Opinion of the Economic and Social Committee on the 'Communication from the Commission on the new regional programmes 1997-1999 under Objective 2 of the Community's Structural Policies - focusing on job creation'
Date: 1998-05-27
Institutions: European Economic and Social Committee
Subjects: European Regional Development Fund, European Social Fund, job creation, regional planning, structural policy

C 235/38

EN

Official Journal of the European Communities

27.7.98

approach to RTD issues. It will be important for future
reports and evaluation commissioned by the European
Commission to assess the impact of these trends. The

Committee notes with interest that a separate report on
RTD and the Structural Funds is to be issued by the
Commission early in 1998.

Brussels, 27 May 1998.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on the ‘Communication from the Commission
on the new regional programmes 1997-1999 under Objective 2 of the Community’s Structural
Policies — focusing on job creation’

(98/C 235/09)

On 17 November 1997 the Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Community, on the above-mentioned
communication.

The Section for Regional Development and Town and Country Planning, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 21 April
1998. The rapporteur was Mr Masucci.

At its 355th plenary session (meeting of 27 May 1998), the Economic and Social Committee
adopted the following opinion with 114 votes in favour and one abstention.

1.

Introduction

In November 1997 the Commission presented a
1.1.
communication setting out
the new regional pro-
grammes for declining industrial areas (Objective 2)
during the second programming period, which runs to
the end of 1999.

The communication is based on an examination of 65
new Single Programming Documents (SPDs) and one
Community Support Framework (CSF) for Spain.

The communication does not consider the SPDs for
Austria and Sweden, as these countries opted for a
five-year programming period (1).

1.2.
The communication summarizes the anticipated
impact on economic development, and especially on
employment.

(1) A summary of the programmes for these two countries is
contained in the Commission communication on the
implementation of EU regional policies in Austria, Finland
and Sweden (COM(96) 316 final, 3.7.1996).

According to information from the Member States,
these programmes should create or maintain around
880 000 jobs, 90 % of which (801 000) are concentrated
in the UK, France, Germany, Spain and Italy.

The planned measures fall into four main catego-

1.3.
ries:

— support for the growth and competitiveness of
industry and businesses, especially SMEs (47,4 % of
expenditure);

— training and reskilling programmes, in particular to
familiarize workers with new technologies (33,8 %);

— regeneration and improvement of run-down indus-

trial and urban areas (12,3 %);

— environmental protection and promotion of clean

technologies and green tourism (5,2 %).

27.7.98

EN

Official Journal of the European Communities

C 235/39

According to the Note for Guidance which the Com-
mission sent to the Member States on 30 April 1996 (1),
the paramount priority for the 1997-1999 Objective 2
programmes is job creation. This is to be achieved by
improving production structures and raising the skills
level of the workforce.

1.4.
The Commission scrutinized each plan in the
light of these objectives and assessed the following
factors: extent to which the priorities have been taken
into account; quality of analysis of the area concerned;
consistency between the declared objectives and the
resources allocated to them; concrete impact on employ-
ment; environmental impact of the strategy and related
actions.

1.4.1.
partnership and additionality.

Account was also taken of the principles of

In particular, the plans were to include a commitment
to ensure that the social partners played their full part,
and were to link the Objective 2 programmes with other
economic regeneration schemes in the region concerned.

As regards additionality, each Member State was to
ensure the same overall level of expenditure as for
1994-1996.

The list of regions eligible for Objective 2 support
1.5.
is broadly the same as in the 1994-1996 period, as is the
percentage of the EU population concerned (16,4 %).

Funding has been set at ECU 8,288 million (1997 prices);
this is a real increase of 13,8 % compared to the previous
period. To this figure should be added ECU 859 million
of unutilized resources from the first period, making a
total of ECU 9 147 million.

some cases the broad range of interventions made
complementarities and synergies more difficult
to
achieve.

Training schemes,

2.2.1.
in particular, were less
closely targeted, although ‘this may partly be due to the
horizontal nature of human resources measures’ (2).

However, the Commission states that ‘the integration
of ERDF and ESF measures was relatively improved’(2)

2.2.2.
The Commission identified more serious short-
comings in the plans originally submitted; these plans
showed ‘an initial lack of quantification of objectives
and outputs including the employment effects and
absence of baseline data’ (3).

