WRITTEN QUESTION E-0741/04 by José García-Margallo y Marfil (PPE-DE) to the Commission. Fiscal incentives to encourage job creation.
Date: 2004-03-11
Institutions: European Parliament, Provisional data
Subjects: aid to undertakings, budget policy, cost-benefit analysis, economic analysis, employment aid, employment statistics, fiscal policy, job creation, national budget, social-security contribution, tax incentive

C 84 E/862

Official Journal of the European Union

EN

3.4.2004

Answer given by Mr Fischler on behalf of the Commission

(29 April 2004)

We adopted our Third Report on Economic and Social Cohesion on 19 February 2003. It concluded that
on the basis of the 1999, 2000 and 2001 figures available the regions with a per capita gross domestic
product (GDP) of more than 75 % of the Community (EU 15) average losing their eligibility after 2006
would be: Sterea Ellada and South Aegean (Greece), Castile-Leon, Valencia and Canary Islands (Spain),
Border, Midlands and Western (Ireland), Sardinia (Italy), Burgenland (Austria), Madeira (Portugal), East
Finland, and South Yorkshire (United Kingdom).

We draw the Honourable Member’s attention to the fact that future eligibility for the ‘convergence’
objective will however be based on the average of the figures for the three most recent years available
when the regulatory framework for the Structural Funds is adopted.

(2004/C 84 E/0954)

WRITTEN QUESTION E-0741/04

by José García-Margallo y Marfil (PPE-DE) to the Commission

Subject: Fiscal incentives to encourage job creation

(11 March 2004)

Has the Commission any precise statistics concerning job creation within the European Union as a result
of fiscal incentives offered to companies which provide jobs for certain population groups (women, young
people, etc.)?

Have any studies been carried out which analyse (cid:1) from a cost-benefit point of view (cid:1) the effect which
reducing the levies imposed on employment (including social-security contributions) has on the labour
market?

Has any analysis been carried out into whether or not such a reduction could jeopardise budget stability
and whether or not a moderate increase in indirect taxation would be sufficient to counter that risk?

Answer given by Mr Dimas on behalf of the Commission

(26 April 2004)

There are no EU level statistics on the employment effects of fiscal incentives for enterprises.

in their national actions plans for employment and in their
However, some Member States report
evaluations on these plans that the reduction in social security contributions (SSC) from enterprises, have
significant effects on employment when they are targeted. In France, it was estimated that a FFR 40 billion
reduction of employers’ SSC had created 106-170 000 jobs between 1993 and 1999 (plus 67 000 jobs
through the introduction of the 35-hours week). Reduced employers’ SSC have even reversed the upward
trend in unskilled labour.

Moreover, a Spanish report provides econometric estimates of the elasticity of employment with respect to
different types of taxes;
it concludes that, despite some methodological uncertainties, a reduction of
employers’ SSC has, by far, the most positive employment effects. Similar conclusions are reached in a
Belgian report, on the basis of macro-simulations from the Federal Planning Bureau (23 000 jobs created
by a EUR 1,2 billion reduction of employers’ SSC; 10 700 jobs created in the social profit sector by a
EUR 0,25 billion reduction). The ultimate criterion used here is the number of jobs created per billion euro
net investment in different measures, where the term ‘net investment’ means that feedback effects have
been taken into account (through wage and price adjustments, government budgets, consumption, etc.).

3.4.2004

EN

Official Journal of the European Union

C 84 E/863

It is widely accepted that the tax burden on labour is a crucial determinant of labour supply decisions,
notably for low-income earners, people starting their working career and members of single earner
households with children (1). However, there is insufficient empirical evidence on the macroeconomic
effects on employment of the reduction in tax and social security contributions (2), despite the results of the
mentioned modelling researches. An accurate evaluation of net effects on employment should take into
account the dead-weight, and the substitution and displacement effects. And these effects are difficult to
evaluate.

As mentioned earlier there is still
insufficient research evidence on the macroeconomic effects of a
reduction in tax and social security contributions. However, there is some evidence on the double dividend
effect, obtained in macroeconomic simulation studies. These studies generally show that environmental tax
reforms may have a small positive impact on employment without jeopardizing budget stability, when the
revenues from increased environmental taxes are used to reduce employers’ social security contributions.
We expect to be able to provide some more information on the effects of a reduction in tax and social
security contributions in the EC publication ‘Employment in Europe 2004’.

(1) See for further information the EC publication ‘Employment in Europe 2003’, September 2003 (Chapter 3).
(2) Some indications can be found in the ‘Impact evaluation of the European Employment strategy. Technical analysis’
from the Commission and in the OECD (1999), ‘Benefit systems and work incentives’ but also in the EC Economic
Paper No 183 ‘How much has labour taxation contributed to European structural employment?’, dated May 2003.
See for further information http://europa.eu.int/comm/employment_social/employment_strategy/impact_en.htm

(2004/C 84 E/0955)

WRITTEN QUESTION E-0743/04

by José García-Margallo y Marfil (PPE-DE) to the Commission

(11 March 2004)

Subject: MEDA programme and regions

As a Mediterranean region, Valencia has important social and economic links with its neighbouring
countries and regions.

In connection with the forthcoming review of the MEDA programme budget, has the Commission taken
into account the possibility of coordinating activities with regional governments in Mediterranean areas?
Are there any studies on the feasibility of creating interregional structures within the Mediterranean basin
in order to improve economic cooperation and increase development aid in the area?

Answer given by Mr Patten on behalf of the Commission

(15 April 2004)

The Commission attaches particular importance to the role of regions and local authorities in the Euro-
Mediterranean partnership. One of the objectives of that partnership is to involve the public and civil
society more closely. Local and regional authorities are important and useful partners in the creation of a
Euro-Mediterranean partnership that is close to the people and the Commission welcomes their growing
interest in cooperation with Euro-Mediterranean partners.

On 22 February 2002 in Barcelona, the mayors of Euro-Mediterranean cities were united in the desire to
inject new dynamism into the Euro-Mediterranean partnership and create a forum for dialogue, exchanges
and cooperation. Their declaration, referred to as the Euro-Med Pact, was the result of a very long-standing
wish on the part of the cities to have their own forum within the Euro-Mediterranean framework. The
Valencia Action Plan, endorsed by the Euro-Mediterranean Foreign Ministers on 23 April 2002, ‘welcomed
the Declaration of the Meeting of Euro-Mediterranean cities held in Barcelona last February. It also agreed
that the Euromed Pact proposal presented by Eurocities merited further study.’