) - The growth and employment initiative, Rapporteurs: Mr Virtanen, Mr Keymer(1),

- Forthcoming Economic Policy Guidelines, Rapporteur: Mrs Bresso(2),

- Communication from the Commission: From Guidelines to Action: the National Action Plans for Employment (COM(1998) 316 final) and the Communication from the Commission: Proposal for Guidelines for Member States' Employment Policies 1999 (COM(1998) 574 final), Rapporteur: Mr Bodfish(3);

Whereas in the 1999 Employment Guidelines the Member States are asked to promote the measures to exploit fully the possibilities offered by job creation at local level and to take into account the special role of local authorities in this respect;

Whereas in its working paper on The Structural Funds and their coordination with the Cohesion Fund - draft guidance for programmes in the period 2000 - 06 SEC (1999) 103 final the European Commission, stated that "the contribution of the European Social Fund to promoting local development, for example via the territorial employment pacts, must be enhanced";

Whereas in its communication on "Community Policies in Support of Employment" (COM(1999) 167 final) the European Commission has drawn special attention to local and regional actions in employment policies,

unanimously adopted the following opinion at its 29th plenary session of 2 and 3 June 1999 (meeting of 3 June 1999).

Background:

The aim of this opinion is to present the COR's views on territorial employment pacts as a contribution towards shaping developments and policy in this area. It is especially targeted at the European Commission which is currently preparing a communication on this subject. The present opinion should not be thought of as a technical assessment, but rather as a political message to all the institutions concerned with employment at the local level, especially local and regional authorities, encouraging them to implement and expand upon the methodology of the employment pacts. It is also targeted at national authorities, asking them to support and encourage the local and regional players in this field.

1. Introduction - the background to territorial employment pacts

1.1. Tackling unemployment presupposes a general mobilization of all interested parties, as well as the development of initiatives and actions which will be based on the possibilities and opportunities provided by local economies. At the same time these actions must take advantage of the opportunities offered by the European dimension of the economy.

1.2. Territorial employment pacts are a new and important effort in this direction. When the Commission drew up its initiative on TEPs in June 1996, the Commission President, Jacques Santer, also called on the Committee of the Regions to participate in devising the pilot programmes to be implemented at local level. At its plenary session in November 1996 the Committee of the Regions contributed specific proposals for defining the procedure and rules necessary for implementing the local employment pacts. A central feature of these proposals is the recognition of the responsibility of all potential players - especially local authorities - to develop the integrated measures needed to tackle the unemployment problem.

1.3. As the project has progressed, the concept of employment pacts has also become more specific. The Commission's Communication of June 1997 defined the three main criteria for drawing up and implementing employment pacts:

a) selection of initiatives which originate from the local level (bottom-up approach);

b) participation on the basis of broad partnership between the public and private sectors, involving all those who have an important influence on employment in a given region (this partnership would go beyond the simple form of partnership created in the context of actions under the Structural Funds, and would actively involve the private sector, the social partners, and the relevant non-governmental organizations);

c) a plan of action based on analysis of the local situation, with the aim of creating an integrated strategy and innovative measures to create jobs.(4)

1.4. All three criteria designate a central role for regional and local authorities to coordinate and promote the implementation of projects. The commitment of elected decision-making bodies and their political support is, therefore, an important underlying requirement for the partnership projects.

1.5. TEPs are not a panacea for the European employment problem, nor are they sufficient by themselves to solve it. They may, however, introduce a new form of dialogue between key players in a region, which may help the local demand and supply for labour to be matched more effectively. The introduction of precisely this type of dialogue may well prove to be an important tool, as the real life case of Sophia demonstrates:

The Case of Sophia

Sophia has done some courses on cheese-making, although this training has not been of any great help in finding a job, even a temporary one. The training scheme seems to bear no relation to the way businesses operate and the way they select employees. As she herself puts it, "If I approach them myself and tell them I have this diploma, that I have completed a course of training, they're unlikely to take me on. What's needed is another, more organized way of contacting employers which workers can't set up themselves, and neither can training centres". It is precisely this kind of local system for matching supply and demand, which would be of great help to Sophia, that many TEPs are trying to create. They provide many unemployed people with access to employers and the chance to acquire the relevant professional experience.

