5.6.2014   

EN

Official Journal of the European Union

C 170/1

1.1

The EESC believes that the Mediterranean Region needs a Macro-Regional Strategy (EU MMRS) to help the regions face challenges that cannot be satisfactorily resolved by single regions or countries through the usual means. Such a strategy would help the regions concerned to address the causes of uncertainty that dominate the Mediterranean region by increasing the value-added of the positive achievements of the initiatives already launched and the Europe 2020 goals. The success of the MMRS will also have a positive effect on the EU as a whole.

1.2

The EU Mediterranean Coastal Regions (EU MCRs) are ideally suited to form a cooperation platform which could become strategically relevant in strengthening economic, social and political links between them and with those of Mediterranean non-Member Countries on specific topics (immigration, maritime transports, maritime safety, environmental protection, etc.). The MCRs have the potential of catalysing the process of economic growth and transformation in uniquely novel ways.

1.3

In view of the vastness of the area the EESC further proposes that the EU MMRS should be subdivided into three sub macro-regions identified on a geographical basis (regional proximity) and rendered operational through action plans based on a functional approach to address common challenges.

1.4

The EESC favours an EU MMRS based on the ‘three yeses rule’ (more complementary funding, more institutional coordination and more new projects) which strengthens synergies between different EU policies and coordinates the efforts of a wide range of stakeholders within the EU MCRs.

1.5

The EESC endorses the development of an EU MMRS — which incorporates all the goals of the EU 2020 strategy particularly those priorities defined as Smart growth (fostering a knowledge based economy supporting ‘innovation’ and new technologies), Sustainable growth (promoting a sustainable, greener and more competitive economy), Inclusive growth (promoting an economy with a strong emphasis on job creation and poverty reduction to support social and territorial cohesion).

1.6

The EESC identifies five Drivers of change which can contribute to the successful implementation of the European cohesion policies 2014-2020 in the Mediterranean area:

1.7

The EESC draws attention to the considerable importance of supporting the Blue Growth strategy, which has the potential of enhancing competitiveness in the Mediterranean area, facilitating the implementation of greener policies and the shift towards a low-carbon economy in all sectors. The Committee also endorses the principle of an EU MMRS, which also takes into account the European disability strategy  (1) and the Strategy for equality between women and men  (2). These three strategies should be mutually reinforcing during the implementation process.

1.8

The EESC welcomes the European Commission's proposal for the Mediterranean in the context of the Integrated Maritime Policy. However, it wishes to propose a more ambitious approach consisting of a macro-regional strategy that incorporates the territorial and maritime pillars, taking account of the experiences in the Baltic and Danube regions as well as the European Parliament report on the evolution of EU macro-regional strategies in the Mediterranean and the European Commission report concerning the added value of macro-regional strategies.

1.9

The EESC notes that the governance structure of the EU MMRS should be based on a multilevel approach involving regional, national and European institutions and should not be seen as an additional activity or effort of the said institutions.

1.10

The EESC believes that the fundamental principle of the implementation of the EU MMRS is the integrated approach which should firstly be defined by setting up round tables and subsequently strengthened by the establishment of a Euro-Mediterranean Macro Regional Forum (EMMRF) to promote the full involvement of all institutional actors and civil society (stakeholders) and to combine existing policies with functional objectives in order to shape a common and shared policy. The proposed EMMRF will harness the experience gained in drawing up, monitoring and assessing Mediterranean territorial and maritime affairs. The EMMRF shall become the macro-regional tool that establishes common strategic lines of action and shall take an active role in the identification of the priority projects for territorial cohesion in the Mediterranean regions.

1.11

In view of the support of the EESC and the Committee of the Regions for a strategy to develop cohesion in the Mediterranean, the EESC believes that it is strategically appropriate for these two institutions to host and provide leadership of the Mediterranean Macro Regional Forum. This will be achieved through the setting up of a leadership group consisting of the European Parliament, the Commission, the EESC and the CoR. This leadership group will provide systematic support during the design process of the strategy and future coordination.

1.12

The EESC endorses the view that the strategy is not to be considered as just a document. Above all it must be a process. This means that the strategy is to be implemented over time. The EESC hopes that the positive lessons learned from the implementation of Macro-regional Strategies in the Baltic and the Danube will be applied to the Mediterranean Region thus contributing to an effective and timely implementation of the new Mediterranean macro-regional strategy to bring concrete benefits to the citizens of the affected regions within a reasonable timeframe.

2.1

It is important to establish a common definition of what constitutes a macro-region. Mostly, a macro-region is defined as ‘an area including territory from a number of different countries or regions associated with one or more common features or challenges (…) of a geographical, cultural, economic or other nature’ (3).

2.1.1

The Commission has established the framework of an MRS which encompasses the following three elements:

2.2

Presently two MRS have been adopted by the EU, one for the Baltic Sea Region which was approved in 2009 and another for the Danube Region which was approved in 2011. An Adriatic — Ionian macro-regional strategy originally proposed by the Committee of the Regions (COR) in 2011 (4) is in the process of being approved while an Atlantic strategy based on a sea basin approach has already been approved.

2.2.1

The debate on MRS should be understood in relation to various developments in the EU policy framework: with the Lisbon Treaty, territorial cohesion has become a central objective of EU policy; with the Europe 2020 Strategy territorial governance is the key factor to support the achievement of the EU cohesion policy goals for the next programming period (Multiannual Financial Framework 2014-2020).

2.2.2

In 2012, the Commission published a communication in which it assessed the needs and potential of sea-related activities in the Adriatic and Ionian area, setting out a framework plan ‘to move towards a coherent maritime strategy and corresponding Action Plan by 2013’, adding that ‘should the EU Member States decide to ask the Commission to prepare an EU Strategy for the Adriatic and Ionian region, this maritime strategy might constitute the first component of such an EU MRS covering additional fields’ (5).

2.3

Given that the macro-regional approach is increasingly featuring in EU policy, the EESC feels that the term ‘macro-region’ itself needs a clearer definition. Furthermore the EESC — in line with the previous opinions (6) — supports this important political strategy as well as the European Parliament resolution on macro-regional perspectives in the Mediterranean Basin (7).

2.3.1

Two main objectives of macro-regional strategies are distinguished: the first deals with problems that cannot be satisfactorily addressed by regions or countries acting alone (for example environmental challenges); the second deals with cooperation which is beneficial to the regions and countries involved. This classification reflects the distinction between a transnational issue and a common issue (used in the debate on transnationality and subsidiarity of EU funding). The geographical, socio-economic and administrative features of the Mediterranean strongly indicate the first category of objectives as being the most relevant for the MRS.

2.4

The Mediterranean basin shares similar environmental, historic and cultural characteristics and for these reasons it could be considered as a single macro-region (8). The EESC is of the view that one single macro-regional strategy has to be implemented in the Mediterranean Basin between the 149 (including 7 from Croatia) EU Mediterranean Coastal Regions (MCRs) of Spain, France, Croatia, Italy, Malta, Slovenia, Greece and Cyprus defined at NUTS 3 (9).

2.5

In 2009 the active population resident in the EU MCR was 32,4 million people, of these approximately 41% women. On average this population is at a greater risk of unemployment with an average rate of unemployment in the EU MCR around 12,9% in 2009 (8,9% for the EU). In 2007, the gross domestic product (GDP) of the EU MCR was 1 715 billion PPS (purchasing power standard) or 13,9% of the EU’s GDP. The average GDP per capita — in these regions — was 23 000 PPS per capita, lower than in the EU (24 000 PPS per capita) (10).

2.5.1

Given the extent of the area, the EESC is therefore of the view that the EU Mediterranean Macro-Region (EU MMR) should be subdivided into at least three sub macro-regions. Recent consultations carried out by the European Parliament (EP) on the evolution of macro-regions showed a point of view leaning towards retaining the option of three distinct Sub Macro-Regions (SMR): (i) one in the western Mediterranean, (ii) another in the central Mediterranean — implementing the Adriatic-Ionian macro-region — and (iii) the third in the eastern Mediterranean, with specific action plans coordinated with each other.

2.5.2

With regard to the sub macro-region for the central Mediterranean, and in line with the opinions of the European Parliament and the geographical distribution established by Eurostat, the EESC considers it essential to involve Sicily and Malta in the Adriatic-Ionian macro-region. More importantly, countries and regions situated on the imaginary borders of the sub-macro-regions should also be able to participate in more than one sub-macro region in order to ensure better coordination and to eliminate wasteful duplication and conflicts.

3.1

The Mediterranean as a whole has suffered from an on-off approach by the European Union with various initiatives and instruments being launched over the years. These initiatives have led to some positive achievements but they have failed to fully address the social, political and economic development goals that were initially set out. It is now time to complement what the EU is doing via the Union for the Mediterranean and its Neighbourhood Policy, as part of its external policies by launching a more integrated policy for its own Mediterranean regions.

3.1.1

Clear and shared strategies for the region as a whole as well as the sub-regions accompanied by the relevant action plan could help resolve some of the regional policy uncertainties which have arisen from the policy failures associated with the EU external policies in the region such as the Union for the Mediterranean and the EU Neighbourhood Policy. Such clear strategies can also help to incorporate and rescue some of the positive achievements and on-going projects of existing external EU policies.

3.2

The EESC favours a macro-regional approach, which strengthens synergies between different EU policies and coordinates the efforts of a wide range of stakeholders located within the EU MCR. Generally speaking a MRS should aim to provide value-added to actions already taking place within a macro-region to coordinate European, national and regional funds in the pursuit of shared objectives and targets, to create a sense of common achievement among the protagonists involved and to bring together organisations and authorities at any level around some key opportunities and challenges. More concretely, in this very particular period of huge fiscal constraints which are strongly impinging upon the private sector’s ability to restart the economic motor, there is a vital need to achieve the strongest degree possible of Pareto efficiency in the use of available resources.

3.3

The current economic situation triggered by the 2008 global financial crisis calls for an on-going effort to encourage new growth areas that could help pull countries out of the economic crises and enable them to create much needed jobs. The coastal areas of the EU in southern Europe have the potential to become innovative centres of dynamic growth by exploiting their unique characteristics.

3.3.1

However this will require an unprecedented effort to coordinate all the work that is being carried out by key stakeholders in the region with the aim of achieving closer integration between the areas in question with the social partners and civil society playing a major role.

3.3.2

It is our view that there already exists a plethora of instruments and policies that could contribute in a significant manner towards the implementation of a MRS. Reference is made here to projects funded from the European Regional Development Fund (ERDF) and the European Social Fund (ESF), the so-called Structural Funds and funds disseminated under the Convergence Objective, Regional Competitiveness and Employment Objective, European Territorial Cooperation Objective, programmes to develop transport and territorial cohesion (earmarked for Europe 2020), particularly those with a specific maritime thrust such as the European Maritime and Fisheries Fund, the Connecting Europe Facility as well as European Investment Bank (EIB) and national funding.

3.3.2.1

In this regard it is pertinent to point out that all EU Member States (and more specifically the 163 regions within the Mediterranean) are currently drafting their individual Partnership Agreements which will set out how each Member State will make use of the CSF funds. Whilst admittedly there is an element of territorial cooperation within such Agreements the EESC feels that an opportunity for more coordination between countries and regions within the Mediterranean is being missed.

3.3.2.2

However, the EESC insists on interim arrangements to favour the implementation of a MRS and by the time of the mid-term review of the Partnership Agreements being concluded with the EU member states, such measures should be fully in place.

3.3.3

To ensure that these instruments are focused upon and optimised, there is a need for multilevel coordination between the institution(s) involved, to lead the process and to ensure that resources are used to the fullest and duplication is avoided. Inter-regional coordination has now become essential and urgent particularly since more needs to be achieved with the same level (or less) of funding. Hence the proper and effective instruments must be set up to ensure coordination and effectiveness.

3.3.3.1

In a competitive globalised world the 163 regions have to be able to compete with close and distant competitors, in view of which the need for leadership and timely decisions is paramount.

3.3.4

The peripheral and maritime regions that are members of the Conference of Peripheral and Maritime Regions (CPMR) and the CoR have repeatedly urged the European Commission to introduce a Territorial Pact so that the EU2020 strategy can be better taken on board by all economic groups in Europe's regions (11).

3.4

What is required is the combination of salient policies with decentralised decision-making which would help ensure that resources are coordinated in such a manner as to be used where they are most likely to have maximum impact in terms of growth and jobs.

3.4.1

Only a well-thought out strategy that is kept simple and which is based on the broadest consensus possible can help to illuminate the paths and choices that confront the regions, towns, cities and ports of the EU MCRs.

3.4.2

It is also important to design a method of measuring policy effectiveness within the Mediterranean macro-region so that timely corrective action can be taken. In the past, the lack of a yardstick by which to accurately measure policy success/failure, coupled with the lack of coordination, duplication of effort and wastage, and a lack of accountability, prevented timely corrective action which ultimately magnified policy failures.

3.4.3

The strategy must be accompanied by an Action Plan which clearly identifies the projects which would mostly be chosen for their cross-regional impact and importance for economic growth, as well as the sources of finance to be mobilised for their implementation. This is essential and should preferably be completed within the first two years after launching the 2014-2020 MFF.

3.4.4

It is extremely important to reduce the bureaucratic demands of reporting and form filling on stakeholders and operators. NGOs, SMEs and regional authorities, particularly those of the smaller regions, are often discouraged from participating by the lack of capacity and the daunting task of keeping up with all the bureaucratic procedures. Whilst recognising the need for checks and balances it is crucial that project beneficiaries are able to dedicate their time and resources to delivering actual benefits to society and the economy at large.

3.4.5

The EESC believes that a failure to deliver on the Action Plans will prevent the regions from capitalising on an opportunity for growth creation. The opportunity cost of such a failure will be extremely high particularly in these times of crisis. The EESC firmly believes that through innovative collaboration there are significant efficiency gains that can be achieved in the utilisation of resources to achieve stronger growth. The risks of failure are also ominous for regional political leaders and their citizens. Growth prospects are not very good for the next two years for most of the regions involved and this drawback will be further compounded if the regions embark on paths that ignore the opportunities provided by an MRS and fail to use the regions' human and natural resources in an effective and sustainable manner (12).

3.4.6

The point of departure of this strategy should be to map out the main objectives and identify existing EU, national and regional programmes, as well as regional and local authorities and associations of civil society that can supply the required coordinating effort. There are several EU-funded projects within the EU MRS which, if properly coordinated, could magnify the value-added which they produce. These kinds of projects which are already in existence, at least on paper, and new ones which will no doubt be launched in the future, can be useful in achieving some of the aims of the EU MRS.

4.1

The main scope is to encourage the definition of a multi-level MMR accompanied by an MRS, in which activities are implemented by specific action plans based on the ‘three yeses rule’: more complementary funding, more institutional coordination and more new projects.

4.2

The Mediterranean regions need a common commitment to work together with the strategy at all levels of action which will make it possible to capitalise on the Europe 2020 goals thus promoting integration between the EU’s policies and funds (territorial cooperation). The MRS should be implemented in order to assist regions and territories to face challenges that cannot be resolved through national means alone.

4.3

The EESC is of the opinion that the development of an MRS for the Mediterranean should be based on three growth pillars:

4.3.1

Smart growth will be supported by taking into account the concept of Blue growth. On 13 September 2012, the European Commission published a Communication on Blue Growth in which it singled out five ‘value chains’ which have the potential to deliver sustainable growth and jobs in the blue economy. These are: blue energy, aquaculture, maritime, coastal and cruise tourism, marine mineral resources and blue biotechnology (13).

4.3.1.1

Blue growth reflects the choices that have been made by maritime regions to enhance their competitiveness and economic growth by utilising their geographic position and particularities, namely marine and maritime activities — in short focusing on what they can do best.

4.3.1.2

The Smart growth challenge for the coastal regions of the EU MMR is twofold:

4.3.1.3

The sustainable use of Mediterranean resources offers the opportunity to create wealth and jobs. Research into advanced environmental systems and technologies should be developed to support the traditional Mediterranean activities which are in decline, thus opening up new opportunities.

4.3.1.4

These challenges require the involvement of the scientific, technological and economic communities together with the social partners. Account should be taken of support activities in fields such as infrastructure, industry, training, R&D investment policies, cooperation between universities, and the creation of clusters.

4.3.1.5

The nautical sector is very strong and contributes to development strategies. Nautical tourism generates economic activity and jobs and also helps develop the Euro-Mediterranean identity.

4.3.2

The main thrusts of Sustainable growth and the sectors involved are all interconnected in many ways. The achievement of sustainability and the implementation of greener policies as well as the shift towards a low-carbon economy in all sectors contribute towards the achievement of climate change targets and climate change adaptation. Resources need to be used efficiently, synergies need to be strengthened, waste and duplication of effort need to be identified and discouraged. The key infrastructures including those of land and marine transport, energy transmission and IT networks need to be constantly upgraded to ensure that no stifling bottlenecks develop.

4.3.2.1

Coastal and marine sustainability are interlinked and both are susceptible to pressure from human activity, including land pollution that eventually flows into the Mediterranean and CO2 emissions from vessels (14). Integrated management of coastal areas should not be restricted solely to coastal economic activity and pollution. Every incentive must be provided to encourage the maritime sector and ships plying the Mediterranean to switch to the most modern forms of ‘green’ technologies.

