1. BACKGROUND

The strengthening of economic and social cohesion is one of the three objectives of the European Union, along with Economic and Monetary Union and the completion of the Single Market.

The ETUC believes that this commitment should be even stronger in an enlarged Europe, insofar as the principles of cohesion and solidarity are written into the Treaty and constitute two of the most important driving forces for the integration of peoples and territories.

The ETUC therefore considers that the EU Constitutional Treaty, which will emerge from the European Convention on the future of Europe, should also ensure the exis-tence of a social and citizens’ Europe and should strengthen the economic, social and territorial cohesion policy, as stipulated in the ETUC contribution to the European Convention adopted by the ETUC Executive Committee.

The Second Report on economic and social cohesion presented by the Commission under Article 159 of the Treaty subscribes to the same approach, launching the debate on the format, tone and aims which such a policy should have in the European Union after enlargement, and giving an account of the current situation with regard to cohe-sion in Member States and the applicant countries.

The Commission’s proposals with regard to the future policy for economic and social cohesion in an enlarged Union, including the financial resources which should be al-located to it, will be presented in the Third Report in November 2003.

For the ETUC, the basic principles which should underpin future economic and social cohesion policy in an enlarged European Union should be social justice and fairness, the promotion of the European social model, real economic, social, territorial and in-ter-regional cohesion, supported by high-quality services of general interest, solidarity and equal rights for workers and citizens.

Community policies for economic and social cohesion form an essential component in achieving the Lisbon employment objectives and in implementing both the European Employment Strategy and the European Social Inclusion Strategy in which social partners play a highly important role. Since the launching of these strategies, there has been a development of Community structural policies. These policies do however need to be developed further so as to become a key mechanism for boosting the poten-tial for economic growth in urban and rural areas with development shortfalls and in declining industrial regions, as well as for developing the skills and qualifications of individuals, thus increasing the potential for creating quality jobs and eradicating un-employment. The Cohesion Fund should be maintained in accordance with the current rules, because this instrument is essential for improving the environment as well as for developing trans-European transport networks, indispensable in present and future Member States.

The ETUC believes that the objectives set out at Lisbon and Stockholm - namely, an economy based on knowledge, competitiveness, innovation, investment in people, the fight against social exclusion, full employment and the search for sustainable eco-nomic growth - should be maintained and pursued systematically as part of the cohe-sion policy.

It is therefore essential to effectively ensure a greater coordination and complementar-ity of future cohesion policy with other Community policies, so that all the European Union’s policies include the fundamental elements of economic and social cohesion, regeneration of employment, and social inclusion. In this respect and in the frame-work of the discussions on the Stability and Growth Pact, greater importance should be given to the quality and nature of public investments instead of aiming only at merely quantitative objectives. The structural impact of public investments and their long-term consequences must also be taken into account.

The evaluation of the implementation of cohesion policy presented in the Second Re-port demonstrates that, despite some progress in terms of results, particularly in the least prosperous areas, real convergence is still a long way off and in some countries regional disparities have even worsened.

Many problems remain to be overcome in the existing Member States, including the persistence of high unemployment, divergent income levels per inhabitant in different Member States, education and training standards which are still too low, and the slow progress towards real equal opportunities.

2. MEETING THE CHALLENGES

For the ETUC, enlargement represents a unique historical opportunity to unite the peoples of Europe founded on fundamental democratic values. This will ensure peace and political stability in Europe, and will contribute to economic and social progress and an improvement in living and working conditions. Enlargement, as well as lead-ing to the re-uniting of Europe, will also make it possible to enlarge the European la-bour and internal markets with a rise in total production volumes and increased con-sumption in the applicant countries, and through developing new competitive products and services in the world market.

All this amounts to an unprecedented challenge in political, social and economic terms from which the whole European Union will benefit. Nevertheless, unlike previ-ous rounds of enlargement, it must be acknowledged that this one will widen the gaps and contrasts.

The European Union’s economic and social cohesion policies are of crucial impor-tance in this process, both for the less-favoured regions within the EU15 and for fu-ture Member States, in preserving the European social model and contributing to har-monious and sustainable economic, social and territorial growth throughout the EU.

The main challenge facing us is the framing of a cohesion policy and eligibility crite-ria that meet the particular needs of the less-favoured regions in the future Member States whilst continuing to take into account the continuing need for economic growth in the less-favoured regions of the existing EU15.

