6cr_en.pdf

8/10/2019 6cr_en.pdf

1/337

8/10/2019 6cr_en.pdf

2/337

8/10/2019 6cr_en.pdf

3/337

European Commission

Promoting development and goodgovernance in EU regions and cities

Sixth report on economic, social and territorial cohesion

Investment for jobsand growth

Brussels, 2014

8/10/2019 6cr_en.pdf

4/337

8/10/2019 6cr_en.pdf

5/337iv

Foreword

The crisis has had a major impact on regions and cities across the EU. Regionaleconomic disparities which were narrowing have stopped doing so, while unem-ployment has risen rapidly in almost all parts o the EU. Poverty and exclusion havealso increased, including in many cities in the more developed Member States.

This 6th Cohesion report departs rom previous reports. It highlights the links oCohesion Policy with the Europe 2020 strategy by including chapters on smart,inclusive and sustainable growth and shows how the Policy has evolved tostrengthen its impact on EU objectives o growth and jobs and how good gover-nance is essential or its effectiveness.

Cohesion Policy has already improved regional competitiveness and peoples livesacross the EU. It has supported business start-ups and helped people to obtainqualifications and new jobs. It has widened access to broadband and invested inrail and in better road links in the less developed parts o the EU. And it has in-creased markedly the number o homes connected to clean drinking water supplyand wastewater treatment acilities.

The EU Structural and Investment Funds (ESIF) are an increasingly importantmeans o achieving the Europe 2020 goals, especially the employment and pov-erty reduction targets. In several Member States, they have become the mainsource o finance or public investment which Member States have cut back toreduce budget deficits.

The ESIF will invest more up to 2020 in a low carbon economy, innovation andSMEs, quality employment, labour mobility and social inclusion, as well as in thecore TEN-T and digital networks, education, training, lielong learning and reormo public administration.

The European Semester and the country specific recommendations which comeout o it, play a critical role in underpinning Cohesion Policy. The legal rameworkor the ESIF in 2014 has introduced new rules to ensure the right regulatory andmacroeconomic setting is in place or the Policy to have the most impact. In ad-dition, ESIF will invest more in strengthening administrative capacity because oa growing understanding that without good governance, high growth rates andregional economic convergence cannot be achieved.

These changes, together with a stronger ocus on results, will ensure that Cohe-sion Policy will better tackle regional disparities in economic perormance andliving standards while also helping to achieve the Europe 2020 goals.

Johannes Hahn

European Commissioneror Regional Policy

Lszl Andor

European Commissioneror Employment, Social Affairsand Inclusion

8/10/2019 6cr_en.pdf

6/337

v

8/10/2019 6cr_en.pdf

7/337vi

Table o contents

Foreword .............................................................................................................................................................................................iv

Lexicon ................................................................................................................................................................................................xii

Investment or jobs and growth.............................................................................................................................................xvi

1. Introduction .............................................................................................................................................................................................xvi

2. An evolving policy: Investing in regions competitiveness to improve peoples lives.....................................xix

3. Achieving results is at the core o the new Cohesion Policy .......................................................................................xxi

3.1 Cohesion Policy programmes need to operate in a avourable environment ........................................xxi

3.2 Cohesion Policy programmes need to concentrate resources on a small number o prioritiesand maximise their added value ............................................................................................................................................xxii

3.3 Cohesion Policy programmes need to define clear objectives and results ............................................xxii3.4 Cohesion Policy programmes need to give a stronger voice to cities .....................................................xxiii

3.5 Cohesion Policy programmes need to better include partners at all levels......................................... xxiii

4. From theory to practice: emerging evidence rom negotiations ............................................................................xxiv

5. Conclusion ............................................................................................................................................................................................xxvii

Executive Summary ....................................................................................................................................................................xxx

Chapter 1: Smart growth ..............................................................................................................................................................1

1. Introduction ................................................................................................................................................................................................1

2. The crisis suspended the reduction in regional disparities ..............................................................................................1

3. Central and eastern Member States maintain a strong industrial sector, but their agricultureneeds to continue to modernise .......................................................................................................................................................11

4. Construction and industry most hit by the crisis ..............................................................................................................11

5. The crisis led to employment losses, but also some productivity gains .............................................................14

