Special Report No 12/2001 concerning certain structural measures to improve the employment situation: the impact of ERDF aid on employment and ESF measures to combat long-term unemployment, together with the Commission's replies
Date: 2001-07-19
Institutions: European Court of Auditors
Subjects: European Regional Development Fund, European Social Fund, employment aid, job creation, long-term unemployment

28.11.2001

EN

Official Journal of the European Communities

C 334/1

I

(Information)

COURT OF AUDITORS

SPECIAL REPORT No 12/2001

concerning certain structural measures to improve the employment situation: the impact of ERDF
aid on employment and ESF measures to combat long-term unemployment, together with the
Commission’s replies

(pursuant to Article 248(4), second subparagraph, EC)

(2001/C 334/01)

CONTENTS

Paragraph

Page

SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Problems associated with employment and policy measures . . . . . . . . . . . . . . . . . . . . . . . . .

Scope of the audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

COMMUNITY EMPLOYMENT POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

European Employment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Economic and social cohesion policy and employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Methodology for evaluating the impact on employment . . . . . . . . . . . . . . . . . . . . . . . . . . . .

THE IMPACT OF ERDF AID ON EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The European Employment Strategy and the ERDF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Coordination within the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taking employment into account in the RDPs, CSFs, SPDs and OPs . . . . . . . . . . . . . . . . . . .

Ex ante evaluation, setting objectives and defining indicators . . . . . . . . . . . . . . . . . . . . . .

Mid-term evaluation — reprogramming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ex post evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Proposals for improving evaluation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taking impact on employment into account for the programming period 2000 to 2006. . .

Aid for productive investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taking employment into account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Aid per job . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sustainability of jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I-IX

1-5

1-2

3-5

6-16

6-10

11-13

14-16

17-77

17-18

19-21

22-45

24-30

31-40

41-42

43-45

46-48

49-77

49-58

59-68

69-71

72-77

4

6

6

9

9

9

10

10

11

11

11

11

12

14

16

16

17

17

17

19

20

21

C 334/2

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Official Journal of the European Communities

28.11.2001

Paragraph

Page

THE EUROPEAN SOCIAL FUND (ESF) INTERVENTIONS TO COMBAT LONG-TERM
UNEMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term unemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial and budgetary aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78-125

79-85

86-90

The management of policy and actions by the Commission . . . . . . . . . . . . . . . . . . . . . . . . .

91-115

The European Employment Strategy and the ESF interventions . . . . . . . . . . . . . . . . . . . .

91-98

Financial management of the operational programmes . . . . . . . . . . . . . . . . . . . . . . . . . .

99-103

Evaluation reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104-109

Audit of Article 6 projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

110-115

Management in the Member States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

116-125

Vague definition of ‘long-term unemployed’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117-118

Low priority of the long-term unemployed and employment aids . . . . . . . . . . . . . . . . . .

119-121

Implementation of employment aids. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

122-125

CONCLUSIONS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126-143

ERDF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126-131

ESF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

132-140

General recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

141-143

ANNEXES I and II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Commission’s replies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22

22

26

28

28

28

29

30

30

30

31

31

32

32

32

33

35

38

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C 334/3

ABBREVIATIONS

Community support framework

European employment policy guidelines

European Regional Development Fund

European Social Fund

Fonds de développement de la petite et moyenne industrie (Development fund for small businesses)

Fonds spécial d’implantation (F) (Special fund to encourage the setting-up of businesses)

Joint employment report

CSF

EEPG

ERDF

ESF

FDPMI

FSI

JER

MEANS

Methods for evaluating activities of a structural nature

MSIF

NAP

OP

RDP

RIME

SME

SPD

Merseyside Special Investment Fund (United Kingdom)

National action plan

Operational programme

Regional development plan

Microenterprise assistance scheme

Small and medium-sized enterprises

Single Programming Document

C 334/4

EN

Official Journal of the European Communities

28.11.2001

SUMMARY

Increasing employment is one of the central objectives of the European Union. The Court analysed the roles
I.
played by the European Social Fund (ESF) and the European Regional Development Fund (ERDF) in the Euro-
pean Employment Strategy. The Court also examined to what extent employment was taken into account when
developing evaluation methodology and during the implementation of the measures for the planning period
1994 to 1999, and, more specifically, in the context of the implementation of measures in support of produc-
tive investment co-financed by the ERDF. In addition, the Court’s audit focused on the implementation of Com-
munity measures to help the long-term unemployed, most of which are co-financed by the ESF within the
framework of Objectives 1 and 3.

II. The Court’s audit identified inconsistencies between the Employment Strategy, and the activities of the ESF
and the ERDF:

— since the introduction in 1997 of the European Employment Strategy, the ESF planning timetable has not
coincided with the schedule drawn up for taking decisions in the context of the Employment Strategy,

— to combat unemployment, the Employment Strategy focuses, primarily, on preventive measures and does
not give sufficient consideration to the curative measures which are required to deal with the problem of
long-term and very long-term unemployment,

— the employment guidelines drawn up annually by the Council make no explicit mention of the ERDF,
although the impact of the ERDF on employment is not inconsiderable. The same is true, with some few
exceptions, of the national action plans (NAPs) submitted by the Member States and the joint employment
reports. Because the ERDF, in contrast to the ESF, is omitted, some potential synergies are not being
exploited,

— there was found to be a lack of coordination between the interventions co-financed by the ERDF and the
ESF. This was due, amongst other things, to differences between the Regulations, the organisational struc-
tures, the procedures for aid applications and grants and the timetables, on the one hand, and the large
number of operators on the other.

III. There were a number of weaknesses in the regional development plans (RDPs), Community support
frameworks (CSFs), Single Programming Documents (SPDs) and operational programmes (OPs), which were
drawn up on the basis of very vague instructions from the Commission as regards employment. For Objec-
tives 1 and 3, the formulation of the objectives, both in general terms and in the form of quantitative targets,
was often imprecise and did not take every factor into account (jobs created/safeguarded, temporary/full-time
jobs, sustainability of employment, accurate data for specific target groups, etc.). In the case of the Objective
2 SPDs for 1997 to 1999, there was some improvement in comparison to the previous programming period.
In this particular instance, the measures in support of productive investment financed by the ERDF included
specific job-creation objectives. However, support for infrastructure, support for the development of local
potential and assistance for the development of human resources, which, together, use up almost 75 % of the
funds made available, were allocated without quantified objectives being specified in the CFSs/SPDs/OPs.

IV. The mid-term evaluations ran into both methodological difficulties (lack of uniformity in the concepts
applied and absence of clear definitions) and practical difficulties (in particular the absence or unreliability of
the necessary data), as well as difficulties with the aggregation of the results in cases where aggregation would
have been appropriate. For the long-term unemployed in particular, these reports recommended a more tar-
geted approach. The ex post evaluations are in danger of running into the same difficulties as the mid-term
evaluations.

V. Contrary to the Commission’s guidelines (see paragraph 31), only in exceptional cases was the reprogram-
ming that was carried out for the ERDF-co-financed measures based on analyses of the impact on employ-
ment.

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Official Journal of the European Communities

C 334/5

VI. However, the initiatives taken by the Commission since 1996, particularly the systematic application of
the MEANS (1) methodology and the introduction of the terms proposed in the Commission working docu-
ment for the new period 2000 to 2006, should result in an overall improvement in the situation.

VII. As far as aid to productive investment is concerned, it was found that:

(a) some grant notification letters were vague in respect of the obligation to take employment into consider-
ation, and the employment aspect was not necessarily given due weight in the co-financing decision pro-
cedures;

(b) the penalties attached to failure to comply with the conditions concerning employment were combined
with exemptions, which, because they were not precisely formulated, did not favour consistent application
of the rules;

(c) the efforts made and the mechanisms applied by the Member States in order to avoid deadweight and
displacement effects, with the aim of increasing the net effects on employment, varied considerably;

(d) even though most of the rules laid down in the SPDs/OPs and aid schemes audited made no provision for
supporting enterprises in difficulty in order to safeguard jobs, or did not contain precise details on this
matter, the Court’s checks showed that the ‘defensive’ aspect of the measures is, nonetheless, very impor-
tant;

(e) the information obtained by monitoring the employment measures is often poorly compiled (inter alia,
incorrect or incomplete records, absence of a definition of the concepts used), poorly exploited and not
harmonised between the regions. Likewise, data concerning the impact on employment were often unsat-
isfactory, as the monitoring systems were not yet able to provide the relevant information;

(f) an examination of the monitoring systems revealed that the number of jobs actually created or safeguarded
thanks to co-financed projects was only rarely subject to systematic global monitoring. The databases thus
quite often only contained information on job estimates;

(g) the databases often contained no figures, or contained poorly analysed figures, concerning jobs safe-

guarded, or they failed to distinguish between jobs created and jobs safeguarded;

(h) the evaluation of the ERDF’s impact on jobs is complicated and even in danger of being distorted by the
fact that the co-financing of a national aid scheme enables the national authorities either to apply for
co-financing for an eligible project or to finance it entirely from national funds. In addition, the Structural
Funds’ rules allow problematic measures/projects to be replaced by other measures in order to ensure that
the funds are absorbed;

(i) while several Member States have set ceilings for the amounts of aid per job, others had not set any. In
addition, the ceilings set per job created varied greatly (from 4 882 euro, paid in the form of a loan, to
511 292 euro, paid as a subsidy);

(j)

the monitoring periods set in order to avoid jobs being abolished once all the aid has been paid differed
greatly from one scheme to another, as this point has never been dealt with in any regulation. The new
Regulation laying down general provisions on the Structural Funds (2) and the guidelines on national
regional aid (3) stipulate that the granting of such aid is conditional on the maintenance of the investment
and the jobs created in the eligible region for a minimum period of five years. However, there is an incon-
sistency between the Regulation and the guidelines, in that the commencing date for the period is not the
same.

(1) MEANS was a European Commission programme aimed at improving the methods for evaluating activities of a struc-

tural nature.

(2) Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds

(OJ L 161, 26.6.1999).
(3) OJ C 74, 10.3.1998, p. 4.

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VIII. As regards ESF measures to combat long-term unemployment, although there have been improvements
in the overall EU unemployment situation in recent years, long-term unemployment has not followed the same
trend:

(a)

information about the management and control systems relating to successful pilot and demonstration
projects (Article 6 of Council Regulation (EEC) No 4255/88 as amended) was not made available to the
Commission and Member States, with the result that similar projects were not incorporated in mainstream
ESF actions;

(b) the implementation in the Member States of ESF-co-financed measures in favour of the long-term unem-
ployed lacked a clear definition of target groups and was given a low priority by national and regional
administrations and in national regulatory and management provisions, thereby incurring deadweight
costs (see also paragraph VII concerning the ERDF) and suffering delays in implementation.

IX. The Court recommends that:

(a) coordination between the Employment Strategy, on the one hand, and the ESF and the ERDF, on the other,

be improved;

(b) consistent objectives for employment be defined during the programming at the various policy, pro-
gramme and subprogramme levels, in order to make evaluation of the impact of the job-creation measures
easier;

(c) the Commission ensure that the obligation to take the employment aspect into account is systematically
given its due weight in the co-financing process. In addition, the Commission should take into consider-
ation the necessity of steps to avoid deadweight and displacement effects.

INTRODUCTION

Problems associated with employment and policy measures

28,7 % — a ratio of 1 to 14 — between regions. The employment
rates for the various Member States range from 52,3 % to 76,5 %
(see Tables 1 and 2). In many regions in the south and on the
periphery and in many former industrial regions of the EU,
employment rates of less than 50 % are common.

1. For almost 20 years the average rate of unemployment in the
European Union (EU) has virtually never fallen below the 8 %
mark. At present, there are approximately 14 million unemployed
in the EU. In addition, in relation to the population of working
age, the level of employment is low, with an employment rate of
62,1 %. Moreover, there is considerable geographical imbalance in
the distribution of unemployment and employment within the
EU. The unemployment rates range from 2 % to 13,9 % — i.e. a
ratio of 1 to 7 — between Member States and from 2,1 % to

2. The severity of the structural problems affecting employment
has gradually become a central preoccupation and at the Essen
European Council (December 1994) — for the first time — com-
mon guidelines were drawn up with a view to improving the
employment situation. Subsequently, at the Amsterdam European
Council (1997), it was decided to insert a new title devoted to
employment in the Treaty establishing the European Community
(see also paragraph 6).

Unemployment in the European Union by Member State (figures harmonised by Eurostat)

Table 1

2000 (1)

342,0
7,9
126,4
4,5
3 177,2
8,1
492,6
11,1
2 331,2
13,9
2 287,2
9,1
74,6
4,5
2 465,7
10,5
3,6
2,0
189,7
2,4
109,3
2,9
214,2
4,2
279,5
10,3
283,2
6,1
1 630,4
5,5
14 006,8
7,0

(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

396,4
9,1
149,0
5,2
3 460,6
8,8
521,1
11,7
2 607,4
15,9
2 886,5
11,3
96,3
5,7
2 648,5
11,3
4,2
2,3
262,5
3,3
146,4
3,8
228,3
4,5
261,0
10,2
319,1
7,2
1 765,5
6,1
15 763,3
9,2

408,2
9,5
148,3
5,2
3 691,6
9,4
482,7
10,9
3 057,5
18,8
3 019,0
11,8
123,8
7,6
2 746,3
11,8
4,8
2,7
312,1
4,0
171,2
4,5
258,3
5,2
285,3
11,4
367,7
8,3
1 829,6
6,3
16 909,2
9,9

398,5
9,4
159,3
5,6
3 870,4
9,9
420,7
9,8
3 351,4
20,8
3 125,6
12,3
152,6
9,9
2 689,6
11,7
4,8
2,7
395,0
5,2
167,2
4,4
330,8
6,8
314,4
12,7
437,1
9,9
2 026,1
7,0
17 850,9
10,6

409,3
9,7
192,1
6,8
3 461,9
8,9
410,8
9,6
3 534,7
22,2
3 126,1
12,4
173,8
11,7
2 663,0
11,7
5,1
3,0
467,6
6,3
164,5
4,3
349,0
7,3
362,7
14,6
425,6
9,6
2 346,0
8,2
18 086,2
10,8

415,8
9,9
203,0
7,2
3 185,8
8,2
385,8
9,2
3 579,0
22,9
2 920,7
11,7
177,5
12,3
2 640,7
11,6
4,9
2,9
507,9
6,9
148,6
3,9
346,3
7,3
381,9
15,4
390,6
8,8
2 493,1
8,7
17 787,5
10,7

415,8
10,0
229,2
8,2
3 306,3
8,4
369,5
8,9
3 733,7
24,1
3 058,2
12,3
203,4
14,3
2 531,8
11,1
5,5
3,2
517,0
7,1
146,6
3,8
330,9
6,9
408,3
16,6
411,8
9,4
2 736,6
9,6
18 408,7
11,1

362,2
8,8
291,0
10,2
3 073,8
7,8
351,5
8,6
3 477,2
22,7
2 900,5
11,7
215,6
15,6
2 327,6
10,2
4,5
2,6
464,0
6,5
151,1
4,0
267,2
5,7
404,8
16,3
401,0
9,1
2 989,6
10,5
17 674,2
10,7

293,6
7,2
264,9
9,2
2 563,2
6,6
317,5
7,9
2 788,5
18,4
2 553,2
10,4
209,2
15,4
2 084,3
8,8
3,6
2,1
392,9
5,6
—
—
202,3
4,3
292,4
11,7
251,8
5,6
2 866,0
10,0
15 240,8
9,2

262,3
6,6
242,0
8,4
2 181,6
5,6
276,3
7,0
2 468,8
16,4
2 311,7
9,5
196,6
14,7
2 051,9
8,6
2,8
1,7
397,0
5,8
—
—
200,6
4,2
168,5
6,6
143,0
3,1
2 537,3
8,8
13 568,3
8,2

261,3
6,7
220,3
7,7
—
—
254,7
6,4
2 439,2
16,2
2 168,8
9,0
175,8
13,4
2 113,2
9,0
2,7
1,7
413,5
6,2
—
—
224,2
4,8
81,7
3,2
79,9
1,7
2 021,2
7,0
—
—

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

European Union

(1) Provisional data.

Source: Eurostat.

.

2
8
1
1
2
0
0
1

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N

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7

Rate of unemployment in the European Union by Member State (figures harmonised by Eurostat)

Table 2

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)
(in 1 000)
(in %)

3 955,0
58,9
2 692,0
76,5
35 742,0
64,8
3 835,0
55,4
13 658,0
52,3
22 661,0
60,4
1 559,0
62,5
20 292,0
52,5
175,0
61,6
7 552,0
70,9
3 644,0
68,2
4 566,0
67,4
2 318,0
67,4
3 998,0
70,6
26 898,0
70,6
153 544,0
62,1

3 841,0
57,3
2 652,0
75,3
35 194,0
63,7
3 854,0
55,6
13 061,0
49,7
22 359,0
59,9
1 462,0
59,7
20 051,0
51,8
170,0
60,2
7 347,0
69,4
3 593,0
67,4
4 504,0
66,8
2 163,0
63,4
3 885,0
68,6
26 441,0
70,2
150 577,0
61,0

3 819,0
57,0
2 649,0
75,4
34 947,0
63,6
3 725,0
54,8
12 609,0
48,0
22 048,0
59,4
1 341,0
56,4
19 731,0
50,5
168,0
59,9
7 126,0
67,5
3 574,0
67,2
4 254,0
63,4
2 103,0
61,9
3 860,0
68,3
26 181,0
69,7
148 133,0
60,1

3 767,0
56,3
2 599,0
74,0
35 292,0
64,1
3 733,0
54,9
12 226,0
46,6
22 065,0
59,7
1 276,0
54,9
19 711,0
50,6
164,0
59,1
6 874,0
65,4
3 577,0
67,3
4 192,0
62,3
2 046,0
60,5
3 926,0
69,7
25 757,0
68,7
147 205,0
59,9

3 769,0
56,3
2 580,0
73,9
35 461,0
64,7
3 693,0
54,5
11 895,0
45,9
21 932,0
59,5
1 229,0
54,1
19 649,0
50,5
161,0
58,5
6 728,0
64,2
3 630,0
68,4
4 210,0
62,5
1 994,0
59,7
4 064,0
73,5
25 490,0
68,1
145 255,0
59,9

3 727,0
55,7
2 519,0
72,4
35 525,0
64,7
3 660,0
54,1
11 599,0
45,0
21 588,0
58,9
1 176,0
52,6
19 711,0
50,9
163,0
60,2
6 647,0
63,8
—
—
4 245,0
62,9
—
—
—
—

25 230,0
67,7
—
—

3 724,0
56,0
2 516,0
72,4
35 795,0
65,1
3 603,0
53,5
11 731,0
45,7
21 760,0
59,6
1 122,0
51,2
19 990,0
51,8
164,0
61,0
6 580,0
63,5
—
—
4 283,0
64,3
—
—
—
—

25 052,0
67,3
—
—

3 751,0
56,5
2 582,0
74,5
36 208,0
66,6
3 561,0
53,6
12 320,0
48,2
21 877,0
60,1
1 114,0
50,8
20 318,0
52,3
163,0
61,5
6 554,0
63,7
—
—
4 344,0
65,9
—
—
—
—

25 287,0
68,1
—
—

3 703,0
55,9
2 583,0
74,6
36 702,0
67,9
3 523,0
53,1
12 482,0
49,2
21 968,0
60,5
1 100,0
51,1
21 146,0
54,1
161,0
60,7
6 351,0
62,1
—
—
4 609,0
67,6
—
—
—
—

25 768,0
69,6
—
—

3 609,0
54,4
2 598,0
75,4
28 714,0
66,4
3 602,0
54,8
12 414,0
49,1
21 725,0
60,8
1 101,0
51,9
20 827,0
53,9
156,0
59,2
6 202,0
61,1
—
—
4 438,0
65,5
—
—
—
—

26 322,0
71,1
—
—

C
3
3
4
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8

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O

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a
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o
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a
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C
o
m
m
u
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i
t
i
e
s

.

