Opinion of the Committee of the Regions on 'New economic activities and new services in rural areas` (97/C 215/03)

THE COMMITTEE OF THE REGIONS,

having regard to its decision on 12 June 1996, under the fourth paragraph of Article 198c of the Treaty establishing the European Community, to issue an opinion on new economic activities and new services in rural areas and to direct Commission 2 - Spatial Planning, Agriculture, Hunting, Fisheries, Forestry, Marine Environment and Upland Areas - to draw up the relevant opinion;

having regard to the draft opinion (CdR 3/97 rev.) adopted by Commission 2 on 12 February 1997 (rapporteur: Mrs Kaija-Maija Perkkiö),

unanimously adopted the following opinion at its 17th plenary session on 12 and 13 March 1997 (meeting of 12 March).

1. Introduction

1.1. Despite the extremely varied nature of Europe's rural areas, their development - which is marked by radical structural change - is similar in a number of ways. Depopulation of the countryside is one example: in 1988, 18 % of the EU's population lived in rural areas, whereas in 1965 the figure was 29 %. It is the inhabitants of remote rural areas in particular (Objectives 1, 5b and 6) who moved to live in towns and cities where they had a better chance of finding work.

1.2. The population of rural areas is ageing. When people of working age move to the towns and cities, it is the elderly who are left behind, reinforcing the ageing of the rural population caused by rising average age and declining numbers of young people.

1.3. The problems faced by rural areas vary from one country to another depending on local and regional factors. In the sparsely populated Nordic countries, villages often have to contend not only with an ageing population but also with the particular problem of women leaving. By contrast, in southern Europe it is usually the women who stay in their villages while their spouses go to towns and cities to find work. However, in certain parts of Bavaria, for instance, this phenomenon has been avoided thanks to a good network of roads and relatively short distances, which make commuting easy.

1.4. There is a trend towards the disappearance of services in many of Europe's rural areas. People who live in sparsely populated regions often have to travel long distances to gain access to services, which are grouped in various centres. People who live in dormitory suburbs, meanwhile, take advantage of services which are available to them close to their place of work. In both cases, the supply of services in rural areas and villages exceeds demand, and when services move away, there is an increase in traffic with inevitable consequences for the environment.

1.5. In order to stop the exodus from disadvantaged and remote regions, rural areas should be guaranteed access to services because if people leave the countryside the existing infrastructure will not be used. Maintaining services in rural areas and stemming the exodus from such areas requires that new strategies be devised at all levels - from the Community to the local level and the individual. Steps should be taken to restructure rural development action and to create new types of assistance in order to extend and maintain services which are commensurate with the needs of people living in rural areas. Efforts must in particular be made to guarantee conditions of access to services and their maintenance in the long term. Among other things, this means that public services have a more important role to play in outlying regions than in rural districts close to population centres. Moreover, the provision of 'combined services` should be encouraged, which would lower the break-even point for each individual service.

1.6. In recent decades the service industries - including new economic activities related to them - have been the fastest growing sector. It is currently the main source of employment for the EU as a whole. This trend is forecast to continue, thus offering new opportunities for rural communities. Growing demand reflects a number of factors, e.g. an increasing need for health services, more leisure time, demands by people living in rural areas for the same services as city-dwellers and the possibilities opened up by technological development.

1.7. High levels of women workers, widespread use - compared with other sectors - of part-time employment and self-employment promotion schemes are features of the service sector. Indeed, if social services and state-sponsored training are excluded, a service-sector firm will usually employ only a limited number of people apart from the head of the undertaking himself. There are numerous opportunities here, but there are also many problems for which solutions have to be found.

1.8. The specific characteristics of the regions should not be ignored given that they have varied strengths and weaknesses. For this reason all development strategies need to be founded on factors which are specific to the region concerned. The employment-creating potential of developing services and organizing new business activities should be ensured. This requires that available human and organizational resources are established for each region, together with any potential needs. This kind of groundwork will afford a basis for finding practical solutions and means of action which are suited to each region and each country, i.e. which take into account the region's or country's prevailing economic conditions, the structure of its economy, its culture, traditions, the political situation, and so on.

2. Overview of the development of services and new economic activities in rural areas

General comments

2.1. Strategies which are drawn up taking regional characteristics as their basis and which make room for local initiative are sustainable strategies. The Committee takes the view that the Commission is to be commended for the way in which it has highlighted the 'bottom-up` and subsidiarity principles in handling structural policy-related programming documents and endorsing various Community initiatives, particularly the Leader programme.

2.2. The scope of services and related economic activities in rural areas is vast. Initiative at local level can inspire economic activities which are part of everyday life, are linked to environmental protection, are services designed to improve the quality of life or are culture or leisure-based.