6. Growth in metropolitan regions more prone to booms and busts than in rural regions ...........................17

6.1 Capital metropolitan regions perormed well until the crisis led to above averageemployment losses..........................................................................................................................................................................17

6.2 GDP growth in rural regions was lower prior to the crisis, but proved more resilient duringthe crisis years ...................................................................................................................................................................................18

7. Start-ups rates and Entrepreneurship rely on individual initiative and the right institutionalenvironment .................................................................................................................................................................................................21

8. Innovation remains spatially concentrated ...........................................................................................................................28

8.1 R&D and the 2020 target ...................................................................................................................................................29

8.2 Patenting in the EU and the USA .....................................................................................................................................34

9. Tertiary educational attainment is increasing, but large disparities persist ......................................................34

10. Gaps in the digital and transport networks are being filled, but more remains to be done...................40

10.1 Digital networks are spreading, but unevenly.......................................................................................................40

10.2 Road network in central and eastern member states still considerably less developed..............41

8/10/2019 6cr_en.pdf

8/337

Table o contents

vii

10.3 Low speeds and low requencies o trains in central and eastern member states limittheir appeal compared to the car. ...........................................................................................................................................43

11. Trade and oreign direct investment stimulate growth in the EU-12 .................................................................49

12. Regional competitiveness produces limited regional spill-overs in EU-13 ......................................................49

13. Conclusion .............................................................................................................................................................................................54

Chapter 2: Inclusive growth ............... ................ ............... ................ ............... ............... ................ ............... ................ .......... 57

1. Introduction .............................................................................................................................................................................................57

2. Crisis wipes out most employment gains since 2000 ....................................................................................................57

2.1 Employment rates declined rapidly in the regions most affected the crisis ...........................................57

2.2 Unemployment highest in the EU in over a decade..............................................................................................58

2.3 Women have ar higher unemployment rates in southern EU regions .....................................................63

2.4 Reduction in early-school leavers is on track ...........................................................................................................63

2.5 Lielong learning is stagnating .........................................................................................................................................66

2.6 Adult proficiency in literacy and numeracy needs to be increased in several EU MemberStates according to OECD PIAAC .............................................................................................................................................70

3. Poverty and exclusion increase due to the crisis ...............................................................................................................71

3.1 Severe material deprivation is highest in the towns, suburbs and rural areas o lessdeveloped Member States...........................................................................................................................................................71

3.2 Very low work intensity in more developed Member States is concentrated in cities ......................72

3.3 Higher urban risk o poverty in more developed Member States and a higher risk in towns,suburbs and rural areas in less developed Member States .....................................................................................73

3.4 Cities in less developed Member States are close to the 2020 targets, while cities in moredeveloped Member States lag behind ..................................................................................................................................74

3.5 Quality o lie in European cities varies .......................................................................................................................783.6 Crime rates are higher in urban regions, border regions and tourism destinations...........................79

4. Movement o people within and between Member States is spurred by disparities in employment,wages and health ......................................................................................................................................................................................79

4.1 The EU is highly urbanised and is still urbanising but only slowly ...............................................................79

4.2 Net migration is the main source o population growth in the 2000s ......................................................86

4.3 More oreign-born workers have joined the labour market with varying success ..............................90

4.4 Lie expectancy is high, but regional disparities persist ....................................................................................91

4.5 Human development is improving in Central and Eastern Member States, but the crisis

reduced it in Spain, Greece and Ireland ...............................................................................................................................965. Conclusion ................................................................................................................................................................................................96

Chapter 3: Sustainable growth .............. ................ ............... ................ ............... ................ ............... ................ ............... ..... 99

1. Introduction .............................................................................................................................................................................................99

2. The EU needs to mitigate and adapt to climate change ............................................................................................100

2.1 The EU needs to reduce its greenhouse gas emissions to reach the 2020 targets........................100

2.2 The EU needs to increase the use o renewable energy to reach the 2020 targets ......................103

2.3 EU needs to adapt to more requent and disastrous natural hazards ...................................................105

3. Shifing to more sustainable transport can increase energy efficiency and improve air quality .........108

3.1 Improving accessibility and energy efficiency .....................................................................................................108

8/10/2019 6cr_en.pdf

9/337

Sixth Report on economic , soc ia l and ter r i tor ia l cohes ion

viii

3.2 Large cities provide better access to public transport .....................................................................................110

