Communication from the Commission to the Council and the European - Parliament Employment in rural areas: closing the jobs gap {SEC(2006)1772}
Date: 2006-12-21
Institutions: European Commission
Subjects: European Employment Strategy, common agricultural policy, rural region

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.12.2006 
COM(2006) 857 final 

COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

Employment in rural areas: closing the jobs gap 

{SEC(2006)1772} 

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1. 

INTRODUCTION 

At its meeting in Lisbon in 2000, under the European employment strategy launched 
in 1997, the European Council set the goal of full employment and, as a medium-term 
target, an employment rate of 70% by 2010. As part of this process, the Agricultural 
Council  of  July  2003  agreed  conclusions  on  "Employment  in  rural  areas  under  the 
European  Employment  Strategy".  The  Agriculture  Council  identified  several 
challenges  for  the  future  of  rural  employment  such  as  the  ageing  of  the  farming 
population,  the  participation  of  young  people and  women  in  the  rural  economy,  the 
enlargement of the European Union and the switch from product to producer support 
under  the  revised  CAP.  It  called  on  the  Commission  to  carry  out  an  in-depth 
assessment  of  employment  prospects  in  rural  areas  and  to  initiate  the  discussion  on 
the creation of statistical tools for rural areas.  

2. 

THE CAP, RURAL DEVELOPMENT AND THE EU PRIORITY FOR EMPLOYMENT 

On  2  February  2005,  the  Commission  proposed  a  new  start  for  the  Lisbon  Strategy 
focusing  on  two  principal  tasks  –  delivering  stronger,  lasting  growth  and  creating 
more  and  better  jobs1.  Under  the  European  Employment  Strategy  there  is  need  to 
improve  the  adaptability  of  workers  and  enterprises  and  to  increase  investment  in 
human  capital  through  better  education  and  skills.  The  guiding  principles  for  the 
contribution  of  the  CAP  –  markets  and  rural  development  –  to  the  Lisbon  Strategy 
were set by the European Council in Göteborg in 2001 and confirmed in the Lisbon 
Strategy Conclusions in Thessaloniki in June 2003 – Strong economic performance 
must  go  hand  in  hand  with  the  sustainable  use  of  natural  resources.  This  was 
reaffirmed  in  the  renewed  EU  Sustainable  Development  Strategy  adopted  by  the 
European Council on 16 June 2006. 

The new CAP is based on a market policy where intervention is a safety net, income 
stabilisation is delivered through decoupled aids subject to cross-compliance, and on 
a reinforced rural development policy focused on jobs, growth and sustainability. The 
Community  strategic  guidelines  for  rural  development  identify  the  areas  key  to  the 
realisation of EU priorities for the period 2007–2013, in relation to the renewed EU 
Sustainable Development Strategy and to the Lisbon Strategy for growth and jobs.  

3. 

THE JOBS GAP 

Europe's  rural  areas  are  diverse  in  terms  of  population,  demography,  economic  and 
social structures and labour markets. It is this diversity that is part of their richness. 
Nevertheless, many of Europe's rural areas face a common challenge – their capacity 
to create high quality, sustainable jobs is falling behind urban areas.  

3.1. 

The characteristics of rural areas  

Based on population density, rural areas represent 93% of the territory in EU-27. 20% 
of the population live in predominantly rural areas and 38% live in significantly rural 

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COM(2005) 24. 

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areas2.  Rural  areas  generate  45%  of  gross  value  added  in  EU-27  and  53%  of  the 
employment,  but  tend  to  lag  compared  to  predominantly  urban  areas.  In  EU-27  the 
income  per  capita  of  predominantly  urban  areas  is  almost  double  that  of 
predominantly rural areas. Low levels of income make it harder to retain and attract 
skilled individuals. This gap is reflected in other key indicators (see Annex). 

An evolving demographic situation 

The  proportion  of  the  rural  population  in  EU  total  population  has  remained  fairly 
constant  in  recent  decades.  This  relative  stability  at  an  aggregate  level,  however, 
masks significant variations between and within individual Member States and hides 
important population developments over the last 15 years at regional level.  