2
8
1
1
2
0
0
1

.

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

European Union

Source: Eurostat.

28.11.2001

EN

Official Journal of the European Communities

C 334/9

Scope of the audit

3. The Court’s audit covers two aspects of Structural Funds inter-
vention to combat unemployment: the impact of the European
Regional Development Fund (ERDF) on employment and the
European Social Fund (ESF) measures to combat long-term unem-
ployment.

4. As far as the ERDF is concerned, the Court examined the role
assigned to the ERDF in the context of the European Employment
Strategy. Its audit also focused on how employment was taken
into account in the programming, organisation, monitoring, con-
trol and evaluation procedures for the various Objective 1 mea-
sures for the planning period 1994 to 1999. Part of the audit was
devoted to the emphasis placed on employment in the implemen-
tation of aid schemes in support of productive investment. Checks
were carried out in the Commission’s departments and in nine
Member States (Belgium, Germany, Spain, Greece, France, Ireland,
Italy, Portugal and the United Kingdom). In the Member States/
regions selected, 92 enterprise support projects under 13 schemes
for aid to the productive sector were audited, either by means of
file audits (38) or on-the-spot checks (54).

5. The Court also examined 25 ESF projects in five Member
States (Belgium, Germany, Greece, Spain and Italy), whose objec-
tive was to combat long-term unemployment, to assess the effec-
tiveness of the implementation of the national action plan (NAP)
measures. The Commission’s (DG Employment) management sys-
tems were examined, with a special focus on the Commission’s
participation in the Monitoring Committees and on evaluation
reports. A selection of innovative projects co-financed under
Article 6 of the ESF Regulation were examined in order to estab-
lish their contribution to the development of new approaches in
the programming of ESF interventions in the long-term unem-
ployment field.

COMMUNITY EMPLOYMENT POLICY

European Employment Strategy

7. The extraordinary European Council meeting on employment
held in Luxembourg on 20 and 21 November 1997 laid down the
principles and the guidelines for the new European policy on
employment for the years to come. It adopted, among other
things, the European Employment Strategy, based on four pil-
lars (1), and 19 European employment policy guidelines (EEPG). It
established the principle of coordination of Member States’
employment policies
the EEPG annually
to implement
(Article 128 of the EC Treaty). The new coordination approach
launched at this summit is known as ‘the Luxembourg process’.

8. As concerns long-term unemployment, the Nice Council in
December 2000 decided in the European Social Agenda to ‘com-
bat long-term unemployment by developing active preventive and
reintegration strategies based on early identification of individual
needs and improving employability’ and to ‘support in this con-
text, the local and regional dimensions of the employment strat-
egy’ (2).

9. The key policy documents involved in the implementation of
this process are:

(a) the national action plans on employment (NAPs),

(b) the annual evaluation report on the implementation of the

national action plans, and

(c) the joint employment report (JER).

The national action plans are prepared by each Member State in
order to implement the guidelines that are adopted by the Coun-
cil. Each Member State prepares an annual evaluation report on
the implementation of its national action plan. The Commission,
on the basis of the 15 national evaluation reports and in order to
assess progress in the implementation of the European Employ-
ment Strategy, drafts the joint employment report. This joint
employment report, which contains the Commission and Council
recommendations for Member States’ national employment poli-
cies and reforms to be made, is used each year to prepare the
European employment policy guidelines.

10. With regard to coordination of the Employment Strategy
with the ERDF and the ESF, see paragraphs 17 to 18 and 91 to 98.

6. The Treaty of Amsterdam defined employment as a major
challenge in the process of European unification by recognising it
as the first priority issue for all Member States of the European
Union. It established that employment should become a matter of
common concern and should be part of all national and Euro-
pean Union policies (Articles 126 and 127 of the EC Treaty).

(1) The four pillars are:

— pillar 1: employability, guidelines 1 to 7,
— pillar 2: entrepreneurship, guidelines 8 to 12,
— pillar 3: adaptability, guidelines 13 to 15,
— pillar 4: equal opportunities, guidelines 16 to 19.

(2) European Social Agenda I(d) and (e).

C 334/10

EN

Official Journal of the European Communities

28.11.2001

Economic and social cohesion policy and employment

11. Economic and social cohesion policy (Articles 158 to 162 of
the EC Treaty) is implemented through the various Structural
Funds Objectives (Objectives 1 to 6 for the programming period
1994 to 1999) (1). The aim of the structural measures imple-
mented within this framework is to reduce the disparity between
the levels of development of the various regions, especially with
regard to investment, employment and unemployment, and to
integrate certain target groups into social and economic life.

12. There are four types of instrument:

— support for productive investment, which consists, in the
main, of co-financing enterprise assistance schemes, whereby
the impact on employment is one of the criteria for granting
aid,

— support for infrastructure,

— support for the development of indigenous potential, which
consists of aid to companies supplying services to enterprises
(in the fields of management, market studies and research,
etc.), financing technology transfer, improving access to capi-
tal markets, direct aid to investments where no aid scheme
exists and small-scale infrastructure projects,

— assistance for the development of human resources.

The ERDF is the main source of finance for the first three instru-
ments and plays a part in the last one. Approximately 25 % of the
total ERDF budget (80 000 million euro) was devoted to produc-
tive investment in the period 1994 to 1999. The ESF is mainly
involved in the context of the development of human resources
and the overall budget for the period 1994 to 1999 came to
49 000 million euro.

(1) Council Regulation (EEC) No 2052/88, as amended by Regulation
(EEC) No 2081/93(OJ L 193, 31.7.1993, p. 5) — Article 1: ‘... promot-
ing the development and structural adjustment of regions whose
development is lagging behind (hereinafter referred to as “Objective
1”); converting the regions, frontier regions or parts of regions (includ-
ing employment areas and urban communities) seriously affected by
industrial decline (hereinafter referred to as “Objective 2”); combat-
ing long-term unemployment and facilitating the integration into
working life of young people and of persons exposed to exclusion
from the labour market (hereinafter referred to as “Objective 3”);
facilitating the adaptation of workers of either sex to industrial changes
and to changes in production systems (hereinafter referred to as
“Objective 4”); promoting rural development by: speeding up the
adjustment of agricultural structures in the framework of the reform
of the common agricultural policy; facilitating the development and
structural adjustment of rural areas (hereinafter referred to as “Objec-
tives 5(a) and 5(b)”)’. Protocol 6 annexed to the Act of Accession of
the new Member States (Council Decision of 1 January 1995 adapt-
ing the instruments concerning the accession of new Member States
to the European Union (OJ L 1, 1.1.1995, p. 11)) is the basis for Objec-
tive 6: facilitating the development and structural adjustment of
regions with an extremely low population density.

13. Although most of the objectives of the structural measures
were connected with employment, directly or indirectly, the actual
impact on employment largely depends on the intensity and on
the combination of the instruments chosen, which vary accord-
ing to the socioeconomic situation of the (regions of the) Member
States and the preferences of the authorities responsible:

(a) certain types of impact on employment are direct. This is the
case for recruitment assistance and for support for produc-
tive investment that is subject to conditions relating to the
creation or maintenance of jobs. In the case of aid to produc-
tive investment, the direct impact on employment varies
according to the nature of the investment, the sectors con-
cerned and enterprises subsidised, and the conditions govern-
ing the creation of jobs and tied to the aid;

(b) other effects on employment are more difficult to define as
they are indirect and only become noticeable in the mid to
long term. This is often the case with training measures to
foster the development of human resources, which are prima-
rily concerned with safeguarding or improving the beneficia-
ries’ employability (2). Likewise, the expansion of enterprises
as a result of investments aimed primarily at increasing pro-
ductivity often produces positive impacts on employment
which are staggered over time. Annex I shows a model of the
cause-and-effect relationships in respect of the impact on
employment of ERDF instruments.

Methodology for evaluating the impact on employment

14.
In 1996, the Commission noted that in the absence of a
common methodology to evaluate the impact on employment,
the information provided by the Member States at the various lev-
els ‘is fairly disparate and so unsuitable for systematic treat-
ment’ (3). In response to this problem, the Commission launched
a series of studies and submitted documents, in particular in con-
junction with the MEANS programme, which are intended to
improve understanding and calculation of the employment effects
of the measures (4).

15. The method proposed, shown in outline in the table in
Annex II, sets out firstly to establish an intervention’s gross effect
on employment, and then to establish the net effect and overall
impact on job opportunities and the effects on unemployment.

(2) An individual’s capacity to find or keep a job in a given socio-

economic environment.

(3) Commission communication ‘Community structural assistance and

employment’ (COM(96) 109 final of 20 March 1996, p. 17).

(4) The findings relating to employment were published in MEANS Jour-
nal No 6 of 1996, ‘Évaluer la contribution à l’emploi des Fonds structurels.
Conseils pratiques pour les gestionnaires de programmes’ (Evaluating the
contribution of the Structural Funds to employment. Practical guid-
ance for programme managers), in the Evaluation and Documents
Series, No 1 of May 1997, ‘Mesurer la création d’emplois. Comment évaluer
les effets des interventions des Fonds structurels sur l’emploi’ (Measuring job
creation. How to evaluate the impact of Structural Fund measures on
employment) and in the MEANS compilation, Volume 5 of 1999,
‘Évaluation transversale des impacts sur l’environnement, l’emploi et les autres
politiques d’intervention’ (Transversal evaluation of the impact on the
environment, employment and other intervention policies).

28.11.2001

EN

Official Journal of the European Communities

C 334/11

16. Even if the majority of the factors have been defined, the
methodology proposed by the Commission is not precise enough
in its treatment of them, in particular when determining the over-
all effects on the number of job opportunities and on unemploy-
ment. However, the Commission deserves credit for having orga-
nised a number of already familiar concepts into a coherent overall
approach.

20. The Interdepartmental Group on Employment also drew up
the communication from the Commission ‘Community policies
in support of employment’ of 1 March 2000 (5), which states that
job creation at regional and local development level should be
actively supported.

THE IMPACT OF ERDF AID ON EMPLOYMENT

The European Employment Strategy and the ERDF

In the context of the employment guidelines (1) (see para-
17.
graph 2), first adopted in 1998, some of whose objectives (2) are
closely linked to the ERDF, no mention was made of the instru-
ments co-financed by ERDF aid. The annual review of the guide-
lines has not brought about any changes in this respect. Further-
more, the guidelines that were adopted for 2000 highlight the
European Social Fund’s contribution to the Employment Strategy
in the course of the new programming period, while the ERDF is
not even mentioned. In the meantime, this problem was recogn-
ised in the joint employment report for 2000 (3).

18. As a consequence, generally speaking, neither the NAPs (see
paragraph III), nor the reports submitted by the Member States on
the implementation of the NAPs contain planned actions or suf-
ficiently explicit information on the ERDF. This finding also
applies to the joint employment reports, in spite of the emphasis
placed on the necessity of increasing investments in infrastruc-
ture, of making access to finance easier for small and medium-
sized enterprises (SMEs) and of entering new promising sectors —
objectives which the ERDF is already pursuing. This almost com-
plete omission of the ERDF means that substantial potential syn-
ergies are not being exploited, or are in danger of not being
exploited.

Coordination within the Commission

19. Under the terms of its remit, the Interdepartmental Group
on Employment (4) is the key instrument within the Commission
for the development and implementation of the Employment
Strategy. An analysis of the work carried out nevertheless shows
that the impact of regional development (supported by the ERDF)
on employment could be reinforced.

(2)

(1) These guidelines are built around four pillars: 1. ‘improving employ-
ability’, 2 ‘developing entrepreneurship’, 3 ‘encouraging adaptability
of businesses and their employees to allow the labour market to adapt
to structural change in the economy’ and 4 ‘strengthening equal
opportunities policies’.
In the main these are objectives connected with Nos 10 and 11 —
making it easier to start up and run businesses, and Nos 12 and 13 —
exploiting new opportunities for the creation of jobs, under pillar 2
‘Developing entrepreneurship’.

(3) COM(2000) 551 final, 6 September 2000, volume 1, p. 6.
(4) Created on the initiative of the Secretary-General of the Commission
and of the Director-General for Employment and social affairs.

21. The Objective 1, 5(b) and 6 programmes and the other Com-
munity initiatives are not mentioned in this communication, for
no apparent reason, although the budgets available within the
framework of these Objectives for measures with great job-
creation potential are also substantial. For this reason the Com-
mission communication gives a false impression of the potential
impact on employment and of the importance of employment for
the various Objectives.

Taking employment into account in the RDPs, CSFs, SPDs
and OPs (6)

22. The regulations governing cohesion policy for the program-
ming periods 1989 to 1993 and 1994 to 1999 did not explicitly
make provision for an ERDF contribution, as a matter of priority,
to safeguarding and creating jobs (see Articles 1 and 2 of Council
Regulation (EEC) No 2052/88, as subsequently amended). How-
ever, an impact on employment is a direct objective of some mea-
sures: for instance, the ERDF participates in the financing of pro-
ductive investment which allows the creation or maintenance of
sustainable employment. Moreover, within the framework of the
programming and monitoring of the various forms of interven-
tion, the Structural Funds Regulations, generally speaking, require
an analysis of the impact on employment of measures in the con-
text of regional development and restructuring plans (see
Articles 8 to 12 of Regulation (EEC) No 2052/88, as subsequently
amended, and Articles 5, 6 and 8 of Council Regulation (EEC)
No 4253/88, as subsequently amended).

23. For the new programming period 2000 to 2006, there is
explicit provision for the ERDF, among others such as the ESF, to
contribute to the creation of sustainable employment, as part of
its general tasks. In addition, ERDF participation in financing
measures is usually linked to the fulfilment of criteria relating to
employment (see Articles 1 and 2 of Regulation (EC) No 1783/
1999 of the European Parliament and of the Council of 12 July
1999 on the European Regional Development Fund).

(5) COM(2000) 78 final, 1 March 2000.
(6) The CSF is the document approved by the Commission, in agreement
with the Member State concerned, after evaluation of the plan sub-
mitted by the Member State and containing the Member State’s strat-
egy and priorities in respect of Structural Fund measures, their spe-
cific objectives, participation by the Fund and participation from
other financial resources.
The operational programme (OP) is the document approved by the
Commission with a view to implementing a CSF, which usually cov-
ers several OPs.
The SPD is a single document approved by the Commission which
combines elements contained in the CSF and the OP.

C 334/12

EN

Official Journal of the European Communities

28.11.2001

Ex ante evaluation, setting objectives and defining
indicators

ERDF RDPs, CSFs, SPDs and OPs for Objective 1 (programming
period 1994 to 1999)

24.
In September 1993, DG Regio submitted and forwarded to
the Member States a working document laying down the ex ante
evaluation framework which was to serve as the basis for draw-
ing up the CSFs, the SPDs and the OPs. However, this document
remains vague with regard to employment.

25. The employment aspect of the set of measures proposed in
the RDPs that led to the creation or maintenance of jobs was not
subjected to general comparative analysis of effectiveness, effi-
ciency, complementarity and substitutability, with the aim of
optimising job supply and satisfied job demand.

26. The ex ante evaluations of the RDPs carried out on the Com-
mission’s initiative generally produced an estimate of the global
impact of the RDP on employment, obtained either by applying
econometric techniques (1), or applying macroeconomic or gen-
eral hypotheses concerning the development of certain endog-
enous or exogenous factors, but without establishing and estimat-
ing the complex causal relationships. In some cases the estimate
was not explained at all. In addition, the transition from the RDP
to the CSF, which was made in order to take into account, amongst
other things, a reduction in the finance in comparison with that
provided for in the RDP, was not usually based on priorities
explicitly related to the creation of jobs.

27. The following weaknesses appeared from the analysis of nine
CSFs and 13 SPDs/OPs:

(a) the formulation of the overall objectives was often imprecise
with regard to the expected impact on employment. The
objectives contained in the CSFs/SPDs were mainly economic
and were often formulated in general terms. Although, at the
level of programmes, subprogrammes, measures and submea-
sures, the objectives were generally more precise (structural
improvement, diversification, adding value, investment aid,
etc.), or mentioned specific sectors (tourism, fisheries, trade,
craft industry, etc.), the term employment was rarely used or
was used only in very cautious formulations;

(b) the overall objectives with regard to employment were not
systematically quantified either. Furthermore,
the bases
required to define adequate quantified objectives in this field
were generally not sufficiently sound for this purpose, with
the exception of the Merseyside (United Kingdom) SPD, which
is based on a model forecast for the local economy, and the
Valenciennes-Douai-Avesnes (France) SPD, which compares
an extrapolation of the initial situation with the situation
expected following the financial intervention;

(1) The results of which are not always consistent (Spain, Portugal).

(c) the links between the overall objectives (general formulation
and quantified objectives) of the CSFs / SPDs / OPs and the
intermediate objectives of the programmes, subprogrammes,
measures and submeasures were not always established
clearly (2);

(d) the definition of the employment targets with regard to the
various interventions, programmes, subprogrammes, mea-
sures and/or submeasures is very selective and is restricted,
with some few exceptions, to gross jobs created and/or safe-
guarded. Thus out of seven OPs/SPDs audited by the Court
which contain targets (a total of 289 210 jobs to be created,
165 000 jobs to be safeguarded and 24 413 jobs to be created
or safeguarded), only three also give net objectives. In the
majority of countries they concentrate on interventions in
favour of productive investment;

(e) supporting measures for productive investments represent an
exception to the lack of precision with regard to the expected
impact in terms of employment (formulation and quantitative
objectives). Although the three other instruments use up
almost 75 % of the funds made available (see paragraph 14),
scarcely any initiative was taken to include quantified objec-
tives in the CSFs/SPDs/OPs;

(f)

in the majority of cases, there were no objectives for the cre-
ation of indirect employment and for the creation of tempo-
rary jobs in connection with the works to be carried out (with
the exception of Ireland and Merseyside). The problems of the
spread across time of the impact on employment were also
neglected. Furthermore, a reduction in unemployment or an
increase in the rate of employment was scarcely ever men-
tioned as a desirable objective.

SPDs for Objective 2 (programming period 1997 to 1999)

28. Substantial progress was found to have been made in the
quantification of objectives in respect of the impact on employ-
ment, in the SPDs for Objective 2 for the period 1997 to 1999,
although for some fields and large-scale measures a greater effort
to quantify results still needs to be made.

29. The methods for setting and aggregating the objectives indi-
cated were not always clear. Nevertheless, on the basis of the data
available, the Commission published a table showing, amongst
other things, the expected impact of the SPDs for Objective 2 in
the period 1997 to 1999 on the creation of temporary jobs and
the creation or maintenance of permanent jobs (see Table 3).
However, the Commission pointed out that the figures would
require further refinement (which was not carried out) and should
be interpreted with caution (3).

(2) With the exception of Merseyside, the links between the general tar-
gets laid down and those relating to the various interventions, pro-
grammes, subprogrammes, measures and submeasures allocated to
the various management bodies with a view to defining responsibili-
ties are not always precise or consistent. For example, the Objective 1
CSF for the new Länder provides for an overall impact of 700 000 jobs
created in the period 1994 to 1999, whereas adding the target figures
contained in the various Objective 1 OPs gives a total of 481 000
jobs.

(3) See Commission communication (COM(97) 524 final of 14 Novem-

ber 1997, pp. 14 and 15).

.

2
8
1
1
2
0
0
1

.