3.3 Congestion is high in several o the large EU cities ..........................................................................................113

3.4 Air quality can still be improved in many places in the EU ...........................................................................115

4. Making cities more attractive can boost EU Resource Efficiency ...........................................................................115

4.1 Cities use land more efficiently .....................................................................................................................................117

4.2 National and local policies can shape the location and land use intensity o newdevelopments by promoting more compact cities......................................................................................................124

5. Improving Eco-systems and reducing environmental impacts can make the EU more efficientand a better place to live ...................................................................................................................................................................124

5.1 Preserving water quality and protecting species and habitats ...................................................................124

5.2 The treatment o urban wastewater is necessary or ensuring high quality o water ..................125

5.3 Solid waste management improving but there is still a long way to go in many EU regions ...128

5.4 Sound ecosystems offer many vital services ........................................................................................................128

6. Conclusion .............................................................................................................................................................................................133

Chapter 4: Public investment, growth and the crisis .................................................................................................137

1. Introduction ..........................................................................................................................................................................................137

2. The share o growth enhancing spending in public expenditure has decreased ..........................................137

2.1 The crisis pushed up government deficits ...............................................................................................................137

2.2 Public investment supports economic growth ......................................................................................................140

2.3 Public expenditure increased, but has now come down ..................................................................................140

2.4 Public investment increased and then dropped ...................................................................................................142

3. Regional and local authorities play a key role in public expenditure and investment ...............................142

3.1 Regional and local authorities are responsible or a large share o public expenditure ..............142

3.2 Regional and local authorities manage the majority o public investments .......................................144

3.3 The crisis ended a period o sustained growth o public expenditure by regional and localauthorities..........................................................................................................................................................................................147

3.4 Investing during times o crisis: direct financing and regional and local investment ....................149

3.5 Revenue at sub-national level relies primarily on transers .........................................................................150

3.6 Public deficit and public debt o sub-national governments ........................................................................152

4. Contribution o Cohesion Policy to public investment in the Member States .................................................154

5. Investment, state Aids, and EIB Loans .................................................................................................................................155

5.1 Competition policy ................................................................................................................................................................155

5.2 European Investment Bank .............................................................................................................................................157

6. Conclusion .............................................................................................................................................................................................160

Chapter 5: The importance o good governance or economic and social development .......................... 161

1. Why should the EU ocus on good governance?..............................................................................................................161

2. Doing business is easier in the North o the EU ..............................................................................................................162

3. Most Europeans think corruption is wide spread and a major problem ............................................................165

4. Governance indicators vary between and within EU Member States..................................................................167

4.1 Some regions have a ar higher (or lower) quality o government ..........................................................168

4.2 The authority o EU regions is growing ....................................................................................................................169

8/10/2019 6cr_en.pdf

10/337

Table o contents

ix

5. Poor governance limits the impact o Cohesion Policy ...............................................................................................172

5.1 Poor governance can slow down investment, leading to unding losses ..............................................175

5.2 Poor governance can reduce the leverage effect o Cohesion Policy ......................................................176

6. Conclusion .............................................................................................................................................................................................177

Chapter 6: The evolution o Cohesion Policy ................................................................................................................. 179

1. Introduction ..........................................................................................................................................................................................179

2. As the unding grew, the geography became simpler ................................................................................................180

2.1 Cohesion Policy expenditure increased as a share o GNI ...........................................................................180

2.2 The geography o the policy became simpler between 1989 and 2013 ..............................................182

2.3 Funding remains concentrated on the less developed regions ...................................................................186

2.4 The European Structural and Investment Funds and Cohesion Policy ....................................................188

2.5 Aid intensities in less developed regions rose up to 20002006 and have since declined .......191

3. How have the goals changed over time? .............................................................................................................................193

3.1 The initial ocus was on training and mobility ......................................................................................................1943.2 The 1970s and 1980s saw structural unemployment and rapid changes in agriculture andmanuacturing .................................................................................................................................................................................194

3.3 The countries joining the EU in the 1980s and 2000s lacked key inrastructure ...........................194

3.4 Improving transport and environmental inrastructure ...................................................................................196

3.5 The Lisbon and Gothenburg Agenda ..........................................................................................................................196

3.6 Europe 2020, poverty reduction, climate change mitigation and beyond GDP .................................197

3.7 Beyond GDP: poverty, human development and well-being .........................................................................198

