Opinion of the European Economic and Social Committee on ‘Industrial change and economic, social and territorial cohesion’
Date: 2004-06-30
Institutions: European Economic and Social Committee, Provisional data
Subjects: EU industrial policy, EU regional policy, competitiveness, economic and social cohesion, industrial restructuring

7.12.2004

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Opinion of the European Economic and Social Committee on ‘Industrial change and economic,
social and territorial cohesion’

(2004/C 302/11)

On 29 January 2004, the European Economic and Social Committee, acting under Rule 29(2) of its Rules
of Procedure, decided to draw up an opinion on ‘Industrial change and economic, social and territorial
cohesion’.

The Consultative Commission on Industrial Change, which was responsible for preparing the Committee's
work on the subject, adopted its opinion on 7 June 2004. The rapporteur was Mr Leirião and the co-
rapporteur was Mr Cué.

At its 410th plenary session of 30 June and 1 July 2004 (meeting of 30 June), the European Economic and
Social Committee adopted the following opinion by 155 votes, with 13 abstentions.

Summary

The aim of this opinion is to check whether the instruments
for fostering economic, social and territorial cohesion are
adequate and whether or not the framework conditions are
favourable to firms, allowing industrial change to be carried
out in a way which is compatible with firms' competitiveness
requirements.

Seventeen points are set out in the conclusions and recommen-
dations section; these point to the need for improvement in
terms of policies, instruments, criteria for determining regions'
eligibility for Community funds, the implementation of good
practices, and the search for synergies between policies and
instruments, as well as general coordination in implementing
the EU's structural strategies, such as the Lisbon Strategy, the
Structural Reforms and Sustainable Development.

The thinking behind the above is based on the following ideas;
these are set out in sequence and provide the main themes
appearing throughout the opinion:

— regional development as a factor regulating globalisation,
through the creation of regional clusters, as an effective
way to attract firms to an area and encourage them to stay;

— corporate social responsibility and the implementation of
‘good practices’ as part of an approach involving preventive
and other measures for anticipating and managing change;

— negotiations and social dialogue in firms to ensure that
restructuring is tackled in a socially responsible fashion,
with a firm's management and workers adopting a positive
attitude to seeking solutions which are seen as successful by
the firm, workers and community, thus striking a balance
between social and economic aspects;

— action in partnership between businessmen, social partners,
civil society (universities, research and innovation centres,
associations, etc.) and local authorities, so as to create the
right conditions for boosting productivity and improving
regions' growth potential; and

— proposal to create the status of ‘most favoured region’ for
those regions which have high levels of social and employ-
ment cohesion and suddenly lose skills because firms relo-
cate, without having any alternative economic activities to
these regions would
sustain local employment
receive financial support, with the specific aim of regener-
ating the local economic fabric.

levels;

Introduction

In its own-initiative opinion entitled Industrial change: current
situation and prospects - An overall approach (1), the EESC
expressed the view that the CCIC's future work should aim to
promote ‘a framework and conditions allowing industrial
change to take place in a way compatible both with firms' need
for competitiveness and with economic, social and territorial
cohesion’, thus laying down the basis for this commission's
work and outlining the type of contribution it should make
and the kind of topic it should cover in its opinions. The deci-
sion to draw up this own-initiative opinion on Industrial
change and economic, social and territorial cohesion is to be
seen against this background.

1. Definitions

In order for this own-initiative opinion to be viewed in
1.1
the right context and properly interpreted,
‘industrial change’
has been defined as ‘the normal and continuous process of an
industrial sector pro-actively responding to the dynamic move-
ments in its business environment in order to remain competi-
tive and create growth opportunities’ (2).
‘Restructuring’ refers
to ‘a particular form of
industrial change and regularly is
[viewed as] an ad hoc process of (often enforced) adaptation to
the conditions in the business environment in order to regain
leading to discontinuities in business activ-
competitiveness,
ities’ (3). The idea of ‘anticipating’ change provides the key to
good management of such change, because it means that
problems can be avoided in the restructuring process. Antici-
pating change involves studying and forecasting future terms of
competition and market requirements, allowing the necessary
adjustments to be planned in good time, thus keeping a firm's
social and productivity problems to a minimum.

