Opinion of the Committee of the Regions on the "Employment policy aspects of EU enlargement"
Date: 2001-11-14
Institutions: European Committee of the Regions
Subjects: economic policy, employment policy, enlargement of the Union

C 107/94

EN

Official Journal of the European Communities

3.5.2002

Opinion of the Committee of the Regions on the ‘Employment policy aspects of EU enlargement’

(2002/C 107/28)

THE COMMITTEE OF THE REGIONS,

having regard to its bureau’s decision on 12 June 2001 to draw up, in accordance with the fifth paragraph
of Article 265 of the EC Treaty, an opinion on the subject and to direct Commission 6 — Employment,
Economic Policy, Single Market, Industry and SMEs — to carry out the preparatory work;

having regard to the study of
in
cooperation with the European Policies Research Centre, University of Strathclyde, Glasgow, concerning
the ‘Impact of the Enlargement of the European Union on Small and Medium-sized Enterprises in the
Union’, Essen and Glasgow, November 2000;

the ‘Rheinisch-Westfaelisches Institut für Wirtschaftsforschung’

having regard to the report of the European Commission ‘The free movement of workers in the Context
of Enlargement’, 6 March 2001;

having regard to the study of the European Commission, DG Economic and Financial Affairs, ‘Enlargement
Papers Number 4, II/419/01-EN’, June 2001;

having regard to the conclusions of the European Council meetings in Stockholm in March 2001 and in
Gothenburg in June 2001;

having regard to the report of the European Commission about the impact of the enlargement for the
border regions neighbouring the accession countries ‘Community Action for the Border Regions’, 25 July
2001;

having regard to its resolution on ‘The European Employment Pact’ CdR 156/1999 fin (1);

having regard to its resolution on ‘The Implementation of the European Employment Strategy’ CdR
461/1999 fin (2);

having regard to its opinion on the ‘Institutional Aspects of Enlargement — Local and Regional
Government at the heart of Europe’ CdR 52/1999 fin (3);

having regard to its resolution on ‘The ongoing EU enlargement process’ CdR 424/1999 fin (4);

having regard to its opinion on ‘The structure and goals of European regional policy in the context of
enlargement and globalisation: opening of the debate’ CdR 157/2000 fin (5);

having regard to the draft opinion adopted by Commission 6 on 28 September 2001 (CdR 269/2001
rev.) (rapporteur: Mr Volker Schimpff, D, PPE, member of the Saxony Landtag),

unanimously adopted the following opinion at its 41st plenary session held on 14 and 15 November
2001 (meeting of 14 November).

Views of the Committee of the Regions

1.

Introduction

The CoR sees the enlargement of the EU to include the Central
and Eastern European Countries as the decisive opportunity
for European policy at the beginning of the 21st century, as
through enlargement the decades-long division of Europe by
the Iron Curtain will be finally ended and the unity of Europe
truly established in freedom, peace and prosperity.

(1) OJ C 293, 13.10.1999, p. 70.
(2) OJ C 226, 8.8.2000, p. 43.
(3) OJ C 374, 23.12.1999, p. 15.
(4) OJ C 57, 29.2.2001, p. 1.
(5) OJ C 148, 18.5.2001, p. 25.

The CoR underlines its unconditional political commitment to
enlargement and it recommends that the momentum of the
accession process be maintained.

2. Prospects for the economy and employment

2.1.
The CoR believes that the planned enlargement will
bring benefits for all concerned. The Committee is convinced
that enlargement of the internal market, the establishment of
a pan-European market economy and the development of a
new, larger-scale European division of labour in the existing
and new EU Member States will be an opportunity to create
new, sustainable prosperity and stability. The CoR also believes,
however, that the challenge posed by this enlargement to the
Community and the applicant countries is far greater than that
of previous enlargement rounds.