4.3.2.2

The European Union and eight of its member states are parties to the 1975 Barcelona Convention for the Protection of the Mediterranean Sea against pollution and its protocols concluded under the auspices of UNEP. By a Council Act approved at the end of 2012, the EU became party to the Offshore Protocol of this Convention to protect Mediterranean coastal areas from pollution generated by offshore activity. The EU Mediterranean regions stand to gain considerably from this Convention and should give it a lot of attention also within the context of their objective of achieving ‘blue growth’.

4.3.2.3

The Mediterranean's renewable energy potential offers a massive source of clean power which remains untapped. In line with the Europe 2020 targets, measures for adaptation and prevention of climate change should be included in the EU MRS.

4.3.2.4

The EU MRS needs actions on sustainable transport to reduce carbon dioxide emissions. Road transport traffic should be transferred to maritime transport (15). On the other hand maritime transport needs to continue on its path towards the use of cleaner fuel. Maritime safety and cooperation in disaster prevention and response should be included.

4.3.3

The EU MRS should include a strong social dimension to support Inclusive growth in the EU MCRs. Economic development and the creation of new jobs should make it easier for the inhabitants of regions to enjoy a better quality of life. The regional authorities should promote social dialogue and the involvement of social and civil society partners. Based on an integrated approach to territorial cohesion, account should be taken of the ‘inclusive’ situation of cities and metropolitan areas, rural areas, small coastal towns and islands. The infrastructure, technologies and services’ accessibility to persons with disabilities should be interlinked to sustainable development as a basic prerequisite of Inclusive Growth.

4.3.3.1

Information technologies have to be developed, particularly in the peripheral areas through better connectivity, to support overall territorial and social cohesion of the Mediterranean regions through a cross-thematic approach. The development of ICT should be fostered.

4.3.3.2

It is also important to emphasise the need of developing further airports and air services in the MMR in order to strengthen regional economic integration. Air services and air transport infrastructure still have a lot of untapped potential and are in need of more investment.

4.3.3.3

The educational and training institutions have a key role in supporting Inclusive growth in the Mediterranean area. Common EU MMR-wide educational objectives need to be identified.

4.3.3.4

The EESC feels that the dialogue between social and civil partners and educational/training institutions needs to be strengthened. priority must be attached to training in maritime and nautical subjects, and cooperation between universities and training centres.

4.3.3.5

The EU MCR's unemployed need also to be heard in the formulation of a future strategy that seeks to provide them with the opportunities to re-enter the labour market. It is also vital that real, tangible efforts are made to involve leaders of ‘excluded’ social groups such as migrant communities, persons with disabilities and women's organisations. The EESC fully supports EU policies aimed at preventing discrimination on grounds of racial or ethnic origin, disability, age, sexual orientation or gender.

4.3.3.6

Considering the European perspectives for demographic ageing, a specific action to support healthy and active ageing in the EU MCRs should be included. The Mediterranean regions also need to launch a viable long-term plan of controlled immigration and seasonal workers to fill the gaps left by ageing populations and address the widening dependency ratio. The EESC is in favour of more strenuous efforts on the part of the EU to help the Mediterranean regions cope with the challenge of migration and to integrate migrants in society.

4.3.3.7

The EESC believes it is essential to develop the EU MMRS taking into account the European priorities aimed at improving social inclusion, well-being and full respect for the rights of disabled people, as well as to promote gender equality in the Mediterranean area. Therefore it is pivotal to secure individual autonomy, dignity and freedom of the disabled and to empower the role of women in the Mediterranean labour market, in society and in decision-making positions.

5.1

The implementation of a Mediterranean MRS offers many opportunities, principally by providing a reference framework relevant to cohesion policy and encouraging inter-sectorial cooperation in a common area of services labour. This framework can steer investment towards more complementarity and can influence the respective priorities of each regional development plan for a European macro-region, ensuring an overview and genuine synergies within an integrated approach.

5.2

An EU MRS would ensure greater involvement and better cooperation between the EU’s various intervention mechanisms, going beyond the appropriations allocated to cohesion policy, pooling the resources of regions and Member States through multilevel governance. This represents a ‘win-win’ strategy for all local stakeholders.

5.3

The benefits of the Mediterranean MRS derive, to a large extent, from its highly comprehensive and multilevel integrative approach, which is capable of promoting synergies between EU policies and programmes, as well as funding complementarities.

5.4

The implementation of the Mediterranean MRS will foster the realisation of strategic activities in the coastal and insular zones, as well as increase cooperation between Mediterranean administrations, regions, cities, ports and, where the need arises, between national authorities.

5.5

Activities linked to the Integrated Maritime Policy and to Blue growth will be pursued, stressing the interdependencies and synergies that exist between activities seemingly unconnected to the maritime sector.

5.6

The proposed actions will address the three growth pillars previously identified. In choosing the proposed actions, each must satisfy the following criteria:

—

Region with a sea border (372 correspond to this criterion);

—

Region with more than half of its population within 50 km of the sea (73 regions correspond to this criterion);

—

Hamburg, a German region, which does not correspond to the definition criteria, has been added to the EU coastal regions list, taking into account its strong maritime influence.

5.6.2014   

EN

Official Journal of the European Union

C 170/11

1.1

Taking into account that volunteering is:

1.1.1

an important driver of inclusive growth, which contributes to both social and human capital, and fosters intergenerational solidarity, while also offering significant economic value,

1.1.2

a key factor in many social policies and an indicator of public policy impact, which should be measured effectively and monitored to offer proper knowledge to decision-makers,

1.1.3

a research subject, which is currently insufficiently measured because of inconsistent and overly restrictive surveys, leaving aside such issues as voluntary help provided directly to people outside any organisational structures as well as neglecting the economic value of the volunteer work,

1.2

The Committee calls on the European Commission:

1.2.1

to put in place the conditions to start methodological work and pilot research, aimed at defining the principles underpinning research into volunteer work by national statistical offices from the EU Member States. In so doing, use should be made of the International Labour Organization's Manual on the Measurement of Volunteer Work and the past experience of countries which have already undertaken research using the solutions recommended in this manual.

1.2.2

over the next few years, to work on a standardised methodology for research into volunteer work and to ensure its adoption via an appropriate European Commission regulation for the purpose of regular research conducted by the Member States.

1.2.3

to take steps to encourage the Member States' statistical offices to become involved in research into volunteer work before the regulation is introduced.

1.2.4

to gather and make available consistent information resulting from research into volunteering conducted in individual countries or at EU level.

1.2.5

to introduce legal measures binding at the EU and Member States level which would enable the non-profit sector to co-finance public grants with the economic value of volunteer work estimated on the basis of solid statistical data produced with the statistical tools developed in accordance with this opinion.

1.3

In addition, the EESC uses this opportunity to reiterate the need for a favourable environment and support for voluntary activities. Exact suggestions for the favourable environment for volunteering were developed within the framework of the European Year of Volunteering 2011, and this includes sustainable support for voluntary activities, which significantly contribute to the common good (1).

2.1

According to the widely used (in EU institutions) definition of the term, ‘volunteering’ refers to all forms of voluntary activity, whether formal or informal, undertaken of a person's own free will, choice and motivation, without concern for financial gain.

2.2

Consistent with this understanding of volunteering, although more precise, is the definition of volunteer work in the International Labour Organization's Manual on the Measurement of Volunteer Work, used as a conceptual framework for measuring formal and informal volunteering in various cultural and legal settings. According to this definition, volunteer work means ‘unpaid non-compulsory work; that is, time individuals give without pay to activities performed either through an organisation or directly for others outside their own household’ (2). This definition, which precisely spells out the features of volunteering, should be used in international comparative research. This stems from the need to take account of all the important characteristics of volunteer work in the definitions used in individual countries, thus ensuring that the area of study is uniformly defined, regardless of local circumstances.

2.3

In recent years, especially in connection with the 2011 European Year of Volunteering, many documents of the EC, EP and Council, as well as the EESC, CoR and the European civil society organisations, have pointed out that volunteering is associated with key EU values such as civic participation and solidarity with those in need. It has been stressed that volunteering makes a major contribution to that part of social welfare that is not measured by GDP, and has a major influence on the quality of peoples' lives. From a systemic point of view, volunteer work helps create social capital, building and consolidating bonds of trust and cooperation, while cultivating widely accepted social norms and values. Informal volunteering is an important form of investment in human capital, e.g. through informal care and education of children and young people, while formal volunteering plays a key role, among other things, in the development of transversal skills and the acquisition of new vocational skills. Also the voluntary care provided to older people as well as by older people, is of utmost importance for the greying European societies. All these characteristics, which point to the role of volunteering in building social cohesion and facilitating employment, mean that it is regarded as an important element of inclusive growth, forming one of the three pillars of the EU's development strategy — Europe 2020.

2.4

A key element of the debate was recommendations highlighting the need to collect comparable data illustrating both the social and economic importance of volunteering. Reference was made in this connection to the methodology proposed in the ILO Manual as an appropriate model for conducting statistical research in this field (3).

2.5

These recommendations were clearly linked to the finding that not enough data was available on volunteering, an assessment which still holds true.

2.6

There has been some research into volunteering carried out in individual countries covering many key aspects of volunteering (not only the level of participation in volunteering and the demographic profile of people involved in this work but also their motivation, for example). One obstacle to the use of this research for analysis conducted on an EU-wide basis is the lack of consistency as regards the scope of the definition of volunteering and the means of defining it, as well as other methodological differences (e.g. the period covered by the research, inconsistencies in the age categories used for the populations surveyed, different research methods, accuracy of the results), together with differences in research dates. As highlighted in the report carried out at the request of the European Commission by the consultancy firm GHK, the differences in results can often be as much as 30-40 percentage points (4).

2.7

Regularly collected and internationally comparable data on volunteering is quite limited in scope, relating mainly to the prevalence of engagement in voluntary work (with its various definitions) carried out through organisations (formal volunteering), and the demographic profile of the people involved in such activity. Sometimes the research addresses other questions, such as the frequency of volunteering (5). Some of these studies are not limited to a general question about volunteering, defined in one way or another, but rather focus on multiple (up to a dozen or so) types of organisation or activity to which people devoted their free time (6). Comparatively speaking, the question addressed with the least frequency is the number of hours worked by volunteers (7).

2.8

Despite major differences in the results of individual international studies, as well as between national and international results, it is still possible to say that volunteering — even if only formal volunteering is taken into account — is very widespread. Estimates of the number of volunteers in the EU over the age of 15 vary between 92 and 150 million, which would mean that between 22 and 36% of adults across all EU countries are involved in voluntary, unpaid work in various kinds of organisation (8). The positions adopted by the main EU institutions on volunteering are based on a relatively low estimate of the number of volunteers, no more than 100 million (9).

2.9

On the basis of the data on volunteering currently available, it is not possible to carry out the analysis called for in the documents of the EC, the Parliament, the European Council or the EESC. At present, it is impossible to monitor reliably the economic importance of volunteering or its contribution to EU-level policies. It is not possible to determine the total amount of time devoted to volunteer work or its monetary value, and thus to assess how extensive it is in terms of universal economic indicators such as national employment (the number of people working in the national economy) or GDP. The only current available data, which however is limited to formal volunteering carried out in non-profit organisations and assessed on the basis of methods which are not very consistent, comes from the international Comparative Nonprofit Sector Project, coordinated by the Johns Hopkins University. This data established the proportion of volunteer work carried out in non-profit bodies relative to GDP and the labour potential of the economically active population in only three EU countries: the Czech Republic (0,2% GDP, 0,5% of the economically active population), France (1,4%, 3,2%) and Belgium (0,7%, no data available) (10).

2.10

On the basis of the methodological principles set out in the ILO Manual, national statistical offices in three EU countries (Poland, Hungary and Italy) have already carried out surveys on the extent and value of volunteer work while in some other countries they prepare to do so (11). The 2011 data for Poland is currently available. It shows that, overall, formal and informal volunteering constituted the equivalent of the work of 9,6% of those working in the extended national economy (including volunteer work) and 2,8% of the broadly defined GDP. In Poland, where extended family ties are particularly strong, volunteer work mainly comprised informal volunteering — its share of the number of people working in the national economy, which also includes volunteering, amounted to 8% and its contribution to broadly defined GDP was 2,2%. Formal volunteering represented 1,6% and 0,6% of the above-mentioned categories respectively (12).

3.1

As mentioned above, the manual on measuring volunteer work published under the auspices of the ILO is mentioned in nearly all EU documents on volunteering as a suitable model for conducting statistical research in this area. The methodological solutions included in this manual were also highlighted by the International Conference of Labour Statisticians as an appropriate basis for research into volunteer work. It is proposed that volunteer work be included in official labour statistics (13). The solutions proposed in the manual have also garnered support from third-sector stakeholders, with many NGOs promoting its model for conducting research into volunteering (14).

3.2

The methodological approach proposed in the ILO Manual is also a response to the lack, or inconsistency, of the available data on volunteering in the third sector, a problem pinpointed by the Comparative Nonprofit Sector Project, and later highlighted as a serious obstacle to the drawing-up of accurate statistics for national accounts and the satellite account of the non-profit sector (15).

3.3

The methodological approach is based on an operational definition of the phenomenon referred to as ‘volunteer work’ in the manual. This is not based on a specific term or terms uniformly used for research in the countries surveyed, but is, rather, a descriptive definition which highlights three fundamental features. Volunteer work is defined as actions which:

The ILO Manual contains many additional explanations, which help resolve any potential doubts over the interpretation of the criteria (16).

3.4

The broad scope mapped out for research in the manual makes it possible to meet the information needs of many stakeholders. The manual's key definition of volunteer work implies a broad range of research, including both formal volunteering (called by ILO as indirect volunteer work) and informal volunteering (called by ILO as direct volunteer work). Furthermore, the focus is not limited to a single sector, but includes both volunteering in the third sector and in public sector institutions, and calls for the separation of data by field and institutional sector, for example. Data gathered are both clearly defined and flexible for users.

3.5

The research model proposed in the ILO Manual is based on a number of general principles which ensure consistency, irrespective of the type of survey on which the research is based:

3.6

The proposed methodology makes it possible to focus research efforts primarily on acquiring the data needed to quantify the volume and value of volunteer work in standard economic units, permitting comparison with national employment or GDP. The data collected can be used to determine the amount and value of various kinds of volunteer work by institutional and economic sector, form of activity, region, level of urbanisation, etc.

3.7

On the basis of the data gathered using the volunteer work module, it is also possible to carry out numerous analyses of a social nature. It is possible to analyse the extent and degree of intensity of volunteer work, the forms that it takes (for people or organisations — in the case of formal structures, it is possible to specify the area of activity or sector). This analysis may take account of the various characteristics of volunteers: demographic characteristics (e.g. age, sex, family status), location (e.g. region, size of locality) and professional, educational and material status. By adding supplementary questions to the volunteer work module, it is also possible to analyse the motivation of volunteers, reasons for not getting involved in volunteering, etc.

3.8

Given the fact that respondents are usually able to provide detailed and reliable data only in relation to the recent past, the manual adopts a four-week reference period for questions on volunteer work. This is dictated by the need to determine the number of hours dedicated to volunteering as accurately as possible. At the same time, the four-week period is significantly shorter than the typical 12-month time frame for most research into volunteering. The shorter reference period translates into lower figures for the extent of volunteer work (number of volunteers), and creates the risk of obtaining results which have been skewed by seasonal fluctuations. The recommendation therefore is to stick to the four-week period for comparability reasons, while finding also methods to balance seasonality and to secure suitable sample size to provide enough volunteers in the survey for further estimations on number of hours in different groupings.

3.9

The guide's recommended method for research into volunteer work is in the form of a Labour Force Survey (LFS) or other household survey module. Using LFS as a platform provides a series of benefits:

3.10

Research into volunteering using an LFS module also involves certain limitations and problems which are solved in accordance with local conditions or on the basis of an overarching approach:

3.11

The Manual on the measurement of volunteer work is comprehensive, including guidelines on organising and conducting research as well as recommendations on drawing up and presenting results. When assessing the value of volunteer work, the manual recommends the full replacement cost approach, using the average wage in the national economy for the type of activity (vocation) and the economic and institutional sector to which the body, for which the voluntary work is performed, belongs.

3.12

Independently of the overarching approach of the proposed solutions and the solid justification for them, the ILO Manual retains considerable flexibility on many questions which may be dealt with by individual countries in the light of local conditions. This concerns issues such as adapting the phrasing to the local circumstances, and the more or less detailed way of calculating the value of the volunteer work (some other examples are given in point 3.10). On the other hand to ensure international comparability of the data, the key elements of the definitions of volunteer work should be used.

3.13

The manual's flexibility stems from a desire to make it universal and to ensure its broad application, regardless of significant cultural and societal differences at global level. In the EU, these differences are relatively small, which makes it possible to develop a more uniform methodology and, consequently, to obtain more comparable data.

4.1

Given the considerable need for data on volunteering, stemming from its key role in generating inclusive growth and strengthening social cohesion, social and human capital, informal education, integration into the labour market and intergenerational solidarity, there is a need at EU level to ensure conditions supporting systematic, comparable research into volunteering in the Member States. The EESC understands that all new activities taken up by the EU institutions and Member States have to get proper financing stability and therefore declares its will to explore all possible means of supporting and financing research on measuring volunteering, including the proposal pointed out in point 4.2.

4.2

Following the recommendations in EU documents which call on Member States to develop research into volunteering on the basis of the ILO Manual, the EESC urges the European Commission, over the next few years, to work on a standardised methodology for research into volunteer work and to ensure its adoption via an appropriate regulation for the purpose of regular research conducted by the Member States.

