Communication from the Commission on environment and employment (Building a sustainable Europe)
Date: 1997-11-18
Institutions: European Commission
Subjects: EU policy, economic policy, employment policy, environmental policy, sustainable development

COMMISSI  OF THE EUROPEAN COMMUNITIES 

Brussels,  18.11.1997 
COM(97) 592  final 

COMMUNICATION FROM THE COMMISSION 

on environment and employment 

(Building a sustainable Europe) 

Communication on environment and employment 
(Building a sustainable Europe) 

/.  Introduction 

1.1. The resources problem 

1.2. The political  mandate 

2.  The  links  between  environment  and  employment 

2.1. Economic growth and sustainable development 

2.2.  Towards a job-intensive and sustainable Europe 

2.3.  Managing the transition 

3.  Supportive  policies  for  jobs  and  environment 

3.1.  Urgent tasks 

3.1.1. Manufacturing industry 
3.1.2. Transportation 
3.1.3. Energy generation 
3.1.4. Agricultural practices 
3.1.5. Consumption patterns and households 

3.2.  Territorial  aspects 

3.2.1. Urban development 
3.2.2. Rural development 

3.3. Supportive policies 

• 

3.3.1. Implement the environmental acquis 
3.3.2. Make taxation more employment-environmentally friendly 
3.3.3. Technology assessment and development 
3.3.4. Dissemination of information 
3.3.5. Domestic and external markets 

3.4.  Reviewing labour market policies 

3.5.  Financial  support 

3.5.1. Community expenditure 
3.5.2. The European Investment Bank 
3.5.3. User charges 

4.  The way forward-  Key  actions 

4.1. Environmental  and social benchmarking 

4.2.  Technology assessment and development 
4.3.  Building upon Agenda 2000 
4.4.  Taxation and prices 

4.5. Environmental  training and  education 

Annexes:  1. Eco-buskiesses,  2. Examples  of  good  business  practice, 

3.  Member  States  actions 

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Executive Summary 

The  purpose  of  this  Communication.  The  Amsterdam  Treaty  includes  a  new 
objective  on  employment  and  a  stronger  commitment  on  the  environment.  Both 
employment  and  environment  are  matters  of  common  concern,  and  the  Treaty 
requires  these  two  areas  to  be  integrated  in  all  other  policies,  in  its  proposal  for 
Guidelines  for  Member  States'  employment  policies  the  Commission  is  advising 
Member  States  to  harness  new  technology  and  innovation  for  the  creation  and 
deveiopmejit  of  businesses  and  the  promotion  of  (environmentally)  sustainable 
production and consumption patterns. 

This communication,  drawing on these political mandates,  seeks to outline a strategy 
through  which  environment  and  employment  policies  can  be  made  mutually 
beneficial. 

The  resources  problem.  The Eli  economies  are still  characterised  by "underuse"  of 
labour  resources  and,  at  the  same  time,  "overuse"  of  environmental  resources.  The 
EU  employment  rate  is  low  while  the  unemployment  rate  is  high,  at  an  average  of 
over  10%. On a separate front,  the industrialised  world is responsible for a  significant 
part  of  global  environmental  problems.  The  main  problems  arise  in  a  number  of 
specific  sectors  of  the  economy  (industry,  transport,  energy,  agriculture),  and  in  the 
pattern  of  consumption.  As a whole, our patterns of production  and  consumption  are 
far from  sustainable. 

The  links  between  employment  and  environment.  The way  we  presently  produce 
goods  and  services  is still  based  on  investment  and  price relations  of  the past,  when 
environmental  concerns had much less importance. Analogously, the way we provide 
and finance public goods and the welfare state stems from  a period in which a decline 
in  the  activity  ratio,  combined  with  an  increase  in  unemployment,  was  less 
problematic.  Today,  Member  States  are called upon  to  accelerate the shift  from  eld, 
polluting  technologies  and  end-of-the-pipe  measures  to  new  clean  technologies.  At 
the  same  time,  they  are  faced  with  the  need  to  reconsider  ways  for  financing  the 
provision of public goods and the welfare state. 

A  shift  in  technology  can  best  be  done  when  old  capital  is  replaced  with  new 
investment,  integrating high environment standards from  the beginning,  supported  by 
a  combination  of  economic  incentives  and  disincentives.  This  brings  dual  benefit: 
investment  creates  jobs  and  business  opportunities  and  new  technology  leads  to  a 
better environment.  The faster  such new technologies and methods are developed  and 
introduced,  the  faster  Europe  will  get  a  sustainable  economy  and  more  jobs. 
Environmental  policy,  if well designed,  should  be seen as a strong  driving force  for 
investment  and  the  building  of  a  sustainable  Europe,  creating  both  growth  and 
employment. 

The way forward-  Key actions. Employment and environment policies can be made 
mutually  reinforcing.  The  rate of  progress  will  among  other  things,  depend  on  the 
speed  with  which  new  technologies  are  introduced  into  the  capital  stock.  The 
Commission  will  support  and  stimulate  initiatives  to  develop  Member  States  long 
term investment strategies. The Commission proposes the following key actions: 

1. Benchmarking  of  employment  and environmental  achievements  of  companies  and 
economic  sectors,  so  as  to  encourage  public  authorities  and  private  and  public 
enterprises  in  their  reorientation  towards  cleaner  and  eco-efficient  production  and 
consumption. 

2.  Promoting  technology  assessment  and  development,  including  the  new  emerging 
sectors  and  technologies,  and  broadening  the  scope  of  existing  Best  Available 
Technologies  screening  exercises  so  as  to  include  employment  effects  as  well  as  a 
detailed assessment of energy and resource use. 

3.  Building  upon  Agenda  2000,  continue  and  increase  the  efforts  to  ensure  that 
Community  Funds  and  Instruments  support  in  an  integrated  way  employment  and 
sustainable  development.  A  focus  on urban  renovation  and  rural  development  looks 
promising. 

4.  Continue  the  gradual  restructuring  of  tax  systems  by  reducing  non-wage  labour 
costs on the one hand  and on the other,  by incorporating  environmental  and resource 
costs into market prices of goods and services. 

5.  Promoting  education  and  training  to  support  the  implementation  of  new 
environmentally friendly  technologies and working practices. 

1  Introduction 

1.1. The resources problem 

Our  EU  economies  are  not  developing  in  a  sustainable  way.  They  are  still 
characterised  by  "underuse"  of  labour  resources  and  "overuse"  of  environmental 
resources. 

The  "underuse" of  labour  resources  can be described  in the  following  way.  For  two 
decades,  the  EU" has  had  rates  of  economic  growth  of  the  order  of  2.5%  a  year, 
including  a productivity  growth  of 2 per cent.  The number  of jobs  lias grown  but  so 
has  the  number  of  people  locking  for  a job.  This  has  resulted  in  a  decline  in  the 
employment rate to around 60.4% of the working age population and in an increase in 
unemployment,  to  over  10%  of  the  workforce  on  average  in  the  EU.  Long  term 
unemployment represents half of the unemployed or 5% of the whole workforce.  This 
problem of "underuse" of labour resources results mainly from  a lack of jobs (too  few 
entrepreneurs  taking  too  few  initiatives  and  hiring  too  few  people),  a  lack  of 
supportive policies and from  a skills gap (too many people have old skills or no skills 
at  all)  when  enterprises  need  people  with  new,  adapted  skills.  Basically,  the 
unemployment  problem  in  Europe  is,  to  a  considerable  extent,  a  consequence  of  a 
slow down of job creating long term investment. 

As regards  the "overuse" of  natural  resources  the problem  has been  analysed  by  the 
OECD,  the  5th  Environmental  Action  Programme  and  its  Review,  as  well  as  by 
assessments  undertaken  by  the  European  Environment  Agency.  EU  Member  States, 
as  part  of  the  industrialised  world,  are  responsible  for  a  significant  part  of  global 
environmental  problems. The main  problems arise in a number of specific  sectors  of 
the economy and in the pattern of consumption, with serious impact on the quality of 
water, soil and air, which represent the basic elements necessary for human life. 

•  While progress has been made, manufacturing  industry continues to be responsible 
for  a  considerable  part  of  environmental  pollution  in  particular  through  the  use  of 
energy and raw materials and the generation of hazardous waste. 