It should also be noted that enlargement will entail new imbalances between central, peripheral and outermost areas. Furthermore, in terms of regional competitiveness, given that some regions in the applicant countries are still very dependent on agricul-ture and traditional industries, there will have to be restructuring in these sectors after accession, with serious consequences for growth and jobs which will hit women in particular.

The evidence suggests that the key word in meeting the challenge of enlargement is solidarity: political, economic and financial solidarity to support new Member States and existing regions with development shortfalls. This will require courageous politi-cal choices regarding the budget, and better coordination of Community policies, avoiding the detrimental impact of policies such as the Common Agricultural Policy and competition policy.

As well as enlargement, there are other major challenges facing the EU today, which also call for joint coordinated answers.

These challenges, which have been identified by recent European Councils, include the rapid globalisation of economies and markets, with all its consequences for the EU; active labour market policies, aiming at creating more and better jobs, and incor-porating the promotion of equal opportunities and reconciling work and family life, integrating young people in active life, as well as the role and responsibilities of the social partners; the promotion of sustainable development and environmental protec-tion; the creation of a knowledge-based economy, covering the development of hu-man capital as well as innovation, research and development, and access to ICT for all to avoid a two-speed society; demographic ageing in the EU, and its economic, social and societal impact; the development of infrastructures, including social infrastruc-tures.

Future cohesion policy must meet these challenges, and, in doing so, reduce dispari-ties between regions and promote a society of full employment, equal opportunities, inclusion and social cohesion.

3. COORDINATION WITH OTHER COMMUNITY POLICIES AND NA-TIONAL POLICIES

The European Council in Lisbon laid the foundations for restoring full employment based on a more efficient economy, innovation, knowledge and social cohesion.

To achieve this aim, it is vital to create new jobs and maintain sustainable growth. But this is not enough. All European and national policies should pursue the aim of inclu-sion, both at work and in society in general. Furthermore, all the players concerned at every level must act to ensure that employment policies, policies for education and vocational training, social protection systems, and health and housing policies all play a part in building a society based on knowledge, inclusion and equal opportunities.

It is clear that all Community policies should act in synergy with economic and social cohesion policies, and should reflect their aims. We know that at present there are ten-sions associated with some policies, which should be avoided in the future.

One of the ways to achieve this would be to treat European regional policy as a hori-zontal policy. In this way all EU policies would be obliged to take account of their regional dimension and their impact on the regions.

The strategy for sustainable development whose key element is the social dimension should ensure the eradication of poverty, environmental protection and respect for fundamental human and social rights. The implementation of this strategy also re-quires both the adoption of new Community policies and the modification of existing ones, for instance in the field of transport and agriculture.

The reform of the Common Agricultural Policy should ensure greater convergence and coordination with cohesion policy and include a societal dimension. This implies evaluating the impact of the CAP on employment, the environment, local develop-ment, the quality of products and food safety, as well as the necessary reorientation of the CAP.

Transport policy needs to be reorientated and in addition competition policy -including state aid to the regions - and taxation policy should also be coordinated with cohesion policy.

More generally, the different Community policies should be consistent with each other. They should all provide responses in terms of competitiveness, environmental standards, and levels of productivity which benefit the EU as a whole.

For the ETUC, it is clear that this consistency also requires better coordination be-tween the different Directorates General within the Commission itself.

At national level, Member States should also integrate the aims of economic and so-cial cohesion into their national and regional policies. The implementation of these policies should be carried out in close coordination with European aims and policies, in order to avoid a certain tendency towards the re-nationalisation of economic and social cohesion policies, whilst also making clearly evident the added value of Com-munity measures.

It is essential for national and regional policies to strengthen each other. The national level must take into account the regional impact of its policies and avoid “sabotaging” regional economic and social convergence.

The ETUC is in favour of a more proactive and innovative approach to economic and social cohesion policies. This approach calls for policies which would not only con-tribute to resolving existing problems but would also prevent future problems and stimulate opportunities for regional development. In this respect, links should be strengthened between investments made under the EU’s structural policies and those of the European Investment Bank.

4. FINANCING

Between 1989 and 1999, the financial contribution has risen from 0.27% to 0.45% of the GDP of the European Union. This level of investment of the Union’s budgetary resources is relatively modest compared with the beneficial results, particularly as re-gards the levels of improvement in the situation in the least favoured regions and the beginnings of real convergence.