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2.2.
The CoR points out that the process of enlargement
will bring about a changed division of labour. Thus, on the
one hand, the demand in the existing Member States for
qualified workers in higher-skill and service occupations can
be met by workers from the applicant countries. On the other
hand, capital from the old Member States, used with the
benefit of entrepreneurial experience and initiative, can make
a decisive contribution to overcoming development and
structural deficits in the new Member States, for example for
the modernisation of industry, the establishment of small and
medium-sized businesses, the restructuring of agriculture and
the development of the service sector, which under Communist
rule was of negligible importance. The CoR is aware that such
investment will be necessary to ensure favourable economic
and employment trends in the new Member States, and that it
will come mainly from the existing Member States. The
Committee believes that enlargement will also have a positive
impact on the research sector.

2.7.
The reorientation of pan-European transport routes
and the development of the future economic structures in
Central and Eastern Europe will be driven by the markets
and by the decisions of firms. In the interests of balanced
development, however, the CoR recommends that the EU, the
national governments and the regions and local authorities
familiarise themselves with these processes at an early stage.

2.8.
The CoR expects that both the linking of the existing
central areas with those in the applicant countries and the
development of the ‘new centre’ will from the outset have a
significant impact on employment, the development of self-
employment and new business start-ups. In the long-term the
demand for workers in the ‘new centre’ will actually lead to
immigration.

The CoR expects enlargement

2.3.
to give a positive
impetus to growth in the EU as a whole. The Commission
estimates that accession will — depending on progress on
reforms — boost GDP growth in the applicant countries by
2 % annually in the first ten years. For the period to 2009 the
Commission expects annual growth of between 3 and 4 % in
the economically strongest applicant countries. The Com-
mission expects an annual average GDP growth boost of 0.7 %
in the existing Member States.

The CoR stresses that EU enlargement will decisively
2.4.
improve the conditions for the development and deepening of
economic cooperation with the CEEC. The more intensive the
cross-border economic relations, the greater the prosperity
gains will be for all the states and regions concerned. The
development of this changed competitive situation will make
it possible to boost prosperity in the applicant countries and
the existing Member States.

2.5.
The CoR believes that the geographical shift associated
with EU enlargement will also change the competitive positions
of Europe’s economic and growth centres. It will offer them
particular competitive advantages and economic opportunities
if they have good existing transport links with the economic
centres of the applicant countries, or if they develop these.

2.9.
In view of the marked disparities in wage and pros-
perity levels and social standards between the EU and the
applicant countries, the CoR does not exclude the possibility
of structural distortions. Apart from the applicant countries’
far lower labour costs, other reasons for this are lower
environmental, social and technical standards, lower taxation
and expected aid disparities.

The freedom to provide services which will come into
2.10.
effect with accession may lead to competitive pressures in
border areas, for example in craft industries and construction,
cleaning and repair services and other ‘mobile services’. Low
hourly wage rates will give providers of simple services an
irresistible price advantage. Moreover, service providers from
the applicant countries will be able to undercut regional
businesses significantly in tendering for public services. This
will weaken regional markets which mainly provide services
for local and regional bodies.

2.11.
The CoR is convinced that the four basic freedoms of
the common market must apply without restriction in the
enlarged EU. The applicant countries already benefit from the
basic freedoms of movement of goods and capital under the
association agreements. With enlargement, freedom to provide
services and freedom of establishment will be added, and the
free movement of goods and capital will apply without
restriction. The impact on employment will vary from one
region or sector to another, both within the existing EU and in
the applicant countries.

2.6.
The CoR points out that, in terms of its transport and
economic geography, Europe essentially divides into a central
economic zone (which geographers call the ‘blue banana’) on
the one hand and coastal and border regions on the other. The
Committee believes that with enlargement the development of
a third zone, the ‘new centre’, can be expected, stretching from
the existing central economic zone to the EU’s future eastern
frontier.

2.12.
The CoR points out that the expected economic
upswing following enlargement will mean job losses in the
applicant countries, particularly in traditional economic sectors
such as heavy industry and agriculture, with workers unable
to find new jobs immediately in the newly developing
economic sectors. The resulting supply of both highly skilled
workers and low-paid workers will lead to migration, estimates
of the extent of which vary, in the emerging integrated and
liberalised pan-European labour market.

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2.13.
The CoR expects to see permanent immigration from
the applicant countries into the existing Member States, as well
as weekly commuters and — especially in border areas — day
commuters, which will have a significant influence on the
employment situation in the old Member States. Clearly border
regions, and especially towns, will be subject to increased
competition, not only in goods with a limited sales radius but
also in services. It is not yet possible to estimate the scale of
the impact on employment with any degree of certainty.