(1) OJ C 10 of 14.1.2004, pp 105 et seq.
(2) EESC own-initiative opinion on ‘The repercussions of trade policy
on industrial change, with special reference to the steel sector’
(CESE 668/2004).

(3) Ibidem.

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1.2
Globalisation can be defined as efforts to step up and
facilitate trade relations between countries, to which end trade
barriers between countries are dismantled,
import taxes cut
back or abolished, and international groupings such as the EU
and Mercosur are consolidated. As part of this process, govern-
ments in every country offer incentives to attract foreign firms
to establish operations within their borders and facilitate the
internationalisation of all aspects of their trade. Globalisation
also calls for common, basic rules to be established and
respected world-wide.

Economic, social and territorial cohesion policy aims to
1.3
narrow current
economic and social disparities between
Member States and between regions, speed up growth and
encourage more sustainable development, helping less-favoured
regions adapt to the challenges of a knowledge-based economy,
thus assisting all regions to achieve the objectives of the Lisbon
strategy.

More specifically, this policy has to target infrastructures, the
environment, entrepreneurship, per capita income, access to
employment and social security, steps to counter social exclu-
sion, access to new information technologies, education and
lifelong learning, better administration and a stronger role for
economic and social operators.

1.4
One good definition of ‘cluster’, as defined by Michael
Porter (Professor at the Harvard Business School) in his book
on ‘The Competitive Advantage of Nations’, is ‘a geographically
proximate group of interconnected companies and associated
institutions (universities, public agencies or trade associations)
in a particular field, linked by competition and cooperation’.

2. The impact of globalisation and the inevitability of

industrial change

2.1
Throughout European society, there is acceptance of the
fact that industrial change is inevitable as a result of globalisa-
tion and lasting changes to the world economy; these are hall-
marked by rapid, far-reaching developments in the markets and
in behaviour, growing technical complexity and considerable
consumer involvement in the design and production of goods,
products and service delivery.

2.2
Globalisation is the driving force behind world-wide
labour market and productivity competition. Multinational
companies are redirecting investment to countries with low-
cost labour, direct market access and technological skills.

Increased competition, an ageing population, and new
2.3
consumer requirements and standards all come together to
create an environment where there are, and will continue to
be, major tensions and problems.

2.4
The European Union must face up to these tensions and
problems with determination using measures which anticipate
de-industrialisation in Europe, i.e. taking steps to prevent the
following three problems from occurring at the same time:

— the relocation of firms (1);

— a fall in employment and production; and

— a worsening trade balance.

These three things are not yet occurring at the same time, but
it is clear that there is a genuine deterioration in the employ-
ment and trade balance situation.

2.5
The EU will only be able to mount a successful response
to these challenges if industrial policy is revamped in such a
way as to make it more pro-active and provide comprehensive,
systematic transparency regarding the particular, cumulative
effects of any decision affecting the European industry's cost
and efficiency structures – in terms of both horizontal aspects
and specific industrial sectors, such as the steel and textile
industries, all the while bearing in mind the impact of enlarge-
ment.

3. Regional development as a factor regulating globalisa-

tion: clusters

3.1
It is a paradox of our times that inequalities persist in an
era when scientific and technical progress is such that everyo-
ne's hunger should be able to be satisfied and yet at the same
time, there is a serious risk that the ‘new global economy’,
because it is rooted in deregulated competition, may exacerbate
these asymmetries.

It is against this background that regional development is to be
instrument for regulating globalisation itself,
seen as a vital
paying more attention to people's needs, irrespective of where
they are located, giving them easier access to goods, services
and opportunities.

Development has to come to the people, wherever they
3.2
might be; it cannot be blithely assumed that the mobility avail-
able to some for boosting personal development is available to
everyone, apart from anything else because those lacking most
in means are also those who are least able to move around.

Regions must mark out their ambitions regarding industrial
change and restructuring, pinpoint the investments which need
to be made and define the cooperation necessary between the
public and private sectors, and more particularly infrastructure
for education and vocational training.