Expected impact on employment in Member States — Objective 2 SPDs (1997 to 1999)

Table 3

Belgium (1)

Denmark (1)

Germany

Spain

Finland (1)

France

Italy

Luxembourg (1)

Netherlands

United
Kingdom

Temporary jobs (2)

120

—

4 100

13 986

—

14 049

6 255

Created or maintained jobs

14 457

2 348

114 224

93 500

15 780

147 459

116 359

—

570

20 193

40 350

43 762

341 873

Europe

106 115 (3)

874 552 (4)

Costs are indicated in ECU (*)

Average public (Community + national)
cost per gross job

Average cost to the Community per
gross job

Average public cost per gross job for
measures targeting job creation

Average cost to the Community per
gross job for measures targeting job
creation

23 172

59 454

15 865

22 450

22 669

30 567

18 646

41 111

25 932

15 096

20 558

10 259

20 060

7 640

11 116

8 510

13 244

7 318

17 258

10 103

6 992

9 158

16 177

51 006

11 181

9 159

7 226

24 251

5 466

4 475

—

—

16 811

15 698

21 842

17 484

13 305

13 847

7 196

6 065

7 107

6 521

6 219

6 154

(1) The estimate of the average cost per gross job at EU level does not include Finland. No data are available on industrial regeneration in Belgium or in Denmark, nor on enterprise infrastructures in Luxembourg.
(2) Data on temporary jobs are not available for Denmark and Luxembourg and are included in created or maintained jobs for Finland.
(3) The Court estimates the number of temporary jobs at 110 983.
(4) The Court estimates the number of created or maintained jobs at 885 056.
(*) Now in euro.

Source: Commission communication (COM(97) 524 final) of 14 November 1997, ‘The new regional programmes 1997 to 1999 under Objective 2 of the Community’s structural policies — focusing on job creation’, Annex 4, p, 58 (with comments

concerning certain Court audit findings — see footnotes 3 and 4).

E
N

O

f
f
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C 334/14

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30. The progress made is shown in the table below:

Mid-term evaluation — reprogramming

1. Overall forecast
2. At measure level:

— productive investment
— infrastructure and environment
— technical assistance

3. For temporary jobs
4. For permanent jobs created
5. For permanent jobs safeguarded
6. For net permanent jobs

Number of SPDs
(Total analysed:
65) (1)

60

55
41
6

33
53
33
25

(1) In order to guarantee compatibility of data, the Court’s audit did not include the
three SPDs which were not included in the Commission communication ‘New
regional programming for the period 1997 to 1999 for Objective 2 of the Com-
munity structural policies — priority for the creation of employment’ (COM(97)
524 final, 14 November 1997).

NB: In the case of 19 SPDs, forecasts do not distinguish between the creation and

maintenance of jobs.

Instructions on reprogramming

interventions and employment (1) and,

31. Taking the increasing political importance of employment
into consideration, the Commission decided in 1996 to focus par-
ticular attention on the mid-term evaluation of the interventions
in the programming period 1994 to 1999. The Commission
therefore presented, in March 1996, a communication on Com-
munity structural
in
May 1997, adopted its guidelines on priorities for the adjustment
of Structural Funds programmes to the end of 1999 (with the
exception of Objective 2, for which new programmes were
adopted), which emphasise the importance of employment. On
this basis it intended to take the necessary political initiatives, in
accordance with the objectives of the Structural Funds, to sup-
port its various partners in their attempts to ensure that growth
resulted in more jobs. A prioritised list of objectives drawn up by
the Commission for this purpose is shown in Table 4.

Commission guidelines on cohesion policy to increase the job intensity of economic growth for the
programming period 1994-1999

Table 4

A.

1.

2.

B.
1.

2.
3.
4.

C.

D.

Providing the long-term conditions for sustainable economic growth

Giving due importance to non-material investment
(a) Necessity of promoting investment in human resources as a matter of top priority
(b) Improving business support services, particularly for SMEs
(c) Systematic integration of financial services (seed capital, risk capital and other forms of financial engineering)
(d) International marketing
Measures to support technological innovation

Increasing the job intensity of economic growth
Devoting particular attention to the employment question when financing infrastructure and productive investment
(selection criteria; evaluation, maximising spillover effect on local employment)
Compensating for changes required by the modernisation of the productive sector
Encouraging dynamic reorganisation of work and working time
Fostering environmentally sound growth

Promoting a more active approach to economic and social solidarity, including equal opportunities

Developing and enriching the partnership in the context of structural assistance

NB: Guidelines A(1)(a) and B(3) are not relevant to the ERDF.

(1) See COM(96) 109 final, 20 March 1996.

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In addition, on the basis of an examination of the program-
32.
ming for the period 1994 to 1999, the Commission proposed to
the Monitoring Committees (1), amongst others, that the room
for manoeuvre and flexibility which existed in the context of
ERDF programming should be exploited, as a matter of priority,
to combat unemployment.

Weaknesses in the approaches adopted for evaluation

33. The work carried out ran into both methodological difficul-
ties (in particular the lack of uniformity in the concepts used and
the absence of clear definitions) and practical difficulties (in par-
ticular, the absence or unreliability of the necessary data) so that
aggregation of the results, in cases where that would have been
appropriate, was not possible. No database at central level in the
Member States nor at the European Commission indicates,
amongst other things, the targets and the results anticipated and
achieved by the various measures in terms of employment (see
also paragraph 105 with regard to the ESF). Some exceptions exist
in the field of aid schemes for productive investment which lay
down more or less strict conditions concerning employment. This
is why the only data available on the impact on employment fre-
quently concern interventions in support of the productive envi-
ronment. Amongst other things, this absence of data on the
impact on employment makes it difficult to take into account the
Commission guideline which requires all expenditure relating to
the various forms of intervention to be justified in terms of its
contribution to the maintenance or creation of jobs.

aggregation of the evaluation work at regional, national and EU
levels.

36. Only in the case of Merseyside (United Kingdom) was a sys-
tem actually introduced to monitor, project by project, the impact
on employment (direct and indirect creation of permanent jobs
and direct creation of temporary jobs) (4) and used for the mid-
term evaluation.

37. Nevertheless, given that information of the bottom-up type
often does not exist or is of unsatisfactory quality, the results of
analyses which follow a deductive method based on the verifica-
tion of hypotheses on cause and effect (also known as ‘top-down’
analysis) are the only ones available in such cases for the mid-
term evaluation procedures. These results are obtained by apply-
ing macroeconomic models, input-output models, counterfactual
analysis (5) or comparative methods which attempt to convert
investments into jobs, measure by measure, on the basis of ratios
that are either calculated using large-scale aggregates from the
national accounts or are the result of observations from previous
periods. With this approach, a certain margin of error is inevi-
table (6).

34. As far as the approach to be adopted for estimating the
impact on employment is concerned, the mid-term evaluation
tends to require an analysis based on the volume of aid, the num-
ber, quality and sustainability of the jobs actually created or safe-
guarded. The corresponding method, sometimes referred to as a
‘bottom up’ approach and applied in the context of certain mid-
term evaluations, involves collecting, in the field, the data relat-
ing to the impact on employment for each project (2) and aggre-
gating them at project, priority and programme levels.

38. All the models used within the macroeconomic evaluation
framework indicate that the Objective 1 CSFs generate net jobs
(see Table 5). The models also deal with the impact of the CSFs on
employment in different ways: some models show a growth in
employment sometimes leading to a reduction in unemployment;
with others, the growth in employment is mainly in the field of
services and is accompanied by a reduction in industrial employ-
ment which is due, in part, to an increase in productivity. In any
case, estimating impact on growth and employment with the help
of macroeconomic models is only possible for large-scale mea-
sures, such as the large Objective 1 CSFs (7).

35. This particular method requires considerable effort, because
the programmes entail a large number of operations and may
result in double counting (3). In addition, the departments respon-
sible for the implementation of the regional interventions apply
their own working methods, which represents an obstacle to the

(4) No quantification of the jobs safeguarded and of the information
required to calculate the net impact was requested. The net impact
was nevertheless estimated within the framework of the mid-term
evaluation on the basis of macroeconomic assessments.

(5) Counterfactual analysis: analysis of the situation which would have

(1) Article 25 of Council Regulation (EEC) No 4253/88, as amended by

(6)

(2)

Regulation (EEC) No 2082/93 (OJ L 193, 31.7.1993, p. 20).
In practice, monitoring the impact on employment is carried out on
the basis of the descriptive forms for each project with details of the
expected impact, to which project-progress data is added.

(3) During the on-the-spot check it was found that the positive assess-
ment by the mid-term evaluation concerning the ‘Structures d’accueil et
immobilier d’entreprises’ measure of the Objective 1 SPD Valenciennes-
Douai-Avesnes for the period 1994 to 1999 was due, inter alia, to the
fact that a large plant had been set up. However, this investment was
also co-financed by the Enterprise investment measure under the
same SPD and the jobs to be created were included in the productive
investment statistics.

arisen in the absence of public intervention.
In Germany, a method based on ‘Okun’ coefficients which establish a
relationship between GDP growth produced by the Structural Funds
(+ 3 900 million euro) and employment (increase in the number of
people in active employment by 57 000 and decrease in the number
of unemployed by 34 000), was used in the context of the evaluation
of the CSF for the new Länder for the programming period 1994 to
1999. This procedure is, however, controversial in respect of the rel-
evance of the forecasts, as limited and simplified hypotheses must be
taken as the basis. In addition, the use of ‘Okun’ coefficients does not
allow the long-term effects and the dynamic aspects of the CSF to be
forecast.

(7) The impact on employment and unemployment of the various mod-
els is described in Special Report No 15/98 on the assessment of
Structural Fund intervention for the 1989 to 1993 and 1994 to 1999
periods (OJ C 347, 16.11.1998, table 10, p. 29).

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Mid-term evaluation results — percentage deviations from baseline in 1999 (i.e. the situation without the CSFs)

Table 5

Germany
(Objective 1)

Greece

Spain

Ireland

Italy
(Objective 1)

Portugal
(Objective 1)

GDP

Employment

3,2

1,5

4,8

2,9

5,1

2,4

3,8

3,2

2

1

4,4

3,7

NB: The employment figure for Portugal is the reduction of the unemployment rate in percentage points.

Sources: IFO Institut (D), KEPE (EL), Quasar (E), ESRI (IRL), Ministero del Tesoro-Nucleo di Valutazione (I), CISEP (P) and the Communication
from the European Commission of 7 January 1999, COM(1998) 782 final, Developing a management culture through evaluation,
Mid-term review of structural interventions — Objectives 1 and 6 (1994 to 1999), p. 15.

Reprogramming

39. Some measures benefited from budget reallocations, thereby
gaining from the poor implementation rates of other measures,
but only in exceptional cases were the resulting negative or posi-
tive changes demonstrated by means of comparative analyses of
the benefits and costs which took into account, amongst other
things, the impact on employment of the revised financial mea-
sures. In addition, the increase or decrease of the budget for par-
ticular measures rarely went hand in hand with an adjustment of
the targets or the quantified objectives to be achieved. Neither the
various evaluation reports nor reprogramming dealt with syner-
gies between Community and national aid or between the vari-
ous Structural Funds.

40.
In the case of Merseyside (United Kingdom), much effort was
invested in measuring and evaluating the impact of ERDF imple-
mentation on employment (see paragraph 36), and this was used
as a basis for reprogramming (1).

Ex post evaluation

identified for the period 1989 to 1993. Some of the criticisms
also apply to the impact on employment. There is therefore also
a risk that such deficiencies will complicate the ex post evaluation
for the programming period 1994 to 1999.

42. Furthermore, the impact of an intervention on employment
can rarely be measured within the duration of a programme. The
timetable of the ex post evaluations therefore seems badly suited
to the spread over time of the impact of programme implementa-
tion.

Proposals for improving evaluation

43.
In view of the keen interest in the evaluation of the effects
on employment, the European Commission (DG Regio) commis-
sioned a study (‘Evaluating Structural Funds employment effects’),
in order to examine and compare the different steps taken con-
cerning evaluation in the Member States and to draw up propos-
als for improving and harmonising existing methods, giving par-
ticular consideration to the approach proposed by MEANS (see
paragraph 14). The final report on this study was submitted in
May 2000.

41.
In Special Report No 15/98 (2), significant shortcomings in
the ex post evaluations of the CSFs for Objectives 1 and 2 were

44. The report made the following recommendations, which are
corroborated by the Court’s findings:

(1) The Court found that in implementing the programme the Mersey-
side authorities had inadvertently used a document which did not
correspond to the SPD approved by the Commission and this docu-
ment also served as the basis for the mid-term evaluation. As a con-
sequence, the objectives for direct and indirect employment to be cre-
ated and for jobs to be safeguarded were considerably altered. In view
of the large differences between the targets set out in these two docu-
ments concerning the impact on employment, some of the criticisms,
observations and proposals for reprogramming put forward in the
mid-term evaluation were not justified.

(2) Special Report No 15/98 on the assessment of the impact of Struc-
tural Fund intervention for the 1989 to 1993 and 1994 to 1999 peri-
ods (OJ C 347, 16.11.1998, pp. 9 to 13).

— collecting adequate data is essential, as without them the pro-
posed methodologies are sometimes too theoretical and inap-
plicable,

— clearer instructions are required at the operational level (for

project leaders and intermediate services),

— priority should be given to quantifying the key factors of jobs
created and jobs safeguarded, with the exception of those areas
where temporary and part-time jobs make up a large propor-
tion of the jobs. In addition, greater weight should be given
to assessment of the quality of the jobs,

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Official Journal of the European Communities

C 334/17

— aggregation and analysis of data at sectoral and subregional
levels are essential, in order to demonstrate more clearly the
Structural Funds’ contribution to the development of the
regions and also to the reduction of interregional and intrar-
egional disparities,

— a common approach should be developed, so as to allow
evaluation of the impact on employment of both the ERDF
and the ESF and to take account of synergy, as neglecting the
latter will lead to incorrect or incomplete assessment of the
situation.

45. The proposed solutions, with which the Court agrees, aim to
improve current practice and involve the use of a form for record-
ing in a standard format essential information on the impact on
employment at project level and, in addition, the gathering of
data at measure, priority and programme level and the storage of
it in a computerised system.

Taking impact on employment into account for the
programming period 2000 to 2006

46. The rules for the new programming period (and in particu-
lar Articles 16 to 18 and 34 to 44 of Council Regulation (EC)
No 1260/1999) provide for the development and improvement of
monitoring, control and evaluation procedures in order to ensure
a more effective deployment of the Structural Funds. In this con-
nection the Commission has presented a working paper entitled
‘Indicators for monitoring and evaluation: an indicative method-
ology’. The aim of this guide is to define the terminology used and
to translate the various concepts into a format suited to the moni-
toring and evaluation of structural interventions, to suggest a ref-
erence framework consonant with the MEANS methodology and
to reconcile the diversity of the monitoring procedures and meth-
ods as regards indicators with the need for consistency at Com-
munity level, by proposing a set of indicators for the principal
areas of financial intervention.

47. Due to the strategic importance of employment, the Com-
mission has proposed that the key indicators ‘new jobs’ and ‘safe-
guarded jobs’ be used for practically all the ERDF areas of inter-
vention.

Aid for productive investment

Taking employment into account

Conditions governing the granting of aid

49. Even when aid for productive investment is linked to respect
for the criteria concerning job maintenance and creation, the
same aid generally also goes towards meeting the economic objec-
tives relating to enterprises’ productivity and output and can lead
— at least temporarily — to a reduction in the labour factor. In
this context, there is also the risk of job creation or job mainte-
nance not being an explicit objective of the financial assistance
allocated to the investment. It is therefore necessary for the eligi-
bility of projects and the amount or rate of aid to be made con-
ditional on explicitly specified effects on employment (see also
Article 1 of Council Regulation (EEC) No 4254/88, as subse-
quently amended).

50. The Court found that the rules for nine of the 13 aid schemes
on which on-the-spot checks were conducted in the Member
States provided for the inclusion of a condition regarding employ-
ment in the letters granting aid or in the agreements concluded.
In the case of four of the aid schemes examined, the legal bases
were vague regarding the obligation to take the employment
aspect into consideration. The importance attributed to employ-
ment within the framework of these aid measures for productive
investment is consequently not very clear or seems limited (1),
with the creation or maintenance of jobs sometimes acting more
as an indicator in the context of the decision to grant assistance
than as an eligibility criterion.

Failure to comply with conditions regarding employment

51.
In those cases where the decision to grant assistance takes
into account the expected effects on employment, the audit showed
that the data provided by investors were more realistic where
there were penalties for non-compliance. Likewise, investors tended
to be more guarded if a reduction in employment should prove
necessary.

52. The majority of aid schemes provide for exemptions from
repayment. However, the fact that the rules on exception are for-
mulated in a very general manner makes it difficult, on the one
hand, to apply these rules consistently, given the diversity of
potential problems, and, on the other hand, to assess the effi-
ciency and effectiveness of co-financed projects.

48. This proposal by the Commission takes into account the
salient points recommended in the report ‘Evaluating Structural
Funds employment effects’ referred to above, but does not con-
stitute a real obligation. It is envisaged that this information, which
in principle exists at project level, should subsequently be con-
solidated at measure level, and then at programme level. The
information obtained on the basis of this bottom-up approach
should ensure efficient monitoring, among other things, and
could be used to create databases that provide a more complete
picture of the effectiveness of co-financed interventions.

(1)

In Greece, for example, the rules on appraisal concerning aid for the
purchase of machines and equipment (Article 23b of Development
Act No 2234/94) do not provide for the possibility of awarding points
for employment as part of the decision on the projects to co-finance,
while the importance of employment is very limited compared to the
other four objectives in the context of the decision on the granting of
aid for complete investment projects (Article 23a of Development Act
No 2234/94). In Italy, at the time of the classification of requests for
aid to SMEs co-financed by the Objective 1 OP for Campania for 1994
to 1999, the impact on employment could only be awarded a maxi-
mum of 15 points on a scale of 100 points.

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Mechanisms designed to augment the net impact on employment

theques, which had to contend with significant displacement
effects (3).

53. There were considerable differences in the extent to which
deadweight and displacement effects were taken into account in
order to augment the net impact on employment.

Deadweight ef fects

54.
In-depth analyses of deadweight effects, for example on the
basis of indicators designed to assess the self-financing capacity of
investments, were only carried out and taken into consideration
in the Nord-Pas-de-Calais region (France). However, in the major-
ity of other Member States, investments initiated prior to the sub-
mission of the aid application were not considered eligible because
it was felt that the incentive effect of the aid on the project in
question had not been clearly established. This was the case in
Portugal with projects which had been launched over 12 months
before the aid application was filed or had already been com-
pleted at that time (1).

55. The problem of deadweight effects was identified and analy-
sed in a number of evaluation reports. However, the estimates of
these effects varied from negligible to major importance (in the
latter case two thirds of the impact was said to be attributable to
deadweight effects). In the vast majority of cases, no proposal was
made regarding the way in which this problem could be avoided
in the context of the aid application procedure. Moreover, only
exceptionally (notably in the Nord-Pas-de Calais region) was a
quantification of the adverse impact on the gross employment
effect presented.

Displacement ef fects

56. An investment should not be co-financed if it only displaces
existing jobs from competitors and/or destabilises local and
regional markets. On the contrary, it should have a positive impact
on the development of the eligible region, notably by contribut-
ing to net job creation (see also paragraphs 122 to 124 concern-
ing the ESF). In the context of the decision to grant aid, one of the
factors taken into account should therefore be the real capacity of
enterprises to expand their market share outside the eligible
region (2). However, several projects were identified in the fields
of craft industry, traditional local commerce, and the provision of
basic local services such as restaurants, snack bars and disco-

(1) During its checks, the Court identified two projects where, contrary
to the beneficiaries’ statements, one (a project in Germany) had been
started and the other (a project in Portugal) finished before submis-
sion of the request for aid. Moreover, in several cases it was not pos-
sible to draw a definite conclusion, on the basis of the files kept by
the authorities responsible, on compliance with these rules.

