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The Maastricht treaty calls for a report every 3 years analysing disparities in the EU. This 2nd report goes further than before in being a first analysis of the situation in a Union of 27.

Three parts :­­Situation­and­trends­­Contribution­of­community­policies­to­economic­and­social­cohesion­­Economic­and­social­cohesion­policy­-­the­results

Plus :­­Conclusions­and­Recommendations­

Introduction Introduction

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An EU of 27: a bigger challengeThe disparities will increase...

1. 1. Situation and trends

• surface­area­­34%

•­population­­28%

•­GDP­­5%

•­average­GDP/head­­18%

• of­the­105­million­inhabitants­of­candidate­countries,­more­than­98­million­will­live­in­regions­with­a­GDP­per­head­less­than­75%­of­the­average­

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•­In­EU27,­more­than­1/3­of­the­population­will­live­in­countries­below­90%­of­the­EU­average­per­capita­GDP,­as­against­1/6­in­EU15

•­10%­of­the­EU15­population,­living­in­the­richest­regions,­have­an­income­161%­of­the­average­(UE15);­the­10%­in­the­least­prosperous­regions­are­at­61%

•­In­an­enlarged­EU,­the­10%­living­in­the­richest­regions­will­have­177%­of­the­average:­the­10%­in­the­poorest­regions­just­31%

An EU of 27: a bigger challengeDisparities will increase...

1. 1. Situation and trends

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The richest and The richest and least prosperous least prosperous

regions in the regions in the EUEU

Source: Eurostat, DGREGIO calculations* 10% + et 25% + : the regions with the highest GDP/head (PPS), representing 10%, resp. 25% of the total EU population * 10% - and 25% - : the regions with the lowest GDP/head (PPS), representing 10%, resp. 25% of the total EU population

199819981988

3.42.02.0Ratio

44.368.366.625­%­-

152.0137.1134.125­%­+

5.72.62.8Ratio

31.161.055.110­%­-

176.9160.9155.310­%­+

UE27 UE15Regions

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<­30

30-50

50-75

75-100

GDP per head GDP per head by region by region

(PPS) 1998(PPS) 1998

Guyane (F)

Guadeloupe

(F)

Martinique

(F)

RÈunion

(F)

Canarias (E)

AÁores (P)

Madeira

(P)

Kypros

Index, EUR-26 = 100

< 30

30 - 50

50 - 75

75 - 100

100 - 125

>= 125

no data

Source: Eurostat

0 km100 500

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GDP per head by region (PPS), 1998

100-125

>=125

No­data

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An EU of 27: a bigger challengeThree groups of Member States...

GDP per head (compared with the enlarged EU average):­

•­­­­first­group:­(16%­of­the­EU­population)­:­40%­of­average­(3­Baltic­States,­Poland,­Hungary,­Roumania,­Bulgaria,­Slovakia)

•­­­­second­group:­(13%­of­the­EU­pop.)­:­80%­of­average­(ES,­GR,­PT­plus­Cyprus,­Malta,­Slovenia,­Czech­Republic)­

•­­­­third­group:­(71%­of­EU­pop.)­120%­of­average­(remaining­Member­States)

The average GDP/head will drop by 18.5%­

1. 1. Situation and trends

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GDP per GDP per head (PPS) head (PPS)

19991999

0

50

100

150

200

0

50

100

150

200

Index,­EUR-26­=­100

average EUR-26

average group 1

average group 2

average group 3

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EU15: disparities in development have been reduced

•­in­GR,­ES,­PT:­GDP­per­head­has­increased­from­68%­of­the­EU15­average­(1988)­to­79%­(1999)­=­a­convergence­of­one-third

•­…between­regions­somewhat­less:­nearly­one-sixth

•­infrastructure­in­Obj1­regions­closer­to­the­average

•­on­the­other­hand…...­other­factors­of­competitiveness­remain­weak

1. 1. Situation and trends

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Employment :

•­employment­rate:­in­4­Member­States­is­­more­than­70%;­EU15­average­is­62%

•­10%­of­EU­pop.­in­regions­having­44%

•­one­woman­in­three­in­EU­works­part-time

•­women’s­employment­rate­19­percentage­points­below­men’s

EU15: ……a long way to go

­

1. 1. Situation and trends

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Social cohesion:

•­unemployment:­small­reduction­in­regional­disparities­(though­rate­is­more­than­20%­in­some­southern­regions);­long­term­unemployment­at­46%­in­EU15

•­youth/women­-­umemployment­­but­increase­in­precarious­forms­of­work

•­poverty:­18%­below­the­income­threshold­(which­is­60%­of­the­median­income­in­each­Member­State)

EU15: ……a long way to go1. 1. Situation and trends

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• zone­Yorkshire/Franche­Comté/­Hamburg:­14%­of­EU­territory,­33%­of­population,­47%­of­EU15­GDP…..