3.3
The EESC deems the creation of regional ‘clusters’ to be
the most effective way of attracting firms and encouraging
them to stay; this is a key component of regional competitive-
ness and at the same time a driving force for economic, social
and territorial cohesion, as well as a means to avoid the nega-
tive economic, social and territorial repercussions which might
be triggered by industrial change and restructuring.

(1) In September 2004, the EESC will adopt an own-initiative opinion
on ‘The scope and effects of company relocations’ (CCMI/014).

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The following factors are likely to ensure that the ‘cluster’
system makes it easier for firms to stay in an area and keep
skills in a region:

— stronger and better cooperation between firms;

4. The effects of industrial change and restructuring

The process of industrial change and restructuring entails reper-
cussions of varying degrees in a variety of aspects as well as
challenges at sectoral and regional level.

— opportunities for improving technological skills linked to
the presence of R&D institutes associated with the ‘cluster’
process (e.g. the car industry ‘cluster’);

4.1 Social aspects

— networking of clients, sub-contractors and suppliers, which
fosters the establishment and development of closer ties
between socio-economic operators, particularly between
regions;

— involvement of

firms in trans-national networks giving

access to new markets; and

— development of workers' mobility experience within ‘clus-

ters’.

infrastructure,

3.4
Since firms in the present economic climate compete on
a global basis, they gravitate towards ‘clusters’ relating to their
area of business, and may gain competitive advantages from
doing so. These advantages are rooted in generic factors such
as: the qualifications and skills of the working population, the
quality of governance,
local and
territorial
regional innovation and development levels and generally the
quality of life in the region (which might require, for example,
public intervention to clean up derelict
industrial areas).
Regional
‘clusters’ may be key factors in boosting economic,
social and territorial cohesion and provide a reason for firms to
move to developing regions, as long as the EU and national
governments carry out and fund programmes to provide back-
up for the establishment of technology firms, promote develop-
ment, innovation and vocational training and foster partnership
between firms, universities, local authorities, social partners and
civil society.

3.5 Metropolitan areas, as centres of culture and a variety of
activities where public and private operators work together to
seek solutions for change and modern developments, have a
key role to play in successfully creating ‘clusters’, since these
areas ‘are in the front line of technological change, affecting
transport, construction and public works,
information and
infrastructure management, etc.
communication technologies,
This technological change is also at
industrial
the root of
restructuring and the relocation of workforce activities and
services with high added value. Economic specialisation also
has a spatial manifestation:
‘clusters’ or groups of business
working as part of a network with research and innovation
centres and universities’ (1).

The major challenge for metropolitan areas also relates to
social cohesion problems such as exclusion and poverty, the
solution to which clearly involves the harmonious, balanced
and sustained development of the major metropolitan areas in
Europe, including links to neighbouring areas. Nevertheless, the
lack of consistent data makes it difficult to find suitable solu-
tions.

(1) EESC own-initiative opinion on ‘European Metropolitan Areas:
socio-economic implications for Europe's future’ (CESE 968/2004).

All economic operators acknowledge that restructuring and
consolidation is a prerequisite for businesses to survive and
improve their competitiveness.

Restructuring is a social problem when there are neither
region
suitable
concerned nor possibilities for mobility.

employment alternatives available

in the

Moreover, firms should act in a genuinely socially responsible
fashion, involving workers' representative bodies and also local
and regional authorities early on in their approach to restruc-
turing.

Industrial competitiveness must be achieved through social
dialogue.

4.2 The challenges facing businesses

The major challenge facing businesses is to find a proper
response to change, taking account of the need to improve
competitiveness in a complex environment and particular
social and institutional situation.

The repercussion for subcontracting SMEs of industrial change
set in motion by big companies cannot be ignored. There
should be a cooperation network allowing SMEs to make the
necessary adjustments.

4.3 Impact on accession countries,

in particular

the impact on

employment

Specific development and employment support policies must
be devised to ensure that change management and industrial
restructuring in the enlargement countries is seen as a major
opportunity to be grasped for managing economic growth,
improving quality of life and protecting the environment.