Two large scale processes of demographic change are taking place in Europe: a long 
established  “urbanisation”  trend  drawing  population  and  economic  activity  out  of 
more  remote  rural  areas  into  urban  and  accessible  rural  areas,  and  a  more  recent 
“counter-urbanisation”  flow  out  of  urban  areas  into  accessible  rural  areas  (made 
possible by new transport and ICT infrastructure) increasingly under pressure from an 
urbanised lifestyle. As a result, accessible parts of significantly rural areas represent a 
zone  of  growth,  with  an  economic  structure  increasingly  similar  to  that  of  urban 
areas.  In  contrast,  predominantly  rural  areas,  especially  in  the  more  remote  parts  of 
the EU are still being depleted of population and economic activity3. 

In  terms  of  age  structure,  Southern  Member  States  exhibit  the  greatest  signs  of 
demographic ageing in their rural areas. As regards gender, the most important trend 
is  a  “masculinisation”  of  sparsely  populated  Nordic  rural  areas  and  less  developed 
rural areas of the New Member States, due to the out-migration of younger women4. 

Lower employment rates and higher unemployment rates 

Across  the  EU-25,  in  the  period  1996–2001,  employment  has  increased  fastest  in 
urban  areas.  The  employment  rate  has  increased  by  3.6%  in  predominantly  urban 
areas  compared  to  1.9%  in  predominantly  rural  areas.  This  suggests  a  widening 
urban-rural employment rate gap5. In 2004 employment rates in EU-27 were almost 
5% higher in predominantly urban (64.7%) than predominantly rural areas (60.1%). 
However,  the  diversity  of  rural  regions  should  be  stressed.  Some  rural  regions,  in 
particular in peri-urban areas have experienced high rates of employment growth, in 
line with a general trend in OECD countries6. At a sub-regional level, trends can be 

2 

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4 
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6 

This definition of rural areas has been adopted in the context of Council Decision of 20 February 2006 
on  Community  strategic  guidelines  for  rural  development  (programming  period  2007  to  2013) 
(2006/144/EC).  The  OECD  defines  areas  as  predominantly  rural,  significantly  rural  or  predominantly 
urban according to population density and is based on the share of population living in rural communes 
(i.e.  with  less  than  150 inhabitants  per  km²)  in  a  given  NUTS  II  or  III  region.  See  Extended  Impact 
Assessment SEC(2004) 931 and SEC(2005) 914. The 1284 NUTS 3 regions of the EU-27 are broadly 
evenly divided between the three rural-urban categories. The Commission is currently undertaking work 
on alternative definitions that better reflect the diversity of significantly rural areas, including peri-urban 
areas.  
Study on Employment in Rural Areas (SERA), p. 214  
http://ec.europa.eu/agriculture/rurdev/index_fr.htm 
SERA, p. 34 
SERA, p. 44 
OECD  2006.  Rural  Policy  Reviews.  The  New  Rural  Paradigm.  POLICIES  AND  GOVERNANCE, 
p. 27. 

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very different compared to those at a regional level, notably where labour moving out 
of  agriculture  in  the  countryside  has  been  absorbed  in  market  towns  and  large 
villages. 

Unemployment  rates  are  generally  significantly  higher  in  rural  than  in  urban  areas. 
Urban-rural differences are particularly pronounced in countries characterised by high 
unemployment rates. Long-term unemployment is relatively high only in significantly 
rural  areas,  which  could  indicate  growing  exclusion  of  low-income  groups.  It  is 
estimated that “hidden unemployment” (involving underemployed farmers and farm 
workers) probably accounts for around 5 million people in rural areas.  

A slower development of the tertiary sector 

The  service  sector  is  the  biggest  employer  in  Europe's  rural  areas  but  is  smaller 
compared to urban areas and tends to be dominated by the public sector. This is due 
to  the  underdevelopment  of  private  services  which  remain  largely  urban.  In  2002  it 
accounted  for  57%  and  65%  of  employment  respectively  in  predominantly  and 
intermediate  rural  areas,  compared  with  75%  in  predominantly  urban  areas.  This  is 
reflected in the slower shift to activities centred in the knowledge-based economy. 