4.3

Before the regulation is adopted, the EC should take steps to support methodological work and pilot studies, with a view to establishing consistent principles for research into volunteer work by national statistical offices, making use of the main principles of the ILO Manual and the experience of countries which have already undertaken research using the solutions described in it. When working out the details of the regulation, steps should be taken to minimise costs and red tape. To this end, the best approach would be to combine research into volunteer work with one of the other areas of research currently carried out by the national statistical offices of the Member States.

4.4

Given the considerable need for data on the extent of formal and informal volunteering and its impact on the general level of wellbeing and on selected areas of public life in individual countries and across the EU, conditions should be put in place to ensure that the European Commission gathers and makes available suitably harmonised data from studies carried out in the Member States and at EU level. One possibility for conducting research into the effects of volunteering could be, for example, the Adult Education Survey, through which data could be gathered and analysed on the impact of volunteer work on acquiring skills useful for obtaining a desired job.

4.5

The economic value of volunteer work must be recognised and valued by public authorities. The European Commission and the Member States should introduce rules allowing the economic value of volunteer work to be one means of co-financing publicly funded projects. Experience and data acquired during research into the economic value of volunteering, carried out on the basis of a single methodology across the EU, will be very helpful in devising practical solutions.

5.6.2014   

EN

Official Journal of the European Union

C 170/18

1.1

The EESC welcomes the debate on social impact measurements for social enterprises but stresses the importance to give more time to this complex topic. A first step is for the Commission to initiate data collection for a comparable analysis of social impact measurement in the Member States, but also explore this subject further in the context of the social dimension of Europe.

1.2

The EESC feels that an incorrect or rushed approach may counter-act the EU Institutions’ aim to support the development and growth of the social enterprise sector. With low awareness of this sector in many Member States, the EESC urges the Commission to prioritise further awareness raising and full implementation of the Social Business Initiative agenda.

1.3

Social impact measurement aims to measure the social outcomes and impact created by specified activities of a social enterprise and not the enterprises itself, even if the structures of social economy enterprises themselves contribute to social value creation. It is an on-going process and integral part of the enterprise’s activity and an important strategic planning tool.

1.4

It is difficult to advocate one single method, which is why the EESC recommends that, rather than developing a new method, the Commission build awareness of the most commonly used principles. What these have in common is that they are bottom-up initiatives designed to capture the social change based on a real need and real activities.

1.5

Any measurement method must be developed from the core outcomes of the social enterprise, be supportive of its activities, proportionate and not stifle social innovation. The method should seek a balance between qualitative and quantitative data, realising that the ‘story’ is central to measuring success. It must also be noted that the difficulties in translating the results of measuring social impact at micro level to macro level (within the EU) needs to be explored further.

1.6

Realising the need for social impact measurement methods specifically for the EuSEF (1) and PESI (2) regulations, the EESC recommends that the methods developed for these regulations be piloted, closely monitored and revised if needed. This to ensure they do not hinder social enterprises’ access to finance through these instruments. This would allow the Commission to draw up common guidelines and principles of what to measure rather than how to measure.

1.7

The EESC will continue to explore this subject and will closely follow the Commission’s work in implementing a method to ensure it does not stifle social enterprise development in Europe. In addition it will continue to engage in a wider discussion on how social impact in time may be considered for other spheres.

2.1

The Commission Communication on the Single Market Act II — Together for new growth (3) highlights the need to develop methods for measuring the social and economic benefits generated by social enterprises in the implementation of the EuSEF and the PESI.

2.2

In response, a subgroup (4) of the Commission's consultative multi-stakeholder group on social enterprise (GECES) has been tasked with giving the Commission guidelines on how social enterprise can measure their social impact.

2.3

This opinion describes the perspective of social enterprises in the development of a EU social impact measurement method primarily in the context of the EuSEF and PESI. However, since this is an important subject the EESC underlines that, ideally, measuring social impact should subsequently be considered for other spheres, to avoid a piecemeal approach.

2.4

Social enterprise is highlighted in several recent EU initiatives. In addition the EESC has done significant work on this topic (5) such as touching on the challenges with EuSEF and social enterprises (6). One central element is the launch of the Commission’s Social Business Initiative (SBI) (7), which aims to promote the development and growth of social entrepreneurship and social enterprise in the EU.

2.5

Social enterprises are created for a social purpose and operate in the social economy. To safeguard this model, the EESC stresses that the SBI description of social enterprises should be the basis for any derived regulation, standard or programmes, since it captures social enterprises in a wide context that fits the various models in the Member States.

2.6

It is important to point out that the intention of this opinion is not to put forward arguments for measuring the social impact of businesses generally. Nor should the issue be confused with initiatives relating to corporate social responsibility (CSR) or the obligation, as for all employers, to provide decent working conditions and to comply with any collective agreements that exist. Further it should be noted that effective social performance and infrastructure remain Member State responsibilities.

2.7

Even if this opinion only considers the social impact of the outcomes of social enterprises’ activities and not the social enterprises themselves, their structure and operating models themselves are key components in creating social impact, through internalising social costs and generating positive externalities.

3.1

Economic outcomes have for a long time been the main indicator to measure the development of organisations and countries, regardless of whether economic or social progress is the main motivation. For a sustainable world, a more holistic perspective considering social, environmental and economic consequences must come to the fore.

3.2

Awareness of this has increased in recent years. In 2008 the EESC adopted an own-initiative opinion entitled Beyond GDP — measurements for sustainable development  (8), which highlighted the need for new methods of measuring sustainability and wellbeing to meet social challenges. The Commission followed up on this with a report in 2009 entitled GDP and beyond — Measuring progress in a changing world  (9), which drew attention to the need for new instruments to monitor and measure social development. In addition, other actors have also taken steps to introduce new instruments, e.g. the OECD with its Better Life Index  (10) .

3.3

For Europe, in the midst of a crisis with changing welfare models, it is now more important than ever to focus on real value creation. Most recently this has been stressed in the initiatives promoting a social dimension of the EMU (11), proposing social indicators and actions to complement the economic reporting. This line of reasoning now appears in many EU documents, where measurement and monitoring of social added value, change and impact are prerequisites for the effective implementation of directives, programmes or activities.

3.4

Social impact measurement is an important topic and central for re-building the social dimension in Europe. The EESC therefore questions the Commission’s very rushed approach in this area and urges that more time be allowed to thoroughly discuss the wider topic to ensure the most suitable forms of methodologies. In this context it must be mentioned that since the overarching objective is to support social enterprises to fulfil their mission, the Commission must tread carefully in developing instruments that may result in an opposite effect.

3.5

This is further supported by the very low awareness and recognition of social enterprise and the social economy in many Member States. Starting the debate from the perspective of social impact rather than fostering an enabling environment for the development of social enterprises may be detrimental to developing this sector. The EESC therefore urges the Commission to prioritise the full implementation of the SBI to ensure fair and transparent conditions for social enterprises in all Member States prior to launching a social impact measurement initiative.

4.1

Measuring social impact is beneficial to all sectors in society. For a social enterprise, achieving a positive social impact is its core purpose and is often an on-going and integral part of the enterprise’s activity. It is important to separate social results from business results; it is the social impact that is to be measured, not the organisation.

4.2

There are similarities in how stakeholders describe social impact, but there are also differences. The EESC stresses the importance of a common understanding and suggests that it be described as the social outcomes and impact created by specified activities of a social enterprise.

4.3

It is also important to note that impact measurement is about measuring not only the intended outcomes, but also the overall outcomes (intended and unintended) and their impact.

4.4

Assessing social impact is challenging since the links between the activity and outcome can be hard to demonstrate. Positive effects are often qualitative and are sometimes only evident over longer timeframes. Trying to capture an activity in figures carries a considerable risk that the information yielded will not measure what was intended, or in the right way. Social enterprises must therefore not be pressured to equate measurement with quantification by only focusing on activities that are easily measured, quantified or externally recognised.

4.5

Quantification should rather be seen as one way of measuring, alongside qualitative approaches such as narrative methods. This alternative, or complementary, approach of gathering information-rich stories from the beneficiary’s perspective is crucial in evaluating the ‘added value’ of the social enterprise’s activities. In addition it should be pointed out that measuring value creation does not necessarily have to result in a final figure but could rather be a combination of figures and text.

4.6

To explore this complexity further the EESC recommends the Commission to initiate data collection of existing methods as a starting point for comparable analysis between Member States.

5.1

A pre-requisite for an EU method of measuring social impact in the current EU context (EuSEF and PESI), is stakeholder participation which primarily include social enterprises, users, policy-makers, finance providers as well as social service providers, public authorities and social partners where appropriate. This stakeholder approach provides a trust-building process to share a common view of the desired impact.

5.2

A pre-condition for this stakeholder approach is a common understanding of the basic concepts for social impact measurements. Terms such as input , output , outcome and impact are often defined differently in different contexts. It is important that the stakeholders share the same view of these terms.

5.3

Only looking at the output (e.g. the number of people taking part in training), neglects measuring the real impact of the activity. It is therefore important to recognise that social impact measurement is a move from measuring outputs to measuring impact. This way real added value can be captured, still bearing in mind the complexity and multidisciplinary state of measuring social impact.

5.4

It must be noted that specifically the difficulties in translating the results of measuring social impact at micro level to macro level (within the EU) needs to be explored further, as does how measurement methods respect the rights and needs of the individuals and the enterprises.

6.1

Social impact is measured in many different ways, which makes it difficult to advocate a single method or even to compare different methods (12). A multitude of methods have been developed, many initiated through different EQUAL projects (13). What they have in common is that they are bottom-up initiatives designed to achieve a desired social change and based on a real need and real activities.

6.2

The best-known methods are social return on investment (SROI), which is an outcome-based concept designed to show an organisation's social, environmental and economic value creation, and social accounting, which is a method for planning, measuring and evaluating the social goals of an organisation (14). An example of a more general method for establishing social added value is the Global Reporting Index (GRI), a sustainability reporting system that provides a framework for social, environmental and economic reporting. But many other methods are also available (15).

6.3

What these methods have in common is that they are designed from the perspective of the social enterprise’s purpose in its activities, rather than models from other sectors. Rather than only measuring outputs between two points in time, these approaches often embrace a wider non-linear process such as Theory of Change (16) which, in simplified terms, involves defining, quantifying and tracking. By using such approaches, the measuring process is itself incorporated into the enterprise’s business planning and an important tool for internal improvement.

6.4

When designing social impact methods they must be kept proportional and be designed to support the social enterprise. Many social enterprises are small and new, with limited resources to apply complicated methods. Therefore the EESC recommends that, to ensure that bureaucratic burdens are limited and proportionate, other stakeholders (EU, fund managers) rather than the social enterprises should bear the cost of impact measurement.

6.5

If considering indicators the EESC suggests that they are chosen by the social enterprises through interviews with users and stakeholders. For example indicators could be ‘avoided costs for society’ or ‘caused impact’ of the social enterprise but also consider the enterprise’s advocacy work and their structure and operating models.

6.6

On the basis of the existing methods the Commission should consider developing an EU framework in accordance with the EESC recommendations that fits in with the specific regulations that exist in some Member States and their models of welfare organizations and social enterprises themselves.

7.1

Since it is extremely difficult to advocate a single method or standard indicators for measuring social impact, the Commission's first step is to build awareness of the most commonly used principles and methods that exist and encourage the enterprises to use them. From these experiences the Commission can draw up common guidelines for measuring social outcomes rather than outputs to establish a framework of principles of what to measure instead of trying to define how to measure social impact.

7.2

Due to the complexity of this subject, the EESC recommends that the methods developed for the EuSEF and PESI as a first step are piloted. This would allow for the Commission to closely monitor the impact of applying these methods and allow for revision if necessary. All data collection should be gender disaggregated so that the role of women in social entrepreneurship can be acknowledged and so as to ensure transparency in the allocation of funding. This helps to ensure that the methods used do not limit access to funding for the intended targets.

7.3

When structuring these pilot projects the Commission also needs to consider aspects such as the competence and objective of the ‘audit’ function/stakeholder. This is closely related to added costs and motives of these actors. The EESC urges the Commission to make efforts in minimising these costs when designing the measurement requirements as well, to avoid creating unnecessary red tape or distort social development.

7.4

There is a risk that the measurement method designed specifically for EuSEF and PESI will take precedence when implementing other instruments and rules relating to social enterprise at national, regional and local level. Inadequate or incorrect application of social impact measurement may hamper social innovation and experimentation. To limit this risk the Commission should offer awareness raising and training programmes in the Member States.

7.5

This opinion is a first step in the EESC work on social impact measurement. It is a response to the current Commission work on the subject. However, the EESC deems it vital to continue and expand this discussion and will therefore monitor the Commission’s work and continue to work on this subject within other areas of its policy work.

5.6.2014   

EN

Official Journal of the European Union

C 170/23

1.1

The negative social and economic impact of the crisis and a lack of structural reforms which is fuelling poverty and exclusion in Europe against the backdrop of an ageing population, increased migration flows and growing Euroscepticism, means that the need for a political paradigm that can reinforce solidarity and the fundamental values of Europe's acquired social rights is now a matter of extreme urgency.

1.2

considers that, at such a critical juncture, establishing a European minimum income will help to ensure economic and territorial cohesion, protect the fundamental rights of the individual, guarantee a balance between economic and social objectives and redistribute wealth and income fairly;

1.3

points out that there was an important discussion at the level of the EESC's bodies and stresses the urgent need to guarantee an adequate minimum income in the European Union under a framework directive, with the aim of effectively combating poverty by facilitating labour market inclusion, as called for by the Committee of the Regions (1) and a range of anti-poverty organisations (2), and calls on the Commission to undertake concerted action in response to the resolution adopted by the European Parliament in 2011 (3);

1.4

calls on the Commission to examine funding possibilities for a European minimum income focusing in particular on the prospect of setting up an appropriate European Fund;

1.5

calls for further measures to be taken to ensure that the objectives of the Europe 2020 strategy concerning employment, poverty and social exclusion are actually achieved. Such measures should include (1) continuing to pursue horizontal employment targets, (2) setting targets for percentage reductions in the three indicators that make up the composite poverty and social exclusion indicator, (3) setting European and national level sub-targets for groups presenting a higher risk of poverty than the population as a whole, such as children and single-parent families, and for the working poor, (4) a review of how Member States calculate poverty levels and set their national targets, and (5) ensuring that the Member States renew their commitment to make sure that the combined efforts of each of them enable the overall European Union objective to be achieved;

1.6

calls for an effective assessment of the social impact of the measures contained in the National Reform Programmes (NRPs) and National Social Reports (NSRs), as well as of the financial consolidation packages, in order to prevent them from worsening poverty or social exclusion and to secure greater civil society participation in drawing up NRPs and NSRs;

1.7

calls for closer monitoring of worsening poverty and social exclusion and calls on the Commission to put forward specific social inclusion recommendations for each country whenever needed, as part of its assessment of national reform programmes and national social reports. Such recommendations should also be made for countries covered by special assistance programmes from the European Commission, the European Central Bank or the International Monetary Fund;

1.8

stresses that to have a decent job is the best guarantee against poverty and social exclusion and urges the Commission in cooperation with the Member States to implement measures of the Growth and Jobs Pact to boost growth, competitiveness and job creation; welcomes the intention of Commissioner Tajani to set-up an industrial compact to strengthen industry in the EU and its potential to create jobs;

1.9

particularly stresses the importance of increasing participation in lifelong learning by workers, the unemployed and all vulnerable social groups and improving the level of professional qualifications and acquisition of new skills, which may lead to faster integration in the labour market, increase productivity and help people to find a better job.

2.1

The Guaranteed Minimum Income (GMI) is income support that is not linked to payment of contributions and that provides a safety net for those not eligible for social security benefits (4). As the last defence against poverty, it is inextricably linked to the right to a decent life for people who have no other means of ensuring an income and for their dependants (5). The concept of ‘guaranteed minimum income’ is not to be confused with that of a ‘minimum wage’, fixed by collective agreement or by legislation.

2.2

Article 10(2) of the Community Charter of the Fundamental Social Rights of Workers (1989) (6) establishes the right to ‘sufficient resources and social assistance’ for people outside the labour market without adequate means of subsistence.

2.3

The Charter of Fundamental Rights of the EU (2000), legally binding as part of the new Reform Treaty stipulates that ‘human dignity is inviolable. It must be protected and respected’ (Article 1) and that ‘to combat social exclusion and poverty the Union recognises and respects the right to social and housing assistance so as to ensure a decent existence for all those who lack sufficient resources’ (Article 34(3)).

2.4

The Treaty on the Functioning of the European Union (Article 53(1)(h) allows the Union to adopt legislation to support and complement the activities of the Member States in the field of integration of persons excluded from the labour market. Among the requirements that the Union must take into account in defining and implementing its policies and actions, its horizontal social clause (Article 9) mentions in particular high employment levels, adequate social protection and combating social exclusion.

2.5

Council Recommendation 92/441/EEC (7) invites Member States to ‘recognise the basic right of a person to sufficient resources and social assistance’ that is also reliable, to ‘adapt their social protection systems’ and to set common criteria of implementation without, however, specifying a minimum threshold at EU level.

2.6

The 2008 Commission Recommendation (8) recognises adequate income support as one of the three pillars of active inclusion emphasising that beneficiaries should be available for employment, training or other social inclusion measures.