«  In the transport sector, the overall negative environmental trend has continued  due 
to traffic  growth and in spite of technological improvements in engines and fuels. 

•  In  the  energy  sector,  the  fossil  fuel  cycle  has  significant  negative  environmental 
impact, mainly on the atmosphere. 

•  In  overall  terms,  present  agricultural  practices  have  negative  impacts  on  water 
levels and  quality,  and on soil  erosion.  Although  the  CAP  reform  of  1992 had  some 
positive effect,  further  efforts  are necessary. 

•  Consumers,  including  households,  represent  70% of  final  demand  for  goods  and 
services  and play  a fundamental  role both through  their  influence  on  industry  and  as 
end users. 

1,2, Th® political mandate 

The  European  Council  in  Amsterdam  paved  the  way  for  significant  progress  in  the 
employment  and  environmental  dimension  of  the  European  Union.  The  European 
Council took several decisions of great importance for these policies: the introduction 
of  sustainable  development  as  a  Union's  objective,  the  introduction  of  a  new 
Employment  Title in the Treaty,  the resolution  on Growth  and Employment,  and the 
Presidency  conclusions on "Employment,  Competitiveness and Growth". 

The newly  signed  Treaty  lays  down  two new  objectives  for  the European  Union:  "a 
balanced  and  sustainable  development"  and  "a  high  level  of  employment".  Besides 
the  present 
the 
development  of  other  policies,  there  is now  a  new  explicit  obligation  to  do  so  with 
employment aspects also. 

integrate  environmental  considerations 

requirement 

into 

to 

The European  Council  Resolution  of  June  1997 on  Growth  and  Employment  placed 
employment  at the core of the economic co-ordination  process with immediate  effect, 
in  advance  of  formal  ratification  of  the  Treaty.  Based  on  this  mandate  from  the 
Amsterdam  Summit  the  Commission  has  proposed  Guidelines  for  Member  States 
employment  policies  based  on  four  lines  of  action:  entrepreneurship,  employability, 
adaptability  and  equal  opportunities.  In  this  context  the  Commission  has  advised 
Member  States  to  harness  new  technology  and  innovation  for  the  creation  and 
development  of  enterprises  and  the  promotion  of  environmentally  sustainable 
production and consumption patterns. 

2. The links between environment and employment 

A  comprehensive  analysis  of  the  links  between  environment  and  employment  has 
been  undertaken  by  the  OECD.  Moreover  at  the  Conference  on  Environment  and 
Employment,  organised jointly  by  the  Commission  and  the  European  Parliament  in 
May  1997,  all  stakeholders  were  brought  together  to  exchange  views  on  policy 
experiences. The following  conclusions emerge from  these and other analyses: 

2.1. Economic growth and sustainable development 

A basic distinction  is to be made between  economic growth  and  development.  While 
growth  generally  refers  to  increases  in  the  level  and  scale  of  economic  activities, 
development  also  implies  a  qualitative  improvement  and  unfolding  of  further 
potential.  Environmental  and  social  considerations  are obviously  at the  heart  of  any 
such improvement. 

The  most  common  definition  of  sustainable  development  is:  development  which 
meets the needs of the present generation without  compromising the ability of  future 
generations  to meet their  own needs1. Critical  in this  concept  is the notion  of natural 
capital:  (1)  the  natural  environment  is  a  source  of  energy  and  materials  which  are 

As used in the 5th Community  Action Programme for the Environment, JO C  138 of  17.5.93 
and in "Towards Susiainability", the Programme's Progress Report,  1997. 

transformed  into  goods  and  services  to  meet  human  needs;  (2)  it  is  a  sink  for  the 
wastes  and  emissions  generated  by  producers  and  consumers;  (3)  the  environment 
also provides a number of basic elements necessary for  human  life  and  the economy, 
such as air, soil and water. 

Empirical  evidence  suggest  that  there  is  no  simple  linear  relationship  between 
economic growth and the use of this natural capital. While it is true that the emissions 
of some pollutants broadly  grow in line with economic activity, there are many types 
of pressure on the environment that actually decrease as economies prosper.  2 Thanks 
to  economic  growth  and  accompanying  policies,  the  Community  has  succeeded  in 
curbing several forms of environmental pollution in the field of air, water and waste. 

However,  one  of  the  major  remaining  challenges  for  the  coming  decades  concerns 
exceedances of the carrying capacity of the planet and the continued  intensive use of 
non-renewable  natural  resources.  The  move  towards  a  sustainable  form  of 
development  thus  demands  increases  in  the  efficiency  of  primary  energy  and  raw 
material use, maximum  rates of recycling products and waste, designing  products  for 
their  durability,  as well  as  a more intensive  reliance  on  renewable  energies  and  raw 
materials.  The  Commission  will  shortly  publish  a  White  Paper  on  a  Community 
Strategy and Action Plan in respect of renewable sources of energy. 

2.2. Towards  a job-intensive  and  sustainable  Europe 

The  availability  of  sufficient  jobs  of  high  quality,  for  the  present  as  well  as  for  the 
future generations, is a critical aspect impinging very much upon the quality of life of 
the  citizen.  The challenge  of  a sustainable  Europe  therefore  consists  of  achieving  a 
competitive economy combined with less environmental pollution,  improved  resource 
efficiency  of energy and raw materials and higher employment rates. 

relationships  between  policies  related 

Before  translating  this  challenge  into  policies,  an  analysis  is  required  of  the  many 
three  elements.  A 
different 
comprehensive  analysis  has been undertaken  by the  OEÇD  . It concluded  that while 
there  will,  be  various job  gains  and  losses  in  different  regions  and  sectors,  the  net 
impact  on  the  over-all  number  of  jobs  will  be  positive.  The  OECD  report  also 
concluded that  it is. desirable to co-ordinate environmental and employment policies. 

those 

to 

The  main  factors  which  OECD  identified  as  critical  for  a positive  environment  and 
employment outcome are set out in the box which follows: 

Communication on "Economic Growth and the Environment", COM(94)465. 
OECD, "Environmental  Policies and Employment",  1997,p.I0. 

Factors determining net employment effects  of environmental policies 
Factor  J: The level and susiainability  of environmental expenditure —Green jobs will be sustained only if 
snvironmentai expenditure continue over time. 
Fzcior  2: The economic context in which the environmental measure is implemented—The  employment  impact 
of environmental measures is affected  by the business cycle. When the economy operates at full  capacity, the 
impact will be largely a shift  of employment rather than an absolute increase. On the other hand, when the 
economy  is depressed, there is normally direct and fairly  instantaneous change in the number of people 
employed. 
Factor  3: The level and the sectoral,  regional and structural patterns  of unemployment—If  environmental 
expenditure  cannot be targeted well, it may be of little value for reducing unemployment  in certain depressed 
regions, industries or occupational  groups and skills. 
Factor  4: The availability  of human resources —The employment  effect  aiso depends on the availability of 
adequately prepared  and skilled human resources at all levels (management, operation, etc.) 
Factor 5: The nature  of environmental policy strategies  to be pursued—Pollution  control, and obviously "end-
of-pipe" strategies have had  and will have different  effects-on  the level and composition of employment than 
pollu'don prevention. The same applies to a switch from  throughput economy to an economy focusing  on reuse 
and recycling. 
Factor  6: The pattern  of environmental spending-*—Investment expenditure induced by environmental  regulation 
is likely to have different  employment effects  than an increase of operational costs or pollution charges. 

j  Factor  7: The type of environmental  investment or technology —Investment in control or "add-on" technologies 
j  will have different  employment impacts than investment in "clean technologies". 

Factor 8: The means of financing  and the impact of borrowing and taxes —The employment effect  is likely to 
1  be different  if all the financing  is from private sources as compared  to a situation in which the funds  come  from 
I  governmental borrowing or t*xes. 

Factor  9: The significance  of import leakage —If a substantial proportion of the environmental expenditure 

j  spills over into buying  imported equipment,  employment will be generated  in the foreign, not in the home 
j  economy. 

Factor  10: The incidence of the environmental measures —It aiso makes a difference  to the effects  on 
competitiveness  and employment  of environmental  measures whether they are introduced domestically  or 
internationally. 
Factor  11: The competitive situation  of the target industries —The net employment effect  of environmental 
policies also depend heavily on the competitiveness of the target industries. 