Foreign direct investment (FDI) comes chiefly from EU coun-
tries (more than 60 % in 1998) and is mainly channelled to the
Czech Republic, Hungary and Poland. These three countries
accounted for around 75 % of inward investment in the enlar-
gement countries at the end of 2001. The case of Košice
(Slovak Republic) provides one example of success in the steel
sector, where FDI enabled the modernisation of local plants
through agreements between local
without any job losses,
authorities, workforce mobility,
innovation and
competition. The impact of multinational strategies on employ-
ment depends on the type of investment involved.

incentives,

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THE IMPACT ON THE EMPLOYMENT: THREE POSSIBLE SCENARIOS

Multinational Strategy

Employment impact

FDI originating country

FDI beneficiary country

(1) Web extension: very local and not very exportable
products or services – Energy – Transports – Banks –
Trade – Food Industry - Tourism

Low or non-existent in the
short term. In the medium
to long term: reorganisa-
tion of back office func-
tions.

or

less

More
sizeable
depending on the purchase
of existing activities (with or
without productivity gains)
or creation ex-nihilo.

(2) Horizontal capacity extension: re-exportable products

or services - Cars - Chemicals - Iron and Steel

Immediate indirect impact
(no capacities created) and
substitutional
possible
effects in medium term, cf:
Seat/Škoda

Major
restructuring in the
event of restarting previous
activities.

Job creation if
enterprises.

‘Greenfield’

(3) Relocation to bring down costs: highly re-exportable
products or services – Textile – Foundry - Car Compo-
nents– large scale Electronics - Computer Services
with low or medium added value

Major
short or medium-
(length of
term impact
substitution varies time in
line with activities)

Major
restructuring in the
event of restarting previous
activities.

Job creation if
enterprises.

‘Greenfield’

Risks in medium to long-
term: relocation.

(Source: studies analysed by Alpha group)

(1) & (2):

These two scenarios cover a horizontal investment strategy adopted by multinationals. In the
first scenario multinationals mainly seek to move into new markets and extend their services
network, such as banking services and transport and energy networks. In the second, multina-
tionals try to expand their production capacities for services or products which are easily re-
exportable.

(3):

This scenario covers a vertical delocalisation strategy which has a greater employment
impact.

This scenario covers firms whose activities are essentially labour intensive (for example, textile and car elec-
tronics).

4.4 Regional and local effects

In managing workers' skills, firms should consider entering into
agreements and adopting joint approaches with employees as
regards requirements for training, skills and qualifications.

infrastructure,

In the event of industrial restructuring or a firm's relo-
4.4.1
cation elsewhere,
and human
resources assets must be assessed and measures taken to attract
new businesses into the area. In some cases, it is vital to clean
up the soil and sub-soil when a firm leaves a region so that the
area can be put to another use.

equipment

Investors receiving public funding must bear more responsi-
bility locally and this must be monitored.

Cooperation agreements between all parties is necessary to
breathe new life into regions badly hit by industrial change.

4.5 Impact on human resources

All parties must be committed in their approach to ensuring
that less qualified workers have access to training. This is one
condition for ensuring that local businesses remain viable.

4.6 Impact on the European Social Model

It is a fundamental for the sustainability of the European Social
Model to reach a high level of economic, social, environmental
and territorial cohesion.

Industrial restructuring within the European Social Model will
be successful if everyone involved benefits from it.

4.7 Aspects of interaction between industrial and services sectors

4.7.1
Since the 1970s, economic growth has been hall-
marked by the services sector becoming predominant over the
it is vital that
manufacturing industrial sector. Nevertheless,
there be a certain interdependence and interaction between the
two sectors in order to increase productivity, boost innovation
and improve the quality of products and services.

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As far as industrial restructuring and change is concerned, this
interaction is crucial, since firms providing services (such as
R&D) for industrial firms generally follow the latter if they relo-
cate.

corporate restructuring’, has also made it possible to pinpoint a
series of good practices in this connection.