2.3. Economic activities which are part of everyday life include services dispensing care to children or the elderly, help in the home, or the organizing of training. Examples of services which help to improve the quality of life are those related to trade and transport. These are services which offer new job opportunities for women, in particular. Where public transport can no longer properly ensure the mobility of people who live in remote areas, possible solutions are to use a taxi system (e.g. in France and in Finland), to set up transport cooperatives (in Italy) or to combine the carrying of mail with public transport services (in Ireland and Northern Ireland). Culture or tourism-related services and economic activities that aim to protect our heritage are, for their part, a source of employment in the culture and leisure sectors.

2.4. Increasing pollution and awareness of the role of ecology are likely to lead to the creation of new jobs in the area of environmental protection, e.g. recycling and re-using waste and protecting and conserving the regional landscape in combination with rural tourism (in Belgium, Ireland and France).

Problems and obstacles connected with the development of new services and economic activities in rural areas

2.5. There are many obstacles in the way of creating new services and restructuring existing services in the Member States. Public authorities are invariably too rigidly organized to create the necessary environment for the introduction of innovative administrative models or production structures. Complicated legislation can also represent an insurmountable obstacle for innovative small businesses if they are not properly advised.

2.6. Innovation in the area of services can also be restricted for economic reasons. Many services are labour-intensive, which inevitably means heavy wage bills. The ability of people using these services to pay the same price for the work which is done varies greatly. Clearly, economic activities which entail costs of these kinds are unattractive to investors, and small businesses are not in a position to be able to give guarantees to their backers. Consequently they find it difficult to obtain venture capital to set up a business.

2.7. The development of services can also be constrained by training deficiencies. Workers in sectors which mostly require a part-time labour force (e.g. tourism) are not motivated to follow training courses. Furthermore, although many businesses in rural areas are multi-sectoral enterprises and require multi-skilled employees, the training which is on offer is generally specialized. A system of ongoing training is essential in order that employers can retain a constant level of know-how in an ever-changing society. Besides technical skills, training can provide added value in the area of human relations, particularly regarding flexibility.

2.8. Training is still devised too theoretically. Vocational training institutions and development projects should (during the training phase) draw on the experience gained at the institutions, at work and through research so that both employers and workers may profit.

2.9. Current legislation in the various Member States can also be an obstacle to the development of the service sector as a source of employment. As new enterprises in rural areas are often multi-sectoral it is difficult to manage the numerous questions that arise concerning taxation, financing arrangements, product quality or monitoring systems as a result of limited economic resources and know-how. Nevertheless, services must be of a high quality since workers employed in this sector have frequent human contact at work.

Possible solutions

2.10. The above economic problems can be solved locally by, for instance, the use of vouchers as a method of payment (in the case of services for the elderly in France, for example) or setting up venture capital funds for small businesses. The assistance given in Finland to women who run small businesses in the service sector is a good example of this.

2.11. There are also solutions at national level: tax measures, reductions in salary-related costs, giving grants either to users (as direct aid) or to producers of services. Schemes are generally more cost-effective when they are only financed in part by the authorities (e.g. care for the elderly at home or in an institution, countryside conservation activities carried out by farmers themselves rather than employees, and so on).

2.12. Local action groups set up in connection with the Leader programme have enabled economic problems to be solved, for instance by setting up multi-sectoral businesses in which stronger economic sectors support weaker ones. Action groups made up of women (within the Leader programme) have broken new ground in organizing health services, day nurseries and training services and have enabled women to have paid work, take up distance working or set up their own businesses (e.g. in Ireland and Wales).

2.13. Cooperation between the public and private sectors creates a favourable environment for developing a system of high-performance services. The production of services can be privatized or entrusted to a commercial enterprise with no reduction in the public sector's share of responsibility in organizing such a system. This kind of cooperation can also embrace sub-contracting. In Ireland, encouraging results have been obtained in developing new ways of providing services by establishing semi-independent local enterprise boards with members drawn from the public and private sectors.

Possibilities opened up by the information society

2.14. More effective use should be made in rural development of the possibilities opened up by the information society. Services founded on information technology (IT) can be accessed directly by personal computers (banking and shopping services, etc.), which makes for easier access to services for people living in isolated areas. Such a system does however require a marked increase in the number of home computers, and in this connection it is worth noting that insufficient economic resources and personal skills are often factors holding back their widespread adoption and use.

2.15. More IT centres (telecottages) should be set up in rural areas to provide users with an IT network which will give them access to different services. This is a system which would afford a basis for a considerable improvement in access to such services. These centres have existed in Finland since the 1980s, but as they have not had official status this has hampered their spread. IT centres should be developed either as commercial undertakings or as service centres funded in part with public money. IT/distance working centres can operate as a network of services or regroup some of the IT services offered by schools and libraries.

2.16. The information society is also opening up many possibilities regarding distance working through information centres or in businesses. As distance working increases, traffic decreases and the number of working people in rural areas - and their need for services - increases. As not all of the possibilities offered up by distance working have yet been exploited (in the areas of education, hospital care, and so on), more emphasis should be placed on extending distance working where rural development is concerned.

