1. INTRODUCTION

In accordance with Article 159 of the Treaty, every three years the Commission evaluates the status of cohesion and the contribution of other policies.

The Second Report (2001) launched a debate on cohesion policy after enlargement. The Third Report (February 2004) used the conclusions of this debate as the basis for presenting the Commission’s proposals for a reformed cohesion policy after 2006, and on 14 July 2004 the Commission adopted the proposals regarding the new rules for the Structural Funds for the period 2007-2013. [1] ETUC’s first contribution to the debate on the future of economic and social cohesion policy in the enlarged European Union, adopted by its Executive Committee of 19-20 November 2002 , [2] emphasised the strengthening of Community structural policies in an enlarged Europe insofar as the principles of cohesion and solidarity are enshrined in the Treaty and constitute two of the most important vehicles for the integration of peoples and territories.

For ETUC, enlargement represents first and foremost a unique historical opportunity to unify the peoples of Europe on the basis of fundamental democratic values. This guarantees peace and political stability in Europe and contributes to economic and social progress and the improvement of living and working conditions. Besides the reunification of Europe, enlargement makes it possible to expand the European job market and internal market by increasing the overall volume of production and consumption level of the new Member States, and developing new and competitive products and services on the world market.

This represents an unprecedented political, economic and social challenge that will benefit the entire European Union. However, unlike previous enlargements it should be noted that this one has resulted in a widening of the economic development gap, caused a geographic shift of disparities towards the East, and made the employment situation more difficult.

Furthermore, the EU is concerned about some other major challenges that were identified at recent European Council summits, which also require joint and coordinated responses and actions.

The EU’s future cohesion policy must contribute to give answers to these challenges, and in so doing help to reduce existing disparities between regions and promote a society of full employment, equal opportunities, inclusion and social cohesion, and so more widely the European Social Model.

To achieve this, the reform under way must guarantee greater complementarity between the Union’s structural policies and other areas of Community policy, whilst also ensuring that all EU policies take on board the crucial aspects of economic and social cohesion and the need to boost employment of quality. In addition to the coordination of Community policies, it is of the outmost importance to coordinate taxation policies in order to avoid any social and taxation dumping.

In this respect, ETUC deems the explicit reference to the Lisbon and Göteborg Agendas in the proposed general Regulation presented by the Commission to be of vital importance. Above all, ETUC believes that cohesion policy must integrate the Lisbon and Göteborg objectives and become an essential medium for their realisation by means of national development programmes.

2. MAIN ELEMENTS OF THE REFORM

2.1. Concentration on three Community objectives

As regards operational programmes, ETUC favourably welcomes the Commission’s proposals to have a limited list of key themes; namely, innovation and the knowledge economy, the environment and risk prevention, accessibility and services of general economic interest, while specifying that these themes must refer to jobs creation and regional development.

At the same time, subject to the stipulations set out below, ETUC is in favour of focussing the implementation of priority themes on three key concepts: convergence, regional competitiveness and employment, and European territorial cooperation.

2.1.1. Convergence

ETUC believes that the least-developed regions of the enlarged Union, those which are lagging behind the Community average, must remain the priority, as is the case in the Commission’s proposal. ETUC also maintains that this objective will primarily concern the regions with a per capita GDP below 75% of the Community average.

Furthermore, ETUC supports the proposal to grant temporary assistance to regions with a per capita GDP below 75% of the average calculated for the EU-15 (referred to as the "statistical effect" of enlargement) and which did not become rich “suddenly”. In the same way, temporary, transitional assistance should be granted to the countries receiving resources from the Cohesion Fund and which will also be affected by the “statistical effect” of enlargement.

However, ETUC reiterates its concern to avoid a two-speed cohesion policy, even if we recognise that certain priorities can differ according to whether they involve the most disadvantaged regions of the EU-15 or those of the new Member States.

Whereas the development of infrastructure has made progress in the EU-15, this has not been the case in the new Member States. Even as we avoid the risk of fragmentation of support measures, a balance must be found between investments in infrastructure and investments in favour of human capital. At the same time the projects concerning infrastructures must integrate the objective “employment” and be linked with a human resources policy including a capacity of anticipation.

2.1.2. Regional competitiveness and employment: anticipating and promoting changes

It is clear that the persistence of structural problems, unexpected shocks, processes of industrial restructuring or economic diversification, and company mergers in several regions of the EU all necessitate the continued provision of support to these areas.

ETUC believes that in the current programming, Objective 2 can indeed present difficulties at the implementation level. It is highly complex, not flexible enough, and only limited - and sometimes somewhat unreliable - statistical data are available.

Since the present objectives 2 and 3 are merged under the new key concept “regional competitiveness and employment”, the social dimension of regional development must be clearly defined. In a similar vein, it is highly important that the Member States actually ensure a link with the National Action Plans for Employment and the National Action Plans for Inclusion.

ETUC welcomes the dual approach proposed by the Commission provided that the two parts are really implemented in all the Member States. Firstly, that regional development programmes should help the regions anticipate and promote economic change by strengthening their competitiveness and attractiveness; and secondly, that programmes defined at the suitable territorial level should help people to prepare for and adapt to economic change.

However, where regions’ eligibility is concerned, whilst it is true that the Member States, in close cooperation with the regions, are in the best position to identify the areas in greatest need of assistance, we feel it is important to reiterate that the Structural Funds are the Community policy whose application is based on a number of common objectives and principles, and that this arrangement is designed to prevent any potential drift by this policy towards renationalisation. Bearing this in mind, it is vital on the one hand to define objective criteria of eligibility and on the other hand to guarantee linkage and an optimal balance between the three levels (European, national and regional) concerned.