Generally such good practice involves:

5. Corporate social responsibility and economic and social

cohesion

— the need to anticipate employment problems entailed in
possible restructuring and deal with these upstream of the
process;

The EESC Opinion on Industrial change: current situa-
5.1
tion and prospects — An overall approach (1) states that
Europe needs to apply ‘a new paradigm focused on ’industrial
change with a human face‘ which is based on competitiveness,
sustainable development and social and territorial cohesion.’
The Lisbon strategy objectives provide the backdrop to this
statement; to this end, the EU has made a special appeal to
firms' sense of social responsibility, bearing in mind vocational
training requirements and best practices for life in general,
inclusion and
work organisation, equal opportunities, social
sustainable development.

It

5.2
is generally acknowledged that corporate social
responsibility, based on an ethical approach, can be applied in
two key spheres:

— working conditions and employment; and

— living conditions

in the

the businesses
concerned are operating,
i.e. a business's involvement in
boosting the local economy and promoting acceptable
environmental practices in the local community.

area where

Firms are generally asked to involve the social partners, local
authorities, consumers and suppliers, each at their own level of
responsibility.

5.3
This exercise in corporate social responsibility (in rela-
tion to the above-mentioned aspects) may be valuable as a tool
for helping achieve economic, social and territorial cohesion, if
a proactive, preventive approach is adopted to managing
change and restructuring;
the parties
involved.

this will benefit all

6.

‘Good practices’ in restructuring, in terms of social and
local responsibility

is

The

Fund

encouraging

European Social

6.1
and
supporting ‘good practice’ as regards ways to manage industrial
change. The European Monitoring Centre on Change (EMCC),
at the Dublin-based European Foundation for the Improvement
of Living and Working Conditions, regularly reflects such good
practice in its moves to promote local and regional corporate
social responsibility. Moreover, the first phase of consultation
launched by the Commission, entitled ‘Anticipating and mana-
ging change: a dynamic approach to the social aspects of

(1) OJ C 10 of 14.1.2004, pp. 105 et seq.

— the need to study the direct and indirect impact on the

region concerned;

— action by, and the mobilisation of, operators in the field
(firms, trade unions, regional and local public authorities,
associations and civil society, etc);

— the promotion of collective bargaining and the requirement
for ‘social dialogue’ between firms, worker representatives,
and local and regional authorities — these are vital in the
search for solutions and alternatives to firms' strategic relo-
cation decisions;

— social support measures accompanying change (retraining,
careers
skills promotion amongst workers,
training,
guidance and steps to renew employment bases, develop-
ment of the industrial fabric; workers setting up businesses,
etc.);

— commitments by firms to do business with workers who
have had to leave because of activity outsourcing and who
now provide services as sub-contractors;

— the emergence of innovative solutions by developing an

entrepreneurial spirit; and

— timely information for the whole network of subcontracting
SMEs, public services and authorities, universities and busi-
ness associations on locally based multinationals' restruc-
to implement when
turing plans;
multinational firms are involved which have a decision-
making centre located outside the region, country or even
Europe.

this is more difficult

Negotiation and social dialogue are crucial

6.2
if restruc-
turing is to be implemented in a socially responsible manner; it
is therefore very important that both firms and trade unions
are positive in their approach to seeking successful restruc-
turing formulas which are good for firms, workers and local
communities. The Commission gave a boost to these good
practices in directives 98/59/EC, 2001/23/EC, 94/45/EC, and
2002/12/EC, which lay down certain guidelines and require-
ments. The 2002 European-level initiative advocating ‘socially
responsible’ restructuring is to be noted here, on the basis of
which a series of guidelines were issued in June 2003. Every
alternative to laying off workers should be explored.

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6.3
There are many positive instances good practice in this
field, of European firms adopting socially responsible practices
as part of industrial change and restructuring strategies. One
such case — among many — is the Arcelor steel group, the
result of a merger between Arbed, Aceralia and Usinor;
it
decided — against a backdrop of structural overcapacity in
steel flat production and with a view to improving synergies —
progressively to close the Liège steelworks and scale down
production in Bremen and Eisenhüttenstadt. In the light of the
job losses these measures would entail, Arcelor undertook to
assist all those concerned, rehabilitate all the sites affected and
contribute to the reindustrialisation of
the local economic
fabric, with the help of all the parties involved.