3.8 What are the goals o Cohesion Policy? ...................................................................................................................200

4. The economic rationale underlying the policy has become more integrated .................................................2014.1 Cohesion Policy has moved beyond first nature determinants o growth ............................................201

4.2 Cohesion Policy can boost growth through investment in second nature determinants ogrowth ................................................................................................................................................................................................203

4.3 Cohesion Policy supports market integration and can help less developed regions growaster ....................................................................................................................................................................................................205

5. The division o unding between policy areas has evolved as the goals o the policy havechanged .......................................................................................................................................................................................................206

6. The impact o the crisis on the 20072013 period .....................................................................................................207

6.1 ESF and the reaction to the crisis ................................................................................................................................210

7. Conclusion .............................................................................................................................................................................................211

Chapter 7: Impact o Cohesion Policy.............. ................ ............... ................ ............... ............... ................ ................ .... 213

1. Introduction ..........................................................................................................................................................................................213

2. The results o programmes in 20072013 .......................................................................................................................214

2.1 The European Regional Development Fund and Cohesion Fund ................................................................214

2.2 The European Social Fund ................................................................................................................................................219

3. Evaluation Evidence on the impact o Cohesion Policy ...............................................................................................221

3.1 The state o play and the challenges involved or ERDF and Cohesion Fund co-financedprogrammes .....................................................................................................................................................................................221

3.2 Evidence rom evaluations o ERDF and Cohesion Fund programmes ..................................................224

8/10/2019 6cr_en.pdf

11/337


x

3.3 Evidence rom evaluations o ESF programmes .................................................................................................228

4. The modelled impact o Cohesion Policy 20002006 and 20072013 ...........................................................230

5. Conclusion .............................................................................................................................................................................................234

Chapter 8: Cohesion Policy in 20142020 ..................................................................................................................... 235

1. Key elements o the reorm ......................................................................................................................................................235

1.1 New geography and unding ..........................................................................................................................................236

1.2 Thematic concentration in support o Europe 2020 .........................................................................................239

1.3 Strengthening the effectiveness o investment ...................................................................................................242

1.4 Achieving and demonstrating results ........................................................................................................................243

1.5 Aligning EU investment with the European semester ......................................................................................246

1.6 A strategic approach to Public Administration reorms ...................................................................................247

1.7 Sound economic governance ..........................................................................................................................................248

1.8 Preserving growth-enhancing investment ..............................................................................................................251

1.9 Linking additionality verification to the stability and convergence programmes .............................2531.10 Increasing the role o financial instruments .......................................................................................................253

1.11 Reinorcing cooperation across Europe..................................................................................................................254

2. Preliminary assessmento the programme negotiations 20142020 .........................................................................................................................258

2.1 Funding priorities in 20142020 ................................................................................................................................258

2.2 Aligning investment with Country Specific Recommendations ....................................................................262

2.3 Increasing the impact o investment and delivering results .....................................................................265

3. Estimated impact o Cohesion Policy 20142020 ........................................................................................................266

3.1 Estimated impact at the national level ....................................................................................................................2663.2 Estimated impact at the regional level ....................................................................................................................271

Reerences....... ................ ............... ................ ............... ................ ............... ................ ............... ................ ............... ................ ... 277

List o figures, maps, tables and boxes ........................................................................................................................... 287

8/10/2019 6cr_en.pdf

12/337

Table o contents

xi

8/10/2019 6cr_en.pdf

13/337xii

Lexicon

Cohesion Policy: Covers all the programmes supported by the ollowing Funds: the European Social Fund(ESF), the European Regional Development Fund (ERDF) and the Cohesion Fund (CF).1It isalso known as regional policy.

Structural Funds: The European Social Fund (ESF) and the European Regional Development Fund (ERDF)

Abbreviations

AMECO: Annual macro-economic database o the European Commissions Directorate-General orEconomic and Financial Affairs.