The Commission would highlight the following aspects: 

•  The policy instruments: 

Because of the flexibility  they  offer  to  economic  operators,  economic  instruments  in 
environmental policy are generally less costly than detailed technical regulation. They 
also provide a permanent  incentive to reduce pollution, thus giving incentives for  the 
production  and application of innovative less-polluting technologies. 

•  The nature of the environmental  investment: 

industry's  efforts 

Until  now,  much  of  manufacturing 
to  meet  environmental 
requirements have focused  on implementing end-of-pipe  solutions such as wastewater 
treatment,  dust filters,  solid  waste treatment,  etc. End-of-pipe  solutions, however,  do 
not  usually  result  in  efficiency  or  productivity  gains,  therefore  representing  a  pure 
cost  to  the  firm.  Clean  technology,  on  the  other  hand,  improves  process  efficiency. 
Although  initial  investment  costs  are  typically  higher  than  those  for  end-of-pipe 
solutions,  there  is  often  a  short  pay  back  period.  Furthermore,  clean  technology 
usually reduces polluting emissions to all media instead of shunting them from  one to 

the  other.  Investments  in  clean  technology  will  help  maintain  a  competitive 
advantage, thus creating and maintaining  employment. 

e  The competitiveness of the businesses involved: 

technology  and 
The  new  demands  for  pollution  control  equipment,  clean 
environmentally-friendly  products will not generate  new jobs  within  the  Community 
if they are produced  abroad  and  imported. Moreover,  the net employment  effect  will 
also depend on the competitive position of the companies involved. As outlined  in the 
Report  on  the  Competitiveness  of  European  Industry,  there  is  little  empirical 
evidence,  at  the  aggregate  level,  that  existing  environmental  policies  have  had 
significant  negative or positive competitive  impacts, but  in specific  sectors  these  can 
be important. 

There are also a number of well-documented  case studies of sectors  and  firms  which 
have been  able to turn  the imposition  of  strict  standards  into  first-mover  advantages 
through  innovation,  efficiency  and  productivity  gains.5  The  innovations  resulted  in 
cost  reductions,  yield  improvements,  market  share  increases  or  the  development  of 
new  markets  and  products.  The  companies  involved  claim  that,  in  particular  in  a 
longer time  perspective,  these  changes  were more often  than  not  keeping  companies 
in  business.  As  a  consequence,  it  has  to  be  concluded  that  businesses  that 
systematically  disregard  their  environment  and  resource  questions  tend  to  put 
themselves into a more vulnerable market position. 

Environment related jobs in Europe currently  amount to at least 3.5 million.  About 2 
million  of  these  jobs  are  related  to  activities  in  the  area  of  clean  technologies, 
renewable  energy,  waste  recycling,  nature  and  landscape  protection,  and  ecological 
renovation  of  urban  areas.  In  the  so  called  "eco-bu$inesses"  there  are  about  1.5 
million  people  at work.  These companies  produce  technologies,  goods  and  sendees 
"to measure, prevent,  limit or correct environmental damage to water,  air and soil, as 
well as problems related to waste, noise and eeo-systems". ° 

There is a large potential  for  domestic employment  creation in this sector. By way  of 
example, according to one study, a half million jobs could be created in the European 
Union  in  the  field  of  renewable  energies  as  a  result  of  an  intensified,  investment 
programme  of  up  .to  180  billion  ECU  by  the  year  2020.  Demand  is  rapidly 
expanding  in  markets  abroad.  While  the  European  market  for  pollution  control 
services and equipment represented  in  1994 some 90 billion ECUs, at world  level it is 
currently  estimated  to  be  worth  around  280  billion  US$  and  is  expected  to  grow  to 

The competitiveness of European Industry, European Commission,  1997, p.  101. 
See for some examples Boxes  1, 2 and 3 in Annex 2. 
The competitiveness of European Industry, European Commission.  1997, p.  103. 
"Attitude and strategy of business regarding protection of the environment" by Eurostrategy 
for DG III, 1995. 
Eurostat for the Eli Employment Report  1997. 
"An estimate of eco-industries in the EU", Ecotec-Eurostat- DG XI,  1.997. See also Annex 1. 
The definition  of eco-business has been agreed on in the OECD, see OCDE/GD(96)l 17. 
"TERES II - The European Renewable Energy Study •• The Prospects for Renewable Energy 
in 30 European Countries from  1995-2020", ESD, for Altener. 

7 

640 billion  US$ in  2010,  giving  an  annual  growth  rate of  some  8%.12  In  addition  to 
pollution  control, the UNEP estimates that the market  for  energy  efficient  equipment 
amounts  to  some  200  billion  US$  while  sales  of  new  and  renovated  "cleaner" 
manufacturing  processes have not yet been quantified.  ' 

2.3. Managing the transition 

Environmental  policies  are  compatible  with  higher  employment  as  long  as  they  are 
consistent and take advantage of the co-ordination mechanisms upon which a modern 
market  economy  is  based.  Indeed,  if  it  is  envisaged  to  tackle  the  twin  problems  of 
"underuse of  labour" and "overuse of natural resources", the most promising  strategy 
would be to adjust relative prices accordingly. 

Such a strategy would  have to be carefully  designed  and implemented.  The  following 
considerations  are  essential  for  a  smooth  managing  of  the  transition  towards  a 
sustainable Europe: 

•  a gradual  implementation  facilitates  the  necessary  adjustments  in the  structure  of 

the economy 

•  a  significant  degree  of  international  co-ordination  eases  the  safeguarding  of  the 

international  competitiveness of vulnerable industrial  sectors 

•  environmental  expenditure  needs  to  be  well  targeted  regionally  as  well  as 

sectorally. 

The  timing  of  policy  measures  within  the  business  cycle  may  also  have  a  certain 
impact. When the economy operates  at Kill  capacity, the impact will be largely a  shift 
of  employment  rather  than  an  absolute  increase.  On  the  other  hand,  when  the 
economy  is  depressed,  there  is  normally  a  direct  and  fairly  rapid  positive  change  in 
the  number  of  people  employed.  This  is  particularly  the  case  when  labour  markets 
function  smoothly and skilled human resources are available at all levels. 

In  view  of  keeping  distributional  impacts  on  certain  economic  sectors  and  regions 
manageable,  pragmatic  solutions  are  to  be  found  to  facilitate  the  transition  towards 
sustainable  production  patterns  for  all  economic  operators  involved.  The  extent  to 
which funds  raised through e.g. higher energy taxes are entirely used to reduce labour 
costs  or for  other  forms  of  incentive  measures,  will  have  to  be judged  on  a case  by 
case basis. 

Policiss  incorporating  those  constraints  are  likely  to  set  the  framework  for  making 
domestic,  labour-intensive  and  sustainable  investment  more  attractive.  They  should 
be supported  by  a stability-oriented  macro-economic  policy  as well  as by  the phasing 
out of subsidies to unsustainable technologies and activities. 

"Global Environmental Markets- An update", for J3ÏAU (Joint Environmental Mfskste  Unit) 
and DTI (Department of Trade and Industry), by Ecotsc,  1997. 
"Private Sector Investment Flows ar.d ike Environment  Defining  the Opportunities and 
Issues", UNEP Round-Table Meeting on ''Investing  in the Environment", October  1995 

3. Supfjortîve policies for jobs and environment 

During  the  last  25  years,  after  the  UN  Conference  on  the  Human  Environment  in 
1972,  that  served  as  a  political  turning  point,  all  Member  States  have  developed 
environmental  policies.  However,  it  is  a  matter  of  fact  that  the  pace  in  the  shift  of 
technology  is  too  slow,  that  there  is too  little  investment  in  clean  technologies  and 
It  is  time  for  Europe  to  mobilise  all  policies,  on  local,  national  and 
systems. 
European 
levels,  in  a  well  co-ordinated  and  sustained  action  for  jobs  and 
environment. 

2.1. Urgent tasks 

Building  a  sustainable  Europe  will  require  important  modifications  in  the  following 
major  sectors: industry, transport, energy, agriculture and  consumption. 

