Opinion of the Economic and Social Committee on the "Draft Commission Regulation on the application of Articles 87 and 88 of the Treaty to State aid for employment"
Date: 2002-07-18
Institutions: European Economic and Social Committee
Subjects: State aid, aid system, control of State aid, drafting of EU law, employment aid, job creation, labour force

7.10.2002

EN

Official Journal of the European Communities

C 241/143

Opinion of the Economic and Social Committee on the ‘Draft Commission Regulation on the
application of Articles 87 and 88 of the Treaty to State aid for employment’ (1)

(2002/C 241/27)

On 30 April 2002, the Commission decided to consult the Economic and Social Committee, under
Articles 149 and 150 of the Treaty establishing the European Economic Community, on the above-
mentioned draft regulation.

The Economic and Social Committee decided to appoint Mr Zöhrer as rapporteur-general to prepare its
opinion.

At its 392nd Plenary Session (meeting of 18 July 2002) the Economic and Social Committee adopted the
following opinion by 120 votes in favour, with two abstentions.

1. Gist of the Commission proposal

1.1.
The draft regulation on employment aid would replace
the current EU guidelines on State aid for employment. It
proposes to exempt certain types of aid which are allowed
under those guidelines, namely aid for the creation of new jobs
and aid to encourage employers to recruit disadvantaged
categories of worker, such as the long-term unemployed and
the disabled. The conditions under which the aid is exempted
have been clarified by comparison with the current guidelines,
and are in line with conditions already existing where aid is
given for the creation of jobs in new investment projects. The
draft regulation also exempts aid to meet the continuing costs
of employing disabled staff.

1.2. Many labour market measures taken by Member States
to promote the creation of employment or the recruitment of
disadvantaged workers do not fall under the definition of State
aid at all. In particular, general measures such as reductions in
the taxation of labour or in social costs which apply automati-
cally to all enterprises in a Member State who recruit, for
example,
long-term unemployed workers do not constitute
state aid. The draft regulation would apply only to those
measures which do fall within the definition of State aid under
Article 87(1) of the EC Treaty because they favour certain
enterprises over others.

2. General comments

2.1.
The Committee broadly welcomes the Commission
proposal, which helps implement the EU’s employment objec-
tives by clarifying the legal conditions under which aid for
employment can be granted without prior notification to the
Commission. This also makes for administrative simplification.

( 1) OJ C 88, 12.4.2002, p. 2.

2.2.
The promotion of employment is — rightly — becom-
ing an ever more important part of EU economic and social
policy. As the Commission points out in the recitals, Member
States are justified in applying measures that provide incentives
to enterprises to increase their levels of employment,
in
particular of workers from disadvantaged categories.

2.3.
Recital 6 of the Commission document states that
general measures which do not distort competition by favour-
ing certain undertakings or the production of certain goods do
not constitute State aid. The concern is that, in practice, it will
be difficult to distinguish aid in the sense of the present
regulation from general measures of this kind. In the interests
of legal certainty, a clear definition would be desirable.

The Committee would therefore encourage the Commission
to publish an explanation, describing general measures in
greater detail. In cases of doubt, the Committee recommends
that Member States seek prior clarification from the Com-
mission.

2.4.
The fundamental importance of legal certainty is also
illustrated by the controversies surrounding the application of
the regulation on aid for training and, more particularly, with
regard to sectoral training funds set up by the social partners
in certain countries.

The Committee would refer to two areas that it feels

2.5.
are not adequately addressed in the Commission proposal.

The Committee thinks that the proposed regulation
2.5.1.
should also apply to aid granted to ‘sheltered employment’
schemes. As a rule, such schemes have predominantly social
objectives that are laid down in national legislation. Hence,
their operations cannot be equated with those of a commercial
enterprise. The regulation should address these needs by
covering aid of this kind and providing a definition of sheltered
employment.

C 241/144

EN

Official Journal of the European Communities

7.10.2002

that

Relevant

2.5.2.
enterprises
studies demonstrate
operating in the social field (such as co-operatives, associations,
societies, etc.) can make an active contribution to creating new
jobs. The EU authorities have repeatedly recognised the
particular importance of enterprises in the social field. Recent
examples alone include the Green Paper on corporate social
responsibility and the European Commission’s consultation
paper on co-operatives in Enterprise Europe.

3.1.3. O l d e r w o r k e r s

3.1.3.1.
In the Committee’s view the proposed age limits
are too rigid because (i) age limits in the Member States vary
(often between women and men) and (ii) the situation may
vary depending on the particular sector or region concerned.
The Committee therefore proposes framing a definition that
can be deployed more flexibly in the Member States in cases
where generally applicable national arrangements are in place.

2.5.3.
special role,
reflected in the possible level of aid intensity.

In order to take due account of these enterprises’
the Committee proposes that this factor be

3.1.4. W o m e n

3. Specific comments

3.1. Article 2 — Definitions

3.1.1.