•­in­the­US:­4­distinct­poles­of­international­significance

•­productivity­2-4­times­greater­than­in­peripheral­areas

•­a­new,­eastern­periphery

•­greater­environmental­pressures­

Economic activity in the Union is heavily concentrated...

1. 1. Situation and trends

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Core and Peripheral Regions

Core­Regions

Peripheral­Regions

Other­Regions

Source : IRPUD - DG REGIO

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Spatial divides:•­urban­areas

–regional­development­poles–more­evident­social­divide

•­rural­areas–more­influenced­by­cities­–the­population­is­abandoning­cities­and­employment­is­diversifying

•­the­border­regions­of­the­EU15­(25%­of­population)­have­improved­their­average;­60%­of­pop.­in­candidate­countries­live­in­border­regions•cohesion­for­ultraperipheral­regions,­islands,­and­mountainous­zones­

Greater territorial imbalance... 1. 1. Situation and trends

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The labour market in the candidate countries

•­unemployment­is­10.2%­(9.3%­in­EU15)

•­employment­rates­close;­higher­for­women­even­if­more­are­leaving­the­job­market­

•­rate­of­employment­high­in­traditional­industries­even­after­losing­20-50%­of­jobs­

•­22%­of­employment­in­agriculture­(4.5%­in­EU15)

•­productivity­remains­low­

•­employment­in­service­industries­-­high­in­the­capital­cities

1. 1. Situationand trends

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Guyane (F)

Guadeloupe

(F)

Martinique

(F)

RÈunion

(F)

Canarias (E)

AÁores (P)

Madeira

(P)

Kypros

% of labour force

< 5.55

5.55 - 8.25

8.25 - 10.95

10.95 - 13.65

>= 13.65

EUR- 27 = 9.6Standard deviation = 5.4D (Sachsen) and F(DOM): NUTS1

Sources: Eurostat and NSI

0 km100 500

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Unemployment rate by region, 1999

<­5.55

5.55­–­8.25

8.25­–­10.95

10.95­–­13.65

>=13.65

Unemployment Unemployment rate by region,rate by region,

19991999

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Index, EU15 = 100

< 9

9 - 39

39 - 69

69 - 99

>= 99

no data

<9

9-39

GDP per person GDP per person (EUR) employed (EUR) employed in Agriculture, in Agriculture,

19981998

69-99

>=99

No­data

39-69

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Demographic changes and the labour market

• Declining­population­growth­rates­in­EU15­and­absolute­natural­decline­from­2008;­population­is­already­declining­in­many­candidate­countries

• population­ageing;­and­decline­in­working­age­population­(by­19­million­between­2010­and­2025)

• questions­of­migration­to­EU15­and­changes­in­labour­force­participation­rates­in­EU­­

1. 1. Situationand trends

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Not­before­2025

Between­2015­and­2025

Between­2005­and­2015

Between­1995­and­2005

Forecast Forecast decline of the decline of the labour forcelabour force

Guyane (F)

Guadeloupe

(F)

Martinique

(F)

RÈunion

(F)

Canarias (E)

AÁores (P)

Madeira

(P)

Periods

Not before 2025

Between 2015 and 2025

Between 2005 and 2015

Between 1995 and 2005

0 km100 500

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Forecast decline of the labour force

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2. Contribution 2. Contribution of community of community

policiespolicies

How they contribute to cohesion...

•­Providing­the­best­framework­for­cohesion-economic­and­monetary­union­means­macro-economic­stability-achieving­the­internal­market

•­fairer­competition•­CAP:­rural­development­funding•­RTD­policy:­still­too­concentrated­in­the­core­and­more­competitive­regions•­TENs:­a­tool­for­balanced­spatial­development•­Environment­:­sustainable­development­

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• The­EU ’s­financial­effort:­0.27%­of­GDP­in­1989­up­to­0.46%­in­1999

•­1.5%­of­GDP­in­Spain•­2.4%­of­GDP­in­Portugal­(10%­of­investment)•­3.5%­of­GDP­in­Greece­(10%­of­investment)

• concentration:­41%­of­the­population­eligible­for­Obj.­1&2­(was­50%)

3. 3. Cohesion Cohesion Policy: thePolicy: the

ResultsResults

The contribution of structural policy

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•­6th PR:­«1/3 of the convergence would not have taken place without the Structural Funds»­

•­in­Obj.­1, GDP­per­head­­from­63%­to­70%­of­EU­average­(1988-1998):­Increase­in­GDP­due­to­structural­interventions–­­9.9%­in­Greece–­­8.5%­in­Portugal–­­3.7%­in­Ireland–­­3.1%­in­Spain

• in­Obj.­2­regions:­a­reduction­in­the­unemployment­gap­vis­à­vis­the­rest­of­EU