On the other hand, an example of what happens when such
good practices are not adopted can be seen in the restructuring
process in the car industry in Mezzogiorno (Italy), where the
company involved was planning to transfer part of its sub-
contracting business abroad without envisaging or organising
any adequate back-up measures or solutions to the problems
thus created.

firms

The industrial change needed for

6.4
to remain
competitive should be backed up by the authorities; this should
include funding for education and training for the work-force,
and against this background, steps should be taken to promote
new technologies. Moreover, it is necessary to work towards
increased corporate social responsibility, the social benefits of
creating more and better jobs and environmental sustainability
in regions where these businesses are located.

help regions maintain and improve their economic and social
structures in a balanced fashion.

8. The proposals for reform set out in the Third Report

on Economic and Social Cohesion

8.1
The Commission is proposing a new design for EU
economic, social and territorial cohesion policy, built up
around three priorities:

Convergence

The aim is to foster growth and job creation in the Member
States and less-developed regions.

Regional competitiveness and employment: anticipating and fostering
change

This priority is welcomed by the EESC in relation to the topic
of this opinion, because it links industrial change with cohesion
policy, through national and regional programmes which are
specifically geared to certain related effects, prevention, antici-
pation and adjustment to economic developments. All this ties
in with the political priorities of the European strategy for
employment and for the promotion of
labour quality and
productivity, together with social inclusion.

European regional cooperation

7. Industrial change and economic, social and territorial
cohesion as instruments of sustainable development

The aim here is to encourage smooth, balanced harmonisation
throughout the European Union by means of measures which
foster cross-border and transnational cooperation.

7.1
The aim of sustainable development is central to the EU.
The main trans-European projects such as transport networks
and other infrastructures in the pipeline at EU level are not
enough to promote sustainable development or to launch
development in general in the least favoured regions. Persistent
disparities between countries and regions
in production,
productivity and access to employment are rooted in shortcom-
ings in key areas of competitiveness, namely human and
innovation capacity
physical capital, environmental aspects,
and regional governance.

Opportunities created by industrial change — due to its
7.2
impact on the economic fabric, social and scientific issues and
civil society and local authority involvement,
through the
combined use of social cohesion instruments and policies and
Community structural policies — may significantly assist the
process of sustainable, balanced development. Change does in
fact require certain adjustment, research, innovation and new
attitudes, both on the part of businessmen and the social part-
ners and civil society acting in partnership. Here the aim is to

9. Comments on the Third Cohesion Report's proposals

on industrial change and restructuring

The EESC welcomes the fact that the Third Report on
9.1
Economic and Social Cohesion, published on 17 February, has
specifically and objectively tackled the subject of industrial and
economic change in general.

In particular, it fully endorses the principles underlying
9.2
the strategies of
the Third Cohesion Report, and the link
between the Lisbon Strategy and the future regional policy with
regard to knowledge-oriented programmes and national and
regional programmes, with a view to driving forward the
economic development of the more disadvantaged regions. It
nevertheless deems these measures to be inadequate and would
raise a number of concerns regarding the following points:

— the lack of quantified objectives for implementing the cohe-
sion measures, either at Member State or regional
level,
indicating a slackening of the requirements for achieving
these objectives from the outset;

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— the absence of guarantees that, during the upcoming 2007-
2013 programme, there will be greater cohesion between
regions and not just between Member States as was the
case with the previous 1994-1999 and 2000-2006
programmes; if this does not change, it will indicate poor
policy implementation and a failure on the part of the EU
to implement its economic, social and territorial cohesion
policy to assist the less developed regions;

— the lack of a specific monitoring process to ensure that the
necessary financial resources are earmarked for the develop-
ment of the less favoured regions, bearing in mind that, as
in the past, the more favoured regions may benefit more
than the less favoured ones because they have better
production infrastructures and service provision;

— the absence of proposals for incentives to encourage busi-
nesses to pursue a policy of social responsibility with a
positive impact on economic, social and territorial cohe-
sion;

— the lack of an effective method for coordinating the
outcome of cohesion policies,
for
Member States which do not achieve the cohesion policy
objectives;

entailing penalties

— the fact that industrial change has not been recognised as a
factor which may generate and fuel regional
imbalances
because of the possibility that businesses might relocate,
causing huge upsets at various levels; indeed, the regions
concerned run the risk that their cohesion position, which
may have been strong, might be adversely affected, jeopar-
dising their medium and long-term capacity to recover; the
report does not make any specific proposals as to how to
prevent this from occurring.