The ETUC believes that, to continue down the road to success, existing efforts should be intensified in order to stimulate growth, jobs, competitiveness and sustainable de-velopment in the less-developed regions, the impact of which on the European Union as a whole is very significant. To do otherwise would run counter to the goals of the EU Treaty, by failing to contribute to arresting the increase of disparities in an enlarged Union.

The ETUC supports the Commission’s assertion that “0.45% of the Union’s GDP is a threshold, and that to fall beneath it would call into question the credibility of future cohesion policy”. The ETUC also considers that a general increase of the EU budget is essential and that, in addition to the need to increase the level of investment, the quality of investments, their actual impact and their sustainability should also be closely monitored.

5. FUTURE PRIORITIES

5.1. Less-developed regions

The ETUC considers that the less-developed regions in the enlarged Union, which are lagging behind the Community average and which need investment in human and physical capital, in infrastructures of varying kinds, in research and development and in job creation, should continue to take priority.

This applies not only to regions with a development shortfall in the future Member States, but also to the existing Objective 1 regions, including the outermost areas, and the lowly populated peripheral areas which run the risk of becoming deserted, areas which deserve particular attention on the part of the EU through the promotion of their attractiveness and their competitiveness. Given the structural dimension and permanent nature of the outermost areas, it is essential that Community policies are adapted to them and that criteria are defined which, instead of being merely statistical, correspond more to the reality of these areas.

It is unacceptable for the Union to cease to support development in these lagging re-gions of EU15 for purely statistical and mechanical reasons.

The ETUC is anxious to avoid a two-speed cohesion policy, although we recognise that some priorities may be different depending on whether we are dealing with the least favoured EU15 regions or regions in new Member States.

Although there has been progress in the development of physical infrastructure in the EU15, this is not the case in the future Member States. While avoiding the risk of splitting interventions, we need to find the right balance between investments in this type of infrastructure and that which supports people, creates quality jobs and im-proves the operation of the labour market, promotes education and vocational training with a view to lifelong learning and the prevention of unemployment, equal opportu-nities, establishing high-quality public services and real guarantees of territorial cohe-sion, research and development, and the information society.

It is also necessary to meet the need for social infrastructures, an essential aspect of promoting equal opportunities for women and men, the reconciliation between profes-sional and family life, and increased quality of life for the population as a whole. This is necessary in all the countries, which will make up the EU in 2006.

The question of eligibility criteria for Objective 1 regions in EU15 remains open. At first sight, and to avoid a two-speed policy for existing and new Member States, the ETUC believes that the 75% threshold should be maintained and accompanied by mechanisms for “gradual withdrawal” in currently eligible regions. Another option might be to raise the 75% threshold, but the question would then arise of what the new threshold should be and what criteria should be adopted to establish it.

As regards other criteria for allocating funds, such as employment rates, peripheral location, demographics and structural lag, the ETUC would draw attention to the quality of harmonised Community statistics, which could still be greatly improved.

5.2. Zones undergoing economic and social restructuring

The persistence of structural problems, unanticipated shocks, the problems of indus-trial restructuring or economic diversification and company mergers in several EU regions require the maintenance of special support for these zones in difficulties.

It is true that under existing planning, Objective 2 presents the most difficulties in im-plementation. It is very complex, insufficiently flexible, and the statistical data avail-able are limited and sometimes not very reliable. We believe that a revision of the eli-gibility criteria is required.

Economic problems often have a very negative impact socially, entailing the need for support measures at several levels and affecting very specific target groups. The ETUC believes that we should look further into the Commission’s proposal for devel-oping an indirect method of defining eligible areas. However although it is true that Member States, in close collaboration with the regions, are the best placed to identify the areas needing most aid, it is important to remember that the structural funds repre-sent a Community policy, the application of which is based on a number of common principles and aims, to prevent any drift towards the re-nationalisation of this policy. It is thus essential to ensure the articulation and optimal balance between the three levels: European, national and regional.

It is also necessary to ensure that Community resources granted for Objective 2 areas are utilised primarily for the realisation of innovative pilot initiatives aimed at territo-rial development, and in an appropriate manner for development actions of a transna-tional or interregional nature. Concerning this second type of action, the use of Euro-pean rather than national resources, as well as the Community added value, must be clearly justified.