The CoR reiterates its call for improved integration of
3.4.
interreg IIIA and phare/CBC It urges that
interreg III A
resources be doubled in the current support period. This
will make possible the rapid construction of cross-border
infrastructure (bridges, roads), which fell into disrepair under
communist rule. Only in this way can the situation at the EU’s
external
frontier be used as a bridgehead for economic
commitment in the applicant countries.

The CoR also expects the applicant countries to enjoy
2.14.
a very strong competitive position outside border regions, e.g.
in the transport sector. This imbalance can be expected to
right itself only when the major disparities in wage levels and
social and labour standards between the old and new Member
States begin to disappear.

3. The Union and the (existing) border regions

3.1. With regard to the preparations for enlargement, the
CoR draws attention to the decision of the Heads of State or
Government in Nice to submit an action programme to
strengthen the economic competitiveness of frontier regions.
The Committee points out that this assistance must not be
restricted to drawing attention to support facilities in the
various areas or to extending existing measures. Rather, direct
additional support is needed for those affected at the EU’s
external
in order to promote cross-border and
transnational cooperation at a devolved level.

frontiers,

3.2.
The CoR therefore welcomes the Commission’s inten-
tion of providing substantial assistance to frontier regions with
its action programme adopted in July. The Committee is
convinced, however, that this is in itself insufficient to satisfy
the needs referred to above and the requirements of the
Council. In this context the Committee points out that the
Commission’s proposals must be guided by the policy line laid
down by the Council.

The CoR calls for additional support for SMEs in the
3.3.
affected sectors,
to enable them to prepare actively for
enlargement. The Committee feels that they should be offered
support in developing cross-border activity even before the
borders are opened up. SMEs are of course a part of the
economy which offers a very large number of jobs and training
places, and they must receive information, guidance and
support in developing cross-border business. Thus, language
courses or introductions to legal and economic systems could
be useful with a view to subsequent activity in the applicant
countries. An overall strategic approach should, the Committee
feels, include systematic training of management and work-
forces in small and medium-sized firms. They could then
help promote the use of information and communications
technologies on a cooperative, cross-border basis, and the
acquisition of experience via specific joint ventures and
networking.

The CoR calls on the regions and local authorities at
3.5.
the EU’s external frontier to begin the job of tackling the
employment dimension of enlargement. Special attention
needs to be paid in this context to the education sector.
Successful projects like cross-border measures for initial and
further training, bilingual schools and cross-border universities
could play an exemplary role here. The local and regional
employment pacts should also begin to be applied across
borders. The ‘Euregios’ could be a suitable framework for this.
The regions and local authorities at the EU external frontier
should also plan and approve cross-border commercial zones,
assisted by national government action to deregulate tax and
customs arrangements.

3.6.
The CoR considers it necessary to mitigate the effects
of the aid disparity to be expected following enlargement
between the new Member States and neighbouring regions in
the existing EU. If the opening up of markets to the applicant
countries causes structural problems in the existing Member
States, options should continue to be available enabling these
areas to adapt to changes in their economic structure and to
react in an appropriate way to the need for post-enlargement
restructuring. In this context the CoR also suggests that, with
a view to specific developments after enlargement, the regions
should, in line with the subsidiarity principle, be given greater
control over the use of European funding in their areas than
they have at present.

3.7.
The CoR is convinced that, in the long-term, enlarge-
ment will mean existing border regions finding themselves at
the heart of Europe and benefiting accordingly. In the short and
medium-term, however, disadvantages will be concentrated in
border regions to such an extent as to constitute a serious
potential threat to the Community’s employment objectives.
The Committee notes that these border regions were in the
past already disadvantaged as a result of their geographical
location at the Iron Curtain and, in the case of Germany’s new
Länder, as a result of the partition of Germany.

The CoR considers it to be an important task of the
3.8.
Union to make sure that these regions do not, in the process
of enlargement, have to shoulder their burdens alone in the
interests of all. As it would be contrary to the principles and
tasks of the EU if, as a result of enlargement, unemployment
were to rise sharply in these regions, counter-measures are
needed in order to achieve the employment policy target.