3.1.L Manufacturing  industry 

Building  a  sustainable  Europe  will  offer  new  business  opportunities 
for 
manufacturing  and  related  service  industries  and  some  sectors  can  be  expected  to 
grow  strongly.  As a consequence  of  a new organisation  of work  and  of  enterprises 
in  the  form  of  subcontracting,  the  employment  effect  will  be  seen  mainly  in  SMEs, 
especially  in the service sector.  The use of information  technologies  has changed  and 
will  continue  to  change  production,  consumption  and  employment  patterns  with  a 
beneficial  impact on the environment (e.g. teleshopping and teieworking).  Enterprises 
will  also  face  a  market  of  much  more  environmentally  concerned  consumers  and 
investment  in  more  sustainable  products  and  production  systems  will  be  good  for 
business. 

3.1.2. Transportation 

The  uncompleted  internal  market  in  rail  and  the  existing  barriers  to  intermodal 
transport  have  led  to  transport  inefficiencies.  Liberalisation  and  revitalisation  of  the 
railway  systems  in Europe has the highest priority  in tackling this, and  could  remove 
the growing  pressure  on  roads  and  diminish  the use  of  motor  fuels.  Also  the  use  of 
intelligent 
transport  support  systems  may  contribute  to  this  effect,  À  further 
substantial  improvement  of  energy  efficiency  in  road  traffic,  especially  passenger 
transport,  must  be  achieved  in the  next  few  years  together  with  the  preparation  of  a 
new  concept  for  the car of the future.  The  success  of  these  initiatives  will  be  crucial 
for  employment  both  in  the  European  car  industry  and  for  the  survival  of  railways. 
Key  elements  of  such  a  forward  looking  environmental  strategy  for  the  industries 
concerned  are  likely  to  be  fiscal  incentives,  road  pricing,  fuel  economy  labelling  , 
and improved fuel  quality. 

14 
15 

See in particular Boxes  1  and 2 in Annex 2 
Commission  Green  Paper on Fair and Efficient  Pricing for Transport. 

3.1.3. Energy  generation 

The  potential  for  job  creation  in  energy  conservation  could  be  substantial  while 
considerable  environmental  benefits  can  be  realised  in  particular  in  the  field  of 
climate  change  and  acidification.  The  Commission  has  already  indicated  concrete 
ways of stimulating  renewable  energy17 and some Member  States,  like Denmark  and 
Germany,  are  particularly  active  in  this  field.  Also,  combined  heat  and  power 
generation  schemes  contribute  to  the  increased  competitiveness  of  industrial  and 
commercial sectors and at the same time generate jobs.  8 

3.1.4. Agricultural  practices 

The  continued  reform  of  the  CAP,  as  announced  in  Agenda  2000,  should  lead  to  a 
new  balance  between  ensuring  a  sufficient  supply  of  agricultural  products  of  high 
quality  and  the protection  of  the natural  environment  including  its resources  such as 
water and soil. Four areas seem particularly  important for the creation of jobs: (i) the 
maintenance of landscapes, the protection of high value nature areas and habitats such 
as wetlands,  rivers  and  protected  areas,  (ii)  forestry  which  is  sustainable,  maintains 
biodiversity and offers  other (e.g. recreational) functions,  (iii) development and use of 
new crops in the non-food  sector (e.g. for  industrial purposes or biomass energy), (iv) 
and finally,  organic farming. 

3.1.5. Consumption  patterns  and  households 

Consumer  demand  is  already  changing  towards  more  environmentally  friendly 
choices.  This  trend  can  be  expected  to  intensify  as  more  information  becomes 
available, through eco-labelling for  example, and as environmental  and resource costs 
become increasingly integrated in the market prices. 

The  recycling  of  household  waste  will  be  significantly  intensified  provided  that 
separate  collection  and sorting schemes treat waste in such  a way that  it becomes  an 
economically  attractive  secondary  raw  material  to  industry.  Moreover,  waste 
recycling has shown to be capable of creating a significant number of jobs. 

16 

17 
18 

Communication on Climate Change-The EU Approach to Kyoto, October  1997. See Box 4 in 
Annex 2 for examples of job  creation. 
See Communication  on Pvenewable energy sources,  1997. 
Communication for a "Combined  Heat and Power Promotion  Strategy", COM(97)514. 

10 

3.2. Territorial aspects 

The building of a sustainable Europe has a strong territorial dimension, with  different 
implications in urban and rural areas. 

3.2.1. Urban  development 

Urban  environmental  stress  is  an  increasing  concern  for  the  majority  of  European 
people.  European  cities have already adopted various  environmental strategies,  based 
on  different  geographic  profiles,  demographic  trends  and  economic  assets.  The  need 
for  a  common  European 
framework  has  been  recognised  through  the  Charter  of 
European cities and towns towards sustainability (1994). 

The  Communication  "Towards  an  urban  agenda  in  the  European  Union"19  sets  the 
appropriate  framework  for  action.  The  Urban  Forum  with  representatives  from 
Member  States, cities, towns and regions, to be held in  1998, will elaborate further  on 
the  Communication.  Also  the  Commission  initiative  for  a  Sustainable  Cities  and 
Towns  Campaign  (in  which  around  320  local  authorities  representing  some  100 
million  inhabitants 
take  part)  will  be  an  important  vehicle  for  consultation  and 
further  action. 

From  the  employment  point  of  view  the  renewal  of  the  urban  environment  offers 
important  opportunities,  not  only  through  the  more  traditional  environmental 
investments  in  waste  and  water  treatment  but  also  in  a  larger  sense.20  Construction 
activities such as renovation of private and commercial buildings,  conservation  of the 
cultural  heritage,  renewal  of  urban  centres  and  of  city  infrastructures  (including  the 
construction  of  pedestrian  and  cycle  lanes  and  the  expansion  of  public  transport 
facilities)  have  the  merit  of  creating jobs,  increasing  economic  activity  at  the  local 
level  (including  in  the  tourism  sector),  conserving  energy  sources,  improving 
environmental  quality  and  upgrading  housing  and  transport  infrastructure  to  modern 
standards. Most of the construction jobs will be in SMEs, which comprise 97% of the 
1.8 million companies in the construction sector. 

3.2.2. Rural  development 

The  Commission's  proposals  in  Agenda  2000  envisage  the  setting  up  of  a  support 
scheme for rural development policy in the Union as a whole. In view of  maximising 
economic,  social  and  environmental  benefits  in  rural  areas,  agricultural,  forestry, 
tourism, nature conservation and energy policies have to be addressed  in an  integrated 
way.  The  development  of  new  services  (e.g.  green  tourism),  the  up-keeping  of  the 
assets  of  semi-natural  habitats  and  rural  diversity,  the  management  of  natural  and 
patrimonial  resources  (waters, forests)  are important  tasks for  rural  communities  and 
have  a  large  potential  for job  creation.  As  local  communities  can  benefit  financially 

20 

COM (97 ), 197. 
See Box 5 in Annex 2 for successful  urban projects and Commission  Communication  "A 
European  Strategy for Encouraging Local Development  and Employment  Initiatives", 
COM(95)273 of  13.6.95. 

11 

from  these projects,  they  have an  incentive  to  protect  and  manage  the natural  assets 
carefully. 

Another  key  aspect  of  a  more  integrated  approach  is  that,  in  the  context  of  the 
Structural  Funds,  the  development  of  rural  areas  should  also  build  better  links 
between  the  countryside  and  local  towns.  This  will  contribute  to  economic 
diversification  and  a  living  countryside,  which  will  be  to  the  benefit  of  both  the 
environment and employment. 

role 

in  environmental  management  can  support 

Exploiting the available opportunities  in rural  areas has to involve regional  and local 
authorities,  farmers,  business,  the  financial  sector  and  the  NGOs.  Developing 
farmers' 
the  creation  of 
complementary  or  alternative  income  and  employment  opportunities  for  rural 
communities.  Local  initiatives  and  territorial  employment  pacts  should  be  used 
further  to  boost  environmentally  sound  employment  generation  and  to  provide  for 
better living conditions. 

3.3. Supportive policies 

There  are  different  ways  to  create  incentives  leading  to  investments  in  new  clean 
technologies  and  to  new  patterns  of  production  and  consumption  which  are  less 
resource intensive.  ' 

3.3.1. Implement the environmental acquis 

The  Commission  has  already  indicated  how  to  improve  the  implementation  and 
enforcement  of  environmental  legislation  in  the  Member  States.22  Further  action  is 
foreseen  to put into place mechanisms not only to guarantee legal compliance but also 
the  effective  application  in  the  field.  There  is  an  implementation  gap  in  terms  of 
investments, in particular in the areas of water, waste and nature conservation.  Efforts 
will  have to be pursued,  within the context of  Agenda  2000, towards  an optimal use 
of  the  Community  Funds  in  favour  of  regions  and  Member  States  catching  up 
economically,  in order to improve the integration of environment and employment. 