2.7

Combating poverty and social exclusion is a headline target of the Europe 2020 strategy that established the European Platform against Poverty and Social Exclusion" (9). It sets for the first time a target of reducing poverty and social exclusion by at least 20 million people by 2020 based on a combination of three indicators: risk of poverty (defined as the percentage of people below 60% of national median income), severe material deprivation (a lack of resources based on a specified list of items), and very low work intensity (the fact of living in a jobless household) (10). The EESC welcomed this commitment and emphasised that EU policies should not increase the risk of poverty (11).

2.8

The main objective set by the Europe 2020 strategy with regard to reducing poverty and social exclusion hinges on a reduction target for a specified number of people, thereby differing from the approach taken to the strategy's other headline targets (12): these are set in percentage terms, making it easier for the Member States to reach the same percentage targets.

2.9

It is up to Member States to decide how to define their national targets and what approaches should be adopted to achieve them. However, all the national targets combined fall well short of the Europe 2020 target of 20 million people: a gap of between 5 and 8 million is reckoned to exist between the Europe 2020 strategy headline target and the sum of the national targets (13). Furthermore, many NRPs lack clarity on how the poverty target will be achieved and lack adequate social inclusion measures (14). Countries receiving special assistance from the European Commission, the European Central Bank or the International Monetary Fund are not required to submit specific NRPs (15): they are answerable only under the terms of each memorandum of understanding — these, however, contain no poverty or social exclusion reduction measures.

2.10

The European Parliament's 2010 resolution (16) invites Member States to introduce minimum income schemes equivalent to 60% of national median income and asks for stronger EU recommendations, while the 2011 resolution (17), urges the Commission to launch a consultation on the possibility of a legislative initiative for a sensible minimum income.

3.1

The EESC recognises that poverty constitutes a human rights violation, making further efforts to achieve the aims set out in Article 3(3) of the Treaty on European Union all the more necessary, and considers overcoming poverty as a Europe-wide challenge.

3.2

The crisis and the lack of structural reforms have increased the risks of poverty and social and labour market exclusion in many countries (18) since 2008. The most recent Eurostat figures (19) confirm that 24,2% of the European Union population — 119,7 million people — are at risk of poverty or social exclusion (20). The rate rose in 19 Member States in 2011 and, between 2008 and 2011, the number of people experiencing poverty or social exclusion rose by 4 million. The three indicators that constitute ‘risk of poverty or social exclusion’ have also worsened since 2008, standing at 17% for risk of poverty, 9% for severe material deprivation, and 10% for people in households with very low work intensity. In many countries the poor are getting poorer (21).

3.3

Children (under 18) are among the groups more at risk of poverty or social exclusion than the overall population, with a rate of 27,1% (22). The risk of poverty rate is, meanwhile, relatively high for people over 65 in some countries (23).

3.4

Income disparities and social inequalities are growing within each Member State and between countries and regions, and have worsened seriously with the crisis (24). What is more, population groups who were already disadvantaged before the crisis are becoming even more so (25).

3.5

The crisis is revealing new forms of poverty such as homelessness, fuel poverty, financial exclusion (lack of access to basic banking services and credit) and household over-indebtedness, while exposure to social risks is higher for women than men. At the same time, the most vulnerable groups, such as elderly people (particularly the very elderly, and elderly women), disabled people, the long-term seriously ill, single-parent families, low-income families, as well as migrants, and certain national minorities such as the Roma, are disproportionately affected by multiple forms of deprivation.

3.6

Employment and the social situation in the European Union are at critical levels. Unemployment continues to rise unabated, affecting, in January 2013, 26,2 million people or 10,8% of the active population (19 million or 11,9% in the euro area), while the financial situation of households is alarming (26). Youth unemployment is at record levels throughout the European Union: 23,6% of young people of working age are unemployed and are tending to remain so for increasingly lengthy periods.

3.7

The EESC is gravely concerned by the growing number of working poor stemming, inter alia, from the spread of precarious jobs and low wages. In 2011, 8,9% of those in employment were living under the poverty line and they accounted for one third of all adults of working age at risk of poverty (27).

4.1

The EESC has issued a number of opinions (28) on issues that directly or indirectly concern minimum income and poverty, making appropriate recommendations. The comments and recommendations it made in 1989 (29) are even more urgent today, under the harmful effect of the crisis. In particular, it supports the European Platform against Poverty and Social Exclusion, considering that the open method of coordination (OMC) together with the horizontal social clause can contribute to the drive for a minimum income and to combat poverty and social exclusion.

4.2

The urgent need for a minimum income scheme was underlined at the public hearing (30) held by the EESC when preparing its opinion and which brought together experts and activists to discuss how to measure poverty more effectively and to review the challenges to be overcome in order to adopt a European minimum income scheme.

4.3

The multidimensional nature of poverty (31) and social exclusion requires a reinforced social dimension in European governance: socially sustainable macroeconomic policies are a precondition for exiting the crisis and for securing social cohesion. Persistent poverty and exclusion are detrimental to the economy as they deplete disposable income and demand, undermine competitiveness and constrain national budgets.

4.4

In this regard, the EESC is convinced of the need to re-evaluate priorities and policies, in particular monetary policies, including the Stability and Growth Pact, competition and external trade policies as well as financial and fiscal policies.

4.5

The EESC welcomes the updated Social Investment Package of 20 February 2013 (32) that calls on the Member States to design efficient and adequate income support considering local, regional and national social needs to establish reference budgets containing a list of goods and services that a family of a specific size and composition needs in order to be able to live at a designated level of well-being, along with the estimated associated monthly or annual costs.

4.6

The EESC strongly urges the Commission to act faster into putting into practice the promise it made (33) to support Member States by monitoring reforms towards active inclusion, developing a methodology for reference budgets and monitoring the adequacy of income support, using these budgets once they are developed together with the Member States.

4.7

The EESC is strongly convinced that the best way to reduce poverty and avoid social exclusion is to re-start growth, to boost competitiveness and to create favourable framework conditions for European companies (including e.g. avoiding excessive administrative burdens, as well as ensuring access to finance), in order to allow them to expand and to create jobs for people with the adequate skills.

4.8

The Committee highlights the need to attach particular importance to lifelong learning programmes as a basic tool for combating poverty and social exclusion, boosting employability and access to knowledge and the labour market. It is important to increase the participation in lifelong learning by workers, the unemployed and all vulnerable social groups and improve the level of professional qualifications and acquisition of new skills, which may lead to faster integration in the labour market, increase productivity and help people to find a better job.

4.9

The EESC supports a comprehensive approach to social entrepreneurship, with increased funding for the Social Entrepreneurship Fund and an improved legal and administrative environment to foster social economy enterprises that can combat poverty, as drivers of growth, innovation and employment.

4.10

The EESC welcomes the recent recommendation on child poverty (34), but regrets that the on-going exposure of so many children to the risk of poverty passed on between generations reveals shortcomings in existing policies.

4.11

The EESC is concerned to see that the poverty and social exclusion target set by the Europe 2020 strategy (20 million fewer people in poverty in the European Union in 2020) will not be met.

4.12

The EESC has already noted that levels of civil society involvement in preparing NRPs differ significantly between Member States with little provision made in some to include them (35).

4.13

The lack of up-to-date figures on income and living conditions is an obstacle to the implementation of the Europe 2020 strategy.

5.1

The EESC is aware that framing a specific central role for the EU in minimum income protection would be an exceptionally complex policy operation, given the economic differentiation between the Member States, diversity of minimum income schemes (36) and social protection structures, subsidiarity, the mesh of rights and obligations linked to minimum income protection, the complex interplay between, on the one hand, existing policies and their results and, on the other, the concept of ‘solidarity’ in the Union.

5.2

The EESC, nonetheless, sees the need for introducing and strengthening minimum income schemes, as 22 years after Recommendation 92/441/ΕEC, all Member States do not yet have them, accessibility and adequacy are not guaranteed everywhere, and the cumulative objectives of the Member States to reduce poverty and social exclusion fall well short of the Europe 2020 target (37).

5.3

Considering the dynamics between poverty and the economy, the EESC underlines the stabilising potential of minimum income schemes that can both mitigate the social impact of the crisis and have a counter-cyclical impact by providing further resources to boost demand in the internal market.

5.4

The EESC fears that minimum income schemes, which vary widely in most Member States in terms of coverage, comprehensiveness and effectiveness, fall short of alleviating poverty and is concerned that non-take-up of such schemes tests their effectiveness still further (38).

5.5

The EESC welcomes the some positive results of the social OMC, but regrets that the existing instruments and structures have not been fully explored and that progress in the fight against poverty and social exclusion was limited.

5.6

To complement the social OMC, the EESC supports the introduction of a European directive that would extend minimum income schemes to all Member States, improve the adequacy of existing schemes, taking into account different national contexts, and thus send a strong message regarding the EU social pillar.

5.7

The proposed directive should set common standards and indicators, provide methods to monitor its implementation and allow for the involvement of social partners, beneficiaries and other stakeholders when establishing or revising national minimum income schemes.

5.8

The EESC takes the view that as a prerequisite for reinforcing solidarity and social cohesion within and among Member States, budgetary and macro-economic policies should also serve the social investment goals of Europe 2020 in implementing existing strategies and using existing instruments and structures.

5.9

The EESC believes that the European Union's efforts to upgrade minimum income protection must consist of helping Member States, particularly those in acute need, to open up markets and implement efficient macro-economic policies, as well as using the available funds in a more efficient and targeted way and examining without delay the possibilities of extending the required funds.

5.10

The EESC would point out that, while minimum income schemes are directly linked to social protection and assistance systems, they should not generate dependency, and it would reiterate the conditions it set as early as 1989 (39). To this end, minimum income schemes should be flanked by general policies and targeted measures such as active labour market policies (ALMPs) to help the unemployed back to work, employment services, and benefits and programme management that is geared to the employment market, including training and job-creation backed by appropriate implementation strategies, to ensure that jobseekers have a greater chance of finding work. Effective labour market institutions, health care, housing policies and affordable, accessible public services of high quality are also essential.

5.6.2014   

EN

Official Journal of the European Union

C 170/32

1.1.

The European engineering industry (1) (EI) plays a vital role in the economic recovery of Europe and the ambitious goal to increase the industrial output by 2020 to more than 20 % of the GDP. However, more investment of companies is necessary to generate such growth, to reverse the current trend and to get people out of unemployment.

1.2.

To reach this, Europe must develop a clear vision and target for industry. This must lead to a coordinated policy with a clear focus on the competitiveness of the European industry that includes the other policy fields and makes Europe a more attractive place to set up business.

1.3.

Europe must develop a more positive approach towards change in industry, especially with regard to the successful transition of the CEECs.

1.4.

Europe should become more aware of its assets, develop and strengthen them — well-skilled and motivated workers, a diverse education landscape, enormous scientific knowledge, many globally leading regional clusters, well-integrated chains of suppliers and services, well-developed transport infrastructure and a huge internal market with more than 500 million consumers and solid cooperation of social partners.

1.5.

In order to generate new investments Europe must follow a strategy that keeps its industry at the forefront of technological innovation and at the same time, in order to reach the necessary volume of output and employment as a main tool of strengthening competitiveness, be more attractive for companies manufacturing mass production goods, both in the high and in the low and medium-tech ranges. The EESC calls upon the European Commission to launch a strategy on how Europe can attract more investments in high tech companies — including modern factories resulting from the 4th industrial revolution — and highly skilled competences fostering innovation throughout the value chain.

1.6.

European research funding should be linked more to the industrial needs, involving companies at an early stage of the innovative process and supporting the creative engineering in SMEs in order to bring easier and faster new ideas to new products. Clusters joining manufacturing companies and research structures should be promoted and supported.

1.7.

The EC should increase its efforts to make the life of European companies easier, especially for SMEs. New technical and administrative legislation should only be considered if its targets cannot be achieved otherwise. The EC should put a stronger focus on a coherent application of existing rules among all Member States, harmonising and strengthening the Market Surveillance. EC should also promote balanced application of such approach globally towards other world’s regions.

1.8.

Disadvantages, such as difficult access to finance, high energy costs or costs resulting from administrative burdens and legislation should be reduced by adopting a more consistent and predictable legislation.

1.9.

High employment in Europe can only be maintained if workers are better educated and trained than in competing economies. Measures should be taken to attract the youth — both males and females — in technological professions with increasingly sophisticated machinery and services. Cooperation of companies with universities and schools, training and lifelong learning has to be encouraged.

2.1.

The EI in Europe is a very wide and diverse sector, covering NACE codes 25, 26, 27, 28, 29.3, 32.11 and 33 with the exemption of 33.15 to 33.17. The EI traditionally is presented by: Mechanical and Electrical engineering and machinery; Electronics; Metal articles and metalwork.

2.2.

The entire EI in Europe consists of some 130 000 companies, employing > 10,3 m people with high qualification and skill level, generating an annual output of some EUR 1 840 bn and about 1/3 of all exports of the EU.

2.3.

Producing a variety of final products and delivering to other sectors components, parts, tools, machinery, installations, systems, technologies, etc., this industry plays a key role for the technology level of a large number of other sectors and defines the development of the society on energy efficiency, health, mobility, communications and security.

2.4.

Due to its enormous volume, high employment and strong export orientation, the EI plays a vital role in the economic recovery of Europe and the ambitious goal outlined in the Communication of the EC ‘A Stronger European Industry for Growth and Economic Recovery’ to reverse the current trend and to increase the industrial output by 2020 to more than 20 % of the GDP.

2.5.

The European engineering industries must be seen and analysed in the context of the EU economic development, and these industries are integral and essential links of the respective value chains. Seen from this point of view, they suffer from essentially the same problems as their chain counterparts (steel industry, power sector ...).

3.1.1.

The European EIs export a considerable part of their output. In recent years investments have lagged behind other regions in the world. This entails a dangerous de-localisation of value chains away from Europe and European EIs are facing increasing global competition.

3.1.2.

North America has adopted a strategy that aims at re-industrialisation, based in particular on low energy costs and lower labour costs in the NAFTA. China and several countries in South East Asia have attracted considerable investment, especially in the electric and electronic sectors, recently also in machinery. With state-backed development plans, these industries not only compete with lower wages but will soon produce goods with higher added value. Japan is gaining competitiveness due to the recent devaluation of the Yen by around 30 %. Finally, Africa and the Middle East have succeeded in recent years to attract manufacturing investments.

3.1.3.

The target of 20 % share of industry in GDP, necessitates the creation of at least 400 000 new jobs/year. Only if Europe can attract more investments, enough jobs and wealth will be created so that the high social standards in Europe can be maintained and the Europe 2020 goals can be reached. And investments will only be made in Europe if it is competitive.

3.1.4.

It is evident that such a high number (> 10m) of predominantly well-paid jobs cannot be maintained if Europe concentrates only on the upper market end of engineering. While high tech companies play a decisive role in the technological lead and foster innovation throughout the value chain, it is crucial Europe to remain a production place for all kinds of engineering products and commodities, also in the low- and medium-tech sector. Besides creating employment, this is decisive for the integrated network of suppliers, which is one of the biggest assets for producers in Europe, and allows fast exchange of knowledge, quick adoption of production and benefits from regional clusters.

3.2.1.

It is in particular the engineering sector that is at the forefront of the transformation to a green and low carbon economy through the products, systems and technologies its companies are producing. The industry is moving very fast towards the fourth industrial revolution (2) which will provide the jump to mass customisation, enabling industry to answer societal challenges with tailor made solutions.

3.2.2.

Europe has the necessary scientific knowledge and research competence for the change to a greener economy, but the path to innovative products requires more than that. Europe has in many technologies a clear scientific advantage, but the industries profiting from this research settled abroad, i.e. Europe is not attractive enough as a production place to bring such innovations to the market and the outflow of knowledge to rival economies becomes a real menace.

4.1.1.

Assessing the chances of the EU in pursuing the really needed industrial policy one arrives in grave inherent problems that would affect the required transition. First of all, unfortunately, the EU lacks vision and leadership, which lead towards too many incoherent initiatives and acute incoherence of the regulatory framework. Second, sustainability concept, which could be such an integration strategy, should give the same importance to all 3 pillars (environmental, social and economic).

4.1.2.

The current decline of investor’s confidence (3) in the EU economy is alarming; it is crucial to win it back. Real implementation of the EU 2020 Strategy and stimulating and motivating business environment could be the way out of current decline.

4.1.3.

Much more investments and growth is needed to reverse the continued decline of industry in Europe. The 20 % target and creation of new jobs won’t happen unless Europe develops a clear vision and agenda for industry. This should lead to a coordinated policy with a clear focus on the competitiveness of the European industry that includes the other policy fields and makes Europe an attractive place to set up business.

4.1.4.

Engineering companies suffer from too much regulation, at times inappropriate, and many national laws overlapping the EU law. Especially SMEs are not able to cope with them. The main task for engineering companies should be to find technical solutions and not to spend a considerable part of their resources to deal with the latest regulations. The direct approach to get relief from this problem is to reduce the amount of new legislation.

4.1.5.

As an example for unnecessary new legislation, it has become a habit that most proposed recasts of existing regulations and directives are followed by amendments. Often better application of existing rules would solve a problem better than creating new provisions. New rules should therefore be the ultima ratio.

4.1.6.

