/ EUROPEAN COMMISSION
Employment, Social Affairs and Equal Opportunities DG
ESF, Monitoring of Corresponding National Policies I, Coordination
ESF Coordination

European Social Fund supporting anticipation and management of economic change and restructuring in the 2007-13 programming period

1.Purpose of the Note

Corporate restructuring, with a growing transnational dimension, is an important element of change. The European Union takes a positive approach to these issues. This requires striking the right balance between flexibility for businesses - which is more important now in a time of permanent restructuring - and security for workers - which is necessary to maintain human capital and employability. Forward-looking planning of human resources and enhancement of skills are core issues in this context and the development of mechanisms favouring them requires an active partnership between actors at national, regional and local level, in particular the social partners, including at Community level.

The aim of this note is to illustrate the possibilities of European Social Fund support for the anticipation and management of economic change and restructuring. Although inspired by past experience, this paper is oriented towards the future.

2.Introduction

The word "restructuring" is usually employed in a crisis context associated with particular events of business reorganisation. It is however used here in a broader sense, encompassing economic change in general.

One of the consensual concepts widely recognised today is the absolute need to anticipate restructuring (in the traditional meaning of the word) and to act as early as possible. In fact, the aim of anticipation should be to create the necessary conditions for fluid and smooth change as opposed to restructuring. That is why predictability instruments (observatories, etc.), integrated approaches and partnerships are so important. As a consequence, the present paper clearly privileges anticipation.

Restructuring cannot however be avoided, not even in the most anticipative systems. Nor should it be opposed as such, although it should be accompanied by supportive measures which are as proactive as possible. In short, ideally, people should be equipped to cope with change on a permanent basis.

The key challenge for the programming period 2007-2013 will be to strike the right balance for companies and workers to promote the conditions for a flexible labour market and providing both security and flexibility. Reconciling security for workers with the flexibility which companies need will entail adaptability to economic and social change. Maintaining human capital and employment protection as key objectives will depend on ESF intervention on improving the qualifications of the work force, increased internal flexibility of companies (multi-skilling, training, flexible working methods and structures and working time arrangements) and external flexibility in the form of contingent jobs and outplacements.

3.Policy and Legal background

The European Union is experiencing accelerating economic changes. These transformations correspond to changes in production inputs, products, markets, production processes or forms of organisation – including structure of capital ownership - and can occur at national, regional, sectoral or company level. Whereas this diversity of economic changeis essential topromote competitiveness and economic growth, it is none-the-less important to place greater emphasison the management of change withinthetransitionprocess ofEuropean labour markets.

In its Communication onRestructuring and Employment – Anticipating and accompanying restructuring in order to develop employment: the role of the European Union[1]the Commission set out measures to be developed or strengthened with the aim of ensuring 'improved anticipation and management of restructuring operations' within the EU. The package of proposals includes enhanced coordination between key strands of EU policy, new and refocused financial support, adaptation of the regulatory framework and the greater involvement of the social partners. The document's starting point is that EU competitiveness depends on enterprises being able to adapt rapidly to change, but that the social costs of restructuring should be kept to a minimum and EU policies should promote employability and alternative sources of jobs.

In the employment field, the Employment Guidelines adopted on 12 July 2005 fully develop the priorities referred to in the Communication of 31 March 2005, all of which are directly relevant to anticipating and managing change and restructuring:

(1) to attract and retain more people in employment, increase labour supply and modernise social protection systems;

(2) to improve adaptability to workers and enterprises; and

(3) to increase investment in human capital through better education and skills.

In this respect Guideline 21 is particularly relevant:

"Promote flexibility combined with employment security and reduce labour market segmentation, having due regard to the role of the social partners, through: (…) better anticipation and positive management of change, including economic restructuring, notably changes linked to trade opening, so as to minimise their social costs and facilitating adaptation (…)".

The Regulation laying down general provisions on the Structural Funds[2] includes the support to anticipation and management of change of restructuring amongst the aims of both:

  • the Convergence objective: "adaptability to economic and social changes" – Article 3.2.a) and
  • the Regional Competitiveness and employment objective: "anticipating economic and social changes … adaptability of workers and businesses" (Article 3.2.b).

The Community Strategic Guidelines for Cohesion[3], as proposed by the Commission, reiterate and further reinforce this focus, notably as regards the new regional competitiveness and employment objective. Its aim is (point 3.3):

"to anticipate and promote economic change by improving the competitiveness and attractiveness of EU regions and cities through investments in the knowledge economy, entrepreneurship, research, university-enterprise cooperation and innovation; access to transport and telecommunication infrastructure, energy, and health; environment and risk prevention; supporting the adaptability of workers and enterprises; reinforcing participation in the labour market; and promoting social inclusion and sustainable communities. (…) Addressing this diversity of problems (industrial regions, low density population regions and rural areas), and helping regions to restructure and generate new activities in accordance with the renewed Lisbon agenda, is the challenge for the new generation of regional competitiveness and employment programmes."