10. Conclusions and recommendations

10.1
The EESC considers that the proposals for cohesion
policy reform presented by the Commission are inadequate,
and that the opportunity to manage change has not been fully
grasped; such change is not only unavoidable, but it is also a
crucial element for securing a dynamic economy and a lever
for attaining sustainable development. All this is because not
enough steps have been taken to obtain maximum benefit
from the situation and to combine the opportunities created by
the Lisbon strategy, its positive approach to change, competi-
tiveness and cohesion, the Social Policy Agenda — a key objec-
tive of which is to pinpoint and anticipate the management of
change — and the European employment strategy, in particular
its focus on adaptability.

10.2
The EESC feels that it is necessary to strike a balance
between economic and social aspects and to manage industrial
change with the two-fold aim of a) securing and promoting
comprehensive social objectives (training, employment, oppor-
tunities and social protection) and b) ensuring the survival of
businesses by means of specific support policies which guar-
antee restructuring and consolidation as a condition of their
through integrated,
survival and increased competitiveness,
complementary actions involving the main operators, i.e. the
state (at national, regional and local level) and the businesses
concerned.

10.3
The EESC deems it vital to the success of economic,
social and territorial cohesion policy that there be better coor-
dination in implementing the EU's current development poli-
cies, involving: existing directives governing workers' participa-
tion in firms; social dialogue covering all the industrial sectors;
regular consultation of the EESC's Consultative Commission on
Industrial Change (CCIC); the European Monitoring Centre on
Change (EMCC);
fund deployment; competition
policy; and steps to promote implementation of corporate
social responsibility. To this end, it is crucial that all the parties
concerned demonstrate compromise and commitment.

structural

The EESC considers it necessary to draw up a series of
10.4
principles for situations where restructuring is needed; these
principles should provide a basis and back-up for good prac-
tice, involving the requirement that firms' competitiveness be
boosted and other requirements pertaining to the consolidation
of economic, social and territorial cohesion.

The EESC feels that

10.5
the continued deterioration in
Europe's competitiveness compared to that of the USA is due
to the fact that there is no obligation on Member States to
meet the deadlines for implementing the EU's basic strategies
and instruments such as the Lisbon strategy, structural reforms
and sustainable development.

If this trend continues, the EU runs the risk that it will slip
back from second to third place in terms of world power
(Japan, China and India are waiting in the wings); this must be
avoided. The EESC therefore concludes that the Commission
has to impose stricter requirements and take on a more active
role in coordinating and monitoring effective implementation
of the aforementioned strategies. A key coordination measure
might entail appointing a commissioner responsible for moni-
toring industrial change and relocation; this would allow a
better link-up between industrial policy and environmental
protection.

In this own-initiative opinion, the EESC recommends the following:

a) It is necessary to revisit the strategic vision for cohesion in
view of the current challenges facing the EU, by devising a
new, stronger concept of cohesion, which is not limited
just to the financial aspects of the Structural and Cohesion
Funds, but which bears in mind the following three-fold
aim:

— to strengthen European economic cohesion;

— to promote a ‘community spirit’ in Europe; and

— to boost solidarity between the countries and regions of

the EU.

b) The absolute criterion of per capita GDP for determining
eligibility should be altered, given that this is a source of
injustice as regards implementation of the structural poli-
cies. As is well known, relative wealth is not only reflected
in cold statistics such as per capita GDP. Workers' skill
levels, infrastructure shortcomings, distance from the hub
of the European economy and demographic structure —
these are all factors relevant to a region's eligibility.