2.1.3. European territorial cooperation

ETUC approves the fact that, on the strength of the experience gained with the current INTERREG initiative, the Commission is proposing to create a new Objective with a view to continuing the balanced, harmonious integration of the Union’s territory by supporting cooperation between its various components on issues of Community importance at the cross-border, transnational and interregional levels.

Cooperation and support measures at these three levels indeed need to be strengthened. The unions’ positive experience associated with the actions conducted by the 41 Interregional Trade Union Councils (ITUCs), including in the border regions with the new Member States, demonstrates that this is the path to follow.

Furthermore, since enlargement the EU’s external borders have shifted, likewise pushing structural problems towards these new regions. Consequently, ETUC believes that particular attention needs to be paid to these regions by optimizing the use of the New Neighbourhood Instrument, without reducing the efforts in favour of the border regions inside the E.U.

2.2 Taking account of specific territorial characteristics

ETUC believes that the outermost regions and sparsely populated peripheral regions that risk becoming deserted, merit particular attention on the part of the EU, consisting of promoting both their attractiveness and their competitiveness.

Along these lines, ETUC welcomes the Commission’s proposal for a specific allocation designed to offset the particular constraints experienced by the outermost regions as part of the ’Convergence" Objective.

By the same token, just as the Commission proposes, it is important that any allocation of resources for the "regional competitiveness and employment" Objective take account of the specific problems of accessibility and distance from major markets faced by many islands, mountain regions and sparsely populated areas.

In any case the criteria of eligibility must be clearly defined.

2.3 Simplification: "a stronger delivery system"

ETUC supports the strategic approach proposed by the Commission, and more particularly the establishment of an annual strategic dialogue with the European institutions to examine the progress as regards strategic priorities and obtained results. To be able to provide its contribution, ETUC believes the European social partners should be consulted on the overall strategic document for cohesion policy. By the same token, at national level, the social partners should be actually consulted on the National Strategic Reference Framework worked out by the Member States.

The fact is that much of the reform involves simplifying the delivery system.

First of all, ETUC welcomes the Commission’s proposal to maintain the basic principles of the Community’s structural policy after 2006, namely concentration, programming, additionality and partnership.

ETUC also feels that the procedures and programmes need to be further simplified and rationalised, though care should be taken to ensure that this does not impair the quality of support measures.

Similarly, ETUC can support the Commission’s proposal aimed at greater decentralisation by delegating more responsibilities to the Member States and regions, whilst maintaining financial rigour, provided that the Commission guarantees consistency with European policies and objectives and linkage between the European, national and regional levels in order to avoid any risk of disparities between and within the Member States.

Finally if the proposed system of “single Fund” may simplify the delivery system, it is necessary to ensure a comprehensive view and parallelisms between the Funds, namely in order to avoid any double use of the Funds. Moreover the efforts towards an integrated implementation of the Funds must continue.

2.4. Community Initiatives

Past experience shows us that Community Initiatives play a vital role in shoring up Europe’s identity, in possibilities for experimentation and in the development of partnership. In addition to this, ETUC deems the aspects related to the transnational and innovative character of these initiatives to be equally important.

Consequently, whilst emphasising the importance of the Commission’s proposals aimed at ensuring equal opportunities and transnational cooperation, ETUC wishes to see the Community Initiative EQUAL maintained or explicitly included under the new Objective 2, given the positive results achieved in terms of promoting equal opportunities for everyone on a labour market that is undergoing radical change and in attempts to combat all forms of discrimination.

2.5. The principle of partnership

ETUC is 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.

Along these lines, ETUC would like to see the future structural funds rules set out the partnership principle clearly, rather than relying on national rules and practices, as the Commission has once again proposed.

As regards the composition of the Monitoring Committee, ETUC welcomes the Commission’s proposal that the social partners be included.

Similarly, with regard to the European Social Fund, ETUC supports the Commission’s proposal that under the ’Convergence’ Objective, at least 2% of the ESF’s resources be allocated both to developing capacity to activities undertaken jointly by the social partners. At the same time, ETUC insists that a clear reference be made to the social dialogue in accordance with the Commission Communication "Partnership for change in an enlarged Europe - Enhancing the contribution of European social dialogue" (COM(2004)557 ). [3]

However, ETUC regrets the fact that in the Commission’s proposal, the European Social Fund is the only fund that depends on active participation by the social partners within its European Committee. ETUC feels that such participation constitutes important added value. Consequently, it is essential that the same type of participation be provided where the other structural funds are concerned at European and national levels.

In a similar vein, ETUC feels that in future the annual meetings between the European Commission and the social partners must entail genuine consultation and insists that other forums of debate with the Member States and the Commission be set up.

The social partners must have access to technical assistance to strengthen their capacities, more particularly in the new Member States, in order to enable them to participate more easily in the management and implementation of the projects financed by the Structural Funds.

3. FINANCIAL RESOURCES

It is a fact that the current level of investment of the Union’s budget resources is relatively modest compared with the positive results obtained, notably as regards the level of improvement of the situation of the less fortunate regions and the start of genuine convergence.

Furthermore, bearing in mind the Member States’ ambitions for the EU, compared with the objectives of enlargement and the Lisbon and Göteborg Strategies, the level of resources cannot be maintained at the present level.

Consequently, ETUC feels that if success is to be guaranteed, the efforts being made to stimulate the growth, employment, competitiveness and sustainable development of less developed regions must be stepped up.

In the light of the limit proposed by the Commission (1.24%) in the financial perspective for the 2007-2013 period, ETUC feels that the 0.41% allocated to cohesion policy is inadequate if the EU is to attain the ambitious goals proposed in the ongoing pursuit of European construction.