S m a l l a n d m e d i u m - s i z e d e n t e r p r i s e s

3.1.1.1.
Annex I defines SMEs with reference to the Com-
mission recommendation of 3 April 1996 concerning the
definition of small and medium-sized enterprises. It must be
ensured that any amendment to this recommendation during
the present regulation’s period of validity is also taken into
account and that the annex can be brought into line without
embarking on a fresh legislative process.

3.1.1.2.
The Committee endorses the more favourable
provisions for SMEs. However, it cannot accept the fact that
large firms in ‘non-assisted’ areas are to be excluded from the
‘job-creating’ provisions on the grounds that they do not ‘suffer
from particular difficulties’ (recital 21). Large firms, just like
small ones, may encounter particular difficulties which justify
their eligibility for job-creating aid.

3.1.2. Y o u n g p e o p l e

The two-year average period for calculating the
3.1.4.1.
unemployment rate is too long. If countermeasures are to be
taken in good time, a one-year reference period should be
sufficient. It must also be remembered that disproportionately
high female unemployment is not necessarily accompanied by
an overall unemployment rate above the EU average. The
Committee therefore proposes the following definition:

Any woman in a NUTS II geographical area where
3.1.4.2.
female unemployment has exceeded 150 % of the average
unemployment rate in the area concerned for at least one
calendar year.

3.1.5. D i s a b l e d w o r k e r s

3.1.5.1.
The Commission’s chosen definition is too restric-
tive. Also, by adding the words: ‘... and yet capable of entering
the labour market’, the Commission rules out support for
establishments that employ disabled people under sheltered
employment schemes, since this phrase refers exclusively to
the regular labour market. The Committee thus proposes the
following wording:

— any person considered disabled under national law.

3.2. Article 4 — Aid for the creation of new employment

3.2.1.
Basically it is understandable that the Commission
proposal should allow aid intensity to vary depending on
whether or not an area qualifies for regional aid pursuant to
Article 87(3)(a) and (c).

Under the Commission proposal, this category
3.1.2.1.
includes any young person under 25 who has not previously
obtained his or her first regular paid employment. The
Committee would point out that in a number of Member
States some young people have already had an employment
contract — albeit a special one — as part of work-linked
training, but were not kept on after training and are unem-
ployed. This group of young people should also be included.

3.2.2.
To calculate aid intensity, the Commission opts for
the same procedures as those used for regional aid. For non-
experts, these calculations are very hard to understand. They
also cause no end of practical difficulties, given the mix of
gross and net calculations involved. The Committee would
therefore encourage a general debate on the issue and proposes
that a simpler method be sought for the next planning period.

7.10.2002

EN

Official Journal of the European Communities

C 241/145

3.2.3.
Furthermore, the Committee fails to understand why
the steel sector is treated differently from other industries.
When it comes to creating new jobs and granting aid for that
purpose, the question of which sector is involved should be
irrelevant. The sectors already exempted under Article 1
(Scope) are the only possible exceptions.

3.3.

Enterprises operating in the social field

Enterprises operating in the social field (cooperatives,
3.3.1.
federations, associations etc.) often play a special role in
creating new jobs. In many cases, they operate regardless
of regional economic conditions in areas where traditional
industries are either non-existent or in crisis.

3.3.2.
This field also fosters social coherence and inte-
gration. Through their work, co-operatives and associations
secure the professional and social integration of people and
groups who, because of difficult personal circumstances, are
in danger of exclusion.

3.3.3. What is more, enterprises operating in the social field
sometimes play a key role in local communities that are in
difficulty as a result of industrial or social restructuring, or are
hit by urban migration. In such cases, these enterprises are
dynamic centres for sustainable local and regional develop-
ment.

In Article 4,

3.3.4.
therefore, the Committee proposes
setting an overall aid intensity ceiling of 20 % for enterprises
and organisations operating in the social field.

Brussels, 18 July 2002.

3.4. Article 6 — Additional costs of employment of disabled

workers

3.4.1.
The aid described in Article 6 of the draft regulation
for the employment of disabled workers relates solely to the
employment of such people on the normal labour market —
i.e. in for-profit enterprises.

Such aid does not

3.4.2.
include the employment of
disabled people as part of sheltered employment schemes.
These schemes may also involve bodies carrying out economic
activities, but they have a largely social remit and are not
profit-based.

3.4.3.
In order to take appropriate account of these schemes
and their function for society, the Committee proposes that,
in general terms, aid to assist the setting-up or maintenance of
such establishments (including administrative and transport
costs) should be exempt from notification.

3.5. Article 11— Transparency and monitoring

3.5.1.
The Committee considers that the obligation on
Member States to keep records of any aid granted must not
result in administrative tasks being shifted onto enterprises,
thereby posing an additional bureaucratic and financial burden.

3.6. Article 12 — Entry into force and period of validity

3.6.1.
The Commission’s proposed period of validity —
until 31 December 2006 — matches the Structural Funds
planning period. To ensure continuity, the Commission should
review the regulation in good time so that a new regulation
can enter into force immediately the old one expires.

The President

of the Economic and Social Committee

Göke FRERICHS