Skills and human capital 

Skills  and  human  capital  are  generally  lower  in  rural  areas  than  in  urban  areas.  In 
many  Member  States  education  beyond  primary  or  lower  secondary  education  is 
more generalised in urban areas. In urban areas  almost 20% of the adult population 
has  tertiary  education,  while  in  rural  areas  the  proportion  is  only  around  15%7. 
Tertiary education can often lead to outmigration of skilled individuals from rural to 
urban areas, who stay on after their studies due to better employment opportunities. 

A lack of opportunities for women and young people 

The  situation  of  women  and  young  people  in  rural  areas  remains  precarious  often 
resulting in the out-migration of females and youngsters in economically  active age 
groups. In some rural areas, the lack of training infrastructure and appropriate child-
care  facilities  prevent  entry  or  upskilling  in  the  labour  market.  Female  and  youth 
unemployment rates tend to be relatively high in rural areas. For women the rates for 
rural areas were 10.6% but male rates were relatively lower at 7.9%. In urban areas 
female  (6.8%)  and  male  rates  (6.2%)  were  more  similar.  Youth  unemployment  was 
significantly  higher  in  both  predominantly  and  significantly  rural  areas,  17.6%  and 
16% respectively, compared with 11% in urban areas.8 

3.2. 

The place of agriculture 

In  most  rural  areas  the  primary  sector  accounts  for  less  than  10%  of  total 
employment.  In  a  third  of  rural  areas  its  share  is  less  than  5%  (around  the  EU-25 
average). However, in some rural areas – particularly in the East and South of the EU 

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8 

SERA, p. 133 
SERA, pp. 47-48. 

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–  its  share  is  above  25%.  Moreover,  agricultural  productivity  is  far  lower  in  most 
predominantly rural areas9. 

The integration of the agricultural sector of the New Member States into the CAP has 
taken place in a generally smooth and positive manner, particular as regards incomes. 
But  successful  agricultural  adjustment,  as  in  other  parts  of  the  EU,  will  be  key  to 
improving  the  competitiveness  and  environmental  sustainability  of  the  agricultural 
sector and boosting jobs and growth in related areas of the economy. 

At present less than 10% of farm holders in EU-25 are younger than 35 and more than 
24% are over 65 years old. Over the period 2000–2005, EU-25 agriculture has shed 
labour mainly in the prime-age group (25–54), followed by younger workers (15–24) 
and only then by older workers (55–64). The decreasing number of young people in 
the agricultural sector in can create specific difficulties for generational renewal. 

Farmers' training levels are highly variable between Member States. Many farmers do 
not  have  the  skills  necessary  to  take  advantage  of  the  potential  of  the  new 
environment for innovation, provision of environmental services, diversification, and 
development of local services and bioenergy production.  

The  Agricultural  Council  has  highlighted  the  need  to  promote  research  and 
development,  vocational  training,  advisory  services  and  innovation,  and  human 
capital10. 

3.3. 

The impact of CAP reform and rural development policies 

The  main  determinants  of  labour  adjustment  in  the  farm  sector  are  technological 
change,  returns  on  capital  and  the  relative  remuneration  of  agricultural  labour 
compared to other sectors. Through successive reforms of the Common Agricultural 
Policy over the past twenty years, labour outflows from the agricultural sector have 
been  broadly  constant  at  around  2-3%  per  year.  The  introduction  of  direct  aids  as 
compensation  for  price  support  reductions  over  this  period  ensured  that  this 
restructuring process has taken place in a socially acceptable manner. Without direct 
aids  many  rural  areas  of  Europe  would  have  faced  major  economic,  social  and 
environmental  problems.  Rural  development  has  played  an  important  role  in 
preventing depopulation and land abandonment in many rural areas. 

The  impact  of  decoupling  introduced  in  the  2003  CAP  Reform  is  expected  to  be 
broadly neutral with respect to employment. Adjustment in production structures will 
be balanced by a more efficient use of capital and land leading to more economically 
sustainable  activities.  Increased  market  orientation  is  expected  to  bring  new  income 
opportunities  through  both  agricultural  and  non-agricultural  diversification  by 
farmers. 