The  preparation  of  the  candidate  Member  States  to  comply  with  the  environmental 
acquis  of  the  Community  is  of  major  importance.  First  estimates  indicate  that  the 
investments  required  could  be up to  120 billion  ECU.  The bulk  of the  investment  is 
likely  to  take  place  for  air  pollution  control  (40%)  and  for  water  and  waste  water 
treatment (40%). 

It should be stressed that such incentives will have to comply with the existing EU rules on 
state aid as laid down in Articles 92-93 of the Treaty. 
Communication  on "Implementing  Community  Environmental Law", COM (96) 500 of 
22.10.96. 

12 

3.3.2. Make taxation  more employment-environmentally  friendly 

In the EU as a whole over 42% of the implicit tax rate falls  on labour as against 30% 
two  decades  ago.23  There  is  now  widespread  agreement  on  the  need  to  reverse  the 
trend  in  taxation  structures  by  reducing  the  burden  on  labour  as  compared  to  other 
factors.  It  is  an  important  question  for  each  Member  State  to  define  how  such  a 
change could be inserted into its overall tax policy. The choice for  alternative  funding 
includes  indirect  taxes,  environmental  or  energy  taxes  and  capital  or  real  estate 
taxation.  Any such tax reform  should  as much as possible simultaneously  correct  the 
above mentioned bias. 

In  this  context,  the  Commission  adopted  a  proposal  for  a  Council  Directive 
restructuring  the  Community  framework  for  the  taxation  of  energy  products.  24-The 
main objectives of this proposal are to eliminate tax distortions between types of  fuels 
and  between  Member  States.  The  Directive  provides  that  "Member  States  will 
endeavour  to  avoid  any  increase  in their  overall  tax  burden  (when  implementing  the 
Directive).  In  order  to  attain  this  objective  Member  States  shall  endeavour,  in 
particular,  to  reduce  at  the  same  time  statutory  charges  on  labour".  According  to 
estimates,  the  implementation  of  the  Directive  on  the  taxation  of  energy  products 
would create a significant  number of jobs. 

The  Commission  has  recently  come  forward  with  a  proposal  which  would  give 
Member  States  the  choice  to  apply,  on  an  experimental  basis,  a  reduced  VAT  rate 
(instead of the standard rate) to supplies of certain labour intensive services. 

Several  Member  States  have  also  undertaken  a  broad  range  of  specific  measures, 
including  fiscal  measures,  to  stimulate  environment  investment  and  employment.26 
Accelerated  depreciation schemes for certain types of investments, tax exemptions  for 
interest  received  from  green  investment  funds,  and  the  introduction  of  specific 
environmental  taxes  and  earmarked  levies have proved  to  be  particularly  successful. 
The  Commission  presented  a  Communication  in  order  to  support  the  use  of 
environmental taxes and charges and to ensure that they are used in a way  compatible 
with Community  legislation.2 

3.3.3. Technology assessment and development 

Research  and  development  of  new,  cleaner  and  energy  efficient,  technologies  is 
essential  for  the  building  of  a  sustainable  Europe.  Past  Community  Research, 
the  Environment 
Technology  and  Development  programmes, 

in  particular 

Implicit tax rate: tax revenues plus social security revenues divided by the sum of employee 
compensations. 
COM (97) 30, adopted on  12 March 1997. 
The Commission working document "Evaluation of the impact of the Proposal" Addendum 
dated  30.07.97 to SEC (97)1026 of 23.05.1997 gives estimates between  155 000 and 457 000 
jobs by 2005. 
See Box  1  in Annex 3. 
Communication  from  the Commission on "Environmental Taxes and Charges in the Single 
Market", COM(97) 9 of 26.03.1997. 

13 

Programme, have provided  important contributions to the development of knowledge 
and  tools  for  building  a sustainable  Europe.  The  Commission's  proposal  for  the  5th 
Framework  Programme  puts  a  reinforced  emphasis  on  environmental  and  on 
employment issues. 

For  decision  makers,  in  both  the  public  and  private  sectors,  interested  in  integrating 
considerations  related  to  employment  and  sustainable  development  into  their 
investment  decisions,  it  is  often  too  costly  to  investigate  and  assess  different 
alternatives, beyond the question of whether their plans are in conformity with strictly 
legal  provisions.  Similarly,  public  authorities, wishing to  set up  a support  scheme to 
promote  the  use  of  new  and  environmentally  friendly  solutions,  need  a  good 
information  system, since emerging technologies are characterised  by rapid  evolution 
and  some  are  more  attractive  than  others  from  an  environmental  and  employment 
perspective. 

A flexible  information  system  appears  to  be necessary  in view  of  disseminating  the 
results  of  available  technology  assessment  according  to  environmental  and  social 
criteria.  Such  information  needs  to  be  designed  for  the  needs  of  entrepreneurs, 
bankers,  local  authorities,  consultants,  engineering  offices,  and  others  involved  in 
investment decisions. The collection and assessment of these data will need to involve 
technical  experts,  producers  and  users  of  environmental  technologies,  engineers  and 
researchers in the private and in the public sectors. Given the social dimensions which 
are to be  included,  other  stakeholders  also have to be  involved  such  as trade unions, 
social and environmental NGOs, financial  institutions, and officials  from  the Member 
States. 

The EU has  already  recognised  the need  for  highly  specialised  and technical  data as 
an  aid  for  those complying with  environmental  regulations  by creating the European 
Bureau for Integrated Pollution Prevention and Control at the Institute for Prospective 
Technological  Studies (IPTS).28 The scope of the assessment currently undertaken by 
the Bureau could be broadened to include employment and sectors not covered by the 
IPPC directive, in particular emerging (often  highly technology intensive) sectors. 

3.3.4. Dissemination  of  information 

Many  initiatives  have  been  undertaken  for  the  production  and  dissemination  of 
information  in the form  of workbooks, data bases, help-lines, conferences,  eco-labels, 
etc.  as  investors  and  consumers  of  greener  methods,  products  and  services  need  an 
exchange  of  information  and  best  practice  concerning  environmental  management. 
More  effort  is needed to spread the information  more systematically.  The building of 
a  sustainable  Europe  will  require  new  active  information  initiatives  to  reach  the 
millions of decision makers in private and public bodies throughout the Community. 

Communication concerning the establishment of a European Bureau for Integrated Pollution 
Prevention and Control at the Institute for Prospective Technological  Studies of the Joint 
Research Centre, COM (  )1997. 
See Box  1 in Annex 3 for Member States initiatives. 

14 

3.3.5. Domestic and external  markets 

An  effective  public  procurement  policy  is  fundamental  to  the  success  of  the  Single 
Market  in  achieving  its  objectives:  to  generate  sustainable,  long-term  growth  and 
create jobs,  to foster  development  of business capable of  exploiting the  opportunities 
generated  by  the  Single  Market  and  competitive  in  global  markets,  to  provide  tax 
payers  and  users  of  public  services  with  best  value  for  money.30  EU  public 
procurement  policies  offer  a  number  of  possibilities  to  contracting  authorities  to 
integrate  social  and  environmental  considerations  into  their  public  procurement 
practices. The Commission will elaborate this issue in a forthcoming  Communication. 

A  strong  internal  demand  for  environmentally  sound  products,  services  and 
technologies  is  the  basis  for  exploiting  the  opportunities  on  world  markets.  Export 
promotion  initiatives  are being undertaken  by the Union's  main  competitors  such  as 
Japan,  USA,  Canada.  Current  EU  initiatives  such  as  the  Community's  Regional 
Institute of Environmental  Technology  (RIET)  in  Singapore  seem  promising  as they 
promote  European  know-how  in  a  context  of  international  co-operation.  In  this 
respect,  integration  should  also  be  strengthened  in  the  Community's  programmes 
such as its Development Fund. 

3.4. Reviewing labour market policies 

The Commission  has in the Guidelines for Member  States'  Employment  Policy  1998 
outlined a new employment strategy, based on a stability  and growth oriented macro-
economic policy and an activation of labour market and other structural  policies. The 
Guidelines  include  four  priorities:  entrepreneurship,  employability,  adaptability  and 
equal opportunities. Following these guidelines, the employment  policies  of Member 
States will facilitate  the ongoing restructuring of the economy,  regardless of whether 
the causes are new technology, global trade or the building of a sustainable Europe. 

