WRITTEN QUESTION P-0438/98

by Reinhard Rack (PPE) to the Commission

(16 February 1998)

Subject: Definition criteria for the new Objective 2

The current proposals for the reform of the Structural Funds and statements by the Commissioner, Monika Wulf-Mathies, at a number of Regional Policy Committee meetings appear to indicate that combatting unemployment is also to be one of the chief, and growing, concerns of the Structural Funds; however, much of the detail is still unclear.

The definition of the new Objective 2, which deals specifically with the economic and social conversion of areas afflicted by the most diverse structural problems, gives no further indication of the importance of the unemployment rate as a criterion for the selection of eligible areas or the formulation of strategy. Nor is it clear whether, in order to define an area as eligible for assistance, its unemployment rate should be compared with the national or the European average.

In view of this confusion, will the Commission state whether:

1. A higher priority should be attached to unemployment than to other definition criteria?

2. It takes the view that fundamentally different sectoral problems call for different selection criteria?

3. GDP, or other criteria such as low population density, migration, the proportion of commuters and an ageing population, would not constitute more reliable indicators of poor socio-economic situation in some regions?

Answer given by Mrs Wulf-Mathies on behalf of the Commission

(8 April 1998)

The Commission adopted on 18 March 1998 its proposals for a new regulatory framework for the structural funds for the period 2000-2006, based on its document Agenda 2000(1) which was published in July 1997. The proposed regulations set out the criteria and delivery system in relation to the new objective 2. Parliament is being regularly informed on the development of the Commission's thinking with regard to structural policies in general and the new objective 2 in particular.

The Commission considers that the new objective 2 list should be determined according to simple, objective and transparent criteria laid out in the proposed regulations. These would be used to identify the areas worst affected by decline due to changes in the industrial or service sectors, declining rural areas, urban districts in crisis and areas dependent on fisheries. The final list of areas would be determined in partnership with the national authorities taking into account national priorities.

Clearly, however, no single criterion can capture the full range of structural problems, and the Commission therefore also proposed that, in order to underpin the notion that all Member States should contribute to concentration on an equitable basis, the fall in population coverage under the new objective 2 in any given Member State (including the objective 1 areas in transition that meet the new objective 2 criteria), compared to the coverage under objective 2 and 5b in the current period, will not exceed one-third.

In the Commission's view, unemployment is the key problem faced by the regions affected by structural changes. It reflects the failure of the region to make full use of its available resources and causes the loss of qualifications and social exclusion of the unemployed. Unemployment and social exclusion (measured by long-term unemployment) are therefore among the criteria proposed by the Commission for the selection of assisted areas.

The purpose of the Community's regional policy is to facilitate and assist structural change so as to promote a process of diversification. It is not a policy with a sectoral focus in the sense that it tries to support employment or activity in a specific sector or sectors in crisis. It seeks, rather, to create new opportunities in areas with longer-term potential. The criteria for the selection of assisted areas are therefore intended to identify regional problems.

Gross domestic product (GDP) is a broad measure of regional prosperity and development and, as such, an appropriate indicator for the selection of the least developed, objective 1, regions of the Community. It is particularly relevant to large regions where commuter flows tend to be limited, so that the GDP generated within the region can be attributed to the resident population.

On both counts, however, it is an inappropriate indicator for the new objective 2 proposed by the Commission in Agenda 2000. First, objective 2 areas are seriously affected by economic restructuring which is not directly related to their level of prosperity. Such areas experience other problems indicated (to quote Agenda 2000) by "the rate of unemployment, the levels of industrial employment, the level and development of activity in agriculture and in the fishing industry, and of the degree of social exclusion". Second, objective 2 areas would typically be significantly smaller than the large less developed regions eligible for objective 1. For smaller areas, the GDP statistic often poorly represents the level of prosperity because of the effects of commuter flows. Thus otherwise prosperous residential areas may have low levels of GDP per head of population because the enterprises responsible for wealth creation are located in an adjacent region.

(1) COM(97) 2000 final.