Territorial Employment Pacts - a solution to Sophia's problem?

Dialogue is therefore required to facilitate the matching of supply and demand. The annexe to this document provides concrete examples of the kind of instruments which have been used successfully to date within the context of TEPs to promote this dialogue:

- In many cases TEP activity focuses on analysing the competitiveness of businesses in a region, in both the industrial and the service sectors. This involves not only analysis of the current situation, but also sector-by-sector projections for the future, which have proved effective in predicting labour needs in each sector over various time frames.

- These competitiveness analyses give a picture of the evolution of labour needs in the different sectors. But to be able to match supply and demand as effectively as possible, it is essential to know what kind of skills companies will expect from employees in the different sectors. For this reason special projects to assess the skills requirements of businesses have been set up within the Pacts to work with local businesses to assess, on a company-by-company basis, the particular skills needed from existing employees and any new staff to be recruited in the near future. Using these assessments as a basis, it has been possible to target measures designed to improve job seekers' employability in such a way that they provide real employment opportunities.

- Parallel to this the structure of the existing labour force and of unemployment have been analysed. By comparing the manpower available and labour demand, bottlenecks in labour demand have been identified, as well as those sectors where labour supply exceeds demand. This has been useful in helping to tailor employment promotion measures to local needs.

This examination of the structure of unemployment has in some cases extended to the indirect effects of unemployment and the problems these present for the individual. These problems include disruption of one's livelihood, deteriorating health and the fall-off of social relations, which increase the risk of the unemployed gradually being excluded from a society centred on work.

- TEPs have also had some impact on these problems by effectively stemming the exclusion process and increasing individuals' chances of getting back into the labour market. In cooperation with local operators and service providers a new range of services has been created which takes account of the indirect problems individuals face as a result of unemployment. The following are examples of such services which have been developed within TEPs:

- drawing up a profile of the job seeker's skills and comparing these skills with local demand and organizing training to improve employability which is geared to the actual needs of local businesses;

- providing advice on self-employment

- services specializing in unemployment-related health problems

- cooperation projects between authorities aimed at tackling social problems.

It is clear that the problem of unemployment transcends the traditional demarcation lines of administrative powers and sectoral programmes. At local level, TEPs can be the instruments which bring together the various players to cooperate on promoting employment, to help put together and implement a broad-based employment strategy. As such, TEPs do the work of consultants, examining the whole range of economic life in a region and its employment potential whilst taking account of the possibilities and needs of businesses, workers and job seekers. This creates the necessary synergy between regional economic policy action and employment policy measures which is itself the key to employment creation.

2. Implementing local employment pacts - preliminary observations

2.1. Overview

2.1.1. The selection of 89 local employment pacts in all the Member States was the result of a remarkable mobilization of local and regional authorities for the planning and development of partnership links which would create integrated actions to tackle unemployment. Also helpful in this sense was the realization by all concerned that the policies which had been applied up to that point were inadequate for tackling the structural dimensions of unemployment. A new and important operational tool was introduced when attempts were made to tackle unemployment through integrated local actions. When it succeeds, this operational model integrates employment policy measures with local business policies and also promotes local economic growth.

2.1.2. The TEPs which have been struck differ substantially both with regard to their respective aims and the actions involved, and with regard to the level of processing and preparation of their proposals. Thus, for example, in the south of the European Union, the programmes concentrate more on the problem of growth, whereas in the north they concentrate on specific aspects of unemployment, such as long-term and youth unemployment. In some cases, the partnership links were based on pre-existing "mature" forms of cooperation between local players, whereas in other cases, partnerships sprung up as a result of the local pacts, while so far lacking the necessary depth and the appropriate institutional consolidation. In the same way, there are differences concerning the extent of the geographical regions covered by the pacts, and the nature and scale of the partnership links on which they are based.