Furthermore, this new approach should be based on full respect for the basic princi-ples of the Structural Funds, including that of partnership, which should be strength-ened with the social partners, additionality, which means that national involvement must also be significant in meeting real local social and economic needs, and concen-tration, which should aim for more targeted actions and the main concern of which is individuals and the development of instruments and conditions helping them to cope with changes and uncertainties in the operation and organisation of the labour market and society.

5.3. Implementing the European Employment Strategy

The creation of large numbers of high-quality jobs, support for the adaptation and modernisation of systems of education and vocational training with a view to promot-ing lifelong learning and the creation of a knowledge society, the promotion of social inclusion, the fight against unemployment and equal opportunities represent the key conditions for the achievements of the Union’s ambitions by 2010.

The ESF is the only structural fund which touches people directly - workers, the job-less, the excluded, young people and older workers.

The ESF is the primary instrument for supporting the implementation of the European Employment Strategy and should remain so. The EES should be integrated into na-tional, regional and local labour market policies, as well as into to aims of the ESF. This involves the ESF contributing yet further in achieving the objectives for chang-ing to a knowledge society and promoting lifelong learning set out at the European Council in Lisbon.

Europe needs massive investment in people, in human capital, which is without ques-tion the most important competitive asset in any society. This investment should an-ticipate the social changes arising from the knowledge society, and, at the same time, provide answers to the problems of job keeping and creation, developing workers’ qualifications and skills, increasing productivity levels in European businesses, find-ing innovative and more effective ways of organising work, through real investment in the development of workers’ skills, social inclusion and promoting equal opportu-nities.

This dual approach, combining prevention and cure, is essential, and should go hand in hand with active innovative strategies and policies at local, regional and national level including the networking of actors as well as strengthened partnerships.

6. TERRITORIAL DIMENSION AND THEMATIC DIMENSION

The ETUC believes that these two dimensions are not in conflict but should, on the contrary, complement each other and develop the synergies between them.

Thus the diversification of economic activities in rural areas and the establishment of activities which respect the environment, reduce desertification problems and contrib-ute to sustainable development in the Union as a whole, involve measures and in-vestments to promote education and training, to analyse the potential of a region, to create new jobs reflecting new social needs, to promote research and development and to build new partnerships. However this is a thematic approach for measures taken in a very specific territory.

The same principle can be applied to the need to resolve problems of economic and social exclusion, poverty, social tensions leading to racism in many urban areas or the need to prevent the detrimental impact of industrial restructuring and company merg-ers on both the individuals and the territories concerned.

The ETUC is of the belief that without a multi-disciplinary approach and concerted action on several fronts, it is impossible to ensure maximum efficiency in terms of results, or to build a European Union - whose diversity represents one of its main wealths - capable of reconciling a balanced and sustainable model of economic, so-cial, environmental development while maintaining individuals at its heart.

7. MAINTAINING THE FUNDAMENTAL PRINCIPLES OF EU STRUC-TURAL POLICY

The ETUC believes that concentration, programming, additionality and partnership, which form the fundamental principles of the Community’s structural policy, should be maintained after 2006.

In this way, the role of economic and social cohesion policies will be strengthened as the primary instrument of economic and social governance and European solidarity, and this will contribute to the successful implementation of the strategy and aims adopted at the European Summit in Lisbon and amplified at subsequent summits.

The ETUC believes that solidarity, as expressed in the four fundamental principles, together with actions to monitor and evaluate the effectiveness and results of the measures taken, should be the mainstay of all the programmes and should be intensi-fied in the future.

Concentration in actions with a high Community added value, programming meeting the real needs of territories, persons and businesses, real additionality based on strong public-private partnerships, respectful of the criteria of general interest and likely to contribute to economic growth and not inspired by substitution or exclusive depend-ence on European aid, the effective implementation of the subsidiarity principle in relations with the European Commission, Member States, regional and local authori-ties, as well as a real dynamic and strengthened partnership calling for the participa-tion of the social partners in all phases of measures linked to the structural funds, are clearly the ingredients for a recipe ensuring success and sustainable development.

The ETUC considers that there should also be more simplification and rationalisation of procedures and programmes, without damaging the quality of the measures under-taken. This simplification ought to entail the increased commitment and participation of all the partners concerned, including at European level.

Conditionality in the granting of funds should be made stricter and more dependent on results, including results in terms of jobs, growth, promotion of equal opportunities and environmental protection.