•­infrastructure:­support­for­SME ’s­(300,000­jobs­created­net);RDT;­training;­education­

3.3. Cohesion Cohesion Policy: the Policy: the

ResultsResults

The impact of structural policy

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• Cross-border­and­transnational­cooperation­

•­Partnership­

•­Multiannual­programming­­more­effective­management­of­regional­development­policies­in­Member­States­­

•­Evaluation,­a­stronger­link­between­grants­and­results­

•­Effective­way­to­mobilise­private­capital

•­Dissemination­of­best­practice­into­programmes­(mainstreaming)­

­­­­­­­­

3. 3. Cohesion Cohesion Policy: the Policy: the

ResultsResults

Added value of the Structural Funds

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The Challenge of a wider EU

• The­disparities­will­double

• Greater­development­gap­between­the­regions

• A­more­unbalanced­territory

• Globalisation

• Knowledge-based­economy

• Demographic­structure

4. Conclusions and 4. Conclusions and recommendationsrecommendations

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4. Conclusions and 4. Conclusions and recommendationsrecommendations

Cohesion Policy:Who is it for?

• Top­priority:­regions­lagging­behind­in­development

• The­GDP­per­head­criterion?

• At­75%,­the­pop.­in­MS­covered­by­Objective­1­will­drop­by­one­half

• Other­regions­in­difficulty

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Territorial Priorities

• The­less-developed­regions

• The­urban­question

• Diversification­in­rural­areas

• Cross-border,­transnational,­and­interregional­cooperation

• Areas­undergoing­industrial­restructuring

• Areas­suffering­severe­geographical­or­natural­handicaps

4. Conclusions and 4. Conclusions and recommendationsrecommendations

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Economic and Social Priorities

• More,­better­quality­jobs

• Support­for­the­new­economy­and­the­knowledge-based­society

• Promote­social­inclusion

• Equal­opportunities

4. Conclusions and4. Conclusions and recommendationsrecommendations

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How do we implement Cohesion Policy ?

• Targetting

• Zoning

• The­amounts– 4%­GDP­limit

• Special­cases

• Type­of­support­-­financial­engineering

4. Conclusions and4. Conclusions andrecommendationsrecommendations

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• Productivity–­towards­high­value-added­sectors–­qualifications

•­Infrastructure

•­Sustainable­development–­management­of­water­resources–­limit­damage­to­the­environment

•­Technological­Research/Development­and­­Innovation

4. Conclusions and 4. Conclusions and recommendationsrecommendations

Factors determining real convergence at theregional and national level

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The challenge of preparing for enlargement

• Administrative­capacity

• Programming

• Additionality

• Evaluation

• ISPA/PHARE/SAPARD

• Other­policies

4. Conclusions and4. Conclusions andrecommendationsrecommendations

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• 17-19­billion­Euros­a­year­for­the­next­10­years­in­environment­and­transport

•­Balance­between­Cohesion­and­Structural­Funds?­Cohesion­Fund­currently­18%­of­structural­policy­expenditure

•­Convergence:­a­long­term­process(it­could­take­at­least­two­generations­for­the­poorest­regions­to­catch-up)

4. Conclusions and 4. Conclusions and

recommendationsrecommendations

The needs of the Candidate countries

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10 questions for the debate4. Conclusions and 4. Conclusions and recommendationsrecommendations

1.­­What­will­be­the­role­of­cohesion­policy­in­an­enlarged­Union­of­30­Member­States?­How­is­it­possible­to­further­economic­convergence­and­preserve­the­European­model­of­society?

­

2.­How­should­Community­policies­be­made­more­coherent?­How­should­the­contribution­of­other­Community­policies­to­the­pursuit­of­cohesion­be­improved?

3.­How­should­cohesion­policy­be­modified­in­preparation­for­an­unprecedented­expansion­of­the­Union?­Should­cohesion­policy­also­address­territorial­cohesion­in­order­to­take­better­account­of­the­major­spatial­imbalances­in­the­Union?

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10 questions for the debate

4.­How­can­cohesion­policy­be­focused­on­measures­which­have­a­high­Community­added­value?

5.­What­should­be­the­priorities­to­bring­about­balanced­and­sustainable­territorial­development­in­the­Union?

­

6.­How­should­the­economic­convergence­of­lagging­regions­of­the­Union­be­encouraged?

7.­What­kind­of­Community­intervention­is­required­for­other­regions?

4. Conclusions and4. Conclusions and recommendationsrecommendations

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10 questions for the debate

8.­What­methods­should­be­used­to­determine­the­division­of­funds­between­Member­States­and­between­regions?

9.­What­principles­should­govern­the­implementation­of­Community­intervention?

10.What­should­be­the­response­to­increased­needs­with­regard­to­the­economic,­social­and­territorial­dimensions­of­cohesion?

4. Conclusionsand 4. Conclusionsand recommendationsrecommendations