2.1.3. The strength of TEPs lies in their sensitivity to the local situation and local needs. The above described diversity is, in fact, a natural consequence of this. Indeed, as an example, the territorial scope should in future also be determined locally, and territorial restrictions should not be written into the programmes. The TEPs' bottom-up approach to the development, planning and implementation of action enables citizens and all local initiatives to play an active part in them. This practice must be maintained and further developed in the next stages of the programme.

2.1.4. Barely 9 % of the total population of the European Union live in the regions to which the pilot programmes apply. The relatively small coverage of these actions means that their beneficial effects are restricted mainly to local employment; however, the success of the programmes will undoubtedly provide the opportunity at a later stage for broader use of the TEPs, and draw attention to a new, important way of combating unemployment and assisting local growth, particularly in the regions of the Union which are lagging behind significantly. One observer described his experience in the following way:

"Territorial employment pacts have introduced a new operational culture, in which the unemployed have also been given the opportunity to have an influence and to be actively involved. Territorial employment pacts are viewed as the driving force behind cooperation on employment promotion. In many regions concrete links have been established between employment and business development measures, and points of consensus have been found concerning social and health policy objectives."

2.2. The role of regional and local authorities in partnership projects

2.2.1. As stated earlier, local and regional authorities play a central role in the planning and establishment of partnership links under the TEPs. The local authorities are always the focus around which the activities promoting social integration and social development undertaken by responsible local bodies and individuals evolve. Local authorities are also in a position to assess which local bodies can participate effectively in the development of partnership links, by supplying funds, human resources and experience. In all cases it is essential to ensure broad participation in the partnership link, so that the full potential of the local community is harnessed.

2.2.2. The COR wants to underline that in addition to their coordinative role, local and regional authorities are also policy makers. In this role they can significantly support and also participate in the "product development" for employment tools undertaken by TEPS. Furthermore the COR wants to point out that the bottom-up approach should count also at local and regional level which means that there must be real opportunities for direct involvement of citizens in TEPs.

2.2.3. The practical operation of the partnership link must begin with the planning of the programmes. This ensures the commitment of the players so that they are ready to organize and implement the relevant actions. In particular, it seems to be vital to involve the region's chief employers or major investors in the partnership link from the start so that they are in a position to assess the practical benefits and opportunities which will flow from the TEPs. Such early awareness and participation will increase the sense of commitment.

2.2.4. Local and regional authorities can take on special responsibilities for employment in regions where major structural changes in the economy or de-industrialization processes are underway. In such cases, pockets of unemployment are often created, and at the same time a series of other social and economic problems arise. These problems can be tackled in the context of horizontal partnership action by local players. In this way it is possible to target as effectively as possible all the resources available at local level to combat unemployment and support local growth. The absence of local coordination leads to the fragmentation of the measures taken, while many of the resources available are used up on overlapping and conflicting actions.

Partnerships can be of help in the development of new economic activities in the social economy, thereby creating employment opportunities which would not otherwise exist. National governments and the European Union should, for this reason, provide particular support for partnerships based on cooperation between local partners and also with partners from neighbouring regions.

2.2.5. The drawing up of TEPs in the context of partnership presupposes a common understanding of the region's employment problems. Indeed, one requirement for a successful partnership pact seems to be the careful mapping out of the local unemployment/employment situation, economic strengths and development perspectives. The partners will need to acquire, with the help of the national and regional authorities, the knowledge necessary to fully understand and monitor the local situation. The partners will also need to be in a position to recognize the best practice applied in the region or elsewhere, which must be maintained or further developed. It is also extremely important to monitor and evaluate the projects in broader terms than just statistical data, analysing the impacts of the TEP on employment-, economic- and social development in the territory concerned. Close monitoring helps in resource allocation and prevents the useless duplication of unsuccessful initiatives.

2.2.6. It is important to notice that the principle of partnership has also a vertical dimension. It requires coordination and cooperation between national, regional and local authorities. However, it has been possible to observe that certain countries, such as Greece, also lack the appropriate institutional framework to develop partnerships. This poses an important obstacle to cooperation between the partners at local level. Developing partnership relations in the form of business groupings, such as limited companies etc., or of non-profit-making organizations, does not always allow the creation of a suitable framework for partnerships. An operational institutional framework should allow cooperation on an equal footing between the partners as well as an equal share in the financing, without creating legal, fiscal or labour problems. In some instances this would require the national level to respond and introduce measures, but it looks as though the "bottom-up" approach has often fallen short in this respect and been restricted to purely local activities.