However,  in Member  States'  policies, more attention will have to be paid to the job 
creating  opportunities  and  the  need  for  new  skills,  linked  to  the  building  of  a 
sustainable Europe. New patterns of training  and  education  are required  in order  to 
build  and to use the  new  environmentally  friendly  technologies  and  infrastructures. 
Moreover,  the move towards  sustainability  will  also  require  a motivated  workforce 
with special skills and a highly developed environmental  awareness, and thus a good 
level  of  educational  training.  However  the  existing  provision  of  education  and 
training for managers and  workers is far from  living up to such requirements. 

The  data  on  environment-related  skills  shortages  show  a  broad  range  of  different 
needs.31 In terms of occupations, the needs include biologists and chemists, geologists 
and  land surveyors, architects  and land-use planners,  civil, mechanical,  electrical  and 
production  engineers,  and  environmental 
training 
specialists. 

technicians,  operative  and 

30 
31 

Commissions'  Green Paper on Public Procurement in the European Union,  1996. 
FAST for instance. 

15 

The  primary  concerns  are  conservation  of 

Evidence  is  available  that  a  large  variety  of  labour  market  measures  and  initiatives 
concerning  environmental  services  are  successfully  being  promoted  in  the  Member 
States. 
the  cultural  heritage, 
environmental  protection, and sanitation. Many promising policies and measures have 
been  undertaken  at  local  or  regional  level,  such  as  the  Ecological  Rehabilitation 
Programme  in  Berlin.  Exchange  of  such  information  could  be  improved  through 
networks of  local  actors. With  increasing  numbers  of  projects  they  will  also become 
interesting in the framework  of the Member States Multiannual Programmes. 

3.5.  Financial 

support 

3.5.1. Community  expenditure 

The  European  Parliament  has  expressed  the  wish  for  a  further  greening  of  the  EU 
budget.  The  Commission  shares  this  preoccupation  and  wishes  also  to  improve 
mechanisms  for  taking  appropriate  account  of  environmental  impacts  of  Community 
spending.  Moreover,  in the context of Agenda 2000, the Commission  has  indicated 
the broad  framework  within  which  environmental  and  employment  objectives  are to 
be specified  in the proposals for the new Funds regulations. 

Through  the  Structural  Funds  and  several  Community  Initiatives,  already  an 
important part of the EU budget is already spent on environment related projects  such 
as:  waste  water  treatment,  waste  management,  soil  decontamination,  air  pollution 
control,  support  for  clean  technology,  cleaner  production  and  industrial  waste 
recycling,  environmental  management." '  The Cohesion Fund  spends  half  of its  funds 
on  environmental  infrastructures  and  half  on  transport  structures,  sometimes  related 
to  public  transport/  Jobs  have  been  generated  in  construction,  production  of 
machines  and  other  equipment  by  the  capital  investments  and,  later  on,  in  operation 
and maintenance."  Moreover,  Environmental  Impact  Assessments  are required  when 
considering the funding  of major projects by the Structural Funds. 

The Common  Agricultural  Policy  (CAP)  has  also  contributed  to  the maintenance  of 
jobs  in  rural  areas  and,  in  certain  respects,  to  the  protection  of  the  environment.  In 
this  latter  context,  particularly  important have been  the  accompanying  measures  (the 
agri-environmental  measures, afforestation  of farm  land) which  support  protection  of 
the  environment  and  the  maintenance  of  the  countryside.  Included  are  crop 
extensification  and  organic farming,  livestock  extensification,  rearing  of  endangered 
breeds, upkeep of abandoned land, long-term set-aside and training. 

33 

34 

35 

36 

37 

See Box 2 in Annex 3 for Member States labour market actions. See also the Commission 
Employment Observatory, "Tableau de Bord"  Î966. 
See Box 5 in Annex 2. 
EP Resolution on Guidelines for the  1997 Budget, 28 March  1996, paragraph 28. 
Approximately 6 billion ECU of the total ED budget. 
Communication  "Cohesion Policy and the Environment",  COM (95) 509. 
Communication on Structural  Interventions and Employment,  1996. An example: the 
Regional Funds' programmes for rail development in Italy and in Greece created or 
maintained 64,000 jobs. 
Working Notes on the CAP, "Agriculture and Environment"..  1997. 

16 

the  funds  made  available 

the  Community  Framework 
Furthermore, 
Programmes for Research, Technology and Development have partly been devoted to 
RTD related to the environment.39 

through 

The  availability  of  finance  for  environmental  investments  clearly  has  had  a  positive 
effect  on job  creation.  Many EU programmes  and  initiatives have been  instrumental: 
the  "Growth  and  Environment"  pilot  project  (with  loan  guarantees  for  SMEs),  the 
European  Investment Fund  (EIF),  URBAN,  LEADER,  the proposed  European  Loan 
Insurance  Scheme  for  Employment  (ELISE),  LIFE.40  These  and  other  experiences 
will have to be incorporated  in the operational follow-up of Agenda 2000. 

3.5.2. The European Investment Bank 

The  European  Investment  Bank,  already  investing  around  one  third  of  its  assets  in 
environmental  projects,  is  planning  in  the  follow-up  of  the  Amsterdam  Summit,  to 
play a bigger role in support of environmental projects by: 
•  extending  its  activities  in  the  fields  of  education,  health,  urban  environment  and 
environmental  protection, 
•  strengthening  its activities  in the fields  of TENs and  SMEs, allowing  a temporary 
increase  in  the  funding  ceiling  to  75%  of  the  cost  of  TENs  and  environmental 
projects, 
•  using part of the  1996 surplus for  financial  instruments (including venture capital) 
for innovative SMEs. 

The Commission  looks forward  to a timely  adoption of these plans by the governing 
board  of  the EIB so that  an  increased  effort  in favour  of  the  environmental  projects 
can take place. 

3.5.3. User charges 

As  public  funds  financed  out  of  general  taxation  become  scarcer,  new  financing 
arrangements  such  as  charging  for  environmental  services  have  developed.  These 
arrangements  not  only  reduce  the  reliance  of  environmental  expenditure  on  public 
budgets, but also offer  opportunities to increase overall economic efficiency  through a 
more  general  implementation  of  the  polluter  pays  principle.  Finally,  user  charges 
generate income to public or private companies and, by extension, facilitate  financing 
through the banking system. 

For instance the 4th Framework Programme, with a budget of 12.3 BECU, had 
subprogrammes for clean and efficient  technologies, environment and climate and socio-
economic research. 
See Box 6 rn Annex 2 

40 

17 

4. The way forward- Key actions 

The building of a sustainable Europe demands new technologies and new  investment. 
This  will  require  the  use  of  different  policy  instruments  and  the  co-operation  of  all 
partners, at EU, Member  State, business, and local  level,  including the private sector, 
public  authorities  and  NGOs.  The Commission  will  support  and  stimulate  initiatives 
to  improve  data  collection  and  analysis  geared  towards  development  of  Member 
States long term strategies. The Commission proposes the following  key actions: 

4.1. Environmental and social benchmarking 

The  development  of  environmental  and/or  social  "benchmarking"  for  industrial 
sectors  can  be  instrumental  in  guiding  investments  towards  cleaner  and  energy 
efficient  products  and  processes.  The  European  Commission  will  take  initiatives  to 
promote  the  establishment  of  reference  criteria  and  to  collect  the  necessary 
information  in partnership with all relevant stakeholders and in particular the Member 
States and the industrial sectors. 

4.2. Technology assessment and development 

The  Commission  will  enlarge  the  existing  screening  schemes  for  Best  Available 
Technologies  by  including  employment  effects  and  a  more  detailed  assessment  of 
energy and resource use. Appropriate initiatives will be taken in order to organise that 
the list of sectors that are presently assessed  is enlarged  to incorporate  new  emerging 
technologies. 