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3.9.
The CoR stresses that workers and firms in the border
regions will have to confront the new competition once
borders are opened up. However, the expected intensification
of competition does not, the Committee firmly believes,
constitute a sufficient argument for systematic and long-term
barriers aimed at restricting freedom of movement for workers
or the freedom to provide services. The CoR points out,
however, that it is nonetheless legitimate, in view of the likely
migratory movements of workers, to give consideration to
transitional periods, if unacceptable structural dislocations are
expected to arise as a result of enlargement. Any transitional
periods agreed with the applicant countries must not, however,
be designed to preserve the status quo for a number of years
in those existing Member States with a lesser degree of
flexibility or a lack of commitment to reform, or to introduce
protectionism within the EU.

The CoR stresses that any such transitional arrange-
3.10.
ments must be both extremely limited in scope and temporary.
If transitional arrangements are agreed, they should be capable
of adaptation to the specific needs of particularly hard hit areas
of the economy, the labour market or social security systems.
Individual Member States should be allowed the scope to
review the transitional periods regularly and to curtail them.

Finally,

3.11.
transitional arrangements should not be
aimed primarily at workers whose migration is dictated by
market circumstances. The CoR is opposed to transitional
arrangements aimed primarily at workers, and its stresses the
employment benefits of migratory movements of workers
which are the result of real demand in the labour market. The
Committee suggests that transitional arrangements concentrate
on migratory movements which are purely the result of
institutional arrangements such as differences in social security
systems.

The CoR suggests making towns the driving force
3.12.
behind cross-border development. In this way towns can give
a major impetus to employment through the local employment
pacts. A particularly important role falls here to towns formerly
divided by the EU external frontier (Frankfurt an der Oder,
Görlitz).

3.13.
A key role will also be played by the Euregios with
cross-border cooperation between border authorities serving
to mitigate the strains arising as a result of enlargement and to
exploit the opportunities thus created. Euregios at the existing
EU external frontier will then find themselves in the situation
of the old Euregios and will be able to learn from their
experience.

Brussels, 14 November 2001.

4. Demands on the applicant countries

4.1.
The CoR stresses that EU law must be fully implement-
if
ed and EU policies applied in the applicant countries,
enlargement is to produce the positive impact on employment
described above. The Committee sounds a warning against the
mistaken approach of a selective or delayed adoption of EU
principles and legal requirements. In particular the applicant
countries must create legal certainty and adopt decisive
measures against discrimination and corruption.

4.2.
The CoR is convinced that an active role by the
regional and local authorities in the applicant countries is
essential to enlargement. Particularly in view of the centralism
practised in these states now undergoing transformation which
were formerly dictatorships, a modern democratic society can
take root only if regions and local authorities take on a
growing importance. Implementation of EU law enacted at
national level is above all the task of these levels of government.

4.3.
The CoR points to the need for effective structures and
capabilities in the applicant countries for drawing on the
Structural Funds from the time of enlargement onwards. To
ensure that structural policy can be implemented, the regional
authorities have to be granted appropriate co-decision rights.

4.4.
The CoR calls on all the regional and local authorities
to step up their cooperation with regions and local authorities
in the applicant states. The Committee points to the high
importance of cooperation between these levels of government
which are close to the citizen and directly involved in problem-
solving. The assistance made available to regions and local
authorities in the future Member States in building effective
devolved structures will be a good investment in the achieve-
ment of a high level of employment throughout the enlarged
Union and in the cushioning of structural dislocations. In view
of the employment dimension of enlargement, it is in the
interest of all the regions and local authorities to ensure that
no avoidable mistakes are made.

4.5.
The CoR reiterates that enlargement must be under-
stood as a challenge. It is up to the regions and local authorities
to recognise the opportunities offered them and to exploit
competition actively as an inseparable part of the market
economy. State dirigism and protectionism would represent a
surrender in the face of the challenges of the EU’s eastward
enlargement. The CoR stresses that the desired employment
effects can be achieved only if after enlargement the four basic
freedoms of the common market are applied in both directions
and without restriction.

The President

of the Committee of the Regions

Jos CHABERT