2.2.7. On the other hand, efforts must be made to ensure that TEPs do not turn into administrative mechanisms, thereby losing their functional character. If this were to happen, it would create yet another sector in an already sectorally fragmented society. The value of employment pacts lies precisely in the cross-sectoral cooperation they entail, and this must be retained in the future. Being truly functional forms of cooperation, TEPs have the potential to form the basis of a substantial local-level approach to employment questions, which appears to be essential as a means of adapting employment policies to local needs. The local approach to employment questions through partnerships will also help to create links with education and vocational training operations. Such links are currently lacking. In many regions there are several operators active in the fields of employment and training at local level, but with no particular coordination or concerted action.

2.2.8. However, with regard to established cooperation, the continuity of actions should also be ensured also through national decisions beyond the expiry of the first approved operational period of TEPs.

3. Integrating the employment dimension into different policy areas

3.1. At the European level it is understood that the employment problem cannot be resolved through employment promotion alone; all measures and development projects must play their part. Indeed, it is for this reason that a debate has been initiated on the integration of the employment dimension into different policy areas. Commission funded projects can often include a requirement for employment considerations to be taken into account at the local level in order to ensure that the Community's employment requirements are met, irrespective of policy sector.

3.2. At the national level, established sectoral boundaries in administration often pose an obstacle to the effective integration of the employment dimension. This has sometimes proved problematic when TEPs are implemented: it has often been difficult to find counterparts at the local level cross-sectoral cooperation projects in national programmes, as they tend to be defined sectorally.

3.3. Incorporating the employment dimension into programmes in other policy sectors is easiest at the local and regional levels. The impact of these programmes on problems, including employment, is tangible; the benefits and returns for the region are immediate. However, a common problem at the local level is the absence of any significant local funding instruments. This means that even well designed programmes are incapable of achieving their full employment creation potential. The Committee of the Regions feels that careful examination should be given to whether successful methods of integrating the employment dimension into other policy areas have been developed within the framework of TEPs.

3.4. However, integration of the employment dimension at local level would be promoted effectively if responsibility for devising a regional or local employment strategy fell within the framework of TEPs. This should be an explicit objective in the future.

3.5. National authorities should be particularly concerned with the fiscal and administrative simplifications required if certain key activities within the TEPs are to be in any way successful. In particular, it will be impossible for SMEs to participate in initiatives to expand employment and local development unless there are major simplifications of this sort which can only be drafted and implemented by national authorities. In addition to administrative simplification, specific support services and programmes targeted at SMEs play an important role. These programmes, and the services running them, should allow for implementation of TEPs and actively support them.

3.6. In certain cases, large national and multinational companies play a major role in local employment. Cooperation with these companies at local level in a spirit of mutual benefit can be an important aspect of TEPs so as to increase the opportunities for local development rather than restricting them. The COR is naturally aware of the difficulties faced by local economies today as the process of globalization gathers pace. Especially by creating new kind of networks which are particularly important for subcontractors TEPs can provide some answers which will be useful in maintaining a local framework of business activity that is not entirely at the mercy of global business networks.

4. A European employment strategy: the new context

4.1. At the Amsterdam summit of the European Council it was decided to incorporate a new employment chapter into the Treaty. This states that Member States consider employment promotion to be a matter of common interest and that they therefore seek to develop a common employment strategy. However, the main responsibility for implementing employment policy remains with Member States.

4.2. The introduction of a European employment strategy has also created a new context for TEPs and this must be taken into account in the future.

4.3. At the November 1997 European Council summit, the first employment policy guidelines were drawn up under the new employment chapter. The guidelines address four main themes: improving employability, support for entrepreneurship, encouraging adaptability in businesses and their employees, and promoting equal opportunities.