(2) For example, although the Objective 1 SPD for the Nord-Pas-de-Calais
region required that care be taken to make measures in favour of pro-
ductive investment more responsive to the real capacities of enter-
prises to expand their market share outside the Objective 1 area and
the Nord-Pas-de-Calais region, the mid-term evaluation showed that
exports outside the area only constituted a small proportion of turn-
over and had not significantly increased in relation to the investment
for which aid had been granted.

57. Nevertheless, in several Member States (Greece, Spain, Italy),
displacement effects were not analysed. In others, ‘negative lists’
of sectors excluded from any participation in assistance (Belgium
and the United Kingdom) or ‘positive lists’ (Portugal and Ger-
many) indicating strategic eligible sectors, were introduced with-
out the displacement effects of specific projects being taken into
account (4).

Saving enter pr ises wit h a view to safeguarding
jobs

58. Most of the rules set by the SPDs/OPs and aid schemes
audited by the Court either did not provide for enterprises in dif-
ficulty to be given assistance in order to safeguard jobs, or were
not clear on this point (5). In the case of only two Member States

(4)

(3) Based on a survey covering 200 enterprises, the mid-term evaluation
conducted for the Objective 1 SPD for Merseyside for 1994 to 1999
showed that the significant rate of displacement had resulted in a sub-
stantial reduction in the gross impact on employment.
In Germany, a ‘positive list’ sets out the activities supposed to fulfil the
condition that at least 50 % of the turnover from the sale of goods
and services produced at the enterprise’s premises should be obtained
outside the region. The concept of ‘outside the region’ is defined on
the basis of a radius. However, this radius definition does not exclude
the inclusion of the additional income generated by exports to other
eligible regions, which is liable to have displacement effects. It is for
this reason that the system for granting aid should always provide for
a detailed analysis of the markets and of the conditions of competi-
tion affecting the investment.

(5) The explanations concerning the measure under which the Mersey-
side Special Investment Fund (MSIF) was co-financed provide for an
examination of the maintenance of jobs during programme imple-
mentation. However, in the SPD, no quantified employment objec-
tives are set for the measure. On the other hand, targets were set for
the MSIF in August 1996, but these objectives were not adjusted on
account of the mid-term evaluation not taking into account new ele-
ments that had been introduced. Furthermore, the employment tar-
gets set for the measure in December 1998 following the mid-term
evaluation were by no means concerned with safeguarding jobs.
The granting of aid which awards priority to the safeguarding of jobs
is not compatible with the rules of the SPD for the Valenciennes-
Douai-Avesnes area (France). Even though the Monitoring Commit-
tee discussed the relevance of granting aid to enterprises at which jobs
were safeguarded, no procedure was launched to obtain a decision
amending the SPD. Nevertheless, several projects were approved,
within the context of the Fonds de développement de la petite et moyenne
industrie (FDPMI), or the Fonds spécial d’implantation (FSI), whose base
documents did not provide for the creation of additional jobs or
pointed to a loss of jobs.
As regards the FDPMI and the FSI, the SPD simply states as an objec-
tive the creation of 3 000 direct jobs. On the other hand, it does not
lay down any quantified objective for the safeguarding of jobs.
Although the mid-term evaluation showed the relative importance of
the defensive component, no proposal was made to incorporate into
the SPD a quantified objective for jobs safeguarded. On the contrary,
at the time the recommendations of the mid-term evaluation were
implemented, it was clearly stated that the expected result was an
increase in the number of jobs for the same amounts of aid.

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Official Journal of the European Communities

C 334/19

(Germany and Greece), was it clearly stated that aid could be
granted in this field. However, the Court’s audits showed that the
‘defensive’ facet of interventions (which aims to save enterprises
in difficulty and safeguard the related jobs) was often very impor-
tant in the other Member States (1).

Monitoring

Weaknesses in the monitoring arrangements

59. The employment information generated by the implementa-
tion and monitoring of programmes constitutes an important
resource, but was often poorly recorded (incorrect or incomplete
records and no definition of the concepts used), poorly exploited
and not harmonised between regions. Therefore, the data relat-
ing to effects on employment often left something to be desired,
since monitoring arrangements are not yet sufficiently developed
to produce the necessary information.

60.
In some cases, the databases established with a view to
financial monitoring did not provide for or permit the recording
of information on the job situation. Moreover, the databases or
systems developed within the framework of national aid schemes
did not always provide for identification of the effects on employ-
ment of investments co-financed by the ERDF (2).

61. Furthermore, the existing databases sometimes included all
the jobs created by a specific project, despite the fact that some-
times only a limited portion of the investments or of the sum
total of aid granted was co-financed with ERDF aid (3).

(2)

(1) For example, the MSIF was described in the Objective 1 SPD for the
region concerned as an instrument designed to support ‘winners’ in
order to enhance employment growth. In reality, due to the difficult
economic situation in this region, the MSIF also has an important
task to perform in supporting enterprises in difficulty and safeguard-
ing jobs. Most of the loans checked concerned ‘safeguard financing’.
In Ireland, the gross and net jobs created are calculated on the basis
of the annual employment survey, which covers all the enterprises
that have received public aid from the various national agencies.
However, the available data make no distinction between beneficiaries
of ERDF aid and beneficiaries of national aid. The upshot of this is
that the statistics concerning the impact of the ERDF on employment
include figures relating to investments that have received only national
aid.
In the three most significant cases detected in the Valenciennes-Douai-
Avesnes area (France), it seems unjustifiable to attribute to the ERDF
intervention all the 2 420 jobs created, since the contribution under
the corresponding SPD for 1994 to 1999, comprising ERDF aid and
national co-financing, only represented a very small proportion of the
eligible investment. On the other hand, far more aid was financed
entirely through national sources outside the SPD. Moreover, in the
case of one of the three projects (forecasting the creation of 2 000
jobs), a proportion of the investments, representing 15 % of the over-
all amount, will be completed outside the eligible period.
In Spain, it was found that the information given in the database con-
cerning a co-financed enterprise was based on the total number of
jobs at this enterprise, when the ERDF had only contributed to the
construction and enlargement of one production plant in an area eli-
gible for Objective 1 funding.

(3)

Differences between forecasts and outturn

62. Examination of the monitoring tools showed that the num-
ber of jobs actually created or safeguarded by the co-financed
projects was only rarely subject to systematic global monitoring.
The databases thus indicated, fairly systematically, the total num-
ber of jobs estimated in the aid applications, decisions to grant aid
or agreements, although the calculation methods used were rarely
described clearly. On the other hand, no information was avail-
able on the number of jobs actually taken up, which could differ
from the number forecast. Consequently, aggregation was based
on the forecasts of the contracting authorities and not on actual
results.

63. At the time of its audits, the Court found that the jobs actu-
ally created or safeguarded only tallied with the forecasts for 13
of the 92 projects. For 43 projects there were negative differences,
and for 27 projects positive differences between the outturn and
the documents serving as the basis for the aid granted (4). There-
fore, around 14 % of the 15 524,5 jobs forecast at the time the aid
was granted did not materialise.

64. This finding shows the necessity of differentiating clearly, in
the statistics, between forecasts, jobs actually created and jobs
safeguarded (5). Furthermore, setting up a more regular system for
gathering information from aid beneficiaries would allow manag-
ers to be informed periodically about the state of progress of the
projects and the jobs actually created and/or safeguarded.

65. Reference tables developed in France and Italy estimate the
number of jobs created or safeguarded, among other things on
the basis of the nature and amount of the investments made, but
they are no substitute for a project-by-project approach, because
the wide variations among the co-financed operations limit the
value of the figures obtained.

Problems concerning safeguarded jobs

66. Statistics on jobs do not differentiate between the jobs cre-
ated and the jobs safeguarded. Therefore, in the majority of these
cases, only the initial labour force, the end labour force and the
jobs created were indicated. On the other hand, jobs that were at
risk of being lost but which were safeguarded due to the granting
of aid were not recorded and any jobs already existing at the time
of the aid application were often considered to be safeguarded

(4) No conclusion could be drawn in nine cases because the supporting
documents were not available (four cases) or because the projects
were not yet far enough advanced (five cases).

(5) The joint employment report (COM(2000) 551 final of 6 Septem-
ber 2000, p. 109) indicates that the Objective 1(a) funding provided
(notably by the ERDF) in Germany will have contributed to safeguard-
ing and creating 480 000 jobs. However, this is only a provisional
estimate.

C 334/20

EN

Official Journal of the European Communities

28.11.2001

jobs (1). However, during the on-the-spot checks, several cases
were detected where there was no risk of jobs being lost unless
aid was granted. Moreover, it also became apparent on this occa-
sion that the statistics contained data concerning safeguarded jobs
at companies that were in a state of bankruptcy or had suspended
payment.

Community programming of large-scale measures in Portugal (3)
and in Ireland (4), without the impact of these measures on employ-
ment really being taken into account.

Consequences of programme flexibility

Aid per job

67. The evaluation of the impact of ERDF aid on employment is
influenced by the fact that the co-financing of a national aid
scheme allows the national authorities either to apply for
co-financing for an eligible project, or to finance the project
entirely from national resources. Furthermore, the Structural
Funds rules permit co-financed projects to be replaced by other
eligible projects at the implementation stage. It is clear that such
choices or substitutions may have a beneficial or adverse influ-
ence on the evaluation of the effectiveness of a co-financed pro-
gramme if the projects in question are typified by differences in
terms of the aid made available and/or the recorded effects on
employment, and may result in a distorted assessment of the
effectiveness of an aid scheme.

68. Moreover, reprogramming decisions are often taken with a
view to ensuring the take-up of the Community funds made avail-
able and take far less account of the impact of measures, includ-
ing the impact on employment (see paragraph 39). Cases of
reprogramming decisions such as these were identified at project
level (2) in several Member States, as was the withdrawal from the

(1)

(2)

In Spain, for example, it was found that the authorities responsible
operate on the principle that if an enterprise implements two projects
co-financed by the ERDF, each project enables all the jobs at that
enterprise to be maintained. In the same way, when an enterprise
receives two consecutive grants of aid, the jobs created by the first
project are presented as maintained jobs in the second project. Con-
sequently, the jobs in question are counted twice over, or in certain
cases even more. In one instance, the number of jobs deemed to have
been created and maintained was even in excess of the total number
of staff at the enterprise.
In Spain, a project to open a new open-cast mine and expand copper,
lead and zinc mining activities was approved in October 1993, with
a view to ensuring a continuation of production up until 2007 and
creating and maintaining a specified number of jobs in an area of
high unemployment. The viability study showed that mining could
only be carried out at a high cost and that it would be very sensitive
to international mineral prices. Subsequently, in the requests and
decisions to amend the project, the conditions concerning the cre-
ation and safeguarding of jobs were watered down and manipulated.
The same was true in the case of another mining company which also
received aid from the Spanish authorities for the creation and main-
tenance of a specified number of jobs, even though the Commission
(Industry DG) had strongly recommended that this aid should not be
granted, due to the critical financial situation.
In Germany, the Court found various eligibility problems concerning
a large project that provided for the purchase of a company threat-
ened with closure, with the intention of safeguarding and creating a
number of jobs. Based on a decision taken by the authority respon-
sible, this project was withdrawn from the programme and replaced
by 51 other projects for which the overall implemented expenditure
was comparable, with little consideration for the effects of the respec-
tive projects, including those in the field of employment.

69. While several Member States have introduced rules on maxi-
mum aid per job, others have not set any ceilings limiting the
amounts that can be granted. This is an advantage in the case of
projects with a large capital component and a relatively limited
impact on employment. However, the ceilings set per job created
range from 4 882 euro, the amount granted as a loan by the MSIF
(United Kingdom), to 511 292 euro, which was the amount
granted in the form of a subsidy in connection with the Common
Task in Germany. Only one Member State (Germany) provided for
maximum aid of 255 646 euro per job safeguarded.

70. The aid approved per job created/safeguarded also seemed to
vary considerably at the level of the projects audited. Depending
on the project, assistance per job ranged from 1 000 euro, granted
in the form of a loan, to 600 000 euro, granted in the form of aid,

(3)

In Portugal, management of the microenterprise assistance scheme
(RIME), which provides start-up assistance for economic activities
liable to create jobs by encouraging small-scale investments, was the
subject of an infringement procedure initiated by the Commission
because the national authorities failed to comply with Article 21(3)
of Regulation (EEC) No 2082/93, which stipulates that the beneficia-
ries of projects should receive all the aid without any deduction. In
the wake of this procedure, Portugal submitted, in December 1999, a
proposal for reprogramming under which the scheme in question
was to be excluded from co-financing (at the end of 1999, the ERDF
contribution amounted to around 302 million euro), despite the fact
that this scheme was considered to be the main instrument for the
creation of jobs supported by the Structural Funds. Furthermore, the
Court’s audit showed a clear discrepancy between the figures pre-
sented by the Portuguese authorities in June 1999 in a RIME brochure
(creation of 12 924 jobs since 1994) and the figures used by the Com-
mission in July 1999 (creation of 35 000 jobs since 1996). However,
these statistics relate to all the projects covered by the aid scheme and
not solely to co-financed actions, the data for which do not exist.
(4) As a result of Ireland’s great success in attracting foreign enterprises
and of the political discussions concerning the issue of relocation, the
ERDF stopped co-financing the ‘Inward investment’ aid scheme as of
1 January 1998. However, the 1998 annual report on the Objective 1
OP ‘Industrial development 1994 to 1999’ still describes the Inward
investment subprogramme without mentioning that the ERDF no
longer contributes to the co-financing. Furthermore, the annual report
states that 16 027 jobs were created with the aid of the OP (a figure
which excludes the data from the government department respon-
sible for the Inward investment aid scheme), whereas the Annex gives
a figure of 32 023 jobs (which includes these data).

28.11.2001

EN

Official Journal of the European Communities

C 334/21

in a manner not apparently connected with the sector concerned
or the objectives of the projects (1).

strated that there was a need for ex ante and ex post analyses of
sustainability (3).

71. Moreover, there is often a lack of transparency or a great
variation in the definitions used to calculate the cost of a job or
the aid paid per job (total cost of the investment, total eligible
cost, sum total of the public aid disbursed, sum total of the Com-
munity aid disbursed, etc.).

Sustainability of jobs

72.
In order to achieve durable positive impact on the job mar-
ket, it is essential for the jobs created or safeguarded to be of
medium or long-term duration (see also paragraph 124 concern-
ing the ESF). The rules relating to the co-financed aid schemes are
meant to help ensure that the jobs do not evaporate after the aid
awarded has been paid in full. Examination of these rules showed
that there were significant differences between the monitoring
periods stipulated (2), since nothing is laid down in this regard in
the Community regulations for the programming periods 1989
to 1993 and 1994 to 1999.

73.
In some cases no time limit was set for monitoring the exist-
ence, beyond the end of the project implementation period, of the
jobs created or safeguarded. Moreover, the Court’s audit demon-

(2)

(1) The highest amount was granted in connection with FSI for a railway
test centre in the Nord-Pas-de-Calais region which was to create only
seven new jobs in return for substantial amounts of investment (eli-
gible expenditure of 18,4 million euro). According to the rules on the
development premium (prime d’aménagement du territoire), which also
apply in the case of FSI, the considerable indirect effects that the
project had on railway construction in the region could not be taken
into account in the context of the aid approval. In consequence the
specified ceiling (10 517 euro per job created) was exceeded by a sub-
stantial amount. This is also the case for 17 other FSI projects
co-financed by the ERDF.
In Spain, at the time the ‘Regional incentives’ aid scheme was launched,
the beneficiary only had to guarantee the creation, at the project
implementation stage, of the number of jobs stipulated in the deci-
sion to grant aid. No period was set with regard to sustainability.
However, since this system was abused (the enterprises concerned
took on staff for a minimum period simply to qualify for aid), a clause
was introduced to the effect that the posts created had to be main-
tained up to the end of the investment period. In 1999, the obliga-
tion to maintain the jobs created for longer than two years after the
end of the project was added. The question nevertheless arises of
whether this additional period of two years provides a guarantee of
the durability of the jobs. During the audit in Spain, for example, it
was found that a company had created (at the end of the project) the
jobs stipulated in the conditions governing assistance. Over two years
later, the number of permanent jobs had been sharply cut, while the
remainder comprised 10 staff on temporary contracts, which cast
doubt on the sustainability of the jobs created.

In the case of the other co-financed aid schemes, the maxi-
74.
mum monitoring period ranged from two years (FSI in France) to
eight years (Common Task in Germany) from completion of the
investment (4).

75.
In view of this kind of diversity, Article 30(4) of the new gen-
eral Regulation on the Structural Funds (Regulation (EC) No 1260/
1999) requires the Member States to ensure that an operation
retains the contribution from the Funds only if that operation
does not, within five years of the date of the decision of the com-
petent national authorities, undergo a substantial modification
that affects its implementation conditions or gives an enterprise
an undue advantage, as a result either of a cessation or change of
location in a productive activity. One of the reasons for introduc-
ing this rule was to prevent enterprises from being able to take
advantage of an aid scheme without having any intention of
establishing themselves long term in the eligible area (although
the rule does not apply to cases of relocation from a site not in
receipt of aid to another site in an eligible zone for the sole pur-
pose of receiving aid, nor to cases of job cuts following a reduc-
tion in output or a rise in productivity).

76. A monitoring period that begins with the date of the deci-
sion is likely to be ineffective, given that the period for carrying
out the investment, and creating jobs in consequence, may be
quite long. Thus, some aid schemes stipulated that the objectives
concerning employment only had to be achieved some years after
the end of the investment programme (5). Such provisions would,
therefore, need to be amended.

(3) Appropriate ex ante evaluations are needed to prevent job losses of
the type experienced in the case of MSIF following completion of the
investments or after the closure of enterprises, and to examine the
viability of the projects. Furthermore, the Italian authorities stated
that great care should be taken when using the available statistics on
the impacts on employment of productive investments co-financed
by the ERDF within the context of the Objective 1 CSF for the pro-
gramming period 1989 to 1993 (creation of 11 200 jobs), since they
could be subject to a significant downwards revision in the event of
certain projects failing.
In Greece, where the monitoring period is five years, it was difficult
to analyse the sustainability of the jobs, due to the lack of mecha-
nisms for reporting and checking on the situation after the end of the
investment period.

(4)

(5) For example, in Belgium, the schemes ‘Aides à l’investissement en faveur
des créations des entreprises’ (Aid for investment in the creation of enter-
prises) and ‘Aides à l’investissement en faveur des mesures d’extension
d’entreprises et de créations de petites entreprises’ (Aid for investment in
measures for enlarging enterprises and creating small businesses)
require that the objectives be achieved two years at the latest after the
end of the co-financed investment programme. In Greece, Act
No 2601/98 on aid for private investments in the economic and
regional development of the country requires that at least 50 % of the
jobs be created by the end of the investment programme, 75 % one
year after it ends and 100 % two years after it ends. In the same way,
an evaluation report on aid schemes to promote productive invest-
ment in Ireland established that five years had been needed to convert
the jobs approved in 1989 into real jobs.

C 334/22

EN

Official Journal of the European Communities

28.11.2001

77. However, the guidelines on national regional aid (1), adopted
by the Commission in March 1998, stipulate that in order to sup-
port regional development and reduce the potential negative
effects of any relocations, the granting of such aid should be con-
ditional on the maintenance of the investment and the jobs cre-
ated for a minimum period of five years in the less-favoured
region. It should be noted that, in connection with aid for produc-
tive investment, the guidelines only cover the jobs created and dis-
regard the jobs safeguarded. Consequently, the two monitoring
periods laid down in two separate sets of rules are inconsistent,
in that they do not have the same starting point.

THE EUROPEAN SOCIAL FUND (ESF) INTERVENTIONS TO
COMBAT LONG-TERM UNEMPLOYMENT

78. This part of the report deals with specific measures financed
by the European Social Fund and focused on the problem of long-
term unemployment (2).