In particular, the Commission notes that little use was
made of the methodological framework sent to the
Member States, on ex-ante appraisal of employment
effects.

2.2.3.
Greater attention was paid to the environmen-
tal aspects. Most plans provided a strategic environmen-
tal assessment, and some gave detailed information on
all the proposed measures.

2.3.
Although most plans included an explicit com-
mitment to the partnership principle, the participation
of the economic and social partners was not always
clearly defined.

2. Problems identified by the Commission

Finally, problems in gathering and verifying data

2.4.
made it difficult to ascertain additionality.

2.1.
The Commission recognizes that the framing of
the new SPDs has drawn on experience gained in the
previous programming period.

For this reason, a clause was introduced in the decisions
approving the SPDs ‘suspending Community payments
after the first advance pending ex-ante verification of
the additionality principle’ (4).

It also notes a strong degree of continuity of strategy
between the new programmes and their predecessors.

Most plans had four or five clearly presented, explicit
strategic objectives; some of these reflected an integrated
approach to economic development, while others high-
lighted horizontal aspects such as environmental sus-
tainability and equal opportunities.

2.2.
In assessing the measures’ consistency with the
strategic objectives, the Commission notes that in

(1) COM(96) 952 final, 29.4.1996.

2.5. Negotiations between the Commission and the
Member State resolved some of these problems and
significantly improved the quality and effectiveness of
the plans, ‘particularly in the light of the results of
evaluation (...) and the paramount priority of job
creation’ (5).

(2) COM(97) 524 final, 14.11.1997, Chapter III (i), point iv.
(3) COM(97) 524 final, 14.11.1997, Chapter III (i), point v.
(4) COM(97) 524 final, 14.11.1997, Chapter III (i), c.
(5) COM(97) 524 final, 14.11.1997, Chapter III (ii).

C 235/40

EN

Official Journal of the European Communities

27.7.98

In some instances, increased importance was given to
measures which promised most job creation. In other
cases, the programmes were completely rethought.

drive to create and save jobs, as this is now the top
priority of Community policies.

3. General comments

4. Assessment

3.1.
The communication is important for a number
of reasons, and firstly because it covers the last period
of operation of Objective 2 in its current form.

3.1.1.
This is because the reform of the Structural
Funds anticipated in Agenda 2000 envisages a radical
revision of structural policy.

The seven current objectives would be reduced to three.
Two of these would be regionally based, while the third
would exclusively cover human resources.

The programmes described in the communi-

4.1.
cation can thus be assessed:

— against the results of the preceding periods, in the
light of the problems which emerged in the earlier
administration of Objective 2;

— with an eye to the future, in the light of the structural

policy reform proposed in Agenda 2000 (1).

4.2. Comparison with earlier action

For the period 2000-2006, the Commission envisages a
slightly lower average annual appropriation than for
1999, and stricter application of the 75 % of GDP
threshold for regions included in the new Objective 1.

4.2.1.
Firstly, it is worth seeing whether the program-
ming for 1997-1999 has improved on previous program-
ming.

3.1.2.
The percentage of the EU population covered
by Objectives 1 and 2 would fall from the present 51 %
to between 35 and 40 %; this means that some regions
would have to be excluded. As all the Community
initiatives will come under the new Objectives 1 and 2
(apart from those for human resources, which will form
Objective 3), it follows that some areas might no longer
receive any structural support at all — other than the
Social Fund and the remaining Community initiatives
— after 1999. For these areas, the measures discussed in
the communication are thus of special importance.

3.2.
There is a second reason why the communication
is so important: in order to ensure that the reform of
the Structural Funds is as transparent and effective as
possible, a careful assessment must be made of the
manner in which the decisions were reached on the SPDs
for 1997-1999, and of the planned measures.

Key factors here might include:

— as regards the way the programmes were devised: a
check on the existence of a horizontal partnership;

— as regards content: the selection of innovative pro-

jects and local development projects;

— as regards objectives: the creation of real additional,

lasting jobs.

A useful reference grid is provided by the issues that
were highlighted at the April 1997 European Cohesion
Forum, which considered some reports on the manage-
ment of the Structural Funds (2).

