DG Empl-A/4/XP - 3.3.2002

High Level Group on the future of the ESF

This paper summarises the main points of the discussions held so far by the High Level Group on the future of the ESF. It does not necessarily reflect the views of the Commission or of the individual members of the group.

1.Introduction

The ESF High Level group has now met three times. Over these meetings, the group has covered a lot of ground: reviewing the key challenges for cohesion policy and the 4 themes for employment and social policy set out in the Cohesion Report.

The meetings have deepened the assessment of the issues at stake and highlighted important areas for further investigation. While it is possible to identify a number of areas of consensus, the group was convened to generate debate on the basis of different experiences and perspectives of individual group members. Consequently, there is some diversity of opinion and approaches reflecting the different experiences and backgrounds of group members.

2.Structural challenges and priorities post 2006

Any assessment of future cohesion policy must begin with an understanding of the key issues likely to face policy post 2006. The main challenges identified in discussion so far are:

  • the sheer scale of regional imbalances in the labour market and economic development following enlargement: Changes in the Union will be on scale never before seen. Around 98 million out of the 115 million people in candidate countries will live in regions eligible for Objective 1 status. Ongoing restructuring in candidate countries and full exposure to the single market will pose additional transitional problems;
  • meeting the employment rate targets set by the Lisbon Council: Wide differences remain in employment and unemployment across different parts of the EU. Living up to the Lisbon agenda for boosting employment rates and tackling the need for structural reform in the labour market will require major policy effort.
  • polarisation of the labour market and society: This is a phenomenon already entrenched in the EU15 which shows signs of widening both in the face of wider social trends and the aftermath of enlargement. Over 60 million or 18% of the population is living at risk of poverty in the EU. Some groups in society will continue to lose out and intergenerational effects can lead to a cycle of decline without appropriate policy intervention;
  • information and communications technology revolution: Developments in ICT open up a whole set of possibilities and threats to cohesion in the Union. Those unable to keep up with the pace of change and increasing skills demands will fall behind the rest. Improving competitiveness in the EU in the face of increasingly global competition calls for a coherent policy response in both the EU15 and those countries soon to join;
  • increasing skills needs: There is increasing recognition of the contribution of investment in skills to competitiveness and economic growth across the Union as a whole and in disadvantaged regions in particular. Skills demands are both increasing and changing rapidly. Keeping pace with these changes will require a major effort;
  • gender inequality remains a concern: Despite some improvements, women continue to face particular difficulties in terms of access to the labour market, career progression, earnings differentials. The uneven distribution of caring responsibilities looks set to continue as a barrier to the full and active participation of women in the labour market. In candidate countries, the scale of industrial restructuring may pose a threat to the relatively good position women have achieved.
  • the modernisation of economic and social systems in response to demographic changes: Raising employment rates to promote economic growth and provide the resources is essential to sustain the increasing demands on welfare systems from the ageing population. A key element in this is to promote and support the employment of women and older workers;
  • pressures from migration and mobility: Already a contentious political issue, enlargement raises further questions about cross-border movements of people. Both income differentials - which will be particularly acute between the current EU15 and new Member States - and emerging shortages of labour for particular types of skill and labour will pose a host of difficult challenges for labour market development, integration and inclusion.

3.Framework for community intervention

The group has strongly underlined the importance of improving human capital as a key driver for economic growth and increasing the employment content of growth at the national and regional level. The key issue is how to translate that potential into an effective framework for Community intervention. A number of issues have been identified which should underpin Community support:

  • Community value added: There needs to be greater emphasis on the transparency and added value of Community intervention:

a) promoting quality improvements and capacity building with a view to anticipating and responding to the impact of economic and social restructuring due to globalisation and enlargement.. The greatest return on Community input might come through:

helping to set the institutional framework for labour market activity and inclusion services;

developing potential multiplier effects by investing in capacity building and quality of delivery, education and training systems, employment and inclusion services;

disseminating experiences – both good and bad.

b) in the least developed regions, including the new Member States, in addition to the above, increasing the volume of investment in human resources, research and innovation through funding from ESF and other Structural Funds. Improvements in public administration can also be a condition for success.

In identifying Community added value it is also important to note that ESF and the Structural Funds in general are just one tool to achieve the objectives of cohesion policy. While financial transfers are a crucial way of galvanising action in support of the objectives of economic and social cohesion, other options are open to influence outcomes in this area (e.g: regulation and the open method of co-ordination on the basis of Article 159 of the Treaty).