4.4. Another decision taken at the summit was for each member state to draw up a national employment action plan incorporating the European Council's guidelines. The action plans must respect the principle of subsidiarity, take account of Member States' competence in this area, and be compatible with the broad lines of the EU's economic policy. In 1998 employment policy in each Member State was conducted in accordance with the approved plan.

4.5. In an increasingly globalized world, the local dimension is steadily gaining importance. Taking account of local conditions is particularly important in attempting to resolve the unemployment problem. The European Commission has emphasised the importance of local measures and, in particular, of local initiative in promoting employment. The Committee of the Regions has proposed that regional and local authorities should be closely involved in the drawing up and implementation of national action plans. This proposal has not, however, received all-round support.

4.6. On the basis of the previous observations, the following conclusion can be drawn: when TEPs which operate on the "bottom-up" principle are being implemented, the problem has often arisen that local activities have not received the necessary institutional response from higher levels of government. The "bottom-up" principle has, therefore, been limited to the local level and to horizontal cooperation. At the same time, the European employment strategy has introduced a process operating in the other direction: (top-down). The idea is to find ways of implementing the political will created at European level in the Member States through national action plans. As stated earlier, the implementation of national action plans ultimately also requires cooperation with regional and local authorities, but this has not yet been sufficiently widely recognized. Thus, the National Action Plans, rather than being a mere list of actions and objectives, should become a solid point of reference for implementing the Territorial Employment Pacts.

4.7. Indeed, the Committee of the Regions wishes to point out that national action plans, which lie at the intersection of these two diametrically opposed processes, provide the opportunity for resolving the problems which have been raised here. If the experience of TEPs and the new practices emerging from them are genuinely taken into account when national action programmes are drawn up, the regional and local level will be automatically drawn into the process of drafting and implementing national action plans. At the same time it will be possible to develop those solutions at the level of central government which are necessary for the implementation of TEPs. This would also introduce an essential element of continuity and would probably ensure a longer-term future for many partnership projects.

5. Link between Territorial Employment Pacts and structural policies

5.1. Particular attention must also be paid to the fact that the forthcoming Structural Fund programming period will serve as an important reference point for the implementation of the European employment strategy. The European Commission has set the following objectives for Structural Fund reform: (1) increasing the concentration of support; (2) decentralising and simplifying implementation: and (3) improving effectiveness and monitoring. As more general objectives, the Commission refers to sustainable economic development, supporting the competitiveness and innovative capacity of SMEs, and promoting employment, environmental protection, sustainable development, and equal opportunities. The European Social Fund will bring local involvement to the fore, with local employment initiatives and TEPs serving as the tools of an active labour market policy against unemployment.

5.2. It is important to notice here, that the broad concept of the partnership and active involvement of all local/regional players who can significantly contribute to employment - principles on which the TEPs are based - can provide clear added value in comparison to the actions traditionally undertaken in the context of structural policies.

5.3. National programmes are not always capable of identifying the best remedy for locally rooted problems, and taking account of regional differences in nationwide employment programmes is not easy. Local activities should be viewed as a way of supplementing national employment measures, rather than competing with them. The local dimension in employment should be firmly anchored at the EU level in the objectives of the forthcoming programming period as well as in the implementation of national programmes. TEPs should therefore be presented as an operational model which provide a flexible way of integrating local partnership into national programmes. Adequate resources should be earmarked for this. It would also strengthen the commitment of national authorities to finding solutions to local problems.

5.4. It seems to be absolutely essential for the Commission to take the initiative of increasing the number of TEPs to be implemented in the coming years and to guarantee the continuity of the existing pacts. There are now major initiatives at local and regional level which the Commission should support, as well as giving the appropriate technical assistance to launch TEPs in areas in crisis or with particular employment problems. This will of course require a substantial increase in the budget allocated for this purpose. It is important that funding is channelled into arrangements which are capable of generating long-term employment.