4.2.2.
The forum’s debate on Objective 2 revealed a
number of basic problems. Broadly speaking, although
Structural Fund assistance in declining industrial regions
has done much to help structural adjustment over the
years (in the period 1989-1993, for example, some
500 000 net jobs were created), its impact has been
limited by the excessively small size of some areas,
which has sometimes made an effective integrated
approach impossible.

The limited duration of the support (two years) has
encouraged short-term schemes, to the detriment of a
strategic approach to development.

4.2.3.
As regards programme content and implemen-
tation, any genuine reconversion of these areas has been
seriously hampered by the fact that small firms are often
unable to follow market and innovation trends, and
therefore fail to produce any appreciable regional added
value.

However, there has been a steady improvement on one
important front. Programme content has given priority

3.3.
Thirdly and most significantly, the communi-
cation is important because of the contribution which
the programmes contained in the SPDs can make to the

(1) See Part One, Chapter II, 2 of Agenda 2000.
(2) The report presented by Prof. Michel Quévit is particularly

relevant.

27.7.98

EN

Official Journal of the European Communities

C 235/41

to intangible factors (development of businesses, inno-
vation, training and skills, environmental protection),
rather than to physical ones such as basic infrastructure.

Greater attention is devoted to training and retraining
schemes, promotion of entrepreneurship and encourage-
ment of RTD.

The attention given to RTD and innovation is also
important. However, care must be taken to ensure that
investment does not just support whatever innovation
is on offer, but is geared to the real needs of small
businesses.

4.2.4. One of the most positive features of
the
Structural Funds is that they have committed the regions
to make more permanent, structured provision for
development.

Management methods still differ considerably, as they
are influenced by the differing administrative traditions,
and this fact is to be welcomed.

However, centralist administrations still find it difficult
to accept a ‘bottom-up’ approach to regional develop-
ment.

4.2.5.
Another plus point is that the Funds have
developed the horizontal partnership and have dove-
tailed more effectively with other national and regional
assistance.

In some areas, setting up the partnership remains
difficult because of the lack of an established tradition
of relations between the public authorities and socio-
economic organizations.

In the past, the private sector has hardly ever taken part
in the framing of the programmes, unlike the public and
semi-public sector.

4.2.6. Other important issues relate to the manage-
ment of the programmes.

Alterations tend to be made on the basis of financial
aspects rather than on changes in regional development
priorities.

This is partly because there is no monitoring, and
because the time frame is too short.

Many projects do not set operational objectives for
implementation and impact. These criteria have rarely
been instrumental in project selection.

Lastly, additionality has often posed a problem. Avail-
able funds have not been used because the regional and
national authorities found it difficult to match the
Community resources.

4.2.7.
In the communication’s conclusions, the Com-
mission points out that the new programmes for 1997-
1999 offer more incentives for investments which pro-
mote employment-intensive growth and sustainable
development.

Efforts will also be made to improve local services,
which offer considerable employment potential.

4.2.7.1. Overall, the Committee is pleased to see a
greater integration of Community, national and local
initiatives. This is vital in order to make optimum use
of resources and obtain better results.

4.3. The reform of the Structural Funds and State aid

for the regions

4.3.1.
The Commission states in Agenda 2000 that
the new Objective 2 programmes ‘will favour economic
diversification, including in regions heavily dependent
on a single declining economic sector’ (1).

It goes on to say that ‘this will require increased support
for small and medium-sized enterprises and innovation
as well as a greater emphasis on vocational training,
local development potential,
the
environment and combating social exclusion (...). Invest-
ment in human resources, based on anticipation and on
activating the labour market (...) should be increased’.

the protection of

4.3.1.1.
The Commission would also like to see
‘simpler, transparent and specific eligibility criteria
developed for the various types of areas covered by the
new Objective 2’. Each region is to have a single
programme involving the various Funds (ERDF, ESF,
EAGGF, FIFG).

4.3.1.2.
the worst affected regions at Community level.

The aim will be to concentrate resources on

Any current Objective 2 and 5b regions which are no
longer eligible under the future selection criteria would
enjoy limited financial support for a transitional period.

The Commission also states that, in order to simplify
the operational arrangements, there will be a single
multi-year programme for each Objective 1 and 2 region,
a clear division of responsibilities between the national,
regional and local authorities and the Commission, and
stringent checks and verification of results.