The European legislator often tries to regulate a certain area in a too detailed manner. While this makes sense in certain technical regulations, it might be inappropriate in other areas, for example, rules on electromagnetic fields are too difficult to comply with for SMEs. The ECs 2013-2020 health and safety strategy must secure an adequate level of protection at the workplaces but should at the same time be consistent, short and easy to apply.

4.1.7.

European legislation must become more predictable. This entails — with regard to the investment cycles of companies — that methodologies shall not be altered once established and targets shall be heightened predictably and in a long-term perspective. One example, where the originally holistic approach of the Commission is getting lost, is the Eco Design Directive. The initial focus has been on energy and the robust methodology used (MEErP) should be maintained. Particular problem results from frequent recasts. For some products the changes in legislation happen roughly in 5 year interval, which is particularly devastating for the engineering sector, where the investment horizon stretches from 10 to 30 years.

4.1.8.

Unfortunately, impact assessments of the EC do not include sufficiently the costs of new legislation for companies, especially for SMEs. The biggest cost of additional legislation actually not taken into consideration is in the investments and new companies that Europe loses and that are instead established outside EU.

4.1.9.

In a similar way, rules for public tenders should be easy to understand. Otherwise, SMEs are no longer capable to make bids, competition gets less, the decisions in the procurement process get more difficult to be verified and public procurement becomes more vulnerable to fraud. Therefore, the focus should be laid on simplification and transparency.

4.1.10.

Energy costs in Europe are much higher than in competing economies. The most urgent measure to make energy more affordable is the creation of a real European energy market. Additionally, it is important to abstain from introducing legislation that results in additional price increases. Decarbonisation must be affordable, technology-neutral and based on market laws.

4.2.1.

Protection against non-conforming dangerous products and counterfeiting is a precondition for fair competition. Currently, less than 1 % of all manufactured goods imported via the big European harbours are checked on their arrival on conformity with EU provisions and many dangerous or counterfeit products, especially electrical, enter the internal market.

4.2.2.

Control and surveillance bodies in individual EU Member States differ largely. In some Member States, the system provides mechanism for necessary protection of businesses, in other countries these bodies are rare, not complete and insufficient or legislation is applied differently. The EU should improve and enhance coordination between these bodies with the aim to come to an appropriate and uniform European system.

4.3.1.

Standardisation in Europe has become a decisive part for the success of the single market. Standardisation helps making products exchangeable and thus tradable all over the world and along long value chains. However, in recent years many SMEs complain about the amount of standardisation mandates by the EC and the fact that standardisation has gone beyond technical requirements. SMEs should be encouraged and supported to participate in the standardisation process.

4.3.2.

As SMEs are increasingly involved in value chains, they should be given the possibility to adequately contribute to the making of standards. Practical measures have to be taken in order to establish equality between stakeholders i.e. better support on national level for the participation of SMEs with less financial resources.

4.4.1.

The companies of the engineering industry are key drivers at the forefront of innovation when it comes to manufacturing the equipment necessary to make the green revolution happen. Energy effectiveness, CO2 reduction and climate-friendliness are positively influencing the sustainable development of the sector. Besides creating new products, the innovations of engineering companies often lead to new ways of production, even more environmentally progressive goods and systems, at the same time more productive and affordable for customers.

4.4.2.

Europe has reached a high level of research and research results. In 2012, there were more than 250 000 patent filings in Europe. However, the pathway from research to innovative products requires more than knowledge and research competence. Europe possessed for a long time a clear scientific advantage in many technologies, but in the end the industries profiting from this research often settled outside Europe. Such weak industrial exploitation of existing knowledge in Europe can only be overcome by industry participation in research programmes at an early stage and an appropriate framework that allows them to exploit the gained knowledge timely. New structures joining industry and research — clusters, technology parks, technological exchange centres — should be promoted through public funds.

4.4.3.

To improve the industrial uptake of new scientific findings, research and innovation funding should be better targeted towards industrial needs and be carried out as a Public Private Partnership, such as the ‘Factories of the Future’ programme. In order to boost participation of companies, especially SMEs, the guidelines and provisions for participation and approval of projects should become simpler. Measures should be taken to promote establishing of modern factories resulting from the 4th industrial revolution.

4.5.1.

The sheer number of jobs in this industry shows that it plays a key role in overcoming the currently high unemployment in the EU and has big potential for new jobs, if Europe can generate the investments for the next economic upswing. Creating these jobs the unacceptable high youth unemployment could be overcome. The current endeavouring by the EU to create a ‘youth guarantee’ seems a good measure during the current crisis. However, on the long run, sustainable employment can only come from sound companies which invest here.

4.5.2.

Many manufacturing sectors face shortage of young professionals. Education and vocational systems shall be much more oriented on the needs and future needs of companies. Measures should be taken by both the administrations and industry itself to attract young people into this sector and improve at the same time the image of the sector. Especially the lack of professionals in science, technology, engineering and mathematics in some regions of Europe must be solved, e.g. by supporting the mobility of these professionals throughout Europe.

4.5.3.

Still too few young women aim at a career in engineering. In many European countries the EI has already started campaigns focused on attracting young women for apprenticeships and the European Social Fund has supported projects aiming at lowering the emotional barrier of young women towards engineering careers. Still, more has to be done. At schools, technics and engineering should be taught in a more inspiring way.

4.5.4.

One of the decisive strengths why many European companies passed well through the current crisis was their excellent workforce. Due to the apprenticeship system, their workers have a comprehensive knowledge of the theoretical basis and the actual production process. They have capabilities to integrate innovation quickly at different stages of the value chain. The European Employment Policy should encourage countries to adopt such apprenticeship systems at company level. Cooperation of companies with schools and universities, start-job exchanges and traineeships should be encouraged.

4.5.5.

Industry associations and trade unions can take initiatives supported by their Governments to evaluate industry education and improve pathways that can help to fill a gap in labour qualification for an industry that provides increasingly sophisticated machinery and technical service, requiring new skills.

4.5.6.

Lifelong learning should be a common duty of employers and employees. Workers who lose their jobs must have sufficient access to quickly updating their qualifications. Active labour market policies should be intensified and the exchange of good practices, such as those co-funded by the ESF and EFRD, accelerated.

4.5.7.

Industrial sectors are subjects to a permanent change. There is a continuous creation of jobs and products, while others get redundant. Necessary restructuring must be organised in an anticipatory process. All social partners — trade unions and employers — as well as governments and EU institutions must be integrated in a dialogue to develop a more flexible and positive approach towards change in industry. As a priority redundancies have to be avoided to keep skilled and qualified workforce in the companies. Unavoidable job losses should be organised and cushioned in a social acceptable way. In some CEECs we can find examples of modernising the economy that is more productive, cleaner and creates new well-paid jobs.

4.5.8.

Government, industry associations and trade unions must find solutions to comply with cyclical fluctuations of business activity. Speedy and efficient deployment of qualified staff is vital if European manufacturing companies are to respond to the increasing pressures of global competition. Employment legislation must admit work arrangements, both externally and internally, which consider the need of efficiency in the production process, as well as health and safety issues and work-life balance. Instruments of necessary flexibilisation must not be used to lower existing social standards in Europe.

4.5.9.

National social partners have a high responsibility in collective bargaining. Competing successfully with present levels of labour cost is challenging and wage earners purchasing power must be maintained. European companies must not strengthen their competitiveness by lowering wages. Efforts must be focused on non-price competitiveness and controlling production costs to preserve and improve employment. Productivity gains should be shared between increased wages, investment and rewarding shareholders.

4.6.1.

In recent years, the EC has recognised that helping SMEs to export is a key to a more powerful economy. For many SMEs, the first step is to export to another EU country. That is why the competition of the internal market is so important, as experiences gained there might motivate companies to export overseas. As the latter is difficult for SMEs, it is important that they are not left alone on those markets. Additionally, the access to export financing instruments should be improved for SMEs.

4.7.1.

Even though public budgets remain constrained, the necessary investments in energy infrastructure should not be delayed, as this would hamper the competiveness of Europe.

4.7.2.

Most investments in energy and resource efficiency are made today only if the break-even is reached in less than 3 years, which leaves a lot of possible gains missed. Many private investments are not conducted even though they would be useful because their break-even would be usually reached in 3 to 5 years. This dilemma could be overcome if the future gains from such investments would create a cash flow already at the time when the investment must be made. Therefore, funds could be established at the EIB or national funding banks that provide credits to companies and households for such investments in exchange for the profits generated by the resultant saving until the credit is paid back. This model makes such investments possible without any public subsidies.

4.8.1.

European manufacturers have profited from endeavours made previously to better recycle waste during the current phase of high raw material prices. Most metals, the base for most goods, are recycled today. Still, the access to raw materials that must be imported remains crucial for the competiveness of the engineering industries. Therefore, the EU must insist that raw-material trade is not hindered by WTO-incompatible restrictions, especially rare earth. Thereby has to be taken into account, that ethic, social and ecologic standards have to be respected.

4.9.1.

European companies should explore and use much better the potential of the new EU Member States. This approach could transform the problems with the excessive economic differences between the European regions in a European advantage.

4.9.2.

EESC urges the EC to monitor the situation in international trade of critical raw materials. EESC recommends preparing several plausible scenarios, with the worst case one, to describe the threats and potential solutions. Cooperation with other countries in the similar situation (US, Japan, South Korea) should be enhanced.

5.6.2014   

EN

Official Journal of the European Union

C 170/38

1.1

The ship maintenance, repair and conversion sector (SMRC) is strategically important to Europe and its sustainable development, since it plays a key role in areas such as environmental protection, transport, security and energy efficiency.

1.2

The EESC believes that, on account of its advanced technical know-how, the current network of SMRC shipyards in the EU is well prepared and capable of meeting the growing demand for sustainable development, technology, innovation, workers' skills and shipyard equipment.

1.3

According to the Committee, opportunities for the sector are emerging despite the difficult economic climate. These relate to the enlargement of the world fleet and the increasing proportion of older ships, and in particular to the growing demand for conversion and modernisation due to environmental, energy and climate requirements. In the immediate term, this involves the growing demand for energy-efficient vessels, the operation and development of offshore wind energy facilities and extraction of natural resources from the sea.

1.4

In the medium to long term, the opening up of Arctic sea routes and deep-sea mining provide further opportunities for the sector.

1.5

The Committee points out that despite these promising opportunities, the on-going crisis means that shipowners and SMRC shipyards are still facing financing bottlenecks, for example, access to credit and thus difficult business conditions for companies. A further challenge is maintaining a critical mass for the sector.

1.6

In order to address this, the SMRC sub-sector should work closely with the maritime value chain with the aim of raising its profile and obtaining support from the EU, the Member States and regions, given the existence of ever greater competition from third countries.

1.6.1

The Committee believes that the following will be beneficial and useful for this sector:

1.7

The EESC points out that although workers in the EU's SMRC sector have adequate skills, they should be continually assessed and updated. These measures should be supported as a matter of priority, for example within the framework of the LeaderSHIP 2020 initiative. There is a real risk of a loss of critical mass in this sector, given the ageing skilled workforce.

1.8

According to the EESC, generating interest in the sector among new and younger workers should be a main concern and this should be linked to measures aimed at improving the sector's image. This should be associated with financial support for schools and universities with specialisations covering SMRC.

1.9

The Committee believes that the Commission, together with the social partners and other stakeholders (using the concept of the sector council on skills, for example), should draw up a plan for the continual adaptation of skills to the new tasks of the SMRC sector, covering among other things off-shore facilities (platforms, wind farms, etc.), harbours, new technical floating units, facilities and ships for LNG bunkering, etc. This requires monitoring of skills, the permanent advancement of training and promotion of mobility within Europe.

1.10

A comprehensive set of principles and rules (environmental protection, security, ports, rules on transport, assembly, recycling) has a crucial impact on the way in which the sector functions and on demand for its services. In light of this, the EESC believes that the SMRC and newbuilding industry should carry out frequent and systematic consultations together with EMSA, with a view to ensuring that ships are safer and more environmentally-friendly and that they are monitored effectively.

1.11

According to the EESC, the collection of new rules and requirements relating to advanced technologies should not be regarded as harmful or problematic for the sector, but rather as an opportunity. In this regard, SMRC and newbuilding yards and the steel manufacturing sector should work together more closely to achieve better results. The Committee calls for DG MOVE to take into account the SMRC sector in its strategic policy developments (including on the matter of short-sea shipping).

The EESC believes that, in accordance with medium-term (3 year) forecasts pointing to strong demand for ship recycling carried out in Europe, the SMRC sector has the facilities to carry out such projects. It also has the human capital to meet requirements for recycling of ships that is not harmful to humans or the environment. At the same time, account is being taken in the sector of the fact that this is a new and different form of activity, with sensitive aspects and requiring a careful approach. The Committee believes that ship recycling will be an increasingly strategic activity for European industry.

1.12

According to the Committee, the key short-term objectives, which require public support with a view to financing conversions in the EU's SMRC sector, are the installation of cleaners and systems for the treatment of ballast water (this may affect up to 65 000 ships around the world according to the Lloyd's Register), and conversions associated with energy efficiency (including installation of LNG-powered engines, installation of facilities for LNG bunkering at sea and heat recovery systems as well as modernisation units for slow steaming, etc.).

1.13

The Committee firmly believes that the SMRC industry is of huge importance to the respective European naval fleets and that this subject should be included in other EESC opinions on the armaments sector.

1.14

The EESC believes that putting IMO rules in practice, particularly the Ballast Water Management Convention, is of key importance for the sector. This convention should therefore be implemented in a proper and efficient way with clear expectations.

2.1

Shipbuilding encompasses all enterprises involved in the construction, maintenance, conversion and repair of all types of ships and other relevant maritime structures. The abbreviated name for maintenance, repair and conversion yards is SMRC. Classification surveys also come under this area of activity. Such shipyards exist in 16 EU countries and employ around 50 to 55 thousand people (the average figure for the 2007-2011 period).

2.2

The SMRC sector is a specific segment of the shipbuilding industry. This sector is growing in importance with the expansion of the global fleet and maritime (and inland waterway) transport, and with the development of ship technologies and increased requirements for water transport in the area of sustainable development.

2.3

The EU currently enjoys a strong position in this sector. Its current share of the global market is around 35%, which shows that the sector is strategic for Europe. This position should be maintained and even enhanced with a view to ensuring a high level of safety in maritime transport and establishing rigorous environmental and energy efficiency standards.

2.4

The SMRC sector differs from the newbuilding sector in many respects. SMRC is divided into the following sub-sectors: ship repair, maintenance and modernisation as well as conversion.

2.5

Maintenance and repair is usually a short-term operation. A ship is in a dry dock for most of the time and on average remains there for around 10 to 12 days.

2.6

The planning of repair work is relatively straightforward and shipyards can influence the shipowner's choice of shipyard. Unplanned repairs which take place following system, mechanical or structural failure must be carried out by the closest possible shipyard. In such cases, it is difficult to influence the shipowner's decision.

2.7

According to a 2008 OECD report (1), choosing the appropriate ship repair yard has become crucially important for shipowners, who often have to decide between a financially attractive low-cost option and the need to ensure reliability and technological sophistication. The most important factors for deciding where a ship will be repaired are usually: cost, length of time for repairs (including deviation cost) and, to a lesser extent, the type of technology used.

2.8

In order to achieve economies of scale, newbuilding and ship repair are being linked–up in various locations around the world. Countries which are leaders in the shipbuilding industry usually separate the activities of newbuilding and SMRC yards in order to strengthen the concentration of the workforce and boost productivity.

In some EU countries (e.g. Poland, Germany, the Netherlands) and in India there are functional and corporate links between newbuilding and SMRC yards. This model appears to function effectively in these countries through the use of joint departments and facilities (and other organisational units (2)) for both types of shipyard, while at the same time taking advantage of the diverse portfolio of products and orders and minimising the risks resulting from the economic slowdown.

2.9

The market realities of the sector

2.10

In recent decades, the term ‘always young’ has been used in literature to describe the development of the SMRC sector. Strong growth of the international fleet from 660m DWT in 1990 to 1 468m DWT in 2011 has been a source of parallel growth in opportunities for the SMRC industry. World annual turnover in this sector was estimated to be around USD 12bn at the end of 2010 (3).

2.11

Turnover in the European ship repair sector amounted to EUR 3,16bn in 2010 (peaking at EUR 4bn in 2008). Appendix 1 shows ship repair yard turnover in various European countries between 2006 and 2010.

2.12

The European SMRC sector was doing quite well before the crisis. Since 2010, shipowners have cut expenditure or postponed orders in an attempt to lower their costs. In the second half of 2010, they managed to make up for losses, as evidenced by the fact that waiting times for repair work went up again (from one week to three weeks).

2.13

There are SMRC yards all around the world. Although Asian shipyards carry out ship repairs at a lower cost (on account of low labour costs), many shipowners choose more expensive shipyards because they are able to offer shorter lead times (thereby avoiding deviation costs) and more sophisticated know-how.

2.14

In some respects, the conversion and modernisation process is more similar to newbuilding than to repair and maintenance work. Ship conversion usually takes longer than conventional repair work. The actions involved in ship conversion can be described as a production process.

2.15

According to Sea Europe (4), ship conversion is closer to the activities of newbuilding yards in terms of timescales, but conversion requires a completely different approach that involves flexibility. This ensures that changes can be made to the work plan in accordance with the client's requirements, and the specific nature of the ship earmarked for conversion.