Evidence suggests that adjustments that took place in the agricultural sector and their 
impact  upon  employment  have  in  part  been  absorbed  through  the  creation  of  new 
employment  opportunities  on  the  farm  or  the  combination  of  part  time  farm 
employment  with  off-farm  employment.  Rural  development  measures  have  been 

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Source:  Rural  Development  in  the  European  Union  –  Statistical  and  Economic  Information  –  Report 
2006, http://ec.europa.eu/agriculture/rurdev/index_fr.htm. 
Informal Agricultural Council, Krems 2006. 

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instrumental in accompanying and supporting this process, leading to the creation or 
the maintenance of a significant number of jobs. 

Evaluations  suggest  that  on-farm  investment,  training,  forestry  measures,  and 
measures  promoting  the  adaptation  and  development  of  rural  areas  are  generally 
considered  to  have  had  been  effective  in  creating  employment.  On-farm  investment 
contributed  on  the  whole  to  securing  employment  through  improved  productivity 
while  economic  diversification  measures  contributed  more  to  new  employment 
creation.  

Although few quantitative estimates are available at EU level, it has been suggested 
that  in  the  course  of  the  LEADER  II  initiative  up  to  100 000  jobs  were  created  or 
maintained  in  Europe’s  rural  areas  (in  social  and  health  care  services,  landscape 
preservation  and  cultural  heritage).  Half  of  the  jobs  concerned  women.  Rural 
diversification measures helped to safeguard many agricultural jobs and at the same 
time temporary jobs were created in environmental and village renewal activities.  

However,  measures  aimed  at  job  creation  and  diversification  into  non-agricultural 
activities remain a relatively small part of programmes. Estimates suggest that in the 
current  period  2000–2006  only  around  10%  of  the  mainstream  programmes  for 
EU-15  was  spent  on  measures  which  directly  or  indirectly  generate  employment 
outside  the  agricultural  or  first-processing  sectors.  This  suggests  that  in  the  new 
period, there is considerable scope to improve the contribution of rural development 
programmes. 

4. 

THE CHALLENGES FACING RURAL AREAS 

Europe's  rural  areas  are  diverse  and  include  many  leading  regions.  However,  some 
rural areas, and in particular those which are most remote, depopulated or dependent 
on agriculture face particular challenges as regards growth, jobs and sustainability in 
the coming years. These include:  

– 

– 

– 

– 

– 

– 

– 

lower levels of income, 

an unfavourable demographic situation, 

lower employment rates and higher unemployment rates, 

a slower development of the tertiary sector, 

weaknesses in skills and human capital, 

a lack of opportunities for women and young people, 

a lack of necessary skills in parts of the agricultural sector and food processing 
industry. 

Furthermore,  the  continued  restructuring  and  modernisation  of  Europe's  agriculture 
will place a heavy burden on many rural areas. On the basis of current trends it is to 
be expected that in EU-15 some 2 million workers on a full time basis will leave the 
sector  by  2014.  In  addition,  1-2  million  full-time workers may potentially leave the 
sector  within  the  ten  New  Member  States,  and  1-2  million  workers  in  Bulgaria  and 
Romania11.  To  this  must  be  added  around  5  million  hidden  unemployed  persons  on 

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SERA, p. 84. 

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farms.  These  changes  will  touch  most  rural  areas.  In  significantly  rural  areas,  the 
challenge will be to avoid the risk of exclusion associated with lack of skills and low 
incomes.  In  remoter  areas  with  higher  levels  of  agricultural  employment,  the 
management  of  the  restructuring  process  will  play  a  significant  role  in  the  broader 
rural economy. 

But rural areas offer real opportunities in terms of their potential for growth in new 
sectors, the provision of rural amenities and tourism, their attractiveness as a place to 
live  and  work,  and  their  role  as  a  reservoir  of  natural  resources  and  highly  valued 
landscapes. Europe's agriculture offers many high quality products. The agricultural 
and  food  sectors  must  seize  the  opportunities  offered  by  new  approaches, 
technologies  and  innovation  to  meet  evolving  market  demand  both  in  Europe  and 
globally.  This  will  require  the  development  of  new  skills,  entrepreneurship  and  the 
capacity to adapt to delivering new types of service.  