4.3.2.
Account must also be taken of the new guide-
lines for State aid to the regions, which were approved
by the Commission on 10 December 1997 following an

(1) Agenda 2000, Part One, Section II (2).

C 235/42

EN

Official Journal of the European Communities

27.7.98

initiative by Mr Van Miert. These seek ‘to set up a more
transparent system’ and ‘to create positive discrimi-
nation with regard to the least favoured regions’ (1).

The Amsterdam Treaty contains a new Title on employ-
ment, deeming it a ‘matter of common concern’.

4.3.2.1.

The main criteria will be that:

— aid should be concentrated on the poorest regions;

— national aid should be consistent with that used for

the Structural Funds;

— special attention should be accorded to aid that is
designed to boost employment; hence aid will no
longer be restricted to productive investment, but
may also cover the jobs that will ensue from it;

— the overall volume of regional aid should be reduced.

4.3.3. Of relevance here is the impact which the
proposed reforms will have on the number of people
covered by the Structural Funds after the year 2000.

This raises the question of how to ease the transition
for the affected regions and adopt new eligibility criteria
that are socio-economically justified.

eligible

The idea of making Objective 2 areas cotermi-
4.3.4.
nous with those
state aid (Treaty
for
Article 92(3)c) is also a cause for concern. While
recognizing the need to coordinate and integrate EU
structural policies more effectively with national ones,
the Committee feels that this could lead to an excessive
reduction in areas.

5.

Impact on employment

5.1.
The employment impact of structural measures
deserves careful consideration. According to the Delors
white paper,
the Structural
the main objective of
Funds is to help create conditions for lasting growth,
competitiveness and economic development.

The March 1996 Commission communication on struc-
tural assistance and employment (2) established the
priority goal as employment.

The Commission’s 1998 work programme (3) also
announces various draft regulations regarding structural
policies, with a view to implementing the reforms
proposed in Agenda 2000, and states that employment
is the first of the ‘political priorities’ on which it intends
to concentrate its action (4).

The question of the employment objectives set

5.2.
in the various SPDs is worth considering here.

The data contained in Annex 4 to the communication,
concerning the expected impact on employment in
the Member States, vary greatly and are not always
intelligible.

In the UK, for instance, over 380 000 jobs are expected
to be created or maintained (including over 40 000
temporary jobs — around 10 %). The figure for Germany
is less than 120 000 (including 4 100 temporary jobs —
around 3 %), while for Italy it is 123 000 (including
6 200 temporary jobs — around 5 %).

Hence there are also considerable disparities in the
average cost of creating each job.

Some of the statements made in the communi-

5.3.
cation appear slightly contradictory.

The Commission begins with the caveat (chapter III,
point v) that ‘an initial lack of quantification of objectives
and outputs (...) was one of the most disappointing
features of the plans originally submitted’.

However, it adds that ‘substantial progress was made
subsequently’ in the negotiations.

It immediately goes on to regret that the Member States
made little use of the note on methodology which it sent
them regarding ex-ante appraisal of employment effects.

Later again, it returns to the ‘substantial progress (...)
made in the quantification of employment effects’, and
speaks of ‘detailed estimates’ (5).

5.3.1.
been made using different calculation methods.

At all events, the assessments appear to have

From Essen through to the recent summit in Luxem-
bourg, European Councils have consistently made
employment their most pressing priority.

A similar problem exists in relation to the

5.4.
comparison with earlier ex-post evaluations.

(1) OJ C 74, 10.3.1998.
(2) COM(96) 109 final, 20.3.1996.

(3) SEC(97) 1852 final.
(4) COM(97) 517 final.
(5) COM(97) 524 final, Chapter III (iii).

27.7.98

EN

Official Journal of the European Communities

C 235/43

According to the eighth annual report on the Structural
Funds, 850 000 gross jobs were created or maintained
during the programming period 1989-1993.

between employment and output growth, it is clear that
the major problem remains the creation of more jobs’ (1).

For 1997-1999 (i.e. just two years), the forecast gross
figure is 880 000 — in other words, a higher figure in
half the time (a rise of over 200 %). This seems to be
due to the greater commitment shown by all parties to
employment.