This approach is further developed in the priority "more and better Jobs" (4.3.1. Attract and retain more people in employment and modernising social protection system and 4.3.2. Improve adaptability of workers and enterprises and the flexibility of the labour market)

4.European Social Fund support for restructuring and economic change

The European Social Fund Regulation[4] responds to this challenge, and identifies anticipation and positive management as a priority:

Art. 3.1

"increasing adaptability of workers, enterprises and entrepreneurs with view to improving the anticipation and positive management of economic change (…) ".

and specifically provides for:

"the design and dissemination of innovative and more productive forms of work organisation, including better health and safety at work, the identification of future occupational and skills requirement, and the development of specific employment, training and support services, including outplacement, for workers in the context of company and sector restructuring."

Reflecting concerns about economic growth and employment levels the current programming period 2000-2006 focused on increased adaptability of companies and human capital, taking account of demographic changes, such as the ageing of the work force. The need for positive adaptability suggested the modernisation of work forms, the adaptation of employment legislation and the skills renewal of the work force through life long learning.

Comprehensive policy reform will continue to be a key issue in the new programming period 2007-2013. European economic performance and change is linked to developing an integrated approach to adaptability, restructuring and modernised social protection systems. Increased flexibility eases structural adjustment and increases innovation capacity of companies and employment. Flexibility is one of the parameters of competitiveness as is anticipation, productivity, quality and the ability to innovate. Innovation relies on the skills of the workforce and their capacity on how to cope with permanent change within flexible labour markets.

Therefore for the programming period 2007-2013, the ESF Regulation has introduced further support in this area:

  • ESF interventions will support national systems of anticipation, innovation and wider levels of structural reform which promote flexibility of the labour market;
  • Tailored measures are introduced for individuals
  • Outplacement is specifically foreseen as a potential tool in the area of redeployment.

5.APPROACH TO PROGRAMMING FOR THE NEW ESF PRIORITY

In the new programming period 2007-2013, the ESF will further support the links with the policy framework –the European Employment Strategy- and the employment objectives and targets of the Lisbon strategy for Growth and Jobs.

Increasing the adaptability of workers and firms, enterprises and entrepreneurs is essential to reach the objectives of full employment, quality and productivity at work. In this framework, the strategic approach to managing industrial change of a MemberState is set out in the National Strategic Reference Framework (NSRF) and Operational Programmes (OP).

When programming support for restructuring under ESF programmes, a number of general principles should be kept in mind:

Where the national strategy envisages a substantial investment in restructuring, (e.g. is a key element of the National Reform Programme) a separate Operational Programme dedicated to this issue could be established.

Normally, the priority axis of an Operational Programme should correspond to not more than one priority of the ESF Regulation. It is up to the MemberState to propose the most suitable arrangement of interventions under different priorities and to ensure their coherence and consistency. In the framework of restructuring the following ESF priorities could be used depending on national and regional analysis.

  • actions related to adaptability of workers in line with economic changes, toimprove the anticipation of change, implement training systems and strategies in enterprises or provide services for workers in the context of company or sector restructuring should be programmed under the priority axis "increasing adaptability of workers, enterprises and entrepreneurs with a view to improving the anticipation and positive management of economic change" (Art. 3.1.a).
  • If targeted actions for specific disadvantaged groups are planned with a view to their (re-)integration into the labour market by training and support services these could be more effectively implemented under the priority axis "enhancing access to employment and the sustainable inclusion in the labour market " (3.1.b) and "reinforcing the social inclusion of disadvantaged people.." (3.1.c).
  • Similarly, modernisation of training and education systems with a view to their responsiveness to labour market needs should be implemented under the human capital priority (Art. 3.1.d).

In Convergence regions and Cohesion countries the development of policies and their implementation can profit from interventions implemented under the institutional capacity priority axis focusing on strengthening administrative efficiency of public institutions and services[5].

Furthermore, Art. 51 of the General Regulation provides for an optional "National contingency reserve" to cover unforeseen local or sectoral crises linked to economic and social restructuring or to the consequences of the opening up of trade. This reserve (1% of the annual Structural Funds contribution to the Convergence Objective and 3% to the Regional competitiveness and employment Objective) should be allocated for each Objective to a specific national programme to the relevant priorities listed above.

The role of Regions

Cohesion policy for 2007-13 seeks to proactively develop all EU regions by investing in growth and more and better jobs for all. It introduces a more strategic approach centred around the Lisbon and Gothenburg priorities. This also means a greater focus on thematic areas i.e. on innovation, entrepreneurship, R&D and Information and Communication Technologies, education and training, sustainable transport and budgetary concentration on the most needed regions.

