“THE EUROPEAN UNION”:The social dimension, Employment Policy

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Lesson 29

"THE EUROPEAN UNION"

Note: the text of this handout is excerpted from the publication in brochure form titled: Europe in 12

lessons" by Pascal Fontaine, published by the European Commission, Directorate-General for Press and

Communication Publication, B-1049 Brussels, Belgium in October 2003.

Students are advised to visit the EU website at europa.eu.int/comm./publications to obtain further relevant

information on the EU provided in this publication as well as in a whole series of similar publication.

In 2005, as a result of negative votes by citizens of major European countries against a draft constitution for

the EU, new debates and speculations have begun on the need to conduct comprehensive reforms and to

bring the EU system closer to public opinion at the grass-roots level. To keep themselves well-informed on

this on-going debate, students are advised to observe programmes on the BBC World Service TV and

analysis printed from time to time in leading newspapers and journals.

The merit of this particular text in this handout is that it provides students with information which is rarely

reported in the daily news media and helps them appreciate the actual, practical work done at the grass-roots

level by the EU.

What does the Union do?

The people who drafted the Treaty of Rome set the following task for the European Economic Community:

`by establishing a common market and progressively approximating the economic policies of member states, to promote throughout

the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability,

an accelerated raising of the standard of living and closer relations between the States belonging to it.'

These goals have been largely achieved, thanks to the free movement of goods, people, services and capital

and to the EU's policy of ensuring fair competition between businesses and protecting consumer interests.

The single market was completed in 1993 and the euro came into circulation in 2002.

But, to enable all sectors of the economy and all regions of Europe to benefit from these achievements, they

had to be backed up by `structural' policies financed and pursued with commitment and determination by the

EU itself.

Europe's political leaders realised early in that European solidarity would mean taking action to strengthen

`economic and social cohesion' in other words, to narrow the gap between richer and poorer regions. In

practice, this meant introducing regional and social policies, and these policies have become more important

with each successive enlargement of the EU.

Regional action

The EU's regional policy consists essentially of making payments from the EU budget to disadvantaged

regions and sections of the population. The total amount allocated in 2000-2006 is €213 billion. The

payments are used to boost development in backward regions, to convert old industrial zones, to help young

people and the long-term un-employed find work, to modernise farming and to help less-favoured rural areas.

The money is paid through specific funds the European Regional Development Fund (ERDF), the

European Social Fund (ESF), the Financial Instrument for Fisheries Guidance (FIFG) and the European

Agricultural Guidance and Guarantee Fund (EAGGF, also commonly known by its French acronym

FEOGA).

These payments top up or stimulate investment by the private sector and by national and regional

governments. To target the payments where they will have the greatest effect, the EU has set itself three

priority objectives:

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Objective 1 is to help develop regions where the wealth produced divided by the number of

inhabitants technically known as `gross domestic product (GDP) per capita' is less than 75% of

the EU average. This aid, amounting to €135 billion, is two-thirds of all the money allocated to

regional policy in 2000-2006. It does to benefit about 50 regions, representing 22% of the EU's

population. It is used to get the economy moving in these regions by creating the infrastructure they

lack, providing better training for local people and stimulating investment in local business.

Objective 2 is to help the regions in difficulty. They may be areas where the economy is being

restructured, declining rural areas, fishing communities in crisis or urban areas with serious problems.

Objective 3 is to combat unemployment by modernising training systems and helping to create jobs.

Specific programmes aimed at these objectives include Interreg, which promotes co-operation

across borders and between regions, and Urban which supports the sustainable development of

cities and urban areas in crisis.

In addition to these `structural' funds there is a `Cohesion Fund'. This is used to finance transport

infrastructure and environmental projects in EU countries whose per capita GDP is less than 90% of the EU

average. The countries concerned until now have been Greece, Ireland, Portugal and Spain.

Thanks to structural schemes such as these, financed by the European Union, EU countries have been better

able to bring their economies into line with one another. This economic `convergence' is also the result of

action by EU governments to meet the requirements for economic and monetary union.

Extending structural policy to embrace the new member states

Enlarging the Union to take in 10 new member states will pose a major challenge for economic and social

cohesion, because development in some regions of these countries lags well behind the rest of the EU.

Enlargement will, in fact, make the Union more diverse and require further efforts at sectoral and regional

adjustment.

A number of `instruments' are already being used to help the candidate countries. First there is the Phare

programme, which channels aid to the candidate countries in central and eastern Europe. Over the period

2000 to 2006 they will receive a total of €10.9 billion in `pre-accession' aid.

Then there is ISPA (Instrument for Structural Policies or Pre-Accession), which finances environmental and

transport projects and has a budget of €7.2 billion.

Thirdly, Sapard (an instrument for financing agriculture) has a budget of €3.6 billion. After accession (i.e.

after the new member states join), the Structural Fund programmes and Cohesion Fund projects will take

over from pre-accession aid.

The social dimension

The aim of the EU's social policy is to correct the most glaring inequalities in European society. The

European Social Fund (ESF) was set up in 1961 to promote job creation and help workers move from one

type of work and one geographical area to another. For 2003, the ESF was allocated €4.8 billion from the

EU budget.

Financial aid is not the only way in which the EU seeks to improve social conditions in Europe. Aid alone

could never solve all the problems caused by economic recession or by regional under-development. Social

progress springs, first and foremost, from economic growth and is nurtured by both national and EU

policies.

Social progress is also supported by legislation that guarantees all EU citizens a solid set of basic rights. Some

of these rights are enshrined in the Treaties for example, the right of men and women to equal pay for

equal work. Others are set out in directives about the protection of workers (health and safety at work) and

essential safety standards.

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In December 1991, the Maastricht European Council adopted the Community Charter of basic social rights,

setting out the rights all workers in the EU should enjoy: free movement; fair pay; improved working

conditions; social protection; the right to form associations and to undertake collective bargaining; the right

to vocational training; equal treatment of women and men; worker information, consultation and

participation; health protection and safety at the work-place; protection for children, the elderly and the

disabled. At Amsterdam in June 1997, this Charter became an integral part of the Treaty and is applicable in

all the member states.

Employment Policy

During the final decade of the 20th century, EU citizens were increasingly calling on their governments to take

more vigorous action to create jobs. How could Europeans believe in the benefits of European integration

and have confidence in its future while more than 10% of the EU's workforce (until 1997) were unemployed?

So a new chapter on employment was inserted into the Treaty of Amsterdam, making job creation a priority

for the EU's economic policy.

At the European Council in Luxembourg on 20 and 21 November 1997, the leaders of the 15 member states

agreed a coordinated strategy for making their individual national policies more effective. It was a strategy for

better vocational training, for helping start up new businesses and for improving `social dialogue' i.e.

relations between employers and employees. It laid down guidelines for boosting employment. Progress on

implementing these guidelines is regularly reviewed by the member states and the EU institutions, using a

jointly agreed assessment procedure.

The `Luxembourg strategy' was beefed up and given a broader scope by the European Council in Lisbon in

March 2000. It became the `Lisbon strategy', and it was directed towards a new and very ambitious goal: to

make the EU, within a decade, `the most competitive and dynamic knowledge-based economy in the world, capable of

sustainable growth with more and better jobs and greater social cohesion'.

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