4.3. Building upon Agenda 2000 

Continuing and increasing efforts  are to be made in order to ensure that the European 
financial  instruments  (Structural  Funds,  Cohesion  Fund,  Community  initiatives) 
promote economic growth, employment and sustainable development  simultaneously. 
The  proposals  presented  in Agenda  2000  are  a first step  in  that  direction.  They  will 
have to be further  developed  through  an  active  partnership  with  Member  States,  for 
example  by  identifying  appropriate  criteria.  Regional/local  actors  should  take  the 
initiative  in  proposing  programmes  and  projects  which  have  a  strong  emphasis  on 
employment  and  environment  and  ensure  the  success  of  their  action  by  building 
partnerships  which  include  not  just  the  public  authorities  but  all  other  interested 
parties. 

In this context, urban  renovation  and rural development  projects  and programmes  are 
of particular importance: 

Member States should strengthen the link between urban development,  environmental 
protection  and  job  creation  by  developing  urban  renovation  plans  which  focus  on 
areas  with  particular  potential  for  environmental  employment.  Regional/local  actors 
should  undertake  concrete  action  to  implement  these  plans  within  an  agreed 
timeframe.  The European  Commission  will  support this action  in  its follow-up  of the 

Communication  on  Urban  Issues  and,  in its preparation of  the  'Urban  Forum'  1998, 
will ensure that its action supports that orientation 

In  its  proposal  for  Agenda  2000,  the  European  Commission  has  outlined  that  the 
review of the CAP must be continued  in view of achieving  a better  balance  between 
agricultural  production,  environmental  protection  and job  creation.  By  responding  to 
the  environmental  demands,  rural  communities  can  benefit  from  new  activities.  A 
further  promotion  of quality production  offers  new market perspectives for  European 
targeted  agri-
farmers.  The  promotion  of 
environmental  measures,  will  increasingly  represent  new  employment  opportunities 
while improving environmental  quality in rural areas. 

farming  systems  and 

low-input 

rural 

Through  the  development  of  new  services  like  tourism  and  natural  resource 
management, 
employment 
opportunities. In addition, the Structural Funds will promote economic  diversification 
more generally  in eligible rural  areas, providing further  incentives  for  people to  stay 
on the countryside and thereby counter land abandonment. 

communities  will 

land-related 

find  new 

4.4. Taxation and prices 

The  tendency  towards  increasing  tax  burdens  on  labour  must  be  reversed.  The 
Commission proposal for  an energy products tax has to be seen as a first step towards 
integration in fiscal policy of the new Treaty objectives. 

As  part  of  its  overall  policy  to  use  a  combination  of  cost-effective  instruments  in 
environmental  policy,  the  Commission  will  continue  to  pursue  the  correction  of 
existing distortions  in the current tax system, and to give a high priority to the use of 
market based instruments, including those of a fiscal  nature. 

4.5. Environmental training and education 

There is a major  need for  developing specific vocational  qualifications  corresponding 
to  new  and  updated  job  profiles.  The  Commission  intends  to  present  specific 
orientations on environmental training and education. 

The preparation of human resources for "greener" production methods will depend on 
active labour market policies targeted at the whole labour force and with an additional 
focus  on  reintegration  of  the  unemployed.  Member  States  will  pursue  such  labour 
market  policies  within  the  context  of the Employment  Guidelines  (entrepreneurship, 
adaptability,  employability  and  equal  opportunities)  on  which  they  will  report 
regularly. 

Progress  in the use of  policies such as taxation  and training/education for  the mutual 
reinforcement  of  environment  and  employment  wHl  be  incorporated  in  the  Joint 
Employment Report 1998. 

0QO0© 

19 

ANNEX  I- Eeo-baasinesses in the EU, 1994 

r The most important activities of eco-industries are: water and waste water treatment (42% of total EU 
output); waste  management  and  recycling  (29%); air pollution  control  (19%); noise  and  vibration 
control;  contaminated  land  and v/ater remediation  works; environmental  research  and  development 
and environmental services/ consultancy. Some 20 to 30,000 companies, small and large, employ one 
million people, while another half million is employed in related activities. The output was worth 90 
billion ECUs 1994 and this includes both public and private buyers. 
The largest markets for these nev/ activities and jobs are: Germany (35% of the EU output), followed 
by France  (20%), UK (12%), Italy  (10%), Netherlands  (8%), Austria  (4%). In national  terms, eco-
businesses  are  the  most  important  in  Austria  (turnover  of  industry  equals  2.3%  of  GDP),  the 
Netherlands (2.3%), Germany (2%), France (1.5%), Sweden (1.5%). 
A broader definition of environmental jobs gives us a total nearer 3.5 million, that is if we include 
renewable energy, recycling, nature and landscape protection and eco-renovation of urban areas. 
Sources: "An estimate of ecu-industries in the European Union 1994", Ecotec/ BIPE/ IFO for DG XI 
and Eurostat,  1997 and Eurostat for the EU Employment Report 1997. 

20 

ANNEX 2- Examples of good business practice 

BOX 1- Waste minimisation project in the Aire and Calder region- UK 
The objective of the Aire and Calder Project was to show that cost savings achieved through waste 
minimization  initiatives  can  produce  a  wide  range  of  benefits  to  the  companies  involved.  These 
include  increased  profitability  and  competitive  advantage,  improved  regulatory  compliance,  and  a 
reduction in rude to the business. 
Aire and Calder acted as a demonstration project to other companies and industrial sectors in the UK. 
The intention was to widely disseminate the results of the project in order to promote the benefits of 
waste minimization. The scheme aimed to show that however small the company, a  fundamentally 
different  approach to pollution control will give long-term dividends. 
The objectives of the protect included: 
* the encouragement of a systematic approach to waste minimization  which could be used by large 
and small companies without assistance from consultants or other agencies. 
*  the  identification  and  quantification  of  waste  minimization  opportunities  and  methods.  As 
assessment of costs, payback periods and waste reduction potential. 
*  a  shift  of  the  waste  management  hierarchy  from  collection  and  disposal  to  prevention  and 
minimization. 
* the creation of a partnership between industry, regulators and support agencies for addressing waste 
minimization issues. 
The Outputs:  The  scheme ran  for  18 months.  At  the  end  of  this  period,  for  the  11 participating 
companies  there  were:  2.5  MECU  per  year  cost  savings  from  542  different  actions  identified  to 
improve efficiency.  One year after the end of the project, in September 1994, savings had increased to 
4.1 MECU per year from  671 efficiency  measures. Ten percent  of the adopted  measures were cost 
neutral 
with a further 60% having payback periods of less than  1  year. The identified  savings totalled 0.3% 
of the participating companies turnover. These savings have assisted the companies involved become 
more competitive and efficient.  As a result, the long-term employment capability  of these industries 
has been improved. 
Environmental savings were also significant, by September 1994 there was: 
* 600.000m3 per year reduction in effluent  discharges to sewers 
* 36.000m3 annual reduction in discharges to  rivers. 
* 15% fall in water usage. 
Source:  Ecotec  (for  the  European  Commission):  Encouraging  Sustainable  Development  through 
Objective 2 Programmes: Guidance for Programme Managers, Final Report, Brussels 1997. 

BOX 2- The introduction of a cleaner technology in a Dutch tannery 
The case: A tannery producing leather for furniture and automotive industries, employing 107 people, 
with a turnover  of  40 million ft.  in  1993, facing  increasing  competitive  pressure, but  nevertheless 
adopting a pro-active approach to environmental issues. 
The investments: Between 1985 and 1993, the company invested 5 million fl. in the development and 
introduction  of  a new  clean  epilation  technology,  costs  of  1.5 million  in  1990-1991,  equal  to  the 
company's net  result  for  1990. The company received  a  subsidy  of  300,000  fl.  from  a  technology 
government programme. 
The benefits:  * improved living environment in the neighbourhood due to reduced use of chemicals 
for destruction of hairs, less production of waste, better quality of waste water, 
*  for  the  business:  lower  environmental  costs  (from  3.5%  to  2%  of  turnover),  lower  costs  with 
chemicals, profits  from  selling the epilated hairs from  the hides, improved image, less absenteeism, 
internal rate of return of the investment is calculated to be 40%, 
*  Employment  effects:  one  environmental  co-ordinator  was  nominated,  increase  in  the  level  of 
qualifications needed from staff  (engineers, chemists), fewer lower qualified  staff needed (up to 30% 
less!). The latter have not been fired as an increase in output is expected. 
* Social effects: better air quality for employees and neighbours. 
Source:  "Case  study  Three:  Cleaner  Technology",  Arthur  D.  Little  for  Forward  Studies  Unit,  E. 
Commission, 1995. 