2.16

Shortly before the crisis, the market for shipyards carrying out conversion work was very good. However, the number of orders began falling in 2009, with the biggest drop occurring in early 2010. At that time, most order books for conversion work were empty. The situation improved somewhat in the second half of 2010. At present, however, many ship owners are restricting orders for conversion because of financial challenges.

2.17

Recently, repairs, conversions and the modernisation of off-shore auxiliary vessels and floating facilities (including drilling platforms) have played an increasingly important role. Given the high costs of new vessels of this kind (and off-shore floating facilities) and long waiting times for their delivery (even up to four years), ship owners are opting to convert existing off-shore units and floating facilities. In Europe, however, there is a strong temptation to use cheaper foreign shipyards to carry out such conversions.

3.1

Research and analysis of the competitiveness of the SMRC sector in the EU was recently carried out under the ECO REFITEC (5) research programme, within the framework of the Seventh Research Framework Programme. The results of this research can be found in appendix 2.

4.1

At international level, there have been no discussions on multilateral agreements on competitiveness (under the auspices of the WTO), which could have an impact on the SMRC sector. The chances of reaching such an agreement in the short term are rather slim.

4.2

At bilateral level, the EU has negotiated trade agreements, which have an indirect impact on competitiveness, with the USA, Canada, Japan and South Korea, but their impact on the SMRC sector is rather minimal.

At European level, EU legislation includes the Framework on State aid to Shipbuilding. Under this framework, the Commission may authorise innovation and regional aid for shipyards or, in the case of export credits, aid to shipowners. Regarding the SMCR sector, this framework concerns the aid for ship repair and conversion in the case of regional and innovation aid and aid for ship conversion exclusively in the case of export credits.

4.2.1

The current framework has been in force since 1 January 2012 and is valid for two years. The Commission predicts that, after this period, it will be possible to integrate the shipbuilding framework into the future version of the EU guidelines for State aid for research and innovation and for regional aid, because currently both the general EU framework and the more specific newbuilding framework are being reviewed.

4.3

4.4.1

The Ballast Water Management Convention solves the problem of the transfer of invasive marine species between different maritime areas through the release of ballast water transported by ships. The entry into force of the convention was planned for early 2014.

4.4.2

The impact of the convention on the SMRC sector will be very significant because many ships will need to be modernised and/or converted, which may affect up to 65 000 vessels around the world according to the Lloyd's Register.

4.4.3

Other potential effects of this convention for SMRC shipyards are, first and foremost, the risks arising from the use and storage of new chemicals and increased legal requirements concerning their use.

4.5.1

This convention, which entered into force in 2013, seeks to reduce air pollution from ships, in particular SOx and NOx.

4.5.2

In order to avoid unnecessary restrictions on the maritime industry, Annex VI to the convention stipulated that emissions may be lowered by using alternative fuels or by adopting gas cleaning technologies.

4.5.3

The convention creates opportunities for SMRC shipyards, since technologies limiting emissions will need to be installed on board ships included in existing fleets. Potential risks for shipyards installing environmentally-friendly devices include a growing dependence on the suppliers of devices and the need for certain investments in shipyards.

4.6.1

This convention seeks to ensure that the risk to the environment, health and safety during the recycling of ships is kept at an acceptable level.

4.6.2

As a result of the provisions in the convention, ship owners must be fully informed about all materials which are used during maintenance, repair and conversion and make sure that unwanted materials are never used in shipyards. This can create additional opportunities to secure new specialised orders for EU shipyards with a high level of know-how.

4.7

Ship recycling will become an increasingly strategic activity geared towards providing and supplying, for example, scrap and other raw materials for manufacturing sectors in the EU (steel, aluminium, copper), with a view to reducing both the direct and indirect environmental impact and preventing unacceptable working and social conditions.

5.1

The SMRC sector and related industries should take account of the opportunities and possibilities for EIB financing through increased loan activities by the bank. EIB measures should be promoted and examined, mainly for projects relating to ‘green shipping’, renewable offshore energy and conversions. It is proposed that DG ENT organise ‘workshops’ as a matter of priority, in order to explore the prospect of EIB support in greater detail.

5.2

The Member States and coastal regions should examine the possibility of allocating Structural Funds to diversify technology in the maritime industry, in connection with new market sectors. This particularly relates to regional strategies for smart specialisation.

5.3

As regards potential long-term EU financing, the European Commission should examine the possibility of measures to finance the construction and modernisation of ships. The Member States, financial operators, the maritime technology industry and other stakeholders should review the availability of market guarantees.

5.4

The shipbuilding industry (including SMRC), in cooperation with the European Commission, the Member States or regions should be included in research activities, through the use of public-private-partnerships (PPP) among other things, taking full account of the structure of maritime sectors and relevant State aid principles.

5.4.1

The EESC agrees with the basic point of the LeaderSHIP 2020 initiative that in order to meet the general PPP objectives for the shipbuilding sector, there needs to be a strong commitment to research programmes. As regards short-term goals, the SMRC sector's sustainable competitiveness should without question be underpinned by appropriate measures to promote innovation in businesses.

5.5

The EESC supports the inclusion of the shipbuilding industry sectoral dialogue committee in the work on defining and implementing policies under the LeaderSHIP 2020 initiative. Currently, the special role of the committee should involve implementing that part of the initiative relating to the better identification and comparability of qualifications and skills with a view to ensuring the sector's long-term prosperity.

5.6

The EESC looks forward to seeing positive progress by the dialogue committee in connection with social standards in the European newbuilding and SMRC sector.

5.6.2014   

EN

Official Journal of the European Union

C 170/45

1.1

In principle, the EESC approves of the way the European Union Solidarity Fund (EUSF) (1), has functioned to date, noting that it supported its establishment from the outset (2).

1.2

The EESC sees a need for the immediate amendment of Regulation 2012/2002 on the functioning of the EU Solidarity Fund, as it has already been delayed (3), and supports the Commission's efforts even though the new proposal is rather conservative, a view shared by the European Parliament (4).

1.3

The EESC considers that the rejection by the Council of the Commission's 2005 proposal (5) represented a missed opportunity to lay new foundations for the running of the fund.

1.4

The EESC believes that all appropriate measures should be taken to cut red tape in the functioning of the EUSF and to accelerate its procedures (6).

1.5

The EESC agrees with the changes put forward in the new proposal for a regulation (7) concerning the introduction of advance payments, a clearer definition of what constitute ‘major disasters’ and ‘extraordinary regional disasters’ and the measures to be taken regarding Member States that fail to focus adequately on disaster prevention.

1.6

The EESC considers that in spite of the particularly difficult financial period the EU is experiencing, greater budget resources should be allocated to the functioning of the EUSF to provide for the unfortunate eventuality of a particularly severe major disaster.

1.7

The EESC is of the view that the EUSF's operating conditions should be entirely transparent so as not to give rise to groundless expectations or become a tool for political manoeuvring, and so as not to create disillusionment among populations experiencing severe hardship.

1.8

The EESC considers that tools such as the EUSF provide the EU with an ideal opportunity to display unity and solidarity, provided that they are used in an appropriate way and that European initiatives and support are made known to EU citizens.

1.9

In the EESC's view, the Fund's activities should include disasters that occur suddenly as a result of the greenhouse effect of climate change in general and also disasters caused by terrorist acts.

1.10

The EESC wonders why the thresholds for declaring a disaster to be ‘major’ remain so high; this obliges the EUSF to use its resources only exceptionally and only by applying derogation clauses. It considers the threshold values mentioned regarding the extent of recorded damage to be particularly high, and these should be lowered.

1.11

The subsidiarity clause, applied strictly by the Council, has a deterrent effect and complicates the Commission's efforts significantly. The EESC calls for more flexibility in applying this clause.

1.12

It is convinced that in many cases, major disasters could have been and could still be avoided by using existing European mechanisms and funds as well as existing know-how.

1.13

The EESC endorses the polluter pays principle.

1.14

It would point out that the number of major disasters in Europe has unfortunately increased significantly in recent years.

1.15

The EESC calls upon the Member States to improve their internal procedures and mechanisms in order to facilitate the Commission's work, by providing it in good time with reliable, valid and well-grounded information.

1.16

It believes that the 9-12 month period for paying aid is excessively long and fails to meet the aim of providing urgent and immediate help.

1.17

The EESC considers that rules should be drawn up on how to publicise and promote the Fund in order to familiarise the public with its work.

2.1

The EUSF was set up in 2002 following the catastrophic floods that hit central and northern Europe, with the purpose of providing Member States and candidate countries affected by major natural disasters with subsidiary support in restoring economic and social activity in the regions concerned.

2.2

The EUSF was set up under urgent procedures when the EU discovered that it had considerable sums available for coping with natural disasters throughout the world, but that it did not have appropriate tools for tackling similar disasters within its own territory or that of the candidate countries.

2.3

Since its establishment, the EUSF has worked satisfactorily in many situations, but there have been a number of instances of organisational and administrative malfunction. The Commission attempted to resolve these with its 2005 proposal for a regulation, which, although welcomed by the European Parliament, was rejected by the Council.

2.4

The Fund's annual budget is capped at EUR 1 billion, an amount that has so far proved adequate.

3.1

The main provisions of the current regulation establishing the EUSF are the following:

3.1.1

It was set up in order to assist Member States and candidate countries in the wake of natural disasters and to enable the EU to act swiftly and efficiently.

3.1.2

It covers the Member States and the countries which have opened accession negotiations.

3.1.3

It is a supplementary instrument providing subsidiary financial support for urgently needed action.

3.1.4

It states that the main aspects of major disasters to be focused on are living conditions, the natural environment and the economy.

3.1.5

A ‘major disaster’ is defined as one that causes severe damage expressed in financial terms or as a percentage of gross national income (GNI) (8).

3.1.6

It stipulates that the EUSF should function with particularly swift procedures and take rapid decisions.

3.1.7

The beneficiary countries always retain responsibility for implementing the assistance.

3.2

The regulation states that maximum transparency and prudent financial management are required.

3.3

It also introduces exceptions in view of the high level of the amounts set for ‘major disasters’, concerning ‘extraordinary regional disasters’ and disasters in a ‘neighbouring country’, but subject to particularly strict criteria and to a maximum of EUR 75 million. These exceptions have eventually become the rule for EUSF intervention, given the particularly high thresholds initially set for major disasters.

3.4

Under the regulation, the main priorities of the EUSF concerning major disasters are:

3.4.1

immediate restoration to working order of infrastructure and plant in the fields of energy, water supply and waste water management, telecommunications, transport and education;

3.4.2

provision of temporary accommodation and funding for rescue services;

3.4.3

measures for protecting cultural heritage;

3.4.4

the immediate cleaning up of disaster-stricken areas.

3.5

The country affected must, as quickly as possible and at the latest within ten weeks of the beginning of the disaster, submit an application for assistance to the Commission, specifying the scale of the disaster.

4.1

The proposal under discussion amending Regulation 2012/2002, which governs the functioning of the EUSF, suggests the changes set out below.

4.1.1

It builds the functioning of the EUSF into the new Multiannual Financial Framework 2014-2020.

4.1.2

It provides a clear definition of the scope of the EUSF, limiting it to natural disasters, also including man-made disasters.

4.1.3

It sets a threshold of 1,5% of regional GDP at NUTS 2 level (population between 800 000 and 3 million) for ‘regional disasters’.

4.1.4

It allows for rapid advance payments at the request of the affected Member State, limited to 10% of the expected amount of the financial aid, and capped at EUR 30 million.

4.1.5

It makes provision, for the first time, for slowly unfolding disasters such as drought.

4.1.6

It introduces provisions encouraging more effective disaster prevention, and encourages the use of EU legislation on prevention, at the same time allowing the Commission to reject applications in the event of serious negligence on the part of Member States or if a similar disaster reoccurs.

4.1.7

It includes new provisions on the eligibility of VAT and the exclusion of technical assistance.

4.1.8

Under exceptional conditions, it permits derogation from certain provisions of the Financial Regulation.

4.1.9

For a disaster to be defined as major, it sets an amount of EUR 3 billion or 0,6% of gross national income.

5.1

The EESC has expressed its agreement on the need to amend Regulation 2012/2002 on the functioning of the EUSF, so that it:

5.1.1

becomes a more efficient support mechanism for the Member States, candidate countries and neighbouring countries in the event of natural disaster;

5.1.2

acquires competences to intervene also in disasters resulting from industrial or technological accidents.

5.2

The EESC considers that the amounts foreseen are inadequate in the event of mass disasters that could affect large parts of the EU such as, for example, nuclear accidents, pandemics, etc., and urges the Commission to pay special attention to this aspect.

5.3

It fully backs the Commission's efforts to speed up the EUSF's operating procedures, ensuring in all cases that these procedures are reliable and that their operating rules are entirely clear and straightforward.

5.4

It calls on the Member States to make use of the Fund with discretion, in order to avoid casting the EU in an unjustly poor light.

5.5

The EESC endorses the advance payments procedure, and the application of the ‘slowly unfolding damage’ clause, e.g. for drought. It also considers that reforestation should be included as part of recovery projects following natural disasters.

5.6

It believes that the Commission should be particularly strict if Member States, in spite of the existence of EU legislation and special European funding, display negligence that leads to serious disasters.

5.7

The EESC is of the view that climate change will lead to even more natural disasters in the future, and consequently calls on the Commission to include such disasters in the regulation under review.

5.8

The EESC considers that civil society always plays a special role during major disasters, and calls on the Commission to introduce into the amended regulation the possibility of funding specialised, licensed organisations of this kind that have the structures and know-how with which they can contribute their services.

5.9

It considers that the efficient functioning of mechanisms such as the EUSF enable the EU to demonstrate solidarity in practical and effective terms, and urges the Commission to take all the measures needed for the European public to be aware of the role played by the Union.

5.10

The EESC believes that EUSF financing should be included in the EU's general budget in order to reduce the delays caused by the slow and bureaucratic procedures involving the Council, Parliament and Commission. At the same time, there should also be a mechanism to supplement funding in the event of an exceptionally large disaster requiring increased assistance.

5.11

The EESC agrees with the European Parliament that the threshold of 1,5% of regional GDP at NUTS2 level is too high, excluding many serious disasters from the Fund, leading to public disillusionment. It therefore proposes reducing it to 1% so that it primarily covers countries with low population figures.

5.6.2014   

EN

Official Journal of the European Union

C 170/50

1.1

The European Economic and Social Committee (EESC) is pleased that the European Commission has finally submitted the long-awaited and oft-announced proposal for a regulation of the European Parliament and of the Council on money market funds.

1.2

The market in shadow banking is huge: the Financial Stability Board (FSB) puts its global value at around EUR 51 trillion, equal to 25-30% of the entire financial system. In Europe, the bulk of money market funds (MMFs) (around 80% of the total volume and 60% of funds) operate under Directive 2009/65/EC (UCITS). Since July 2013, the remaining MMFs have operated on the basis of the rules laid down by Directive 2011/61/EU on Alternative Investment Fund Managers.

1.3

There are two main reasons why shadow banking needed to be regulated: first, the possibility that it might be used to get around regulation, particularly capital requirements, or to perform activities that could be managed within the traditional, regulated system, thus increasing the probability of a systemic event; and second, the fact that shadow banks' financial activities have considerable leverage; like traditional banks, they can thus expose the financial sector to panic and systemic risk.

1.4

The EESC endorses the Commission's decision to use a regulation rather than a directive to regulate this sector. Given the characteristics of MMFs which operate at global level but are essentially based in three countries (France, Ireland and Luxembourg), uniform and immediately applicable rules are crucial. The Commission's choice of instrument complies fully with the principles of proportionality and subsidiarity.

1.5

Commissioned by the FSB, in October 2012 the International Organisation of Securities Commissions prepared an initial set of recommendations to steer regulators towards intervening in MMF markets. In November 2012, the Financial Stability Board itself published regulatory guidelines intended to reduce MMFs' vulnerability to divestment rushes and on 20 November 2012 the EP issued its own guidelines. Lastly, in December 2012 (1), the European Systemic Risk Board (ESRB) issued its recommendation.

1.6

In the United States, the Securities and Exchange Commission issued rule 2-a7 which has addressed this issue since 2010. On 19 November 2012 (2), the Financial Stability Oversight Council (FSOC), the United States' regulatory authority, began to revise the rules in force, putting forward proposals very similar to those issued by the Commission: the requirement to establish a capital buffer, to move to variable net asset value MMFs, to carry out very short term investments and to disclose the contents of investment portfolios more frequently. Given the high degree of market integration, the EESC recommends that uniform and effective rules be applied jointly with US authorities.

1.7

The EESC agrees with the statement in the ESRB's recommendation: ‘Although MMFs did not cause the financial crisis of 2007 to 2008, their performance during the financial turmoil highlighted their potential to spread, or even amplify, a crisis. The experience from the 2007 to 2008 crisis has shown that MMFs may be susceptible to investor runs and may need the support of sponsor companies, in particular to maintain their constant net asset value.’

1.8

The EESC reiterates: ‘Although the financial system's need for liquidity — which, since before the financial crisis, has depended to a large extent on the shadow banking system — is unquestionable, the lesson to be drawn from the crisis is that the regulatory process should give priority to the stability of the financial system, which is indispensable.’ Indeed, ‘there should be no such thing as “shadow” activities: the shadow banking system should be subject to the same regulatory and prudential requirements as the financial system as a whole’. ‘The new rules should also have as an objective a high level of protection of European consumers.’