However, it is not possible to make the most interesting
comparison — concerning the creation of new jobs —
because (surprisingly) data are not available on the
number of net jobs; these data are provided only by the
UK and France.

This gives a telling indication of the reliability of the
data provided by most countries.

In contrast to this lack of precision, data on the number
of temporary jobs is available for 12 Member States.
The figure for these (106 115) is rather high when
compared with the possible, realistic final figure for net
jobs.

5.5.
The Commission obviously has difficulty
obtaining reliable information from the Member States,
and lacks the manpower to carry out the large number
of checks required. However, there remains the problem
of the methodology to be followed, and — more
importantly — the problem of checks on whether the
objectives are being achieved; these checks are not being
made at present.

Checks and verification are carried out meticulously
when it comes to the accounting procedures for expendi-
ture, but there is no ex post verification or monitoring.

These are not just issues of methodology; they have real
practical consequences for employment.

5.6. Here the Committee would again stress that real
economic growth — with an increase in demand and in
available income — is a precondition for creating real,
lasting jobs.

Support policies for generating new jobs must form part
of a process of wider growth and development.

What is true at macro level is also true at micro level.
Measures for introducing innovation and increasing
productivity must be matched by measures for expanding
demand.

Structural measures,
including those funded under
Objective 2, must aim not only to boost the competi-
tiveness of businesses and regions, but also to boost
production, demand and income. This is the only way
in which the improvements will produce additional jobs.

6. Concluding comments

The Commission communication highlights a few out-
standing problems which must be solved with a view to
the reform of the Structural Funds. It also provides an
opportunity to consider ways of managing resources
more effectively, in the interests of both the short term
aim of saving or creating jobs and the strategic aim of
economic and social cohesion.

6.1. Strengthening the partnership

The question of

6.1.1.
the partnership must be
addressed clearly and firmly. The communication
devotes only a short paragraph of Part I to this key
instrument; it is not mentioned at all in the analytical
tables for the Member States or in the conclusions. Only
in the summary tables for territorial employment pact
projects (Annex 5) do we find a list of the main partners.

6.1.2.
As the Commission states in the Note for
Guidance which it sent to Member States in 1996 (2),
many Objective 2 regions already have a tradition of
partnership and this needs to be further developed. The
Note stressed that in developing and implementing the
new Objective 2 programmes, ‘full use should be made
of the regional and local authorities and the economic
(such as, for example, SME representatives) and social
partners’. This was necessary ‘in order to ensure that
programmes fully reflect local needs and conditions’.

6.1.3. However, the communication does not assess
the nature or efficacy of this involvement, either in the
framing of the programmes or in implementation and
checks.

6.1.4.
The Committee would again stress that the
partnership must function right from the planning
stage, and must continue during the implementation of
structural measures. A strong partnership is essential

In its recent report on Employment in Europe 1997, the
‘whatever the relationship
Commission states that

(1) COM(97) 479 final, 1.10.1997, p. 1.
(2) COM(96) 952 final, 29.4.1996, point III.

C 235/44

EN

Official Journal of the European Communities

27.7.98

for effective structural measures because it makes
it possible to tailor projects to real socio-economic
problems and to incorporate them in a regional develop-
ment strategy.

have to be altered. Re-allocating human resources also
takes time, as people have to be properly trained for the
new activities.

The public authorities can no longer treat involvement
of the socio-economic organizations as an optional extra
or as a mere formality that complicates decision-takers’
work. There must be an organized partnership, which
must function across all Member States and for all
structural measures.

6.1.5.
Use of the partnership has improved since the
reform of the Structural Funds and the 1993 regulation,
but the degree to which Article 4 of Regulation 2081 is
applied varies from country to country. The Committee
has long asked that this article be reworded to give a
clearer definition of the principles of the partnership,
without giving too much leeway to the Member States.
The Commission’s new proposal (Article 8 of the recent
proposal for the framework regulation) would appear
to be a step forward which meets the Committee’s
recommendations. Common criteria also need to be
established regarding the operation of the monitoring
committees.

6.1.6.
Funds in 1996 (1) rightly notes the importance of:

The Commission’s report on the Structural

— reformulating the legal framework so as to clarify

the roles and responsibilities of each partner;

— improving the technical and operational capacities
of partners where necessary, by supporting training,
information and technical assistance measures.