5.5. The TEPs in operation at present, and especially those to be implemented in the future, should in addition to concrete regional needs also place the emphasis on sectors such as the environment, health, tourism, culture and social services which facilitate the creation of jobs in new dynamic economic activities. At the same time, TEPs must be able to provide a launch pad for the creation of new businesses in these and other sectors. This kind of initiative can be backed up by creating "hothouses" to provide training and technical assistance to new entrepreneurs. These activities must be supported as far as possible by creating regional funds, or capital associations to take on business risk and to back small investments for which new entrepreneurs cannot provide the guarantees required to get financing from the traditional banking sector.

6. Dissemination of experiences and best practices

6.1. The COR asks the Commission to draw up a European action plan for dissemination of experiences and best practices implemented by TEPs. This action plan should have an interinstitutional character thereby profiting from the existing networks of each institution.

6.2. As an element of this action plan the COR proposes the creation of a manual listing the characteristics of TEPs and the best practice emerging from them. This manual must be based on data to be gathered in a special study with the aim of identifying the advantages and opportunities afforded by forms of local cooperation in tackling employment issues. The manual should provide particularly detailed information on the procedures, methodology and institutional preconditions of the partnerships on which TEPs are based.

6.3. A guide to TEPs should be sent out to local and regional authorities, providing information on the methodology of successful initiatives within Pacts and assessing the durability of actions and the employment created through the Pacts. The COR commits itself to participate actively in the preparation of this kind of manual and invites the other institutions especially the Commission to cooperate in this work.

7. Final remark

7.1. Finally, it is worth reconsidering the fundamental nature and assumptions behind the employment pacts. They are a mechanism for horizontal cooperation, which partly represent a counterforce to the ongoing sectoral fragmentation of society and its administrative structures. By bringing together all the key players it will be possible to obtain an overview of both problems and opportunities, as well as the measures which need to be taken.

7.2. These cooperative attributes must be preserved in the future; indeed, employment pacts should not lead to the creation of yet another separate sector in a still more fragmented society. On the contrary, TEPs must be a rallying point for local actions and the basis for a local approach to employment issues by virtue of the extensive partnerships they create. The COR wishes finally to encourage local and regional authorities to take an active part in the planning and implementation of TEPs and to help all the relevant local players to recognize the considerable opportunities they afford.

8. Recommendations

The Committee of the Regions underlines that within the activities initiated under the framework of territorial employment pacts new tools, new partnerships and new cultures have been created. In order to take full advantage of these innovations and in order to encourage a larger use of the model of TEPs, the following actions should be taken:

1. local and regional authorities should be further encouraged to participate actively in the preparation of the TEPs and other partnerships as policy markers and as coordinators;

2. both horizontal and vertical dimensions of the partnership must be strengthened;

3. special attention must be paid to the evaluation of activities. The evaluation must take place in broader terms than just statistical data, analysing the impact of the TEPS on employment, economic and social development in the territory concerned;

4. it must be carefully examined whether successful methods of integrating the employment dimension into other policy areas have been developed within the framework of TEPs;

5. the local dimension in employment should be firmly anchored at EU level in the objectives of the forthcoming programming period as well as in the implementation of national programmes;

6. the number of TEPs must be increased, the continuity of the existing pacts must be ensured and larger use of the partnership model must be encouraged with the main purpose of creating lasting employment;

7. given that inadequate resources are a fundamental obstacle to the implementation of TEPs at local level, special provision should be made for TEPs in the Structural Funds;

8. in addition to concrete regional needs more emphasis should be placed on sectors such as the environment, health, tourism, culture and social services;

9. the Commission should draw up a European action plan for dissemination of experiences and best practices implemented by TEPs;

10. a manual listing the characteristics of TEPs and the best practice emerging from them should be prepared, as an element of this action plan.

Brussels, 3 June 1999.

The President

of the Committee of the Regions

Manfred DAMMEYER

(1) CdR 46/98 fin - OJ C 251, 10.8.1998, p. 41.

(2) CdR 110/98 fin - OJ C 51, 22.2.1999, p. 63.

(3) CdR 279/98 fin - OJ C 51, 22.2.1999, p. 59.

(4) Commission Communication on the interim progress report on the implementation of territorial pacts for employment, CES(97) 3 final, Brussels, 10.6.1997, p. 1.