1.9

In line with the FSB's recommendations, the EESC has been calling for some time for the regulation to be issued swiftly (3). The Parliament and the Council must come to an agreement as soon as possible so that this regulation can be adopted, taking account of the EESC's proposed changes. There is a real danger that the regulation may be postponed for months, given the institutional deadlines of the Parliament and the Commission.

1.10

The EESC considers that the best and most appropriate recommendation is that issued by the FSB and the ESRB (4) on the dangers of constant net asset value (CNAV) funds, which should be converted into variable net asset value (VNAV) funds. The 3% capital buffer seems insufficient — given that the biggest possible risk faced was over 6% — to cope with liquidity demands at a time when all operators must anticipate considerable turmoil in the market and may rush to withdraw their investments.

2.1

The proposal for a regulation follows up on last year's green paper on shadow banking (see IP/12/253 and MEMO/12/191). It recapitulates the work carried out to date and provides a roadmap for possible further regulation in this key sector.

2.2

The events which occurred during the financial crisis have shed light on many aspects of MMFs which have made them vulnerable in the event of difficulties in the financial market, and they can spread or amplify risks through the markets.

2.3

One year on, the guidelines adopted by the ESRB to establish some degree of common ground have been applied by only twelve Member States, demonstrating the persistence of national rules. Timely and decisive action is needed.

2.4

MMFs will not be able to operate with derivatives outside the usual safeguards against exchange and interest risks.

2.5

MMFs will also have to reduce counterparty risk by diversifying their investments: 20% will be the limit for a repurchase agreement with the same counterparty.

2.6

Managers will have to refrain from asking specialist external agencies for their opinion; they will also have to apply regular stress tests to MMFs to assess their resilience.

2.7

The proposal for a regulation aims to ensure greater transparency by means of:

2.8

The proposal for a regulation also proposes a clamp-down on money market funds, calling for stricter liquidity requirements. The Commission considers that this will guarantee that the funds will be able to reimburse capital should investors decide to withdraw, without repercussions for the system.

2.9

Specifically, the funds must ensure that their portfolios contain at least 10% of daily maturing assets and a further 20% of weekly maturing assets, while their exposure to a single issuer cannot exceed 5%. A 3% capital buffer must also be guaranteed for constant net asset value funds.

3.1

Shadow banking plays an important role in financing the real economy. ‘The shadow banking system contributed to the financialisation of the economy and to the property bubble which from 2007 affected various developed countries, bringing their economies to the brink of collapse. As a result, it can be considered fundamentally, even if not exclusively, responsible for the major recession which has affected the United States and several EU countries. The financial system as a whole must serve the real economy.’ (5) SMEs in particular are facing major problems in terms of reduced credit. The banking system seems to be unable to fulfil its primary role of supporting the real economy.

3.2

MMFs bring supply and demand for liquid assets together for a short period of time.

3.3

As noted by the Financial Stability Board and other major institutions such as the International Organisation of Securities Commissions and the European Systemic Risk Board, MMFs are not sufficiently regulated despite the fact that their systemic importance is recognised. The EESC supports this view.

3.4

Conversely, the European Banking Federation is concerned about the impact of the proposals regarding money market funds, deeming them to be restrictive and difficult to implement, while the funds' resources can be used by banks to support lending to the real economy.

3.5

Meanwhile, the G20 is also active in this area. Its focus is the sector's activities rather than the players. Comments by G20 countries show a desire for soft regulation of the sector to avoid excessive repercussions on global financial flows, given the key role played by shadow banking in providing the banking sector with liquidity.

3.6

As regards the institutions and activities involved, in 2011 the Financial Stability Board estimated that the global value of shadow banking was around EUR 51 trillion, equal to 25-30% of the entire financial system and half of banking activities (euro area: nearly 17 trillion, United Kingdom: nearly 7 trillion, United States: 17,5 trillion (6)).

3.7

There are a number of intermediaries in this system, but MMFs are systemically important and a considerable source of short-term financing for financial institutions, businesses and governments. For this reason, the functioning of money market funds is central to the international regulatory activity under discussion.

3.8

In Europe, MMFs hold around 22% of short-term debt securities issued by governments or the corporate sector and 38% of short-term debt issued by the banking sector, equal to around EUR 1 trillion.

3.9

In terms of overall geographic distribution in the EU, MMFs are based chiefly in France, Ireland and Luxembourg and are used heavily, mainly by companies in Germany and the United Kingdom; this applies to constant net asset value funds.

4.1

The MMF sector is closely interlinked with the banks, which often manage the funds and even draw on the funds to finance themselves. According to the Commission, the majority of MMFs are supported by banks: nine out of ten of the largest MMF managers are financed by commercial banks. This illustrates the high degree of interplay not just between these two sectors, but also between MMFs, corporate financing and governments.

4.2

For companies, MMFs represent an alternative, short-term means of investing their cash resources. Using these instruments, companies can invest their capital and earn a better return rather than depositing it in a bank. While acknowledging the potential validity of this method of investing money, the EESC would highlight the inherent risks. Unlike banks, in the event of problems, the funds do not have access to any support from central banks.

4.3

There is no deposit guarantee system for MMFs. Shadow banking intermediaries (hedge funds, MMFs or structured investment vehicles) provide credit.

4.4

Under current operating procedures, MMFs can lend all the money collected from individuals or companies. The EESC notes that an MMF could collapse should one or two borrowers be unable to repay their debts, because if several depositors/investors also wish to withdraw their money at the same time, the fund will be unable to honour their requests. Unless prudential rules are introduced, these procedures could trigger another crisis.

4.5

In light of these observations and considering that, as already noted, the MMFs' largest providers of funds/sponsors are in fact banks, the EESC firmly believes that the MMF industry should be subject to rules and controls similar to those already in place for the banking system.

4.6

The EESC considers that the Commission's proposal to avert this danger by imposing a compulsory 3% liquidity buffer will not be enough to cover the risks arising from constant net asset value MMFs, given that there have been cases of risks exceeding 6%.

4.7

The Commission's provisions also fall short in respect of the recommendations of the FSB and the ESRB. Both these boards, with a view to prudential safeguards within the system, have suggested that the Commission adopt a mechanism for evaluating the funds based on variable net asset value, so that the fund's value adapts to price fluctuations. The regulation, however, has maintained the initially planned mechanism of constant net asset value, merely adding a liquidity buffer to deal with any negative variations in value. The EESC considers that the recommendations of the two market regulators adhere more closely to the principle of safeguarding the stability of the financial system, as illustrated by the table below.

Money market funds (MMFs) with Constant Net Asset Value (CNAV) (Article 25)

Table comparing recommendations (7)

With regard to the products on offer, the EESC would draw attention to the fact that products already in circulation in the traditional banking system, and thus regulated, have shifted to the parallel banking system in order to avoid the stricter controls which come with bank oversight.

4.8

The EESC is deeply concerned that these risks may be reproduced by the shadow banking system in order to escape scrutiny. It therefore believes that the principle of ‘same activities = same rules’ should apply.

4.9

The EESC proposes a tried and tested principle: a proper level of transparency and oversight would guarantee that the financial system operates in the interests of the economy, with consequent gains in terms of trust, effectiveness and efficiency.

The proposal for a regulation also bans external ratings of money market funds. This measure aims to prevent potential downgrades sparking panic on the markets. Although this measure runs counter to the principle of transparency and efficiency and could harm full information symmetry, the EESC considers that the MMF market is used by professional operators and that rating agencies can trigger panic among investors simply by changing their opinion. Internal rating measures, stronger risk management procedures and safeguards and more rigorous, stricter oversight will help safeguard the quality of benchmark assets and the funds' collateral quite effectively.

5.6.2014   

EN

Official Journal of the European Union

C 170/55

1.1

The European Economic and Social Committee (EESC) welcomes the communication as a coherent contribution to on-going efforts to reform financial services with a view to restoring harmony and stability to this key sector and minimising systemic risk.

1.2

The EESC believes that the new financial market regulations will make a positive contribution towards a sound economy and it is profoundly convinced that a stable financial sector and the success of the reforms are preconditions for sustainable economic development, employment and the completion of the EU's internal market.

1.3

The EESC considers that the roadmap setting out measures already taken and those for the future marks a step in the right direction. It recognises the progress already made but would note, nevertheless, the urgent need to accelerate work in a number of areas and to carry through those legislative initiatives that are pending. Following its assessment of the five priority areas for future action (1), the EESC would make the following remarks:

1.4

The Committee considers that addressing arbitrage is of key importance to financial services reform (2), and therefore welcomes the detailed package of measures (3) and, more specifically, the strengthening of the prudential banking framework for limiting contagion and arbitrage risks.

1.5

The Committee welcomes the efforts to boost transparency and in particular the specific measures aimed at providing a monitoring framework for shadow banking risks in the EU, the development of central repositories for derivatives under EMIR (4) (the European Market Infrastructure Regulation), the review of the Markets in Financial Instruments Directive (MiFID) (5), the implementation of the Legal Entity Identifier (LEI) and the increased transparency of securities financing transactions.

1.6

The Committee recognises that progress has been made towards establishing a stronger regulatory framework for certain investment funds focusing on improving liquidity and stability particularly for money market funds (MMFs) that are based or sold in Europe.

1.7

The Committee considers that with regard to the priority area entitled ‘reducing the risks associated with securities financing transactions’ the communication limits itself to general observations that may reflect a certain reality but omit a number of key circumstances. The EESC recommends stepping up the pace and focusing work on legislation on transferable securities, as securities financing transactions — especially repurchase agreements and securities lending transactions — play a central role when it comes to excessive indebtedness in the financial sector.

1.8

Similarly, it notes delay and recommends intensifying and accelerating action to clarify the crucial issue of strengthening oversight of the shadow banking sector, where mention is simply made of a few issues and the only future measure referred to is the review of the European System of Financial Supervisors (ESFS), to be performed by the Commission in 2013.

1.9

Given that the main unintended victims of the financial and economic crisis are the public as taxpayers, workers, depositors and consumers, the EESC would recommend bolstering the regulatory initiatives regarding the protection of citizens by means of transparency, proper information, social responsibility on the part of the financial sector, and protection for consumers and small investors. It also recalls its own important comments on civil society involvement in the regulation of the financial markets (6).

1.10

The Committee considers it important that in its Communication the Commission points out that the shadow banking sector should not be seen solely in terms of the risks that it poses. It also constitutes an additional alternative financing channel that can be useful for the real economy.

2.1

The shadow banking system is defined as ‘a system of credit intermediation that involves entities and activities outside the regular banking system’ (7) composed of two inter-related groups. The first includes entities that are involved mainly in activities such as raising funding with deposit-like characteristics, transforming maturity and/or liquidity, transferring credit risk and using direct or indirect financial leverage. The second includes activities including securitisation, securities lending and repurchase transactions (repos) that are an important potential source of finance for financial non-banking entities.

2.2

Special purpose vehicles are securitisation vehicles such as ABCP conduits, special investment vehicles (SIV) and other special purpose vehicles (SPV), money market funds (MFF) and other types of investment fund/products with deposit-like characteristics, which are susceptible to massive redemptions (runs), investment funds, including Exchange Traded Funds, that provide credit or are leveraged, finance companies and securities entities providing unregulated credit or credit guarantees, or performing liquidity and/or maturity transformation, like banks, and insurance and reinsurance undertakings that issue or guarantee credit products.

2.3

The origins of shadow banking activities lie in the deregulation of the financial system in the 1980s in the United Kingdom, which continued in the US and elsewhere in the 1990s (8). The role of the early Basel Accords was important as speculative activities were treated as off-balance sheet while bank balance sheets were subject to strict regulations (9).

2.4

The repeal/relaxation of rules and provisions (10) enabled financial bodies to extend their activities into new areas and complex models, while the promise of high returns had an impact on millions of people around the world with little knowledge of the products and workings of the shadow banking system.

2.5

In 2007, the G20 decided to adopt a package of regulatory measures to promote the security and viability of the financial system, while the serious social and economic impact of the 2008 crisis revealed the risks associated with shadow banking activities and the shortcomings, regulatory loopholes, inadequate supervision, lack of transparency in the markets and excessively complex products, emphasising the role of the Financial Stability Board (FSB).

2.6

The European Union is playing a leading role in the international effort within the G20 and the FSB, and has pointed to major progress in implementing the commitments set out in the roadmap for financial sector reform and in establishing new supervisory structures. A number of reforms have already been written into legislation, for instance regarding over-the-counter derivatives, to name just one example.

2.7

The FSB report of October 2011 represents the first comprehensive international endeavour to step up supervision of the shadow banking system and focuses on: a) defining principles for monitoring and regulating the shadow banking system; b) mapping and assessing systemic risks; and c) identifying the scope for regulatory measures within five workstreams (11). The European Commission meanwhile issued its green paper, focusing on the potential dangers of the shadow banking system in the EU and on tackling them by means of regulatory provisions.

3.1

The communication first examines the measures that have already been taken in two areas. The measures for financial entities focus on reinforcing the requirements imposed on banks and on insurance companies in their dealings with the shadow banking system and on designing a harmonised framework for alternative investment fund managers. The market integrity measures focus on risk transfer instruments, stronger provisions to govern securitisation, and a more sturdy framework for rating agencies.

3.2

It also sets out the five priority areas in which the Commission intends to take additional measures:

3.2.1

With regard to the transparency of the shadow banking system, efforts regarding the collection and sharing of reliable and complete data are complemented by initiatives to develop a monitoring framework for shadow banking risks and central repositories for derivatives under EMIR (12) (the European Market Infrastructure Regulation), to review the Markets in Financial Instruments Directive (MiFID) (13), to implement the Legal Entity Identifier (LEI) and to enhance the transparency of securities financing transactions.

3.2.2

For certain investment funds and principally for money market funds (MMFs) that are established or sold in Europe, new rules have been proposed to improve liquidity and stability alongside reform of the rules for undertakings for collective investment in transferable securities (UCITS).

3.2.3

When it comes to reducing the risks associated with securities financing transactions reference is made to the in-depth work that has been carried out in order to improve understanding of the problems and learn from them and to the fact that the Commission is considering a legislative proposal regarding securities law with a view to resolving these issues.

3.2.4

Prudential supervision in the banking sector is to be strengthened with a view to reducing the risks of contagion and arbitrage by establishing stiffer rules that step up banks' capital requirements when dealing with unregulated entities, and introduce stricter regulations regarding solvency and new rules on liquidity by means principally of the application as of 1 January 2014 of the Capital Requirements Regulation (CRR) (14) and Directive (CRD IV) (15). There are also plans regarding the possible extension of the scope of application of prudential rules to reduce arbitrage risks.

3.2.5

Regarding the need for greater supervision, emphasis is placed on the diffuse, multifaceted and dynamic nature of the shadow banking sector and the challenges inherent in prudential supervision (the cross-border circumventing of rules for instance). At European level, preliminary work is under way in relation to the European Systemic Risk Board (ESRB) and European supervisory authorities. These aspects, the need to address arbitrage and the possible need to clarify the institutional role of each authority, will be tackled by the review of the European System of Financial Supervisors (ESFS), to be performed in 2013.

4.1

Since the onset of the financial crisis, the EESC has expressed the views of civil society in a series of opinions (16) on a wide range of subjects relating to the functioning of the financial system and has made important comments and recommendations, both of a general nature, and more specifically on the recovery and reform of credit institutions (17).

4.1.1

The EESC welcomed the green paper on shadow banking (18), considering it an important step towards dealing with existing problems, emphasising, among other things, that there should be no such thing as ‘shadow’ activities and that these activities should be subject to the same regulatory and prudential requirements as the financial system as a whole.

4.2

The EESC endorses a world-wide approach to prudential requirements with the aim of extending regulation and oversight to all systemically important financial institutions, instruments and markets (19). It welcomes the adoption of the recommendations made by the FSB at the recent G20 summit (20), which are fully in line with the present communication.

4.3

It calls on the Commission to specify and lay down a timeframe for increased oversight of the shadow banking system by implementing a cohesive supervisory mechanism, accelerating clarification of the institutional role of the supervisory authorities as part of the review of the European System of Financial Supervisors (ESFS).

4.4

Given that, depending on the country, certain shadow banking activities and entities may or may not be subject to a regulatory regime, it is especially important that there be a level playing field for competition between countries and between the banking sector and shadow banking system entities, by means of appropriate regulations to prevent regulatory arbitrage, which would lead to distorted regulatory incentives.

4.5

The EESC notes in particular the need for regulatory authorities analysing data to adopt a common global approach, with common frames of reference and open industry standards, to enable the rapid exchange of data and effective and timely action to avert systemic risks and preserve financial stability.

4.6

The EESC believes the scale and rate of growth of the shadow banking system to be another significant factor for systemic risk; according to the FSB (2012) (21) it had reached USD 67 trillion in 2011 (up from USD 26 trillion in 2002), equivalent to 111% of cumulative GDP for the countries studied by the FSB.

4.7

The Committee also considers that careful analysis of the issue would be useful regarding activities beyond entities in the shadow banking sector, since supervision and checking of such activities is key to the success of the measures.

4.8

The EESC considers that the issue of scale and of distorted practices is not the sole preserve of the shadow banking system. The oversized banking model, combined with lack of transparency, demonstrably brings with it the risk of economic instability, resulting in the costs of rescuing institutions that are ‘too big and interconnected to fail’ being passed on to society.