C 302/48

EN

Official Journal of the European Union

7.12.2004

c) A new matrix of criteria for assessing the regions should be
drawn up so as to produce a new map of European cohe-
sion requirements.

d) As far as territorial cohesion is concerned, the way that the
Community's territory is managed should be revamped so
as
to allow multi-centred, harmonious, balanced and
sustained development to take place. Such spatial planning
should bear in mind inter-regional physical and economic
cohesion, involving local, regional national and European
authorities in the construction of a European territorial
development model
leading to new economic strategies
(investment, R&D and social (employment) strategies).

e) A more speedy approach has to be adopted to formulating
structural policies for economic, social and territorial cohe-
sion, as a way of anticipating economic change in general
and industrial change in particular. The current ceiling on
financial resources (1.2 %) — which might even be lowered
in the 2007-2013 financial perspectives — is too low to
cover needs and it
limits the scope for action, which
prevents
the cohesion objectives being attained more
quickly.

f) It is important to focus on human resources, channelling
resources to vocational courses at school and colleges and
vocational training per se, but adopting a flexible approach
which can be adapted to the various problems facing
Member States and regions.

g) Special assistance must be provided to regions where the
industrial production structures are undergoing dramatic
restructuring, by pinpointing those sectors and regions
where there is a high risk that competitiveness may be lost;
specific proposals
taking
account of the particular features of each sector. Particular
attention should be paid to the impact of industrial restruc-
turing on the new Member States.

support must be made,

for

h) In this connection, a ‘most favoured region principle’ must
be established, whereby it would be possible to provide
fostering regional
support aimed at
specific financial
conversion. Social dialogue has a key role to play here, as
well as does civil dialogue, involving all the local protago-
nists (firms, universities, research centres, local authorities,
associations, trade unions, etc.). It would thus be possible
to breathe new life into the economic fabric of a region by
creating new alternatives for economic activity.

Brussels, 30 June 2004.

i) It is necessary to encourage the development of regional
‘clusters’ by fostering the expansion of information and
communication technology sectors, creative industries, and
industries with a strong technological base so that they
boost regional potential and skills, promoting region's capa-
city to attract
firms and encourage them to stay. This
would help ensure that industrial change and restructuring
generates
greater
economic, social and territorial cohesion and more employ-
ment.

competitiveness,

stronger

regional

It is vital that regional studies be carried out and that steps
be taken together with national and regional governments
in
to plan how to make full use of a region's potential
building up a ‘cluster’.

j) Account should be taken of positive, previous experience
with sectoral programmes such as Rechar, Resider and
Retext in formulating policies for the industrial modernisa-
tion of regions in order to make full use of their potential
for development.

k) The Commission must continue to modernise and revitalise
industrial policy with a view to aligning its rules on the
new world context. Here the EESC welcomes the recent
proposal to revisit industrial policy, which was presented
on 20 April 2004. (1) It is particularly important to ensure
that industrial policy is coordinated with other Community
policies, especially environmental policy.

l) Europe must comply strictly with, and enforce, the ILO
rules; if nothing is done to put a stop to ‘social and tax
dumping’ in other areas which do not apply market rules
equally, it could slide into an economic crisis because of a
lack of competitiveness on the part of European firms.

m) Europe must operate on the world stage by displaying high
levels of technical, technological and human skills, but to
do so it has to revisit its policy for supporting research,
the approximately
and particularly human capital. Of
14,000 European researchers who leave to study in the
USA, only around 3,000 intend to return to Europe. This is
a most serious situation requiring immediate measures.
One step in the right direction is the ‘Regions for Knowl-
edge’ initiative (KnowREG) under which it was decided on
27 April 2004 to set up 14 pilot projects promoting the
knowledge economy at local and regional level.

n) The European Council must establish a clear link between
the competitiveness and knowledge objectives on the one
hand, and the future regional policy on the other.

The President

of the European Economic and Social Committee

Roger BRIESCH

(1) Communication from the Commission: ‘Fostering structural change:
an industrial policy for an enlarged Europe’ (COM(2004) 274).