Long-term unemployment

79. The long-term unemployed target group had already been
identified by the Commission and the Member States as a politi-
cally sensitive and particularly difficult population to help back
into employment. Recognising this priority, the Commission
drafted, with effect from the first reform of the Structural Funds,
specific guidelines concerning the ESF interventions in this field (3).

80. Although the long-term unemployment situation has gener-
ally improved in recent years, long-term unemployment has per-
sisted at high levels despite the sums spent on reducing it by the
Member States and the European Union. The long-term unem-
ployment rate in the total working population (see Table 6)
remained stable or increased in most Member States up to 1998.
Only in 1999 was a certain fall observed. Spain has the highest
rate for long-term unemployment as a percentage of the total
working population (7,3 %), followed by Italy (6,9 %) and Belgium
(5 %). In certain Member States long-term unemployment rates
are higher in the group of persons less than 25 years old (e.g.
18,8 % in Italy) (see Table 6).

81. Long-term unemployment as a percentage of total unem-
ployment was, as can be seen in Table 7, in 1999 highest in Italy
(61,4 %) and Belgium (60,5 %) and was above 50 % in three other
countries (Greece, Germany and Ireland). In seven Member States

(1) OJ C 74, 10.3.1998, paragraph 4.14.
(2) The Court uses in this part (the ESF and long-term unemployment)
the statistics issued by the Community’s statistical unit, Eurostat.
Long-term unemployed: persons out of work for more than a year.
Very long-term unemployed: persons out of work for more than two
years (see Table 8).

(3) Guidelines concerning European Social Fund intervention in respect
of action against long-term unemployment and occupational integra-
tion of young people (OJ C 45, 24.2.1989, p. 6).

(Belgium, Germany, Greece, France, Luxembourg, Austria and
Sweden) the trends show an increase in the ratio of long-term
unemployment to total unemployment. Table 8 shows the num-
ber of long-term unemployed in the EU Member States.

82. The ‘very long-term unemployed’ (unemployed for more
than two years) part of the long-term unemployed population
presents a higher risk of social exclusion and withdrawal from the
labour market. The largest fractions were in Italy and Belgium,
where three quarters of the long-term unemployed have been
unemployed for more than two years. In Germany, Spain, Ireland
and the United Kingdom the relevant percentage is over 60 % (see
Table 8). According to the JER for 1999 (4) the number of persons
unemployed for more than two years was higher in 1998 than in
1994 (5,2 million against 4,8 million).

83. Combating long-term unemployment was one of the major
objectives of the Community support framework 2 (5) pro-
grammes. The measures targeting long-term unemployment
include a wide range of different actions (training, employment
aids, guidance, etc). Objective 3 is the main instrument for com-
bating long-term unemployment. In Objectives 1, 2 and 6 there
are also measures to combat long-term unemployment, even
though the links between measures against social exclusion, unem-
ployment in general and long-term unemployment are not neces-
sarily clear. Also, the Integra (6) strand within the Community
employment initiative provides assistance for the jobless, includ-
ing the long-term unemployed.

84. Operations funded through Objective 3 to help people back
to work fall into two broad categories:

— vocational training and guidance measures (supply side),

— the development of support,

training and employment

schemes and employment subsidies (demand side).

85. Council Regulation (EEC) No 4255/88 as amended by Regu-
lation (EEC) No 2084/93, Article 1(1)(a), on the 1994 to 1999
ESF (7) provides that Objective 3 ESF interventions should con-
centrate on assisting the unemployed and persons exposed to
long-term unemployment, bringing them back into the labour
market through training, counselling and guidance, or employ-
ment subsidies. Similar importance is given to the new ESF Regu-
lation (8) on the issue of long-term unemployment (Articles 2 and
3).

(4) COM(1999) 442 of 8 September 1999.
(5) Programming period 1994 to 1999.
(6) Strand within the Community Employment initiative with the objec-
tive of improving access to the labour market and employability of
vulnerable groups (communication to the Member States 96/C 200/
06).

(7) Council Regulation (EEC) No 4255/88 as amended by Regulation

(EEC) No 2084/93 (OJ L 193, 31.7.1993, p. 40).

(8) Regulation (EC) No 1784/1999 of the European Parliament and the
Council of 12 July 1999 on the European Social Fund (OJ L 213,
13.8.1999, p. 5).

.

2
8
1
1
2
0
0
1

.

Yearly data of part of the LTU (one year or more) in working population by age

Table 6

E
N

LTU rate

1999

1998

1997

1996

1995

1994

Total

Less than
25 years

25 years
and over

Total

Less than
25 years

25 years
and over

Total

Less than
25 years

25 years
and over

Total

Less than
25 years

25 years
and over

Total

Less than
25 years

25 years
and over

Total

Less than
25 years

25 years
and over

European Union

Eurozone

Belgium

Denmark

Germany

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

4,2

4,8

5,0

1,1

4,4

7,3

4,4

2,4

6,9

0,8

1,2

1,2

1,7

2,9

2,1

1,8

5,6

6,5

7,4

0,6

2,3

9,9

4,8

2,9

18,8

1,3

0,9

0,8

1,7

1,6

1,3

1,8

3,9

4,5

4,8

1,2

4,7

6,8

4,4

2,2

5,3

0,7

1,3

1,2

1,7

3,1

2,2

1,8

Source: Eurostat New Cronos 5/2000.

4,7

5,4

5,7

1,3

4,8

9,4

4,8

3,2

7,1

0,9

1,7

1,3

2,2

3,9

2,9

2,1

6,7

7,9

9,4

0,6

2,7

13,5

5,8

4,0

19,3

1,9

1,4

0,9

2,8

2,5

2,2

2,3

4,4

5,0

5,3

1,5

5,1

8,6

4,7

3,0

5,5

0,8

1,7

1,4

2,0

4,0

3,0

2,0

5,2

5,9

5,7

1,5

5,0

8,1

9,6

9,6

0,7

3,1

10,9

16,3

5,0

5,3

7,9

0,9

2,5

1,3

3,7

4,0

3,4

2,6

6,8

6,5

21,9

2,0

2,8

1,0

5,3

1,7

2,8

3,2

4,8

5,4

5,2

1,7

5,2

9,8

4,7

5,0

5,9

0,8

2,3

1,3

3,3

4,5

3,4

2,5

5,3

5,8

6,0

1,8

4,3

8,6

10,0

9,1

1,1

2,8

4,7

5,2

5,5

2,0

4,5

5,2

5,7

6,1

2,0

4,0

8,5

9,9

10,3

1,0

2,4

4,7

5,1

5,6

2,2

4,1

5,3

5,7

5,9

2,5

3,8

8,7

9,8

9,8

1,5

2,3

4,7

5,0

5,3

2,8

4,0

11,7

18,3

10,4

12,4

19,3

10,9

12,7

20,5

11,0

4,8

6,9

7,7

0,8

3,1

1,2

4,0

5,1

2,9

3,3

6,4

8,5

21,7

2,6

4,0

1,1

6,9

2,7

2,9

3,9

4,5

6,5

5,5

0,6

2,9

1,2

3,4

5,7

2,9

3,1

4,6

7,5

7,4

0,7

3,3

1,0

3,7

5,6

2,0

3,7

6,2

9,4

21,2

1,5

4,0

0,9

6,8

4,7

2,5

4,3

4,4

7,0

5,2

0,6

3,1

1,1

3,1

6,0

1,9

3,6

4,7

9,1

6,9

0,9

3,5

1,1

3,1

6,2

1,9

4,3

6,6

11,9

19,8

1,3

4,4

0,8

5,3

5,8

2,8

5,4

4,5

8,4

4,8

0,9

3,2

1,1

2,7

6,4

1,7

4,0

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

C
3
3
4
/
2
3

C 334/24

EN

Official Journal of the European Communities

28.11.2001

Long-term unemployment as share of total unemployment ratio

Table 7

European Union

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

Source: Eurostat New Cronos 5/2000.

1994

—

58,3

32,1

44,3

50,5

52,7

37,5

64,3

61,5

29,6

49,4

—

43,4

—

—

45,4

1995

—

62,4

28,1

48,7

51,2

54,6

40,2

61,4

63,6

23,2

46,8

27,5

50,9

37,0

—

43,6

1996

48,2

61,3

26,5

47,8

56,7

52,9

38,2

59,5

65,6

27,6

50,0

25,6

53,1

35,9

19,1

39,8

1997

49,0

60,5

27,2

50,1

55,7

51,8

39,6

57,0

66,3

34,6

49,1

28,7

55,6

29,8

34,2

38,6

1998

48,0

61,7

27,3

52,6

54,9

50,0

41,7

—

59,6

31,3

47,9

29,5

44,7

28,1

37,8

32,8

1999

46,0

60,5

20,5

51,7

54,9

46,3

38,7

55,9

61,4

32,3

43,5

31,7

41,2

22,7

29,5

29,8

28.11.2001

EN

Official Journal of the European Communities

C 334/25

Table 8

Unemployment by duration

European Union

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

Total
<12 months
12 — 23 months
> 24 months

1999

—
—
—
—

378
149
63
166

146
116
16
13

3 445
1 662
650
1 133

—
—
—
—

2 566
1 378
398
790

3 127
1 919
520
689

—
—
—
—

2 693
1 040
490
1 163

4
3
1
1

248
140
46
61

181
124
31
27

231
136
48
47

303
234
28
40

329
232
96
—

1 779
1 248
211
320

1998

16 954
8 820
3 115
5 018

397
152
72
173

141
103
21
17

3 779
1 793
785
1 202

475
214
92
169

3 055
1 528
512
1 014

3 099
1 806
592
701

—
—
—
—

2 774
1 121
521
1 132

5
3
1
1

301
157
54
91

212
150
29
34

231
128
42
62

326
234
42
49

383
239
144
—

1 775
1 193
209
373

1997

17 934
9 141
3 410
5 384

378
149
74
155

152
110
24
17

3 791
1 890
742
1 159

406
180
92
134

3 355
1 618
604
1 133

3 176
1 919
606
651

152
66
29
58

2 796
941
581
1 274

4
3
1
—

383
195
75
113

193
138
27
28

305
136
80
90

366
257
43
66

448
295
150
3

2 028
1 244
282
502

1996

18 051
9 348
3 294
5 409

397
154
84
159

192
141
29
22

3 403
1 775
641
987

411
178
97
136

3 526
1 661
646
1 219

3 124
1 929
534
661

171
69
31
70

2 750
945
561
1 244

6
4
1
1

438
219
81
138

202
150
25
27

328
154
93
81

348
223
54
71

419
339
80
—

2 336
1 406
337
593

1995

17 573
8 933
3 442
5 198

391
147
87
157

195
140
32
23

3 155
1 620
663
873

378
184
88
106

3 529
1 602
662
1 265

2 958
1 769
593
595

168
65
30
73

2 637
961
561
1 115

5
4
1
—

487
259
81
147

164
119
20
25

321
158
96
67

360
227
63
71

360
288
72
—

2 464
1 390
393
680

(in 1000)

1994

—
—
—
—

400
167
88
145

222
150
44
27

3 398
1 894
735
770

368
182
82
104

3 754
1 776
837
1 142

3 131
1 957
657
517

200
71
41
88

2 533
976
544
1 014

6
4
1
—

455
230
73
151

—
—
—
—

308
175
84
50

—
—
—
—

—
—
—
—

2 738
1 494
500
744

Source: Eurostat New Cronos 5/2000.

C 334/26

EN

Official Journal of the European Communities

28.11.2001

Financial and budgetary aspects

86. ESF mainstream assistance to the Member States to combat
long-term unemployment is granted to programmes and projects
included in the operational programmes (OPs) under various
Objectives (1 to 6), Community initiatives and pilot projects. ESF
interventions operate mainly in the fields of vocational training,
employment aids, educational advice and guidance activities and
Article 6 projects (innovative actions).

87. The amount estimated for ESF expenditure from 1994 to
1999 was approximately 48 000 million euro (1). Objective 3,
which is specially designed for the fight against long-term unem-
ployment, absorbs 13 000 million euro, more than 28 % of the
ESF resources. Measures to combat long-term unemployment
within Objective 3 amount to 5 600 million euro, more than
40 % of the Objective 3 resources. Employment aid within Objec-
tive 3 represents 2 100 million euro of the resources. Specific data
on the amounts for employment aid and fighting long-term
unemployment within Objectives 1, 2 and 6 are not readily avail-
able. However, according to data from the Commission for seven
and eight Member States respectively, the measures to combat
long-term unemployment within Objective 1 absorb 2 800 mil-
lion euro and employment aid 3 600 million euro and represent
19 % and 18,5 % respectively based on the available data (see

Table 9). It is difficult for the Commission to provide an overall
picture of actual actions and expenditure on long-term unem-
ployment at a European Union level since there is no manage-
ment by policy objective or target group.

88. The ‘supply side’, that is, initiatives to raise prospects for the
long-term unemployed by improving their skills and motivation,
represents about 74 % of the ESF spending (2). The ‘demand side’
initiatives, which represent about 21 %, are mainly concerned
with increasing demand for labour, some of these directly through
subsidies or other incentives to encourage employers.

89. The employment aid is aimed towards heterogeneous target
groups, since most Member States have no specific measures tar-
geting long-term unemployment only. Rather, this target group
consists of all unemployed people, irrespective of the duration of
their unemployment, as well as those who are threatened with
long-term unemployment.

90. Pilot and demonstration projects designed to combat long-
term unemployment have been financed through Article 6 of
amended Regulation (EEC) No 4255/88. Total appropriations allo-
cated to the Article 6 projects for the period 1994 to 1999 amount
to approximately 150 million euro.

(1) Commission: The 11th annual report of the Structural Funds (1999),

(2) Fighting against long–term unemployment; European Commission

COM(2000) 698.

DG V; ISBN 92-828-2958-8, pp. 10 and 14.

ESF Objective 3
expenditure
1994 to 1999
(Structural
funds 1996
report)

ESF measures to
LTU within
Objective 3 ESF
(Commission
5/2000)

401 900

249 458

268 100

216 363

1 682 100

828 412

1 480 300

504 398

2 562 400

566 103

Table 9

ESF expenditure during 1994-1999 period

LTU share of
ESF Objective 3
expenditure

Employment aids
within Objective 3

Employment
aids share of
ESF Objective 3
expenditure

ESF Objective 1
expenditure
1994 to 1999
(Structural
funds 1996
report)

ESF measures to
LTU within Objec-
tive 1 ESF (Commis-
sion 5/2000)

LTU share of
ESF Objective 1
expenditure

Employment aids
within Objective 1

(in million euro)

Employment aids
share of ESF
Objective 1
expenditure

62,1 %

80,7 %

49,2 %

34,1 %

22,1 %

2 283

11 133

333 394

1 657 676

0,6 %

0,0 %

0,7 %

22,5 %

64,7 %

170 300

58 601

34,4 %

Non-existent

4 092 000

Not available

2 638 100

Not available

900 260

395 718

6 118 700

1 821 762

29,8 %

1 739 515

22,0 %

15,0 %

28,4 %

525 500

1 953 000

258 080

13,2 %

11,5 %

Non-existent

Non-existent

93 383

3,4 %

1 300 100

364 500

28,0 %

Non-existent

2 739 000

314 503

20 700

7 830

935 300

536 506

37,8 %

57,4 %

981

4,7 %

0,0 %

334 000

121 011

36,2 %

75 794

22,7 %

40 000

33 120

n.a.

11 584

35,0 %

1 870

15 108

3 160 900

215 420

6,8 %

428 062

4,7 %

45,6 %

13,5 %

258 400

100 530

347 700

194 708

38,9 %

56,0 %

58,9 %

43,5 %

25 044

27 007

9,7 %

0,0 %

0,8 %

747 800

155 744

20,8 %

50 634

6,8 %

2 133 311

16,7 %

22 218 420

2 835 694

19,0 % (1)

3 624 549

18,5 % (1)

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

Sweden

United Kingdom

3 177 500

1 870 422

Total

12 768 500

5 560 241

(1) The calculation of the percentage is based on the available data.

Source: — Commission June 2000.

— The Structural Funds in 1996 - Eighth annual report.

.

2
8
1
1
2
0
0
1

.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

C
3
3
4
/
2
7

C 334/28

EN

Official Journal of the European Communities

28.11.2001

The management of policy and actions by the Commission

The European Employment Strategy and the ESF
interventions

91.
In the context of the European Employment Strategy long-
term unemployment issues are a key component of the employ-
ment guidelines. The Commission services, mainly the Employ-
ment DG, are in charge of analysing and assessing the national
action plans sent from the different Member States. The outcome
of these assessments in the last three years (joint employment
report 1998, 1999 and 2000) shows that although long-term
unemployment decreased during the period 1996 to 2000 (from
6,3 % to 4,5 %), the share of long-term unemployment remains
significant (± 45,2 % of total unemployed people in 2000).

92. The current four-pillar structure of the guidelines (see also
paragraph 7), based on employability, entrepreneurship, adapt-
ability and equal opportunities, provides the basis for an inte-
grated multiannual approach to employment. In order to reduce
long-term unemployment, Member States are required, through
the employability and entrepreneurship pillars in particular, to
develop preventive and employability-oriented strategies (1).

93. The ESF Regulation and the present structure of the employ-
ment guidelines do not provide a specific role for the employment
aid mechanism, although this type of measure is co-financed by
the ESF and is a key instrument in the fight against long-term
unemployment.

94. The employability pillar guidelines (in both 1998 and 1999)
state that preventive measures should be combined with mea-
sures to promote the re-employment of the unemployed before
they become long-term unemployed (preventive approach). These
preventive measures are, however, not sufficiently combined with
others, such as employment aids to promote the re-employment
of the long-term unemployed, thus leaving aside the crucial issue
of absorbing the existing stocks of long-term unemployed (cura-
tive approach).

95. The subpopulation of very long-term unemployed is not
taken into account as such in the present four-pillar structure of
the employment guidelines. This is the most difficult target group
to reabsorb into the workforce, since it requires optimal coordina-
tion of training and employment aid measures together with
important incentives to the private sector in order to avoid social
exclusion and withdrawal from the labour market. The absence of
specific policy and actions targeted on this group has not con-
tributed to the improvement of their situation in the labour mar-
ket.

(1) These strategies are principally based on:

(a) an early identification of the individual needs of the unemployed;
(b) facilitating the start and running of businesses (fiscal and manage-

ment incentives);

(c) incentives concerning recruitment;
(d) life-long learning; and
(e) training in new technologies.

96. The timetable for the preparation of the employment guide-
lines for coordinating the preparation of the national action plans
with the Member States is not consistent with the ESF annual
financial planning. Member States are not informed of the new
guidelines and Council recommendations for the coming year
until November of the current year. That leaves them with very
little time (November to January) to adapt ESF interventions, if
necessary, to these recommendations.

97. The implementation of the principles of the national action
plan in the existing programmes varies between the Member
States. An analysis of the minutes of the Monitoring Committees
for programmes in six different Member States (Belgium, Ger-
many, Spain, France, Italy and United Kingdom) showed that spe-
cific measures from the national action plan had only been intro-
duced in the current programmes for France and Spain. In Italy it
was decided to implement the national action plan strategy in the
following programming period. In the United Kingdom, the Moni-
toring Committee for Objective 3 opened a discussion involving
all the members about the way to introduce this strategy into the
programmes. In Belgium the reorientation of the programmes
was not discussed at all in the Monitoring Committees.

98. Few Member States provide detailed information concern-
ing the way in which the ESF supports the employment guidelines
or the national action plans (which is also confirmed by the joint
employment report for 1999, page 40). In particular, the focus on
preventive measures and the fact that neither the population of
the very long-term unemployed nor the instrument of the employ-
ment aids is mentioned explicitly in the guidelines indicates that
the problem of reducing the current level of long-term unemploy-
ment is not sufficiently addressed in the European Employment
Strategy.