In short, Europe's rural areas must exploit their potential or risk falling further behind 
urban  areas  in  meeting  the  Lisbon  targets,  particularly  in  the  remotest  and  most 
agricultural areas. 

5. 

CONCLUSIONS: CLOSING THE JOBS GAP 

There are significant challenges for employment in rural areas in Europe. At the same 
time there are a broad range of instruments at European and national level that can be 
used to close the jobs divide between rural and urban areas. Multi-sectoral, area-based 
approaches based on a partnership approach going beyond agriculture, the agri-food 
industry  and  farm  tourism  should  be  encouraged.  In  particular,  rural  development 
measures should be fully exploited for employment and growth. 

Examples of job creation under the European Agricultural Fund for Rural Development12: 

– 

– 

– 

tourism, crafts and the provision of rural amenities are growth sectors in many regions and offer 
opportunities both for on-farm diversification outside agriculture and the development of micro-
businesses in the broader rural economy; 

local initiatives to develop childcare facilities can facilitate access to the labour market. This can 
include the development of childcare infrastructure, potentially in combination with initiatives to 
encourage the creation of small businesses related to rural activities and local services; 

integrated initiatives combining diversification, business creation, investment in cultural heritage, 
infrastructure  for  local  services  and  renovation  can  contribute  to  improving  both  economic 
prospects and quality of life; 

–  developing  micro-business  and  crafts,  which  can  build  on  traditional  skills  or  introduce  new 

competencies; 

– 

training young people in skills needed for the diversification of the local economy 

–  encouraging  the  take-up  and  diffusion  of  ICT.  developing  the  provision  and  innovative  use  of 

renewable energy sources; 

–  small-scale local infrastructure, supported within rural development programmes, can play a vital 
role in connecting major structural fund investments to local strategies for the diversification and 
development of agricultural and food-sector potential. 

12 

Key  actions  identified  under  Council  Decision  2006/144/EC  of  20  February  2006  on  Community 
strategic  guidelines  for  rural  development  (programming  period  2007  to  2013)  (OJ L 55,  25.2.2006, 
p. 20). 

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In  the  light  of  these  future  challenges,  an  integrated  approach  of  Community  and 
Member State policies combined with a strong focus on human capital and skills will 
be key elements in exploiting the opportunities for growth and employment that exist 
in rural areas. The Commission therefore recommends that: 

– 

the  process  of  CAP  reform,  with  increased  market  orientation  and  income 
stabilisation through direct aids, should be maintained and consolidated; 

–  Member States should use existing opportunities to encourage and support the 
cultivation  of  energy  crops  and  the  development  of  renewable  energy 
enterprises,  which  can  help  stabilise  employment  in  rural  areas  and  greatly 
contribute to promote sustainable development; 

– 

– 

– 

given  the  special  challenges  confronting  many  of  their  rural  areas,  the 
integration of the new Member States and the restructuring of their agriculture 
will remain a priority over the coming years; 

in  line  with  the  Community  Strategic  Guidelines  for  rural  development, 
Member  States  should  use  their  rural  development  programmes  to  deliver  the 
priorities  of  knowledge  transfer,  modernisation,  innovation  and  quality  in  the 
food  chain,  investment  in  human  capital  and  the  overarching  priority  of  the 
creation of employment opportunities and conditions for growth; 

as rural development can only play a part in closing the jobs gap, the full range 
of Community instruments should be used to promote and growth employment 
in rural areas. Member States should ensure that the synergy between structural, 
employment and rural development policies is maximised13; 

Examples  of  support  from  the  European  Regional  Development  Fund  and  European  Social 
Fund for the diversification of rural areas14: 

– 

the provision of a minimum level of access to services of general economic interest; 

–  support for an integrated approach to tourism; 

–  encouragement for process and product innovation in existing economic activities; 

– 

investment  in  development  poles  in  rural  areas  and  by  developing  economic  clusters  based  on 
local assets. 