In this context, the interventions co-financedby the Structural and Cohesion Funds, are adapted to each region's needs. The regional and local dimension is particularly important to strength innovation strategies to achieve the goal of a knowledge based economy. Another important factor is to use new instruments and tools to anticipate economic changes in national, regional and local level and develop partnerships and territorial dialogue in order to take full advantage of their existing capacities for innovations. Improving human capitalis also a key factor to anticipate and manage economic changes.

6.Experience to date and action for the future

The ESF has been co-financing activities aimed at anticipation and positive management of change during the current and previous programming periods. Building on these successful practices, the support has been concentrated and will still concentrate on:

  • Support to systems
  • Support to company and sector restructuring
  • Support to individuals

6.1.Support to systems

As part of the drive to create sustained economic growth and more and better jobs in Europe through the re-launching of the Lisbon strategy, the next programming phase will see ESF intervention strengthen the consistency and complementarity of existing mechanisms and systems on the management anticipation of change.

The rate of innovation and change in products and technologies needs to be matched by the capacity of systems to reinforce the flexibility of the labour market by promoting knowledge, anticipating economic change, developing adequate intervention to equip companies and people with the tools to manage the restructuring and the flexibility of employment.

6.1.1.Enhance labour market performance and anticipation of changes

The European Employment Observatory (EEO) was initially introduced by the European Commission in 1982 as an informal network of national correspondents in national ministries to exchange information on recent policy developments. It contributes to the development of the European Employment Strategy through the provision of information, comparative research and evaluation on employment policies and labour market trends in the countries covered by the EEO.

Set up in 1993, EURES is a co-operation network between the European Commission and the Public Employment Services of the EEAMemberStates and other partner organizations. The purpose of EURES is to provide information, advice and recruitment/placement (job-matching) services for the benefit of workers and employers as well as any citizen wishing to benefit from the principle of the free movement of persons. EURES has a human network of more than 700 EURES advisers across Europe.

In Member States a variety of observatories for employment, education and skills is already in operation at national, regional, local, company and sectoral level. Observatories are set up to monitor labour market trends and policies, to collect, analyse and interpret data, to communicate data to users according to their needs. There is scope for improvement as some observatories are better equipped to access and process quantitative data than they are to balance it with the qualitative information which is the essential element of good anticipation. National and transnational networking for observatories is of key importance. In a European and global market, which favours flexibility, observatories cannot exist in isolation from each other. As predictability instruments to better anticipate economic change, each observatory needs its own objectives but it will strengthened and its products valued if it is in regular and coherent communication with others operating in similar fields of activity or level.

Creation of Observatories of skills and jobs

Creation of Observatories of skills and jobs at national, regional, sector, local, and company level can contribute to the effective anticipation and management of change. These structures can provide strategic information to the various actors which should take initiative of restructuring process in order to make better use of opportunities in sector such as SMEs, education and training institution, local authorities, employment services, business support services. They identify training priorities and assure a more effective interaction between skills development and job creation; monitoring changes and labour market needs; analyse work and educational statistics; provision of information and statistical services; "school –to- work transition observatories" which aims mainly at monitoring education and training pathways leading to work life, qualification changes and relationships between supply and demand in economic sectors and various professions at both national and regional level; coordination of studies and surveys and acting as a promoter of innovation and policy development; dissemination of information to different target groups (see Annex 1). Such actions should in particular be coherent with actions undertaken under the human capital priority (Art. 3.1 d, 3.2 a) of the ESF Regulation for the 2007-13 period.

Creation of National Employment Observatories

The Greek Employment Observatory PAEP A.E. carries out research and studies on the labour market and prepares integrated solutions for the computerization and the statistical monitoring of actions deployed by the Employment services and other stakeholders. The Employment Observatory provides systematic analysis of the labour market on a national as well as a local level. Comparative analyses on a sector level, and identifying demand for various vocations and specialisations in regional and local level in order to determine future demand (source:

Development / Creation of Regional and local labour market observatories

These observatories can enhance the impact and effectiveness of economic development strategies; assessing social and economic changes on a territorial/local level that imply the definition of new job profiles especially in emerging sectors and the re-definition of profiles in traditional sectors to better adapt the qualification of workers. They encourage developing partnerships for change and innovative activities such as networks involving social partners, development of life long learning strategies, vocational guidance services, specific training between companies and sectors and local employment initiatives. These observatories associate various stakeholders and become a place of discussion between relevant actors about the evolution of the national, regional and local economy (see Annex 1). It is particularly important to identify new possibilities of job creation in terms of new economic activities, new occupational profiles and new skills. Coherence with interventions under other priorities and in particular under the human capital priority (Art. 3.1 d, 3.2 a) and under promotion of partnerships and pacts (Art. 3.1 e) should be ensured in the future.