Financial management of the operational programmes

99. Pursuant to the amended Regulations (EEC) No 2052/88
and (EEC) No 4253/88, the Commission takes part in the man-
agement of the programmes at several levels:

(a)

it coordinates the activities (Article 1 of amended Regulation
(EEC) No 4253/88);

(b) it participates in the Monitoring Committees (Article 25 of
amended Regulation (EEC) No 4253/88). It confirms any
amendments to the financing plans within a period of 20
working days from receipt of notification thereof;

(c)

it should carry out on-going and ex post evaluations, pursu-
ant to Article 26 of amended Regulation (EEC) No 4253/88
and the guidelines for evaluations as defined in the Commu-
nity support frameworks.

100.
In order to check whether these conditions are being met,
the Court examined changes in the financial planning of a num-
ber of selected operational programmes (nine).

28.11.2001

EN

Official Journal of the European Communities

C 334/29

101. As regards the coordination of the measures and the Com-
mission’s participation at Monitoring Committee level, the Court
found that the Member States had different priorities for combat-
ing long-term unemployment, especially those relating to recruit-
ment aid (1) As regards employment aid, it was noted that in Spain
the Monitoring Committees had, on several occasions, increased
the weight of employment aid in the financing plans. In Belgium
following a reorientation of the actions and in Italy due to an
underspending of the corresponding amounts, these actions were
permanently reduced.

102. Although the Monitoring Committees in the Member States
have the authority to change the programmes, the Commission,
through its presence on these Committees, should ensure a cer-
tain harmonisation of the strategies, taking into account the dif-
ferences between Member States as regards the labour market.

— it is not possible to aggregate or compare the results,

— the targeting of measures has proved to be very limited in

practice,

— the impact of the ESF measures is reduced and there is no tar-
geting which would give them ‘added value’ over and above
the total effort,

— the macroeconomic impact and spin-off effects (2) of the mea-
sures jointly financed by the ESF, which are needed in order
to assess the direct effects, are rarely to be found.

103. The examination showed that the period of 20 working
days within which the Commission should confirm a request for
amendment made by a Monitoring Committee (Article 25(5) of
amended Regulation (EEC) No 4253/88), was, in general, not
respected.

105. The Court’s examination of these reports did not usually
uncover either the specific strategy in favour of the long-term
unemployed category or the various population types which it
comprises. Moreover, there was no thematic approach to assess-
ing the target group.

Evaluation reports

104. The Court analysed a number of assessment reports (ex ante,
mid-term and ex post), for the mainstream ESF, drawn up between
1994 and 2000 in respect of projects implemented during the
period 1990 to 1998 in seven Member States. The objectives of
this analysis were: to draw the main conclusions on the measures
undertaken by the ESF in favour of the long-term unemployed, to
gauge their usefulness for redirecting ESF management in the lat-
ter years of the planning period 1994 to 1999 and to establish the
lessons to be learnt for the reform covering the period 2000 to
2006. The assessments revealed that:

— the forms for forwarding balance request data are not suitable
for measures other than those relating to vocational training
(for example the employment aids),

— the monitoring system is very cursory,

106. With regard to the impact of the measures, the assessments
revealed that the effects had not been very significant, save for
two exceptions: when training is specific to a well-targeted popu-
lation and complies with the strategies of undertakings which
employ trainees, and when the training measures are combined
with employment aids. Moreover, stagnation in very long-term
unemployment was noted. There is a hard core of unemployed
people who experience serious problems in returning to work
and who may even drop out of the workforce entirely.

107. The reports’ most significant recommendations were:

— to give higher priority to the long-term unemployed, and to

the very long-term unemployed in particular,

— the indicators are not adapted for each type of measure,

— to readjust measures in favour of people who are no longer in

the labour market,

(1)

In the United Kingdom, for example, measures in favour of the long-
term unemployed in one OP scrutinised had been considerably
increased. In France, on the other hand, in axis 1 of one OP (occupa-
tional integration of the long-term unemployed), there was a 30 %
reduction in 1997 in favour of axis 3 (integration of persons facing
exclusion from the labour market) following a change in national
policy. Although the Commission departments, in a memorandum to
the Member State dated 5 November 1996, had insisted on priority
being given to combating long-term unemployment in Objective 3,
the Commission approved this change by Decision C(97) 2192 of
9 September 1997. The following year (1998) the Monitoring Com-
mittee again modified the financial plan for the programme twice, by
transferring the amount of 540 million euro back to axes 1 and 2 of
the OP. As regards employment aid, it was noted that in Spain the
Monitoring Committees had, on several occasions,
increased the
weight of employment aid in the financing plans. In Belgium the fol-
lowing reorientation of the actions and in Italy due to an underspend-
ing of the corresponding amounts, these actions were permanently
reduced.

— to promote the overall ‘pathways to integration’ approach:
guidance, advice, monitoring, preliminary training, vocational
training, starting work, especially for the most disadvantaged,

— to improve the planning: more focused targeting, which may

(2) The following shall be considered spin-off effects:

— the deadweight effect, when the measure will be implemented in

any event, with or without Community aid,

— the substitution effect, when the positive effects for the ESF ben-
eficiaries are offset by the negative effects of those who have not
been able to benefit,

— the creaming effect, when the least problematic population within
a target group is selected in order to guarantee the best result.

C 334/30

EN

Official Journal of the European Communities

28.11.2001

increase the ‘added value’ in relation to overall input; to give
shape to the strategy in the operational programmes,

— to improve the selection criteria for beneficiaries and improve

the monitoring systems as well,

— to standardise results, using appropriate and operational indi-

cators (1).

113. The absence of a Commission procedure for following up
these projects after their implementation, in order to establish
their short-term and long-term impact, together with the absence
of an overall evaluation report on the Article 6 projects, deprived
the Commission of valuable information on the efficiency of these
projects. The lack of any policy regarding the dissemination of the
results of the projects reduces any positive impact these projects
might have and is not in accordance with Article 6(2)(b) of
amended Regulation (EEC) No 4255/88 concerning exchanges of
experience.

108. The results of these assessments were not sufficiently taken
into account in the reprogramming measures (see also para-
graphs 100 to 104 on the Monitoring Committees and financial
reprogramming and paragraph 39 concerning the ERDF).

109. As for the indicators, the Court, like the evaluations, notes
that the joint report on the 1999 national action plans stressed
the need for targeted and more appropriate indicators to enable
assessments to be made by target group and to harmonise the
Member States’ approaches in this area.

114. Because of these weaknesses, none of the projects audited
has been integrated into the mainstream ESF projects. In conclu-
sion, Article 6 projects have not contributed to the objectives of
the Regulation, notably that of promoting new approaches in the
fight against long-term unemployment.

115. Finally, Article 6 projects were not followed up in a way
that would allow the lessons learnt to be applied in combating
long-term unemployment through the mainstream ESF.

Audit of Article 6 projects

110. Article 6 of Council Regulation (EEC) No 4255/88, as
amended, establishes the aims and conditions of the financing of
pilot and demonstration projects. In contrast with mainstream
ESF-funded projects (ESF studies), they should be innovative,
include exchanges of experience and know-how and should be
carried out on the Commission’s initiative.

111. The Court selected and audited a number of projects (seven)
for long-term unemployed at Commission and Member States
level in order to establish what contribution they had made to the
development of new and innovative approaches to the fight
against long-term unemployment.

112. There is no reliable management system nor proper iden-
tification of the projects by target group. As a result of weak man-
agement procedures most projects examined had suffered impor-
tant implementation delays. For most of them the Commission’s
follow-up was not consistent, and in a number of cases payments
were still pending four years after actual closing deadlines. Deci-
sions for extensions of the implementation periods for projects
were delayed and were granted retroactively for all of them.

(1) Characteristics which indicators must have in order to be operational.

They must be:
— relevant: useful for the administrators in the decision-making pro-

cess,

— reliable: the indicator’s meaning should be the same for all users,
— realistic,
— quantifiable,
— profitable: the gain derived from its use should exceed the cost of

its calculation,

— accepted by the person addressed.

Management in the Member States

116. The following gives an overview of the common problems
that were identified as affecting the management of the pro-
grammes in the Member States.

Vague definition of ‘long-term unemployed’

117.
In order to establish the efficiency of EU employment strate-
gies in combating long-term unemployment, it is important that
Member States correctly interpret the term ‘long-term unemploy-
ment’, especially in the case of measures specially designed to
finance actions or provide funds for this target group.

118. Several operational programmes included in their specific
measures for long-term unemployed not only people who had
been unemployed for more than 12 months, but also people who
looked as if they might become part of the long-term unem-
ployed (‘threatened with long-term unemployment’) (2). The
absence of a differentiation between these target groups weakens
the statistics concerning the impact of the programmes on the
long-term unemployed.

(2) This definition was used in Italy and in Spain as well in the Objective
1 and Objective 3 programmes. In Greece, the same was noted for
some actions within the Objective 1 programme during 1998.

28.11.2001

EN

Official Journal of the European Communities

C 334/31

Low priority of the long-term unemployed and
employment aids

and administrative framework of the Member States concerning
the net job creation effect (see also paragraph 56 concerning the
ERDF).

119.
In several Member States there was a gap between the
importance of the long-term unemployed in relation to the total
number of unemployed and the part of the funds within the
operational programmes allocated to measures directed towards
the long-term unemployed. Some Member States had no provi-
sion for different intervention rates for long-term unemployed
and other unemployed beneficiaries (1).

123. Some of the employment aid schemes do not legally oblige
the companies receiving the aid to increase the total number of
employees. This lack allows the payment of an employment aid
for employees who would have been hired in any case (4) (see also
paragraph 54 concerning the ERDF).

120. The mechanism of employment aids was only significantly
used in one of the five Member States (2), although the impact of
this instrument in reducing long-term unemployment is quite
important.

124. Weaknesses have also been found in the provisions for
durable job creation,
in that mechanisms do not require a
minimum-period employment contract in respect of the subsidy
granted (5). Furthermore the monitoring of sanction with regard
to the non-respect of a minimum-period employment contract is
sometimes too bureaucratic and is therefore a disincentive for
employers who might otherwise apply for such aids (6).

121.
In one Member State employment aid mechanisms for
long-term unemployed were introduced and abandoned without
any ex ante or ex post evaluation (3).

125. The fact that most of the Member States do not set specific
conditions concerning the nature of the jobs to be created by
employment aid sometimes leads to deadweight effects (7) (see
also paragraph 72 concerning the ERDF).

Implementation of employment aids

122. Although the absolute number of jobs created by using
employment aids was quite significant, the following observations
show that there is still room for improvement in the regulatory

(1)

In Belgium, although the percentage of long-term unemployed is
about 60 % of all unemployed, in the two OPs selected only 28 % and
14 % respectively of the financial contribution for unemployed people
was granted to specific actions to reduce long-term unemployment.
In Greece, long-term unemployment represents 57 % of all unem-
ployment, but long-term unemployment participants in the selected
OP represent only about 18 % of all participants. In Italy, in general,
long-term unemployment represents about 60 % of all unemploy-
ment. Nevertheless, the Objective 3 programme in the region of Lazio
dedicated only 28 % of the resources to the fight against long-term
unemployment. In this region the share of long-term unemployment
amounts to as much as 72 %. The same applies to the region of Apulia,
where 27 % of subobjective 3 was earmarked for measures to combat
long-term unemployment, although long-term unemployment rep-
resented 68 % of all unemployment.

(2) The Member State was Spain, where the ESF intervention measures
operating in the field of employment aid amounted to 63 % and 41 %
of the funds programmed in the period 1994 to 1999 for all ESF
intervention measures focused on long-term unemployed people in
both CSF-Objective 1 and CSF-Objective 3. It should also be noted
that during the period 1994 to 1998 the situation of long-term
unemployed in relation to the total unemployed continued to dete-
riorate in all the Member States visited, with the sole exception of
Spain, where long-term unemployment was reduced.

(3) This concerns Germany, where the region selected used the ESF con-
tribution to complement an existing federal employment aid measure
for long-term unemployment. This additional financing was intro-
duced and abolished without any evaluation of the need or the impact.

(4)

(5)

(6)

(7)

In Germany, Spain and certain regions of Italy, the employment aid
schemes do not legally oblige companies receiving the aid to increase
the total number of employees. At the level of the final beneficiaries,
the Court noted, in fact, that in some cases the total number of per-
sons employed by the beneficiary did not increase by the number of
employees subsidised.
In Spain, for example, the mechanism is such that part of the social
security expenses of a newly recruited, former member of the long-
term unemployed was paid using ESF funds, but in the regulations
concerning this mechanism in connection with contracts of indeter-
minate duration there is no provision for a minimum period of
employment. This weakness jeopardises the objective of sustainable
job creation. In Italy, a regional authority did not anticipate any
follow-up of beneficiaries after the conclusion of the interventions.
The obligation for the employment contract to remain in force for a
minimum period of two years after the employment aid had been
paid (as prescribed in the invitations to tender) was not therefore
guaranteed in cases where the beneficiary did not present an applica-
tion for support for the second year of the employment contract. Fur-
thermore, the employment aid mechanism set up by the region did
not guarantee payment of the second year contribution to companies
which had received the first year contribution and fulfilled all national
eligibility conditions. This is a disincentive for employers to apply for
such aids.
In Germany there was provision for a minimum duration in respect
of the contracts. The companies were required to provide periodic
documentation for monitoring purposes. As a consequence, many
potential beneficiaries refused the employment aid scheme because it
seemed to them to be too bureaucratic.
In Greece, for example, employment aid was paid to hire employees
with special qualifications who would have found a job in any case.
Another company in the same Member State hired such people in
order to train them in maintaining stocks. The training started with
the practical part, while the theoretical part was attended later by only
a few workers. The company maintained that hiring the workers was
essential for its business. On one project audited in Spain the recruit-
ment of temporarily unemployed persons to permanent jobs was
subsidised under the scheme, although this recruitment would have
been done in any case.

C 334/32

EN

Official Journal of the European Communities

28.11.2001

CONCLUSIONS AND RECOMMENDATIONS

ERDF

126. While the employment objective is an important policy
issue, it is not easy to assess at its just value the question of the
number of jobs created or safeguarded thanks to ERDF aid. In fact,
the prime aim of the regional policy supported by the ERDF is to
radically restructure production structures in disadvantaged
regions. These structural modifications do not always go hand in
hand with an increase in available jobs — at least not in the short
and/or medium term. Furthermore, the assessment of effects on
employment attributable to the ERDF aid allocated to a measure
must, in principle, take into account not only its interaction with
other national and Community measures, but also the effects
linked to general cyclical trends, making it difficult to define the
exact impact attributable to the measure in question. Finally, it is
not always possible to obtain assurance as to the reliability of
either the estimated or the real data concerning the jobs created
or safeguarded.

130. At present, the databases concerning aid for productive
investment are not reliable and are not suitable for analysing the
impact of ERDF aid on employment. Nevertheless, they do fur-
nish data concerning the indicators selected for the monitoring
and evaluation of Community interventions. Since monitoring
and evaluation of programmes are related operations, it is impor-
tant at all stages of implementation (appraisal of applications,
financial and administrative management, technical assistance,
checks on completion of investments, analyses of sustainability
and closure of the file) to insist that the information received is
reliable and comprehensive, and suitable for use in the evaluation
process. Making maximum use of the internal information avail-
able is therefore a priority objective. Evaluation should be seen
not as an isolated task, but as one that requires a sustained effort
that calls, not least, for systematic consolidation of relations
between statistics producers and beneficiaries.

131. Taking the ERDF into account as part of employment strat-
egy, which is currently not done, could produce important syner-
gies and help to improve the quantitative and qualitative indica-
tors as well as the systems for collecting the data used in impact
evaluations. Programme managers would thus have a better basis
for gauging the progress achieved in relation to the objectives and
targets set for employment, and the Treaty, which gives the Euro-
pean Union the task of promoting a high level of employment,
would be respected.

127. The objectives and targets of the RDPs/CSFs/SPDs/OPs in
the field of employment are often imprecise as regards anticipated
effects. It is therefore doubtful whether the development of
employment is as strategic in nature as the many policy decisions
concerning the implementation of ERDF interventions imply and
the EC Treaty, as amended by the Treaty of Amsterdam, requires.

ESF

128. As regards the evaluation of effects in terms of employ-
ment, the macroeconomic methods used are not directly capable
of producing the desired indicators. Furthermore, the diversity of
practices at project and measure level makes aggregation difficult.
For these reasons, the Court recommends that the Commission
press forward with the efforts that it has been making since 1996
to harmonise evaluation procedures, establish a common frame-
work on the basis of the MEANS methodology, and award increased
importance to employment within the framework of the pro-
gramming period 2000 to 2006.

132. Over the past 10 years considerable efforts to redress the
situation have been made by the Commission and the Member
States at the regulatory, administrative and financial levels. Some
improvement in the general unemployment situation in the EU
could be observed towards the end of the 1990s, but in the long-
term unemployment field progress has, unfortunately, been slower.

133. The Commission has not been able to provide an overall
picture of actual expenditure on long-term unemployment at EU
level, since there is no management by policy objective and target
groups.

129. The various top down approaches should give an overall
picture of the jobs created and safeguarded, which would be of
use for, among other things, the ex ante evaluation. However, the
use of these methods must be supplemented with that of the
bottom-up approach based on the effects on employment identi-
fied for each of the co-financed investments, from appraisal of the
application to final completion of the projects, taking sustain-
ability into account. Based on these raw data, the net impact
should also be calculated, by analysing the deadweight and
displacement/substitution effects on the basis of projects’ particu-
lar characteristics.

134. The Court identified inconsistencies between the European
Employment Strategy and activities of the ESF:

— lack of consistency between the ESF Regulation (provide a role
for the employment aid mechanism) and the structure of the
employment guidelines in which there is not a specific role for
the employment aid mechanism,

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Official Journal of the European Communities

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— lack of consistency between the employability pillar guide-
lines regarding the use of a combination of a preventive
approach and actual absorption of the long-term unemployed
(curative approach). The preventive approach has not been
sufficiently combined with the curative approach,

national and regional administrations, and in national regulatory
and management provisions, thereby incurring deadweight costs
and suffering delays in implementation.

— lack of consistency between the ESF planning timetable and
the timetable for decision-taking in relation to the Employ-
ment Strategy,

140. The Court recommends that:

— as few Member States provide detailed information about the
way in which the ESF supports the European guidelines or the
national action plans, there is a risk that not all elements of
the guidelines will be represented in the ESF intervention area.

135. Where the long-term unemployed are concerned, employ-
ment aid has proved to be an important means of providing stable
employment, since training alone is often not sufficient. The Court
found that the tendency is towards a reduction in the employ-
ment aids rather than an increase in the implementation of opera-
tional programmes, despite the recommendations made in the
evaluations.

136. The Court’s observations concerning the weaknesses in the
planning of the measures, and the absence of proper indicators in
particular, are also confirmed by the results of the evaluations and
of the Council’s recommendations as stated in the joint employ-
ment report for 1999.

137. Moreover, there is a need to improve the administration of
the employment aid mechanism and related actions at Commis-
sion and Member State levels. The Court has also referred in a
special report on ‘youth unemployment’ (1) to the need for clearer
definitions, improved targeting of measures by means of appro-
priate indicators, strengthening the functioning of the monitor-
ing Committees, together with clearer and better targeted policy
guidelines.

138.
Information about the management and control systems
relating to successful pilot and demonstration projects (Article 6
of Council Regulation (EEC) No 2084/93) was not made available
to the Commission and Member States, with the result that simi-
lar projects were not incorporated in mainstream ESF actions.

— a better balanced approach in employment measures between
the ‘preventive approach’ and the ‘curative approach’ be
ensured,

— in future, specific activities such as Article 6 projects for ESF
be better targeted and more carefully considered for the imple-
mentation of mainstream activities,

— the Commission ensure that past assessment reports are suf-
ficiently taken into account in reprogramming measures,

— the administrative procedures be clarified and simplified.