4.9

The EESC holds that in order to boost the competitiveness and stability of the European financial sector while reforming the shadow banking system, it is necessary to address the issue of the size of banks rendering their failure prohibitive, by increasing transparency, rationalising the scale of activity of mega-groups and reducing interdependence within groups.

4.10

Along with the supervisory measures and structural reform, the EESC therefore considers it essential that effective action be taken to combat all distortions of the financial sector, and urges the Commission to speed up procedures for introducing a single reform mechanism, taking account of the recommendations of the Liikanen report and the recent report by the European Parliament's Committee on Economic and Monetary Affairs on structural reform of the EU's banking sector (22).

4.11

Since the diffuse, multifaceted and adaptable nature of the shadow banking system makes effective supervision complex and difficult, the EESC urges the Commission to act quickly to clarify questions as to whether the relevant national and European supervisory authorities, including the single supervisory mechanism (SSM), are equipped with sufficient resources, supervisory tools and powers.

4.12

The EESC believes that successful oversight must go hand-in-hand with effective, dissuasive and proportionate arrangements for enforcing sanctions, publicising the level of sanctions and information relevant to those who infringe the rules, and points to the issue of non-compliance with European rules on the part of third country natural and legal persons.

4.13

The EESC highlights the need to protect consumers of financial products from unfair practices, misleading and worthless products or services, as well as from any unfair contractual terms. It would also repeat its call for the establishment of a European agency for consumer financial protection, in order to strengthen consumer protection and transparency and ensure disputes are settled effectively.

4.14

User-friendly websites and other up-to-date information tools can enable consumers to compare and choose products and services, while boosting competition and self-regulation on the financial market.

4.15

The EESC strongly urges the Commission to accelerate the completion of the impact studies so that the new liquidity rules can be finalised and a cost-benefit analysis carried out concerning the efficiency and proportionality of the numerous legislative practices adopted since the beginning of the financial crisis, the purpose being for an overall evaluation to be made of the impact of legislation on the EU financial market.

4.16

The EESC also points to the need for regulatory efforts to be bolstered by advanced expertise and scientific research into questions relating to the collection and exchange of data. There is also a broader need to monitor the on-going development of the shadow banking system more comprehensively and to identify those aspects of benefit to the real economy as well as those that may generate new sources of vulnerability and systemic risk.

5.6.2014   

EN

Official Journal of the European Union

C 170/61

1.1

The European Economic and Social Committee (EESC) agrees that partnerships offer a range of advantages for developing innovation and that they still have untapped potential.

1.2

The EESC considers it important to fine-tune and synergise the 10 proposed initiatives with financial support from Horizon 2020 (H2020), inasmuch as they are different from other types of partnership in terms of instruments, form and substance.

1.3

The EESC calls for long-term financial certainty for the initiatives and a stable regulatory framework to reduce the high-risk aspects that set them apart and to help achieve the EU's general objectives: sustainable development, jobs and skilling of new professional profiles.

1.4

The EESC considers that these instruments are important means of boosting funding for investment in research and innovation, provided they are flexible, simple, non-bureaucratic, open and transparent, with a leverage effect on additional funding, and that they secure increasing participation by small businesses, especially in disadvantaged regions.

1.5

The EESC believes that the objectives must be measurable and targeted towards innovation and its translation into industrial goals and new jobs, and be anchored in a shared medium-to-long-term vision, within the context of a balanced, transparent system of governance with clear scientific, technical and socioeconomic performance indicators.

1.6

With regard to institutional public-private partnerships (PPP), the Committee calls for greater attention to be given to mechanisms to impede insider trading, for more to be made of the leverage effect, for more room to be given, in programmes and projects, to all forms of small business including the social economy, and for a strong communication policy to be put in place with a proactive role for stakeholder forums in all joint undertakings.

1.7

With regard to public-public partnerships (P2P), the Committee considers that it would be helpful if the European R&I budget contributed to bringing about a more balanced distribution of EU resources, with a greater focus on technology-intensive SMEs and to clinical, medical and technological innovations that promote the well-being of all, especially as regards active ageing and assistance to the elderly.

1.8

The EESC calls for a proactive communication policy on developments in the 10 new initiatives, and recommends that annual conferences be organised with all interested parties from organised civil society, during which annual reports on results achieved and future strategies would be presented. It also calls for multilingual handbooks for smart participation in the various forms of partnership that exist at EU level.

1.9

The EESC recommends that the Commission develop that proactive policy, perhaps by including the establishment of EESC prizes for economic and social innovation. This concerns three main target sectors: interested scientists and industrialists; users of innovative solutions on the market; and the European public as a whole, to satisfy society's needs, especially in terms of employment and training. The EESC advocates establishing a ‘European innovation prize’ to reward innovative applications in the industrial, economic and social sectors, and to give prominence to European added value.

2.1

Horizon 2020 provides for the establishment of public-private partnerships in key sectors, in which research and innovation could help with:

2.2

It is worth pointing out that there are various forms of research and innovation partnership:

2.3

The experience with institutional PPPs as EU bodies under Article 185 of Regulation (EC, Euratom) No 1605/2002 has demonstrated that more categories should be added in order to increase the choice of instruments that are more flexible and accessible for private partners than those applicable to the EU institutions.

2.4

H2020 PPPs can be considered to be innovative financial instruments, identified and implemented openly and transparently, on the basis of an assessment carried out by independent experts. They have the following characteristics:

2.5

Joint Technology Initiatives (JTI) are a tried and tested form of public-private cooperation in the area of R&D.

2.6

JTIs stem predominantly from the European Technology Platforms (ETP), on which the EESC previously issued an opinion (1) and, in particular, those ETPs for which the usual instruments for supporting R&D activities would be insufficient when it comes to achieving the objectives set by the strategic agendas.

2.7

The EESC agrees that partnerships offer a range of advantages and still have untapped potential. For this reason, it has welcomed ‘the Commission's initiative to establish and promote European innovation partnerships (EIP) under the Innovation Union flagship initiative’.

2.8

The EESC has also highlighted ‘the crucial importance of innovation to the Europe 2020 strategy’ and reiterated that ‘innovations are not necessarily the outcome of a linear sequence..., but derive in a complex process...’ (2).

2.9

Whilst there is a high level of interdependency between research and innovation, ‘innovation must not be subsumed to research, nor may research be subsumed to innovation. That would constitute a cultural impoverishment of fundamental European values.’ (3)

2.10

The EESC reiterates its support for promoting social innovation, in particular in the context of European funding programmes such as the Structural Funds or the Programme for Social Change and Innovation, as a means of facilitating additional support for capacity building for social enterprise funding (4).

2.11

Furthermore, the EESC emphasises the importance of partnering in increasing Europe's attractiveness as a global partner in R&I.

2.12

The EESC has repeatedly expressed support for the role of partnerships in bringing together European and national stakeholders from the public sector in P2P and PPP (5), in order to meet the major challenges facing society and to strengthen Europe's competitive position. By analysing the following aspects:

it has been possible to draw out many positive points in this area (6).

2.13

The EESC supports the method by which the 10 proposals under the Innovation Investment Package have been developed by the Commission, on the basis of the results of public consultations, impact assessments and various road maps.

2.14

For its part, the EESC held a hearing on the proposed package of initiatives on 31 October 2013, which was attended by a large group of interested representatives of civil society, of senior management of various existing joint undertakings, and of the Commission itself.

3.1

The EESC wholeheartedly supports the Commission's package of initiatives and considers that both the proposals on PPP within the meaning of Article 187 TFEU and those on P2P within the meaning of Article 185 TFEU can be powerful instruments in tackling the big challenges affecting Europe's competitiveness and its sustainable economic and social development.

3.2

The EESC considers it important to define the 10 proposed initiatives with H2020 financial support inasmuch as their instruments, form and substance set them apart from other types of partnership. Although the objectives sometimes dovetail, duplication, overlap and potential conflict must be avoided, instead emphasising synergies and complementarity with other initiatives. Under no circumstance are the Member States released from their responsibilities in the areas concerned by these partnership initiatives.

3.3

The Committee highlights the importance of the EU securing financial certainty in the area of R&I and a stable, simplified regulatory framework, and of ensuring, on the part of business, initiatives to reduce the high-risk aspects that set them apart. It also considers that the distribution of financial support ought to be better balanced between initiatives, with more emphasis on technologies for ambient assisted living and the programme for high-tech SMEs.

3.4

As to the instruments themselves, these are important means of securing greater funding for investment in research and innovation, provided they are flexible, simple, non-bureaucratic, open and transparent, and provided ways are found to resolve problems relating to the balance and/or possible conflict between upholding competition rules while promoting innovation, protecting intellectual property and disseminating and promoting open access to results. The ultimate aim is that the service offered to citizen-taxpayers and consumers should improve.

3.5

In particular, the EESC recalls that ‘researcher authorship and intellectual property must continue to be safeguarded...’ and that ‘open access to an appropriate selection of data underlying figures in openly accessible publications could be useful — especially if there is global symmetry between Europe and countries outside Europe...’ (7).

3.6

The EESC believes that the objectives must be measurable and closely linked not only to the sectoral industrial strategy but also to addressing society's problems and sustainable economic and social development issues, especially in terms of employment. They must also be anchored in a shared medium-to-long-term vision, within the context of a balanced, transparent system of governance with clear, explicit scientific, technical and socio-economic performance indicators.

3.7

Whilst the EESC takes a positive view of the experience of PPPs as a means of combining different sources of finance, it favours radically simplified cost-funding models to improve the reliability of the model, reduce the risk of irregularities in beneficiaries' declarations of expenditure, make project accounting less complex, eliminate verification steps that are not strictly necessary, and thus facilitate and speed up the application process.

3.8

The EESC therefore considers it necessary, in order to guarantee fair conditions to all businesses operating in the single market, that H2020 funding for PPP and P2P be designed, on the one hand, so as to comply with the rules on state aid in order to ensure that public money is spent effectively and avoid market distortions and, on the other, complies with all ethical requirements.

3.9

In particular, the EESC considers that the creation of public-private partnerships should be subject to conditions aimed at ensuring an effective competitive environment is maintained and allowing new entrants to come in at any time, and indeed the systematic involvement of groups of end users in the programmes and projects.

3.10

The EESC considers that the importance of intellectual property rights must be recognised. In particular, patent-sharing agreements should be encouraged to enable the sharing of scientific data and enhance cooperation and research efforts in specific areas of technology, thus avoiding ‘patent thickets’ (8).

3.11

The EESC recommends that an ‘instruction manual’ be drawn up for end users of the various EU instruments for innovation, and the various forms of partnership, joint initiatives, flagship initiatives, knowledge communities, platforms and other similar Community actions in the area of R&I. The introduction of a cross-cutting approach would also boost investment (e.g. in nanotechnologies and assisted ageing) and would make greater involvement of all the different types of business possible.

3.12

The EESC considers it essential to make the complex system of EU measures, synergies and policies involved, which range from R&I policy to regional and cohesion policy to industrial policy, more user-friendly and transparent, especially for SMEs and small social economy organisations.

3.13

Similarly, the EESC considers it important to ensure that the whole package and related initiatives and instruments have a high profile and are transparent and well-publicised (in multilingual form) by means of a proactive communication policy and annual conferences involving all interested parties from organised civil society, during which periodic reports on results achieved and future strategies could be presented.

3.14

Given the scale of resources involved and the diversity of the situations and real needs in the Member States, the EESC recommends that a communication policy be developed, targeted at four types of audience:

3.15

The EESC considers that an EESC Prize for economic and social innovation could be launched so as to recognise the results achieved by the ten proposed partnerships in the various disciplines in the 28 Member States, with the involvement of Stakeholder Forums provided for in the joint undertakings statute. The EESC calls on the Commission, meanwhile, to work on a wide-reaching campaign to raise awareness and develop training in the area of PPPs.

4.1

The EESC is pleased that there is a clear trend towards increasing the use of PPP in the areas of public health and clean skies, aerospace management, electronics and computing, and fuel cells and hydrogen. However, it warns of the need for synergies with various other existing partnerships and initiatives under other EU policies.

4.2

With regard to the Innovative Medicines Initiative, the Committee recommends that more room be given to the development of affordable medicines for the poorest sections of society for long-term use and for rare diseases. The EESC also recommends that priorities include the marketing in the EU of the products of European research and the establishment of rules on the price per gram of active ingredient that take account of the difficulties of Member States' budgets and social systems.

4.3

With regard to the FCH 2 initiative (Fuel Cells and Hydrogen), the EESC considers it especially important that the development of CO 2 -free technologies for hydrogen generation be included among the objectives.

4.4

With regard to the Clean Sky initiative, more emphasis should be placed on the impact of the results, even in itinere, of the demonstration projects, and of the management of safety and environmental risks in the Single Sky PPP.

4.5

With regard to the bio-based industries initiative, it is important to ensure that those technologies (dealing with biological and bio-agricultural materials and biomaterials) fully respect the biosphere, the environment and the sustainability of the agri-food sector in accordance with the precautionary principle. The EESC hopes that this initiative will achieve positive, tangible and visible results.

4.6

The significant commitment, not least financial, to the ECSEL initiative for digital technologies and nanotechnologies, which is already mentioned in the thematic parts of H2020, should be matched by tangible benefits for citizens and taxpayers in terms of more user-friendly and cost-free access to such technologies (9).

4.7

The EESC also wholeheartedly supports the four P2P initiatives, but stresses the importance of two of them, which should be strengthened, not least in terms of the resources allocated to them:

4.8

More specifically, with respect to AAL, the EESC recommends that account be taken of the different situations in Member States, not least with regard to the likelihood of these issues becoming more acute given demographic trends to 2024 and beyond. The level of funding offered by the EU needs to be increased considerably compared with that under FP7 and take account of the future opinions of the various representative categories of civil society by creating an ad hoc committee.

4.9

The EESC recommends, for the sake of faster development and enhancing the opportunities for job creation and for more skilled professional profiles, that these institutional partnerships be developed in close synergy and coordination with other comparable ones that exist within the context of the industrial policy and smart specialisation flagship initiatives, cohesion policy and the regional innovation strategies.

4.10

With regard to participation in the metrology programme, the EESC refers to its opinion on the matter (10) and recommends that the support, including funding, for participation by small businesses and user groups be increased. As regards the Europe — Developing Countries Partnership, it refers to the EU-Africa opinion (11) with a specific recommendation not to ignore the issue of the return to Europe of illnesses that are covered by the research and to monitor full compliance with ethical principles in the protocols.

5.6.2014   

EN

Official Journal of the European Union

C 170/68

1.1

The European Economic and Social Committee has been calling for more than twenty years now for collective legal protection instruments at EU level that would provide effective legal protection in the event of violations of collective rights. Collective redress measures should cover all areas in which EU law protects citizens' rights, while at the same time duly respecting the Member States' different legal traditions.

1.2

The EESC welcomes the fact that the European Commission has finally seized the initiative and called upon the Member States to introduce national collective redress systems underpinned by shared European principles. This initiative was long overdue. Collective legal protection instruments are in the interest of both the Union's citizens and of companies that operate fairly and within the law. They protect industry from unfair competition and strengthen the public's trust in it.

1.3

The Committee regrets that the Commission has not issued a proposal for a directive. A mere communication and recommendation are not enough to ensure the necessary uniform implementation in the Member States. The EESC therefore calls on the Commission to present a proposal for a directive. Collective redress is the only procedure that can ensure a comprehensively effective remedy in the European Union.

1.4

The EESC recognises the efforts the Commission has made to take a balanced approach intended to guarantee the fundamental procedural rights of the parties and prevent abuse. It also endorses the Commission's desire to provide for both injunctive and compensatory collective actions. The possibility of extending the types of action should be examined.

1.5

The EESC welcomes the Commission's rejection of a US-style class action. This is precisely the form that collective redress within European law must not take. The Commission's safeguards to this end are sufficient and appropriate. Contingency fees for lawyers that create an incentive for litigation, as well as punitive damages, are quite rightly rejected. The rules on the certification of claimants and payment of costs must be re-written to accommodate access-to-justice considerations.

1.6

The EESC endorses the Commission's view that individuals should have the right to opt in to a group action. However, the Committee can also envisage circumstances in which an opt-out procedure would have its advantages. Particularly where a large number of injured parties have suffered very minor harm, it might make sense to extend the action to all potential injured parties. It is not clear whether the Commission considers an opt-out procedure in such cases as legally safe. The EESC therefore calls on the Commission to clarify its proposal. The Committee also recommends a central European register of actions to provide information for potential claimants.

1.7

The EESC has always highlighted the potential of out-of-court dispute resolution. For this reason, it welcomes the approach chosen by the Commission of providing for this procedure as a complementary instrument that parties can opt for and of giving the judge a remit to encourage out-of-court settlement.

1.8

The EESC recommends that specific conflict rules be instituted for collective redress actions. The provisions regarding the funding of collective legal protection should be expanded. The financial risk for non-profit organisations must be made clear. There are rules on this in the Member States.

2.1

The Commission summarises in its communication the conclusions of the consultation exercise carried out in 2011 entitled ‘Towards a coherent European approach to collective redress’ (1). It also states its case on the central issues in such redress. In the recommendation (2) published in tandem, the Commission proposes to the Member States the introduction of national systems for collective redress based on common European principles. Member States are expected to incorporate these principles into their domestic systems within two years. After four years the Commission will weigh up whether further legislation should be proposed.