3. The Committee would therefore wish to make a number of

General comments

3.1. The COR welcomes the action carried out under the Community Leader I and II initiatives which have as their objective the establishing of new economic activities and new services in rural areas. The Committee takes the view that the principles on which Community initiatives regarding the granting of funding to action groups are founded - namely the 'bottom-up` principle, innovativeness, the possibility that they may serve as examples, and transferability of skills - are extremely important. This kind of approach contributes to fostering a sense of initiative, cooperation and imagination locally, for instance at village level. The COR considers that the Leader projects and programmes could be carried out more efficiently if they were better coordinated with the Structural Fund objectives or with the 'integrated approach` referred to in point 2 of the Cork Declaration.

3.2. Innovativeness comes to the fore when, for example, projects are carried out in collaboration with new partners. What is needed is for a new work-sharing arrangement to be found in respect of the public and private sectors and between the various government departments. The Committee would particularly emphasize that efficiency is not the only valid criterion where services are concerned. Account must also be taken of the social dimension and general accessibility, which services that are exclusively private in nature and are governed by the principles of market economics are not always in a position to embrace.

3.3. The COR notes with satisfaction that the Commission in considering the programming documents relating to different regions' structural policies has drawn attention to implementation of the 'bottom-up` principle in the programmes carried out under Objectives 1, 5b and 6 of the Structural Funds. This approach has led to the setting up of an inter-regional cooperation network which provides a basis for determining local needs and disseminating new information, and in which operators are ready to act as a link between supply and demand on the employment front and devise new development projects.

3.4. The Committee welcomes the content of the fourth EU framework programme for 1994-1998, and particularly its chapters on technology and services in the area of information and telecommunications, given that such projects contribute to carrying out pilot projects in, for instance, the fields of distance working and distance training. Plans for the fifth framework programme should also include these aspects.

3.5. The Commission has drawn up a report on European strategy for promoting local development and employment initiatives (). The Committee notes that the report proposes seventeen initiatives and measures for development in this field which include new economic activities and new services in rural areas. The Commission should develop the report's proposed measures and should itself decide on them. It should also assist the Member States in carrying out their own activities, in compliance with the subsidiarity principle.

4. COR proposals to promote new services and new economic activities in rural areas

4.1. The Committee would urge the Community institutions to encourage local and regional initiatives for organizing services in rural areas by simplifying and accelerating the application procedure and consideration of pilot and research projects.

4.2. The Committee would invite the Commission to pay special attention to how the various programmes implemented at regional level contribute to improving service quality, including the setting-up of quality systems and quality monitoring.

4.3. The Committee would also invite the Commission to encourage action to strengthen minimum EU quality requirements for the products of combined service enterprises.

4.4. The COR would ask the Commission to encourage action to contribute to improving the flow of information on the various possibilities opened up by the implementation of Community initiatives (e.g. Leader, NOW, SME) for organizing services and connected activities. A sufficient level of resources in the field of technical assistance for programmes must be provided for this. More should also be made of the data collected from the national Leader networks and the Community Leader observatory AEIDL; the aims, structure, financing and future of these institutions should be considered right now in the discussions on the forthcoming structural policy reform.

4.5. The Committee urges the Community institutions to encourage the Member States to carry out specific action of the Leader type and put local initiatives into practice at national level in order to create innovative ways of producing services. Special attention should be paid to access to services and certainty of supply. Particular effort should also be made to solve problems concerning the share-out of work between the public and private sectors.

4.6. The Committee takes the view that the Member States should be encouraged to find new ways of simplifying and reducing taxation and salary-related costs in the case of small service-producing enterprises.

4.7. The Committee would call on the Commission to begin improving venture capital systems for service enterprises so that they operate as effectively as investment systems for other enterprises. This is particularly important for new multi-sectoral businesses in rural areas.

4.8. The Committee takes the view that the Commission should step up its action at Community level to improve the use made of telecommunications networks in sparsely populated regions (reductions in construction costs, and so on). The information-protection problems which are inherent in new technologies must also be solved, both at EU and national level.

4.9. The Committee would invite the Commission to take account of the fact - both in the renewal of the Structural Funds and in the review of the areas qualifying for the different Structural Funds Objectives - that defining such areas has a clear territorial and problem-related dimension; it must therefore be ensured that those areas of cooperation which are important for developing services and other initiatives to promote endogenous development potential are not affected. Improvements should also be made to coordinating structural measures in these different regions (cf. the example of rural packages) to ensure maximum synergy. A single programming document should be drawn up for each rural area instead of several programmes (e.g. for Objectives 5a, 5b, 3 and 4) as at present.

4.10. The Committee endorses the rural development programme set out in the Cork Declaration (), which corresponds with the objectives and measures presented in this opinion.

Brussels, 12 March 1997.

The Chairman of the Committee of the Regions

Pasqual MARAGALL i MIRA

() COM(95) 273 final.

() OJ No C 116, 14. 4. 1996, p. 46.