The aim should be for the partnership to become an
essential part of structural policy, and ensure genuine
involvement of the public and private socio-economic
partners in the framing of structural programmes.

6.2. Reviewing the length of the programming periods

and regional eligibility

6.2.1.
Rather than extending the 1994-1996 pro-
grammes, the Commission has opted for new pro-
grammes, as it feels that this will improve the use made
of the funds. In this particular case the decision may be
justified by the need to reorient the programmes towards
the priority objective of employment.

In general, however, the Committee thinks that the
productive side of a regional economy cannot be changed
overnight, as the whole socio-economic geography may

6.2.2.
The Committee feels that, in future, longer
term programming would be more in keeping with a
more integrated strategy that has a stronger impact on
conditions in Objective 2 regions. It goes without saying
that there should always be a mid-term review, as this
provides an opportunity not only for checks and
adjustments but also to put forward new measures if
necessary, so as to focus on the areas which offer the
best prospects for improving local competitiveness and
creating stable employment.

6.2.3.
The eligibility criteria should be carefully
reviewed. A more effective and integrated approach
obviously also presupposes more flexible criteria for
demarcating the
covered by
measures.

geographical areas

6.2.4. One problem which needs to be solved with
the help of the Member States and local authorities
concerns the statistical indicators used for assessment
and decision-taking.

It is important, with respect to crisis-hit areas, to define
indicators based on inter-comparable, credible statistics.

The Committee generally endorses the need to
6.2.5.
concentrate resources in order to obtain a critical mass
that will stimulate regeneration and new development.
Resources should therefore be concentrated in the worst
hit areas of the eligible regions.

6.3. Focusing on support for SMEs

In order to make Objective 2 measures more
6.3.1.
effective, especially on the employment front, priority
should be given to SMEs. The development of existing
SMEs and micro-businesses and the establishment of
new and innovative ones are a vital way of diversifying
production in areas that need regeneration.

(1) COM(97) 526 final.

SMEs should be helped to become competitive on the
national and international market. Innovation-transfer

27.7.98

EN

Official Journal of the European Communities

C 235/45

schemes should be provided for them, gearing the
regeneration exercise more closely to their needs.

As well as for infrastructure, Objective 2 resources
should be used to improve the position of SMEs in
intra-EU trade, with new products and access to new
markets. The overall aims should be to create an
operating environment conducive to the generation of
profits, and to foster a spirit of risk-taking and inno-
vation among young people.

6.3.2.
The development of information and com-
munication systems is of basic importance here — in
other words, the implementation of the information
society in manufacturing and service SMEs. One priority
should be the establishment of centres providing services
geared to the needs of SMEs.

It is necessary to eliminate a certain bias towards
‘industry’, which leads all countries to skew their
planning towards companies in traditional manufactur-
ing sectors rather than services, trade and tourism.

It should be remembered that for some years now, while
industry and agriculture have steadily shed jobs and
created few new ones, services have registered a virtually
uninterrupted rise in employment.

new employment. Both the Delors white paper and the
most recent economic forecasts suggest that millions of
jobs can be created by fully exploiting the opportunities
of the information society. Programmes financed under
Objective 2 should include funding for innovation (e.g.
telematics in trade and services).

6.3.3.
sources of new jobs:

Two other fields deserve more attention as

— environmental protection (water treatment, recy-
cling of industrial waste, improvement of the urban
environment, and so on). The recent communication
on environment and employment (1) is relevant here;

— tapping of new sources of employment to meet the
changing needs of society. Objective 2 regions
have a high population density, and industrial
restructuring has left a large pool of labour.

6.3.4.
The final important factor is the development
of human resources, with the training system being
geared to business needs. This is of special importance
in Objective 2 areas, where hundreds of thousands of
workers — many of them highly skilled — are obliged
to acquire new skills at an advanced age. A continuing
training system is thus vital, to help workers cope with
the increasing pace of change.

Services such as telecommunications, information tech-
nology and distribution still offer considerable scope for

(1) COM(97) 592 final, 18.11.1997.

Brussels, 27 May 1998.

The President

of the Economic and Social Committee

Tom JENKINS