– 

actions  in  these  fields  of  human  development  should  be  implemented  in  full 
compliance  with  the  objectives  of  the  European  Employment  Strategy,  as  set 
out in the Integrated Guidelines for Growth and Jobs. All Member States should 
promote the anticipation of change within the agricultural sector in the context 
of restructuring, and develop a proactive approach to training and retraining of 
farmers, particularly as regards transferable skills; 

– 

the Rural Development Network should establish, as its central work theme in 
2008, job creation in rural areas.  

The  Commission  will  reinforce  the  use  of  statistical  instruments  in  assessing  the 
employment  effects  of  rural  development  policies  in  the  context  of  the  Common 
Monitoring and Evaluation Framework for Rural Development. 

13 
14 

Ibid. Section 3.6. 
Council  Decision  2006/702/EC  of  6  October  2006  on  Community  strategic  guidelines  on  cohesion 
(OJ L 291, 21.10.2006, p. 11) Annex, Section 2.2. 

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Annex: Key Characteristics of Rural Areas in EU-27 

Territorial Characteristics 

% Territory 

% Population 
% GVA 
% Employment 

% Utilised agricultural area (1) 

(1) excluding ES, SL 

EU-27 

Predominantly 
Rural 

Significantly 
Rural 

Predominantly 
Urban 

Definition 
of region 

100,0 

100,0 
100,0 
100,0 

100,0 

57,0 

20,5 
13,2 
18,7 

43,2 

35,7 

37,8 
31,7 
34,6 

46,8 

7,3 

41,7 
55,0 
46,7 

10,0 

NUTS 3 

NUTS 3 
NUTS 3 
NUTS 3 
FSS 
District 

Year 

2003 

2003 
2002 
2002 

2003 

Demographic Characteristics 

Population density (per km2)  

% people aged 15–64 in total population (1) 

Net migration rate(2) 

(1) excluding BE, DK, LV, MT, SI 
(2) excluding EE, CY, LU, MT 

GDP/capita (EU-25 = 100) 

Primary sector as % total GVA (1) 
Tertiary sector as % of total GVA  
(1) excluding MT 

EU-27 

114,8 

67,2 

Predominantly 
Rural 

Significantly 
Rural 

Predominantly 
Urban 

Definition 
of region 

Year 

40,9 

65,9 

118,2 

67,1 

638,7 

68,0 

NUTS 3 

2003 

NUTS 3 

2001 

3,9 

1,8 

4,0 

4,8 

NUTS 2 

2003 

Economic Characteristics 

EU-27 

Predominantly 
Rural 

Significantly 
Rural 

Predominantly 
Urban 

Definition 
of region 

95.5 

2,3 
71,1 

64,5 

5,1 
62,4 

82,3 

2,8 
67,9 

122,8 

0,9 
74,5 

NUTS 3 

NUTS 2 
NUTS 3 

Year 

2001 

2002 
2002 

Employment Characteristics 

EU-27 

Predominantly 
Rural 

Significantly 
Rural 

Predominantly 
Urban 

Definition 
of region 

Year 

Employment rate % 
Rate of unemployment (% active population) 

Long-term unemployment (% active 
population) 
Self employment as % of total employment 

Adults participating in education and training 
as % of population (1) 

Employment in primary sector % 
Employment in tertiary sector % (2) 

(1) excluding EL 
(2) excluding NL, RO 

62,7 
9,2 

4,1 

15,3 

8,5 

6,7 
66,8 

60,1 
9,9 

4,5 

19,3 

8,2 

20,6 
57,1 

61,9 
10,1 

4,7 

15,2 

7,8 

6,9 
65,0 

64,7 
7,8 

3,3 

13,8 

10,1 

1,7 
74,7 

NUTS 2 
NUTS 2 

2004 
2004 

NUTS 2 

2004 

NUTS 2 

2004 

NUTS 2 

2004 

NUTS 2 
NUTS 3 

2002 
2002 

Source: Rural Development in the European Union – Statistical and Economic Information – Report 2006, 
http://ec.europa.eu/agriculture/rurdev/index_fr.htm 

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