  • promoting greater effectiveness through greater concentration: There was support for focusing on a narrower and more selective range of themes. However, support for a specific policy of promoting target groups at the European level is mixed. There is some concern about pinning down specific target groups too soon and, more fundamentally, the value of drawing up a list of groups at all given the state of permanent change in the economy. Nevertheless specific areas for Community attention identified by the group include:

increasing investment in and quality of education systems, including higher education, especially in regions lagging behind and in the new Member States after enlargement;

facilitating the transition from one occupation to another and supporting adaptability of workers to restructuring and economic change;

preventing exclusion of the most vulnerable;

activation measures for the unemployed (particularly the long-term unemployed);

supporting adults with literacy and/or numeracy problems;

gender equality;

tackling polarisation within the labour market;

promoting the inclusion of migrants;

promoting entrepreneurship;

  • importance of generating a lasting impact from the Structural Funds. It is crucial that the Funds do not represent a one-off gain to those Member States and regions receiving support. Efforts are needed to ensure support goes towards investing in the longer term development of the labour market and in particular those activities with a multiplier effect.
  • set human resource development in the wider policy context: experience of the European Employment Strategy highlights the potential from a more strategic approach to the implementation of the Funds. It is important to strengthen the link between investment in people and the wider framework for employment and economic policy.
  • Promoting synergy between investments in people and in infrastructure: There is a strong case to promote greater synergy between human resource development and investment in infrastructure. This would both improve the effectiveness of Structural Fund interventions and contribute in a more sustainable way to growth and competitiveness.

4.Implementation of Structural Fund support

In terms of how future programmes are implemented, support for the following approaches has been expressed by the group:

  • further review of funding allocation criteria: The group supported the principle that all Member States should benefit from the Funds to ensure that all have a stake in the Funds. However, there is acknowledgement that the greater part of funding will go to the new Member States. Decisions over the allocation must be made on the basis of clear and transparent criteria. These must be respect the principle of consistency in the treatment of both the EU15 and new Member States.

Although no firm proposals have been put forward, there is some support for considering alternative criteria for funding allocations beyond GDP per capita. Options for further investigation include: employment rates, educational profile of the population, the degree of industrial diversification.

  • explore a new approach to reviewing progress in cohesion policy: The open method of co-ordination is tried and tested in the context of the European Employment Strategy. Further efforts could be made to explore its potential role in cohesion policies.
  • partnership principle: It is important to encourage the involvement of social partners and civil society in the Funds. This is one of the benefits and potential areas for Community added value particularly in candidate countries. The demonstration effect has the potential to bring lasting changes to the policy development process as has been achieved through the Structural Funds in many parts of the EU15.
  • more flexibility and simplification: comments made call for the continuation and deepening of efforts towards greater decentralisation and simplification in the management and planning of Structural Fund interventions.

5.Themes

The general view within the group was that it was best to develop a thematic approach at Community level which could be applied regionally. Within this broad framework, there was a clear desire to encourage a degree of flexibility in implementation which respects the specific needs of different regions. The group broadly endorsed the analysis of the four themes presented in the discussion papers during the second and third meetings[1]. Additional points made in discussion by the group were as follows:

  • More and better jobs: At a minimum, the group agreed that ESF has a role to play in helping to generate the conditions for job creation. Support for human resources can strengthen the capacity of the economy to change and develop in the face of labour market strains. However, there remain some differences of opinion on the direct job creation effects and the issue of quality of employment. The majority view is that ESF needs to focus on both quantity and quality of employment and that there is a strong link between investing in job quality and improving productivity and job prospects. However, there was also some concern that the quality agenda might have some adverse effects of employment prospects for the unemployed and lower skilled workers.

An entrepreneurial gap was highlighted as a particular problem in candidate countries. The concern to stimulate the job-creating potential of small enterprises was also shared across the Union as a whole. The needs of micro-companies are perhaps underplayed in domestic policies particularly in terms of difficulties of supporting training.

  • Knowledge based economy: Underpinning this theme is the view that the future lies in investing in knowledge with lifelong learning the cornerstone of economic growth. Given the current under-investment in lifelong learning in Europe, the scope for Community added value is likely to be high. In terms of Community input, the group emphasised the role of ESF in:

developing education and training systems particularly in candidate countries.

improving education and training infrastructure through investing in teachers and trainers.

increasing the investment in human resources as a basis for regional development

supporting and improving the effectiveness of other Structural Fund investments in physical infrastructure

helping people to cope with changes in work organisation.

influencing inward investment decisions of companies on the basis of knowledge and skills availability.

  • Social Inclusion: In the wake of industrial restructuring, the potential strains on social protection systems within candidate countries will change the scale and nature of the problems facing social policy. It was also generally agreed that social exclusion is not just the result of joblessness – although employment is a key factor. There was a need to look at the balance of support offered by ESF in future between training and other activities focusing more directly on poverty and exclusion. The group highlighted the growing concerns over social exclusion among migrants and the more extreme forms of social exclusion associated with drugs and the trafficking of women.
  • Gender Equality: The group stressed that the issue of gender equality goes beyond a narrow concern to boost the labour market participation of women. There are fundamental questions about the organisation of work and the distribution of tasks in the home and the potential and limitations of ESF in these areas. There were also strong arguments in favour of using ESF to promote efforts to tackle occupational segregation in the work place and earlier in the choices made by boys and girls at school. Despite the relatively good performance of women in candidate countries in labour market terms, this could change rapidly. ESF will need to provide an adequate response to this danger.

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[1] Themes covered: more and better jobs; the knowledge based economy; social inclusion; and gender equality.