General recommendations

141. The Court recommends that the cohesion between the
Employment Strategy, on the one hand, and the ESF and ERDF on
the other hand, be improved. In this respect, synergies should
increasingly be sought between the interventions co-financed by
the ESF and the ERDF.

142. Consistent objectives concerning employment should be
defined at policy, programme and subprogramme levels. This
would make the ex ante, mid-term and ex post evaluation work
that remains to be done so much more effective. In particular, for
every intervention (or group of interventions), the techniques for
gathering data on the direct and indirect impact of actions on
employment, on the one hand, should be harmonised with the
aggregation methods used at the various project, measure, prior-
ity and intervention levels, on the other hand. At the same time,
the indicators in question should be such that any relationships
between the impact achieved and the various levels are as obvi-
ous as possible.

139.
In the Member States, the implementation of ESF co-financed
measures in favour of the long-term unemployed lacked a clear
definition of target groups and was given a low priority by

(1) Special Report No 3/2000 on the European Social Fund and the
European Agricultural Guidance and Guarantee Fund (Guidance Sec-
tion) — Measures to assist the employment of young persons
(OJ C 100, 7.4.2000, pp. 1 to 26).

143. The Commission should ensure that the obligation to take
the employment aspect into consideration is systematically
awarded the appropriate importance in the co-financing process.
Moreover, the Commission should take any steps necessary to
ensure that national mechanisms for preventing deadweight and
displacement effects are improved and that the efforts made in
this respect are intensified. The same applies to the monitoring
periods needed to ensure that the jobs created or safeguarded are
sustained.

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Official Journal of the European Communities

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This report was adopted by the Court of Auditors in Luxembourg at the Court meeting of 19 July 2001.

For the Court of Auditors

Jan O. KARLSSON

President

ANNEX I

FLOW CHART SHOWING THE EFFECTS OF ERDF AID ON EMPLOYMENT
(closed economy without savings or taxation)

ERDF co-financing of
infrastructure projects

Projects
implemented – creating
or safeguarding
direct jobs

Jobs linked to maintenance etc.

Improvement of production conditions

1

3

2

1

2

4

(Additional) income

(Additional) consumption

Production of (additional) consumer
goods – creating or
safeguarding indirect jobs

1

2

Additional demand for
capital goods

Investment or (additional)
working time – creating
or safeguarding indirect jobs

1

2

ERDF co-financing of
productive investments with
the condition of creating or
safeguarding jobs

Productive
investments – creating
or safeguarding
direct jobs

1

2

2

ERDF co-financing of
productive investments
without the condition of
creating or maintaining jobs

Productive
investments

3

Influence on direct jobs
– increase in productivity
– increase in production

4

Reduction in
direct jobs

Reduced
Income

Reduced
consumption

Safeguarding of
direct jobs

Income
maintained

Consumption
maintained

Creation of direct
jobs

1

ERDF co-financing of projects
supporting endogenous potential

Consultancy

NB: Each number refers to other numbers in the flow chart.

Financial engineering

Creation or preservation
of direct consultancy jobs

Improvement of production
conditions

1

2

3

.

2
8
1
1
2
0
0
1

.

E
N

O

f
f
i
c
i
a
l

J
o
u
r
n
a
l

o
f

t
h
e

E
u
r
o
p
e
a
n
C
o
m
m
u
n
i
t
i
e
s

C
3
3
4
/
3
5

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EXPLANATORY POINTS

1. The direct effects of interventions in favour of infrastructure are, in the first place, linked to construction activity and
concern, in particular, the creation of temporary jobs. Furthermore, they can also have a direct link with the end results of
construction (new staff responsible for the operation and maintenance of the co-financed facility). These effects come at the
beginning of the impact chain and are therefore relatively easy to identify and quantify.

2. The indirect effects arising from an increase in competitiveness and productivity thanks to infrastructure investments
are long-term effects generated by complex mechanisms which come almost at the end of the impact chain. These effects
are therefore difficult to identify and attribute to specific interventions.

3. Support for the development of the endogenous potential boosts the injection of non-material capital and makes for an
increase in the efficiency and competitiveness of enterprises. The effects on employment in beneficiary enterprises are not
clearly defined. Moreover, they come at the end of the impact chain and are therefore difficult to identify and quantify. At
service-provider level, the direct effect on employment is somewhat limited, but these are nevertheless jobs for highly-
qualified people which have significant global potential.

4. The development of human resources has a variety of effects on competitiveness and employment. It should be noted
that the main difference between the two types of effects generated by the ERDF and the ESF is that, in the case of the ERDF,
the effects on employment essentially concern the creation or maintenance of a post that could be taken up by different
people, whereas in the case of the ESF, the effects on employment essentially concern the preservation or enhancement of
the employability of individuals, either by helping them to maintain a certain level of qualification, or by giving them a bet-
ter chance of meeting the professional requirements of potential employers and therefore of finding a job.

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Modified methodology proposed by MEANS for assessing the impact of ERDF aid on employment

ANNEXE II

Nature of the employment

Job created — Job maintained
Permanent job — Temporary job
Full-time job — Part-time job
High-quality job — Low-quality job

Geographical aspect

Important for the purposes of displacement effects, overspill effects, relocation
effects and in-migration, out-migration and commuting effects

Time scale

Short-term effects, medium-term effects, long-term effects
Sustainability of employment

1. Net direct effects

2. Global effects on job demand

3. Effects on unemployment

Net direct effects = gross direct effects
— (displacement effects + involuntary
substitution effects + deadweight effects)

Effects on job opportunities = direct
effects + multiplier effects + supplier
effects — overspill effects – relocation
effects

Effects on unemployment = effects on
activity rate + effects on in-migration +
effects on out-migration + effects on com-
muting

NB: The amendments made by the Court are shown in italics.
Source: Ernst & Young final report: ‘Evaluating Structural Fund employment effects’, a study conducted for the European Commission, DG

REGIO, and presented in May 2000, Table 1, p. 5, amended on the basis of the results of the audit work.

1.

In order to evaluate gross effects accurately, the following must be taken into account:

— the distribution in time of the effects (risk of not taking into account effects which will arise later and/or risk of

taking into account effects that are only short-term),

— the quality of the jobs,
— the nature of the jobs, which may be full-time or part-time. The overall quantity of jobs generated can be expressed

as the full-time equivalent (FTE).

2.

In order to evaluate net effects accurately, the following must be taken into account:

— the deadweight effect: effect which would have been produced even without any aid,
— the displacement effect: effect obtained in one eligible area to the detriment of another eligible area,
— the involuntary substitution effect: effect obtained to the benefit of a direct recipient but to the detriment of a person

or organisation not eligible.

3.

In order to evaluate accurately global effects on job opportunities, the following must be taken into account:

— the income multiplier effect: effect arising from the increase in incomes and in consumption,
— the supplier effect: effect on companies within the eligible area which supply goods and services to the enterprises

— the overspill effect: effect on companies outside the eligible area which supply goods and services to enterprises

that are direct recipients of the aid,

that are direct recipients of the aid,

— the relocation effect: effect arising from the relocation of an enterprise from one region to another.

4.

In order to accurately evaluate effects on unemployment, the following must be taken into account:

— the effect on in-migration (increase) or out-migration (decrease),
— the effect on commuting.

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THE COMMISSION’S REPLIES

SUMMARY

I.
In general, the Commission shares the analysis of the Court of Auditors of the weaknesses in previous
programming periods in relation to the evaluation of the impact of structural interventions on employment.
The Commission welcomes the Court’s comments that the action the Commission has taken should signifi-
cantly improve knowledge of the effectiveness and impact on employment of structural interventions during
the programming period 2000 to 2006.

The report refers on a number of occasions to a need for common and harmonised procedures, methods and
techniques; however, this is an area where, according to the regulations, the Commission has no mandate. The
Commission wishes to emphasise the diverse nature of assistance concerning employment in the Member
States and the correspondingly diverse nature of the methodologies used to measure its impact. The improve-
ments foreseen will not harmonise practices across all Member States, since the objective is to enhance the
effectiveness and impact of policies within Member States. The greater level of transparency achieved will show
where it is possible to aggregate or compare data across Member States, but it will also highlight where such
aggregation or comparisons are inappropriate because of different approaches reflecting national or cultural
characteristics. The Commission seeks to enhance comparability through the development of a shared under-
standing and use of common terminology, definitions and approaches, but only where these are appropriate.

II. The role of the ESF in supporting the European Employment Strategy (EES) is reported in the annual
national action plans for employment. However, the Commission recognises that it must make more progress
to ensure that the ESF is fully integrated into the EES and that there is a clear link highlighting the contribu-
tion of other Structural Funds to the Strategy.

In reforming the ESF, the Commission was keen to move away from the target group approach to one based
on achieving policy objectives at European level. This gives greater freedom to Member States to define their
own priorities and to focus the ESF towards greatest need, in line with national and regional development
needs.

The Commission was able to negotiate with Member States some limited changes in the last two years of the
programmes to shift resources towards EES priorities ‘... by reallocations towards preventive action and other
EES priorities within the target groups identified for ESF support, due to the flexibility of the programming
structure under Objectives 1 and 3.’ (joint employment report JER/2000). The EES is the starting point for ESF
assistance for the period 2000 to 2006. Analysis of these programmes shows that there is now a much firmer
link between the activity funded by the ESF and the four pillars of the EES.

The long-term unemployment situation at any given time determines the balance between the two types of
measures. The diversity of situations in the Member States also needs to be taken into consideration.

The guidelines for the employment policies of the Member States are based on the contribution of the Struc-
tural Funds as a whole to carrying out the European Employment Strategy.

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The programming of structural measures during the period 2000 to 2006 has significantly improved the syn-
ergies referred to by the Court, in accordance with the guidelines given by Regulation (EC) No 1260/1999.
Synergies between the ERDF and ESF to promote employment have been possible in the context of negotiat-
ing the programmes — with measures under one Fund becoming complementary to those carried out by the
other.

Consideration should be given to the essential role devolved to the Member States by Regulation (EC) No 1260/
1999 in the context of the 2000 to 2006 programming process, in terms of implementing measures
co-financed by the Structural Funds and optimising the use of the funds allocated.

III. The regulatory environment in relation to employment for the period 1994 to 1999 differed from that
which now exists. The weaknesses which the Court of Auditors has identified in the programming period 1994
to 1999 have been explicitly tackled for the programming period 2000 to 2006, particularly with regard to
clarification of the respective responsibilities of the Commission and the Member States in terms of program-
ming. Furthermore, the Commission has provided guidance on how programming should be improved. The
establishment of global, specific and operational objectives and the need for quantification at each level have
been clearly set out in Commission working documents No 2, ‘The ex ante evaluation of Structural Fund inter-
ventions’, and No 3, ‘Indicators for monitoring and evaluation: an indicative methodology’. As the Court notes,
the process of incremental improvement is evident in the improvements to the programming in Objective 2
SPDs for the period 1997 to 1999 as compared to the previous period.

However, ongoing efforts have been made in the context of the programming period 2000 to 2006 to improve
the formulation of objectives and determine relevant indicators. In particular, allocation of a performance
reserve halfway through the period 2000 to 2006 implies the existence of reliable objectives and indicators.
The programme complements are a significant advance in this regard and should in particular focus attention
on the following elements.

Quantification of objectives

Objectives are quantified at global level in the CSFs and at programme level. The programme complement
should provide quantified objectives defined at the level for each measure, where the nature of the measure
allows for this.

Indicators

— Monitoring and physical implementation (output) indicators corresponding to each OP/SPD measure must
be given in the programme complement if they have not been defined in the OP/SPD concerned. These
indicators should include those adopted for allocating the performance reserve and those relating to ‘ef-
fectiveness’. These indicators will be representative, covering at least 50 % of the total cost of the interven-
tion.

— Financial indicators must cover all measures in the OP/SPD.

— Result and impact indicators, used to measure the effects of the intervention, will be available for a sig-

nificant and sufficiently representative number of measures.

IV.
In relation to the difficulties the Court has highlighted regarding the heterogeneity of concepts used and
practices, the Commission’s work in developing guidance documents and working in cooperation with the
Member States is intended to achieve greater understanding and agreement on such methodologies and prac-
tices. However, the Commission cannot impose methodologies on the Member States. The regulations require
those responsible for programmes examine and consider the effects and impact of structural
that

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interventions in order to improve their effectiveness and impact in their regional or national context. The
primary objective is not to feed into a uniform exercise across the entire territory of the European Union.
Where we can aggregate or compare data across Member States, this is useful, but it is not the primary purpose
of the programme evaluations undertaken at ex ante, mid-term or ex post stage.

The results of the mid-term evaluation in relation to measuring the effects on employment reflect the fact that
programming in 1994 was not sufficiently focused, making it difficult to measure results. In addition, 1996,
the time of the mid-term evaluation, was generally too early in the programming period to measure employ-
ment effects. Some useful work was undertaken, however, in refining macroeconomic modelling techniques
to enhance forecasts of likely employment effects by the end of the programme period. The ex post evaluation
of Objective 1 for 1994 to 1999 should demonstrate the appropriateness of the models used and further
improvements which may need to be pursued.

The ex post evaluations of Objectives 1 and 2 between 1994 and 1999 have been launched and are expected to
commence in September 2001 and to be completed within a year. Measuring the effects on employment is a
key priority for both evaluations.

V. Reprogramming in general was based on the best quality data available in the Member States at the time.
The effect on employment was just one of the criteria for assessing the effectiveness of interventions. Given
the lack of comparable data across regions and Member States, it was inevitable that reprogramming at the
mid-term review stage could not be based on a comparative analysis in relation to effects on employment.

VI. The Commission welcomes the Court’s acknowledgement of the work it has undertaken to promote good
evaluation practice in the Member States. The impact of this work will first become evident in the quality of
the mid-term evaluations due to be completed by the end of 2003 and in the reprogramming which follows.

VII. The doctrine of State aid is based on evaluation of the maximum acceptable intensity, taking into account
requirements in terms of economic or regional development or with a view to achieving a priority Community
objective. In the particular case of regional aid, maximum intensity is measured in terms of the value of fixed
investments or the costs of the jobs created. Depending on the criterion used in each case, the number of jobs
created is taken directly into account.

If the planned number of jobs is not created, the amount of State aid should be reduced in line with the reduc-
tion in costs for jobs planned and not created.

(c) The Commission agrees with the Court’s finding and has already taken action as set out below to reduce

windfall and displacement effects.

(d) The Commission authorises aid for rescuing and restructuring enterprises where such aid is the minimum
necessary for ensuring the viability of the enterprise and preserving jobs in the long term. Safeguarding
employment is also an essential criterion for Structural Fund assistance.

(e) It is true that the performance of monitoring systems may vary widely; nevertheless, measuring and moni-
toring the effects on employment cannot in general be done solely through the monitoring system but
must also use differentiated evaluation procedures (surveys etc.).

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VIII.

(a) The Commission is prepared to recognise that evaluation, follow-up and mainstreaming of the results of
the projects financed in 1994 to 1997 should have been more effective for the purposes of transferring
into the mainstream European Social Fund.

Since then, the Commission has improved and is currently improving this transfer of information, namely by
developing the description of successful projects on the relevant website.

IX.

(a) The Commission will continue to promote coherence between the ESF and ERDF through the European
Employment Strategy and multifund operational programmes and Single Programming Documents. This
work is supported by better programming and evaluation approaches. However, such coherence is ulti-
mately the responsibility of the Member States implementing the programmes supported by the Structural
Funds.

(b) This recommendation has already been implemented in the new regulations for the Structural Funds for
2000 to 2006 and the guidance documents which the Commission has prepared for the current program-
ming period.

(c) The Commission agrees with the Court’s recommendation and has already taken action to reduce windfall
and displacement effects, particularly through stronger emphasis on providing indirect support to SMEs.
This action was taken on the basis of the Commission’s study of the impact of the Structural Funds on
SMEs and had the specific objective of reducing windfall and displacement effects.

COMMUNITY EMPLOYMENT POLICY

Methodology for evaluating the impact on employment

14 and 15. The Court has accurately outlined the Commission’s
concerns in relation to the absence of a methodology for evaluat-
ing the impact of structural interventions on employment, which
led to the launching of a range of studies seeking to establish such
a methodology.

16. The Commission shares the Court’s analysis that the guid-
ance given to date has led to a coherent overall approach on the
part of the Member States with the introduction and establish-
ment of a number of key concepts in the area. The Commission
agrees that further work remains to be done to develop agree-
ment on precise definitions and methodologies. However, such
work must recognise the different approaches taken in different
Member States and the need to build on work under way rather
than impose a single solution which might undermine the con-
tinuation of valuable work already undertaken. The work under
way in some Member States represents good practice over many
years and also reflects cultural characteristics which should be
respected.

One of the conclusions of the latest study undertaken for the
‘Evaluating Structural Fund employment effects’
Commission,
(January 2000), was that improving current practices should be

tackled comprehensively and in stages, taking account of defini-
tions and methodological issues, but also providing guidance on
practical issues such as the collection, storage, retrieval and analy-
sis of data. It concluded that ‘this is a major undertaking with the
need to gain the “buy-in” of partners and, as such, can only real-
istically be tackled in stages over the lifetime of the new Structural
Fund programmes’. The Commission is committed to continuing
this work over the programming period 2000 to 2006. The next
significant step will be the Commission’s ex post evaluations of
Objectives 1 and 2, which have recently been launched. These
large-scale evaluations are expected to be completed by Septem-
ber 2002.

THE IMPACT OF ERDF AID ON EMPLOYMENT

The European Employment Strategy and the ERDF

It is hard to dispute the observation that none of the
17 and 18.
employment guidelines, the NAPs or the JER makes explicit refer-
ence to the ERDF. However, efforts have been made to put this
right. Recital 16 of the employment guidelines 2001 notes that:
‘The contribution of the Structural Funds, and in particular the
European Social Fund and the Community initiative EQUAL to

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the European Employment Strategy in the new programming
period should be highlighted, as well as the role of the EIB’.

Coordination within the Commission

19 to 21. These communications should not be read on their
own. There were four of them on a yearly basis, and they were all
supposed to highlight specific aspects of Community support for
employment policy. The 2000 communication mentions at the
outset that it describes four broad areas of Community policy par-
ticularly relevant to the agenda for the Lisbon Summit.

Secondly, Objective 2 areas receive particular attention because it
was considered, in cooperation with the services directly con-
cerned, that support for employment was particularly apparent
for this type of objective, especially in the context of the Lisbon
strategy which insists on achieving full employment through life-
long learning and other developments facilitating readaptation
and competitiveness.

Ex ante evaluation, setting objectives and defining indicators

ERDF RDPs, CSFs, SPDs and OPs for Objective 1 (programming
period 1994 to 1999)

24 to 27. The regulatory environment in relation to employment
for the period 1994 to 1999 was different to that which now exists.
The weaknesses identified by the Court of Auditors in the pro-
gramming period 1994 to 1999 relating to Objective 1 have been
explicitly tackled for the programming period 2000 to 2006. The
establishment of global, specific and operational objectives and
the need for quantification at each level have been clearly set out
in the Commission working documents No 2 (The ex ante evalu-
ation of Structural Fund interventions) and No 3 (Indicators for
monitoring and evaluation: an indicative methodology).

26. The Hermin model, funded by the Commission, produced
comparable estimates at CSF level across large Objective 1 Mem-
ber States. This work contributed to the programme negotiations
in those countries at the start of the programming period 1994
to 1999.

27.

(a) The Commission understands the Court’s criticisms. How-
ever, to a significant extent these weaknesses stemmed from
In
weaknesses in programming by the Member States.

response, the Commission proposed significant changes to
the Regulations to clarify the respective responsibilities of the
Commission and the Member States in planning, implement-
ing, monitoring and evaluating the Structural Funds. The
Member States accepted those responsibilities in adopting the
Regulation. In addition, the Commission has produced guid-
ance to the Member States in the form of working documents
on ex ante evaluation, indicators for monitoring and evalua-
tion, implementation of the performance reserve and, most
recently, mid-term evaluation.