21 

BOX 3- The re-maiaiifacturing of driveshafts  in  France 
A French producer of driveshafts  for the automotive industry started, in  1976, a parallel production of 
re-manufactured  driveshafts.  This line now employs  100 people (80 full-time).  In  10 years, production 
grew from  50,000 units to more than 427,000 and the number of models went from  50 to 275. Sales in 
Ï996 totalled MECU  18. For comparison,  the  company also produces  3.5  million new driveshafts  per 
year. 
Competitiveness:  The re-manufactured  driveshafts  are of high quality  and are 50% cheaper than new 
ones.  The  production  costs  are  lower  than  for  new  driveshafts  (18.5  and  38  respectively)  and  the 
production  is  profit  making.  Re-manufacturing,  although  marginal  to  the  production  of  new 
driveshafts,  is good for the company's image. 
Environment:  The  environmental  impact  of re-manufacturing  is  lower than  for  new  driveshafts:  less 
resource use and 24% less  energy use. Even though waste production per unit is lower, waste disposal 
costs are nevertheless  6 times higher than for new  driveshafts  and have increased  by a factor  5 since 
1994.  Solid  waste  disposal  costs  (of  scrap  metals,  greases  and  sanding  waste)  per  unit  are  26  times 
higher. 
Labour: Re-manufacturing  is twice as labour intensive than new manufacture  and the jobs are at a 
higher skills level. 
Results: gocd for  competitiveness,  employment and environment; somewhat tempered by higher costs 
of waste, treatment. 
Source: "Cass Study Six: Effect  of Extending Product  Service Life on Competitiveness, Employment 
and Environment", Arthur D. Little for Forward  Studies Unit, E. Commission,  1997. 

3ox  4- Examples of job  creation  related to energy conservation  and  renewables: 
* Applying  26 BATS for  energy  saving and  energy  efficiency:  net  cost  =  19 billion  ECU  for  EU-12, 
creates 690,000 jobs.  (Source: Ecotec for the European Foundation for the Improvement of Living and 
Working Conditions,  1994). 
*  Upgrading  of  all  single-glazed  windows  of  the  EU  housing  stock  to  high-performance  double-
glazing.  Results:  Investments  of ECU  34 billion  (over  10 years)  and  creation  of  127,000 jobs  lasting 
10 years. (Source: Industries du Verre and DG XVII- Thermie,  1995) 
*  Applying  the best  policies  of  support  for  renewables  from  individual  countries  into  all  other  EU 
countries  leads  to:  extra  investment  of  180  billion  ECU  by  2020  and  500,000  extra jobs.  (Source: 
Teres 11/ Altener, DG XVII,  1966) 
* Some 3.4 million job-years  could be  created directly through the installation  of energy  conservation 
equipment and materials. In the initial stages, the vast majority  of the jobs will come from  distributing 
and installing (rather than manufacturing)  the goods and equipment.  Source: Euro ACE. 

Box 5- Examples  of successful  environmental projects in  cities 
*  With  recently  unemployed:  (i) Berlin,  where a project  was set up  involving  urban planning,  urban 
renewal,  greening  the  city,  introducing  clean  technologies  to  SMEs and  water  saving  measures,  and 
(ii)  Tampere,  Finland,  where young people  are  engaged  in  a variety  of  activities:  recycling,  vehicle 
renovation, waste management). 
*  With  several  generations  of  unemployed:  Glasgow,  Scotland,  where  temporary jobs  and  training, 
some dealing with the  environment, help  the social problem of the unemployed, without there being a 
real perspective on first  class jobs). 
* With young unemployed:  (i) Baix Llobregat,  Spain, where young people work in the recuperation 
and promotion of the artistic natural or cultural heritage, the recuperation of urban surroundings or the 
environment and (ii) Strasbourg, France where companies have been set up to employ young (with 
social problems) in the collection and recycling of household goods)* With high skilled unemployed: 
Stockholm, Sweden, where people with an environment-related  qualification  are helped to find jobs in 
enterprises). 
* With socially handicapped unemployed:  Graz, Austria, where projects  in recycling have been set up 
in partnership  with local  industries  and municipal waste services, with a high transfer  rate to the  first 
labour market). 
Source: "Job  Creation  in  the  Environmental  Sector",  European  Academy  of  the Urban  Environment 
for DGV,  1997. 

22 

Box 6- Employment effect  of LIFE-Nature projects 
The 63 projects of LIFE-Nature in 1996 had a value of 45 MECU and created approximately 500 full 
time equivalent jobs (involving 1300 workers), 300 of which are directly the result of EU funds and 
200 are related to Member States finances. As projects have an average duration of 3.3 years, around 
1,500 FTE jobs are created with the 1996 LIFE funds. The cost for the EU of o;ie full time job per 
year is around 30,000 ECUs. 
Source: "Life-Nature  1996 & L'Emploi", Ecosphère for DG XI, 1997. 

23 

ANNEX 3- Examples of Member States actions 

BOX  1- Member States direct and indirect support to environmental jobs 
- Measures to provide  information  so that markets  can function  better:  information  on best  available 
technologies  through  data  bases,  help  lines,  guidebooks,  fact  sheets,  fairs,  conferences,  infocentres, 
"observatoires".  Also  information  on  export  markets,  on products  (eco-labeling) and  on  firms  (Eco-
auditing scheme, guidelines for environmental reporting). 
- Voluntary  agreements with certain sectors (producers of hazardous waste, on recycling of products), 
co-operation  agreements  between  different 
levels  of  public  administration  for  environmental 
infrastructures,  co-operation  between  regions  for  the  exchange  of  information  on  environmental 
projects, support to networking/partnerships/clubs  of companies. 
- Financial  support  for investments, construction or training in  cleaner technologies or energy  saving 
(often  through  a  technology  support  programme  and  sometimes  through  pilot  projects),  aid  to 
environmental job  creation  schemes  (for nature conservation projects,  reduction of noise from  roads, 
for  temporary  hiring  of  environmental  auditors/advisors,  through  urban  eco-renovation  programmes, 
etc.) 
- Fiscal measures such as allowing accelerated rates of depreciation for  environmental investments or 
construction,  tax  relief  on  interest  perceived  from  investments  in  "green  funds",  lower  VAT  on 
renewable resources. Chargers for waste production and water use and the carbon/energy tax that  exist 
in several  EU Member  States  should  also be  seen as an incentive for  investing in cleaner  production 
and energy saving. 
- Support to R&D and innovation. 

BOX 2- Examples of Member States labour market  actions : 
- Improvement  of the living  environment through  subsidies amounting to  50% of wage  costs payable 
by  private  households  or  flatowners  for  repair  work  (effect:  approximately  5000  jobs  created); 
adoption  in  1993 of  an  order  on  waste  disposal  and  recycling,  involving  subsidies  for  projects,  etc. 
(Denmark); 
-  Schools-workshops  (Programa  de  Escuelas-Taller),  a  programme  offering  sandwich  training  for 
unemployed young people; both theoretical  training and work experience relate to the safeguarding  of 
the cultural heritage (Spain); 
-  Financial  support  to  organisations  of  the  unemployed;  an  increasing  amount  of  attention  is  being 
devoted  to  environmental  questions  in  relation  to  all  activities  in  society  and  in  companies,  with 
development of the necessary know-how and technology (Finland); 
- Residential buildings programme (renovation); Law no.451/94 introduced new provisions on work in 
the  public  interest  in  fields  such  as  cultural  heritage,  protection  of  the  environment,  urban 
regeneration, and support for SMEs (Italy); 
-  System of incentives for young entrepreneurs, i.a.  for projects  aiming to  safeguard  the  environment 
(Portugal); 
-  Subsidies  for  urban  and  rural  regeneration  trough  the  Single  Regeneration  Budget  (SRB). 
Partnerships  in  Enterprise  Zones  help  promote job  creation  and  investment  by  clearing  and  using 
waste land and vacant sites (UK). 
- Creation of new, permanent jobs in waste management and environmental consultancy (Austria). 

24 

ISSN 0254-1475 

COM(97) 592  final 

DOCUMENTS 

EN 

14  04  05 

Catalogue number  :  CB-CO-97-642-EN-C 

ISBN  92-78-28048-8 

Office  for Official  Publications of the European Communities 

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