It is clear that this would require the improvement of the techniques and statistics used to assess the effectiveness of measures. The ETUC also believes that this evaluation of effectiveness should be carried out continuously, in such a way as to stress the sus-tainability of the results, rather than a short-term perspective.

The ETUC is calling for all the projects financed by the structural funds to include gender objectives, and for the development of monitoring indicators to evaluate the actual impact on women. The same principle should be applied to objectives in envi-ronmental protection.

In addition, the exchange of good practices, an essential aspect of Community added value, should be encouraged and continued.

The ETUC believes that the basic principles for ensuring success and cohesiveness consist in setting joint and measurable objectives, and in granting funds on the basis of measurable results evaluated internally and externally.

7.1. The partnership principle

The ETUC remains convinced that the partnership principle is a fundamental principle in guaranteeing the successful operation of structural fund measures. High-quality partnerships should be pursued, involving the social partners in every phase of the funds’ interventions.

As in the past, the ETUC is pressing for future structural fund rules to set out the part-nership principle clearly, rather than leaving this to national rules and practices. It is also necessary to establish clear roles, tasks and methods of operation for the various monitoring committees, and to work towards developing more cooperation and syn-ergy between these committees. To this end and on the basis of existing experiences, two ways forward are particularly interesting. The first one consists in establishing a “Charter of principles and rules” with a view to setting up and improving partnership between all national and regional programmes. The second one consists in establish-ing the structure of the partnership as well as the corresponding rules in the national legislation of administration and management of Structural Funds programmes.

The social partners should have the benefit of technical assistance in developing the skills of their representatives in the different bodies responsible for applying the struc-tural funds. This is already a real and pressing need for existing EU Member States, and it will be all the more so for the social partners in future Member States. The measures undertaken to provide training for civil servants at all levels in these coun-tries ought also to apply to the social partners.

Finally, the ETUC stresses that the European Social Fund is the only fund which re-lies on the active participation of the social partners in its European Committee. We believe that this participation represents significant added value. The moment has now come to extend this same participation to the other structural funds. Although we be-lieve that the annual information meetings held by the European Commission and the economic and social partners are very important, other forums of debate should be opened up with Member States and the Commission.

8. COMMUNITY INITIATIVES

Past experience shows that Community initiatives play a very important role in strengthening the European identity, in offering possibilities to experiment, or in de-veloping the partnership. Apart from this we also consider that the transnational, in-novative nature of these initiatives is also important.

The ETUC considers that Community initiatives must be better integrated into the other structural programmes and the usual programming instruments in the regions and territories through the support of projects, exchange of information, training of actors and social animation.

In addition, the different Community initiatives must also be better integrated between one another with a view, on the one hand, to promoting an original, innovative and high quality development strategy, and on the other, to avoiding the overlapping of measures, as well as to promoting the partnership principle.

The promotion of equal opportunities for all in a fast-changing labour market remains an ETUC priority for the future.

It is also necessary to strengthen cooperation and measures at the cross-border, trans-national and inter-regional level.

The positive trade union experience of the activities carried out by the 41 Interre-gional Trade Union Councils (ITUCs), including actions in regions bordering the ap-plicant countries, demonstrate that this is the path to follow.

The measures supported by EURES and Community initiatives should be continued in order to promote mobility and the development of cross-border and inter-regional labour markets, Territorial and Local Employment Pacts, as part of the European Em-ployment Strategy.

The ETUC also considers that, in future, EURES should be funded by grants from the structural funds.

Account should also be taken of the fact that once enlargement has been achieved, the present external borders of the European Union will move, thus also moving structural problems to these new regions. The ETUC believes that particular attention should be paid to these regions, by strengthening specific measures of cross-border, trans-national and interregional cooperation provided for these regions in the framework of the Community initiative INTERREG.

9. ENSURING CONTINUING TRADE UNION INVOLVEMENT

In recent years, trade union organisations have made considerable efforts to bring more attention to bear on the structural funds issue.

We should strengthen these efforts. The knowledge and command of the structural funds, a qualitative participation of trade union representatives in all the different stages, the knowledge and links to be established between the different European, na-tional and regional policies, as well as between contractual and cohesion policies, re-quire more information and training activities on the part of trade union organisations.

The ETUC urges that this commitment should continue in the future at every level, so that the enlarged Europe may strengthen its solidarity, economic and social cohesion, full employment and opportunities for every citizen.