A further point to note is that employment was only one of a
number of general objectives for the Structural Funds in the period
1994 to 1999.

SPDs for Objective 2 (programming period 1997 to 1999)

28. The Objective 2 programming of 1997 to 1999 enabled
some of the lessons from the 1994 programming to be put into
practice. Therefore, as the Court of Auditors notes, the program-
ming demonstrates an improvement in the quantification of objec-
tives in relation to effects on employment.

29. The programming period 1997 to 1999 was short, and
expenditure under the programme will only be complete at the
end of 2001. While some refinement of indicators did take place
in some Member States during the implementation period, the ex
post evaluation of Objective 2 will allow a comprehensive exami-
nation of progress made in measuring the employment effects of
Structural Fund assistance.

Weaknesses in the approaches adopted for evaluation

33.
In relation to the difficulties highlighted by the Court regard-
ing the heterogeneity of concepts and practices, the Commission’s
work in developing guidance documents and working in coopera-
tion with the Member States aims to achieve greater understand-
ing and agreement on such methodologies and practices. How-
ever, the Commission cannot impose methodologies on the
Member States. The regulations require that those responsible for
programmes examine and consider the effects and impact of
structural interventions in order to improve their effectiveness
and impact in their regional or national context. The primary
objective is not to feed into a uniform exercise across the entire
territory of the European Union. Where we can aggregate or com-
pare data across Member States, this is useful, but it is not the
primary purpose of the programme evaluations undertaken at
the ex ante, mid-term or ex post stage. The results of the mid-term
evaluation in relation to the measurement of effects on employ-
ment reflect the fact that programming in 1994 was not suffi-
ciently focused, therefore making it difficult to measure results. In

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addition, 1996, the time of the mid-term evaluation, was gener-
ally too early in the programming period to measure employment
effects. Some useful work was undertaken, however, in refining
macroeconomic modelling techniques to enhance forecasts of
likely employment effects by the end of the programme period.
The ex post evaluation of Objective 1 1994 to 1999 should dem-
onstrate the appropriateness of the models used and further
improvements which may need to be pursued.

40. The Commission points out that this work was undertaken
on its initiative. The Commission funded it in the interests of
developing good practice in the United Kingdom.

Ex post evaluation

34 to 36. The Court’s analysis reflects the serious efforts made
in the regions and by the mid-term evaluators to measure employ-
ment effects using a ‘bottom up’ approach, which is particularly
necessary in small Objective 1 regions. By definition, such an
approach must reflect the specific nature of regions and pro-
grammes, and it is not suitable for aggregation at national or EU
level. However, it is important not to undermine the usefulness of
such an approach. It is essential for measuring the employment
effects of the interventions concerned and their context, and it
also stimulates improvements to those interventions and their
related data-gathering systems.

41 and 42. The ex post evaluations of Objectives 1 and 2 between
1994 and 1999 have been launched and are expected to com-
mence in September 2001 and be completed one year later. Mea-
suring the effects on employment is a key priority for both evalu-
ations. They are not being undertaken until after all expenditure
is complete, so it is anticipated that good quality data on the per-
formance of the programmes will be available. It is recognised,
however, that an evaluation exercise such as the ex post evalua-
tion will not be able to capture the full employment effects of
some interventions, which may not be fully evident until some
years later. However, the deadline was set down in the Regulations
in accordance with good practice in evaluating structural inter-
ventions in general.

35. The example in footnote 23 shows the difficulty, rightly
referred to by the Court, of obtaining reliable statistics on a small
geographical scale (three cantons) which does not correspond to
an administrative or economic breakdown. It should be noted
that for the period 2000 to 2006, efforts have been made to
define a common frame of reference and to organise the collec-
tion of statistics.

37 and 38. The alternative to the bottom up approach is the use
of ‘top down’ techniques including macroeconomic modelling,
input-output models and counterfactual analysis. As the Court
points out, there is an inevitable margin of error in applying such
techniques, but the advantage is the generation of more compa-
rable results across regions and Member States. Across large
Objective 1 Member States, the Commission has applied the same
macroeconomic modelling techniques, using both the Hermin
and QUEST models. Because of weaknesses in relation to both the
bottom up and top down approaches, the Commission prefers a
combination of both as the ideal approach where possible.

Proposals for improving evaluation

43 to 45. The Commission agrees with the Court on the useful-
ness of the findings of the Commission’s study on ‘Evaluating
Structural Fund employment effects’. As mentioned above, this
study was the latest in the series contracted by the Commission,
all aiming to enhance measurement of the efficiency, effectiveness
and impact of structural interventions. The Commission has con-
sidered the findings of the study and has discussed them with the
Member States. The findings, however, cannot replace the exist-
ing framework for the evaluation of the Structural Funds. To the
extent that the findings have been accepted, the Commission is
working to respond to the recommendations made and the results
of the ex post evaluations will support this work. The Commis-
sion would point out, in relation to the finding of a lack of coher-
ence between the ERDF and the ESF, that all its working docu-
ments on programming and evaluation apply to structural
interventions co-financed by all Structural Funds, and they there-
fore provide a framework for such synergies.

Reprogramming

Taking impact on employment into account for the
programming period 2000 to 2006

39 and 40. Given the lack of comparable data across regions and
Member States and, therefore, the absence of benchmarks in rela-
tion to costs, it was inevitable that reprogramming at mid-term
review stage could not be based on a comparative analysis of
costs and benefits. The lack in some cases of a revision of quanti-
fied targets following increases or reductions in financial alloca-
tions was clearly a weakness which must be avoided in the mid-
term reviews which will take place in 2004.

46 to 48. The Court has presented the situation in relation to the
programming for the period 2000 to 2006. A priority for the
Commission in the negotiations has been to ensure systematic
application of the principles of quantification of objectives in line
with the Commission’s guidance contained in its working docu-
ments. The existence of the performance reserve creates an addi-
tional imperative to ensure that appropriate indicators are quanti-
fied. This work is continuing.

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Aid for productive investment

Taking employment into account

Conditions governing the granting of aid

49 to 77. The analysis in these paragraphs highlights the inevi-
table diversity of practice across Member States. The Commission
does not wish to prevent this, and indeed welcomes it as it pro-
motes experimentation and the development of best practice in
relation to methodologies which are not yet and never will be per-
fect. The Commission’s objective is to help Member States and
regional and local authorities to improve methods and techniques,
and where common definitions and methodologies are appropri-
ate the Commission promotes their use.

Mechanisms designed to augment the net impact on employment

Deadweight ef fects

54 and 55. For cases in Portugal, the Commission proposes ask-
ing the Member State for elements to enable the importance of
these effects to be assessed when terminating the programme.
These points should also be analysed in the context of the ex post
evaluation.

Displacement ef fects

57. Legal frameworks for aid systems differ from one region to
another.

Monitoring

Weaknesses in the monitoring arrangements

the level of jobs created lies with the Member States. Neverthe-
less, it must still be recognised that a discrepancy exists between
forecasts/estimates and actual achievements. Any improvement in
this area depends on the willingness and ability of those respon-
sible to monitor the projects.

With regard to the period 2000 to 2006, improvements in the
information held by the Member States can be expected as a result
of the obligations imposed by the new regulations.

65. France: for the period 2000 to 2006, the Commission has
co-financed a national computerisation programme in France
which will enable each region to have its own monitoring soft-
ware with, in particular, indicators regarding jobs per project.
Regardless of basic methodological interrogations and the capac-
ity to provide reliable information on these indicators, hitherto
fragmentary data will now be available.

Italy: tables drawn up in Italy, based on the top down approach,
already make it possible at times (for example in the case of Law
488/92) to estimate the number of jobs created or maintained at
project level. This information is contained in the list of co-financed
projects attached to the annual reports.

Problems concerning safeguarded jobs

66. The statistical error referred to by the Court occurred dur-
ing the first stage of implementation of the Spanish OP.

Following improvements to the monitoring system, double count-
ing of jobs disappeared from the last annual report and will not
occur in the final report. Jobs created and jobs maintained by one
investment receiving several amounts of aid from the ERDF dur-
ing implementation of the OP are only counted once (footnote 1
on p. 20).

59. The Commission agrees that necessary information on jobs
created and maintained should be gathered. However, it should be
noted that there is no legal basis for the Commission to impose
the application of harmonised methodologies among regions for
the collection of data.

Consequences of programme flexibility

61. France: when granting ERDF aid relating only to a part of the
investment, there is no differentiation or pro rata for specifying
the ‘percentage’ of the Community contribution to the total of
jobs created or maintained.

The Commission is not responsible for evaluation at project level.

67 to 77. The flexibility permitted the Member States is based on
the Structural Funds Regulation.

Differences between forecasts and outturn

62. The Commission has no competence to initiate evaluations
at project level. Responsibility for monitoring and examination of

68. The aid referred to in footnote 2 on p. 20 was finally with-
drawn from the operational programme following interservice
consultations and discussions held during the two meetings of the
OP Monitoring Committee in 1999.

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Consequences of programme flexibility

putting this right, this is a matter of concern which deserves more
attention in the future.

70. Concerning the choice of projects, it should be pointed out
that the Commission does not intervene in the programming of
the projects themselves.

THE EUROPEAN SOCIAL FUND (ESF) INTERVENTIONS TO
COMBAT LONG-TERM UNEMPLOYMENT

Long-term unemployment

The scale of the ESF and the nature of labour market problems in
Member States influence the content of programmes and the bal-
ance of support across the four pillars of the EES. The underlying
concern is to concentrate support where it will have greatest effect
both in relation to labour market needs and the level of existing
financial support for particular activities. Where a Member State
already invests heavily in a particular area, the value added by the
ESF in that area may not be high.

Financial management of the operational programmes

80. The Court notes that long-term unemployment remains at
relatively high levels despite the sums spent on reducing it. This
underlines the difficulty faced in finding work for those who have
fallen into long-term unemployment.

102. The operational programmes and Single Programming
Documents represent and describe the strategies of the Member
States. However, they should take account of the objectives and
priorities defined by the Commission.

The management of policy and actions by the Commission

The European Employment Strategy and the ESF
interventions

It is in this perspective, and bearing in mind the need for balance
between the specific characteristics of each Member State and
Community strategy, that the programming documents and their
amendments must be analysed.

It is left to Member States to decide which instruments they

93.
want to use in order to meet specific targets.

94. The Commission, through the EES, has encouraged the exten-
sion of more preventive active labour market policies to stop
people moving into long-term unemployment in the first place.

103. Confirmation of the decision by the Monitoring Commit-
tee takes the form of a formal decision by the Commission. Bear-
ing in mind the length of this procedure and the time which may
be required for improving the Monitoring Committee proposal in
terms of presentation and content, the deadline could prove to be
too short.

95. The problem of the very long-term unemployed has been
raised in the JER 2000 and is emphasised in the NAP on social
inclusion developed by Member States. Based on an analysis of
this year’s NAPs, Member States appear to have focused more
attention on this group.

104. To overcome these shortcomings, the Commission has
produced precise guidelines for 2000 to 2006 on monitoring and
evaluation systems.

Evaluation reports

96. Both the EES and ESF are mid-term strategies or instruments
which allow for adjustments in the face of changing circumstances
but whose basic direction and objectives remain stable in the mid-
term. As there should only be an element of annual fine-tuning,
the detrimental effects of any apparent difference in timetables are
limited.

Given their diversity, it is not surprising that there are no indica-
tors adapted to all types of measure. Moreover, some types of
measure do not lend themselves easily to quantification by means
of an indicator.

98.
It is true that not all Member States provide information in
their NAPs on ESF support for the employment guidelines.
Although there are some more recent examples of Member States

In the case of strictly comparable measures (which is fairly theo-
retical), there could in fact be indicators making it possible to
carry out these aggregations and/or comparisons. The primary
objective of evaluations of ESF priorities and measures remains
the assessment of the impact of the measures implemented.

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The general finding of ‘limited targeting’, particularly with regard
to the long-term unemployed, is confirmed by the results of the
evaluations.

The criteria for success in measuring the impact of the ESF are not
expressed principally in terms of the number of jobs created but
in an increase in employability, improved integration into the
labour market or progression towards employment (in the case of
groups far removed from the labour market). In addition, the
evaluations have shown that where the targeting was accurate,
ESF interventions were more effective.

In the case of Objectives 1 and 3, the macroeconomic impact of
ESF measures was not measured; on the other hand, structuring
effects of different degrees on systems (training, active labour
market policy systems) were identified in a number of cases. Iden-
tification of net effects was not general practice in evaluations of
Objectives 1 and 3 for the period 1994 to 1999, but is noted in at
least six Member States with regard to Objective 3.

108. This finding is a very pertinent one. In terms of the upcom-
ing reallocation of performance reserve and the related mid-term
evaluation exercise, the Commission should take special care to
ensure that the recommendations made in the mid-term evalua-
tions (in terms of initial programme results) will actually direct
the distribution of the performance reserve towards those pro-
grammes identified as successful (i.e. achieving all objectives in a
cost-efficient way).

Audit of Article 6 projects

110 to 112. The 1994 to 1998 calls for proposals for pilot
projects were theme-oriented and hence did not specifically target
a group or groups. A database for projects from 1996 onwards
managed by the Commission (1994 and 1995 projects were man-
aged by the Member States) was established according to a range
of criteria, including target groups, and the long -term unem-
ployed were the beneficiaries of some of these pilot measures.
(The database has been available since summer 2000 on the web-
site of the Directorate-General for Employment and social affairs).

112. As regards the Court’s references to project management,
and to delays in implementation and in making final payments, a
distinction should be made between the 1994/1995 projects and
projects from 1996 onwards. Member States were and are respon-
sible for the management of the 1994/1995 projects, as well as for
passing on information to the Commission. In some cases this
has indeed resulted in considerable delays in the closure of projects,
since the Commission did not have sufficiently detailed informa-
tion to calculate the final ESF grant, always having to pass through
the relevant national public departments to obtain the necessary

information. The situation is quite different since 1996, and a
constant improvement in the management system and the estab-
lishment of different tools (handbook for promoters, standardised
reporting procedures, seminars, visits to monitor activities and
expenditure, external evaluation, intranet) ensures a consistent
approach from both the Commission and project promoters when
dealing with monitoring, reporting and payment requests.

113 to 115. The Commission recognises that the evaluation and
follow-up of the results and impact of the projects supported
between 1994 and 1997 may not have been sufficiently active to
enable the mainstreaming of information into general European
Social Fund measures. However, since 1996 these projects appear
on Europa on the ESF website. Also, an overall evaluation of the
1994 and 1995 projects was carried out by an external consult-
ant and, where relevant, a number of 1996 and 1997 projects
were included in the capitalisation exercise for projects funded
under the ‘Third system and employment’ programme. The 1996
and 1997 projects have also been publicised in the project direc-
tory published by the Commission.

More proactively, since 1998 the Commission has reinforced the
monitoring, evaluation and follow-up of Article 6 projects. Projects
are accompanied by an ongoing evaluation conducted by external
experts, whilst almost half of the projects have already been vis-
ited by staff from the managing unit. An interim evaluation report
was presented to the ESF Committee last December and the first
annual report will follow in December 2001.

The Commission has the impression, however, that in spite of
information provided through the ESF Committee and other ini-
tiatives as described above, Article 6 projects are treated as a low
priority by some of the Member States. This could perhaps be
linked to the fact that they are not responsible financially for these
projects. Nevertheless, projects are asked to mainstream and pub-
licise their activities as much as possible, and there is evidence
that in some cases a project has ended prematurely because it has
been ‘absorbed’ into mainstream activities by the Member State.
The Commission is actively considering what steps it can take to
ensure a better flow of usable information to the Member States
about the results and findings of Article 6 projects in order to
capitalise fully on these projects and improve mainstreaming into
the European Social Fund.

Management in the Member States

Vague definition of ‘long-term unemployed’

117 and 118. The Commission agrees with these comments, but
the definition of long-term unemployed rests with each Member
State.

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118 to 121. There is a degree of flexibility in the implementa-
tion of programmes to allow greater sensitivity to national and
regional needs and practices.

129. The Court has clearly outlined the Commission’s position.
However, the Commission would point out that the bottom up
approach cannot involve the same methodology in all cases, given
the different interventions and contexts involved.

Programmes had begun before the EES was introduced, and this
made it more difficult to fully integrate the statistical and pro-
gramming demands of the EES into programmes for 1994 to
1999.

131. The Commission considers that in the programming period
2000 to 2006 the ERDF is taken into account in the European
Employment Strategy and that this is apparent in the programme
of interventions.

Low priority of long-term unemployed and employment
aid

ESF

120.
It is also true that employment aid (particularly recruitment
subsidies) is important, but it may have significant windfall effects.
The fact that not all programmes make use of employment aid
highlights differences in national contexts.

132. The scope of the ESF is much wider than the fight against
long-term unemployment (LTU), and its impact should not be
quantified only on the LTU rate. Moreover, the EU’s developing
economic situation during the period in question needs to be
borne in mind.

CONCLUSIONS AND RECOMMENDATIONS

ERDF

126. The Commission agrees with the analysis that the ERDF
has two primary aims — to enhance the competitiveness of
regional economies and to create employment. Sometimes these
two objectives have contradictory effects in the area of employ-
ment.

A further point is that the Commission’s guidance on indicators,
together with its insistence on the development of information
systems in the Member States, will strengthen the quality of data
for the period 2000 to 2006.

127. This was also the Commission’s position in relation to the
period 1994 to 1999; hence the significant improvements for the
period 2000 to 2006.

128. The Commission will continue to promote good practice in
evaluation and the use of common definitions and methodolo-
gies where appropriate. However, as stated above on a number of
occasions, the Commission has no mandate to impose on the
Member States methodologies which in many cases would be
inappropriate to the specific nature of the interventions being
funded. Aggregation of data is not the primary objective in evalu-
ating Structural Fund interventions. Rather, the objective is to
establish progress towards economic and social cohesion, to iden-
tify improvements which will enhance the impact of the Struc-
tural Funds in their national or regional context, and to account
for the expenditure of the funds which have been allocated.

134. The Court states that there are inconsistencies between the
EES and ESF activities. As noted earlier, the EES arrived a number
of years after ESF regulations for the period 1994 to 1999 had
taken effect. However, ESF regulations for the period 2000 to
2006 take the EES as its starting point.

135. Employment aid is certainly an important element in sys-
tems to combat long-term unemployment, but it frequently comes
into play only after a process of integration (training, orientation,
individual monitoring, etc.) aimed at improving the employability
of job seekers who have been absent from the labour market for
a long period.

137. The Commission shares the Court’s findings and points out
that the evaluations related to priorities and measures as defined
in the programmes, and despite shortcomings, particularly with
regard to indicators and monitoring systems, they have produced
encouraging results and lessons for the period 2000 to 2006.

138. This issue has been considerably improved, for instance
through publications on the relevant website.

General recommendations

141. Through the current programmes, the Commission is work-
ing towards improvements in this area. Through the annual meet-
ings with Member States and managing authorities, it will review
all aspects of programme implementation including the question
of coherence between the ESF and ERDF.

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142. This recommendation has already been implemented, where
appropriate, in the new regulations for the Structural Funds for
2000 to 2006 and the guidance documents which the Commis-
sion has prepared for the current programming period. As regards
the recommendation to harmonise data collection techniques and
aggregation methods, this can only be done where appropriate,
i.e. where interventions and their contexts are similar.

143. The Commission agrees with the Court’s recommendation
and has already taken action to reduce windfall and displacement
effects, particularly through a stronger emphasis on indirect sup-
port to SMEs. This action was taken on the basis of the Commis-
sion’s study of the impact of the Structural Funds on SMEs and
had the specific objective of reducing windfall and displacement
effects.