COH: Cohesion Countries including less developed plus moderately developed Member States (seebelow)

DG BUDG: European Commission, Directorate-General or Budget

DG COMP: European Commission, Directorate-General or CompetitionDG ECFIN: European Commission, Directorate-General or Economic and Financial AffairsDG EMPL: European Commission, Directorate-General or Employment, Social Affairs & InclusionDG MOVE: European Commission, Directorate-General or Mobility and TransportDG REGIO: European Commission, Directorate-General or Regional and Urban PolicyEAFRD: European Agricultural Fund or Rural Development, ormerly known as the European Agricultural

Guarantee and Guidance Fund (EAGGF)EEA: European Environment AgencyEFGS: European Forum or Geography and StatisticsEIB: European Investment BankEMFF: European Maritime and Fisheries Fund, ormerly known as European Fisheries Fund (EFF) and

beore as Financial Instrument or Fisheries Guidance (FIFG)

ERDF: European Regional Development FundESF: European Social FundESIF: European Structural and Investment Funds. Covers all programmes supported by ESF, ERDF, CF,

EAFRD and EFF.EU: European Union, ormerly known as European Coal and Steel Community (ECSC), European

Economic Community (EEC) and European Community (EC)ISCED: International Standard Classification o EducationJRC: European Commission Joint Research CentreNSI: National Statistical Institute

OECD: Organisation or Economic Cooperation and DevelopmentPPS: Purchasing Power Standards

Member States and their abbreviationBE BelgiumBG BulgariaCZ Czech RepublicDK DenmarkDE GermanyEE Estonia

1 EAFRD and the Fisheries Fund have been considered part o Structural Funds or Cohesion Policy during certain periods. But they will betreated separately in this report.

8/10/2019 6cr_en.pdf

14/337

Lex icon

xiii

IE IrelandEL GreeceES SpainFR FranceHR Croatia

IT ItalyCY CyprusLV LatviaLT LithuaniaLU LuxembourgHU HungaryMT MaltaNL NetherlandsAT AustriaPL PolandPT PortugalRO RomaniaSI SloveniaSK SlovakiaFI FinlandSE SwedenUK United Kingdom

Member State groupings

By enlargement

For ease o reading, this report reers to the European Economic Community (EEC) and the European

Community (EC) as the European Union (EU).

EU-6: The six initial member states: BE, DE, FR, IT, LU and NLEU-9: EU-6 plus DK, IE and UKEU-10: EU-9 plus ELEU-12: EU-10 plus ES and PT (when reerring to data or the period 1986-1995)EU-12: All Member States that joined in 2004 and 2007: BG, CZ, EE, CY, LV, LT, HU, MT, PL, RO, SI, SKEU-13: All Member States that joined in 2004, 2007 and 2013: BG, CZ, EE, HR, CY, LV, LT, HU, MT, PL, RO,

SI, SKEU-15: EU-12 plus, AT, BG, ROEU-25: EU-15 plus CZ, EE, CY, LV, LT, HU, MT, PL, SI, SK

EU-27: EU-25 plus RO and BGEU-28: EU-27 plus HR

By geography

Central and Eastern Member States: BG, CZ, EE, HR, LV, LT, HU, PL, SI, SK

Southern Member States: EL, ES, IT, CY, MT, PT

Western Member States: EU-15

Nordic Member States: DK, FI, SE

Baltic States: EE, LV, LT

Benelux: BE, LU, NL

8/10/2019 6cr_en.pdf

15/337


xiv

By level o development

Less developed Member States: BG, EE, HR, LV, LT, HU, PL, SK, RO (GDP per head below 75% o EU average in2012)Moderately developed Member States: CZ, EL, CY, MT, PT, SI2(GDP per head between 75% and 90%)Highly developed Member States: BE, DK, IE, ES, FR, DE, IT, LU, NL, AT, FI, SE, UK (GDP per head above EU aver-

age)By status

Candidate countries: Turkey, Montenegro, Serbia and the Former Yugoslav Republic o Macedonia (FYROM)Potential candidate countries: Albania, Bosnia and Herzegovina, Kosovo under UNSC Resolution 1244/99 andIceland

Regional typologies

Metropolitan regions

This classification was developed in cooperation with the OECD and consists o NUTS 3 approximation o allurban unctional areas o more than 250,000 as defined by the EU-OECD Functional Urban Areas methodol-

ogy.Predominantly urban, intermediate, predominantly rural regions

This is classification is based on the OECD classification, but revised by the Commission. A detailed methodol-ogy is included in the Eurostat Regional Yearbook 2010.

Border regions

Border regions are NUTS 3 regions which are eligible or cross-border cooperation programmes under theEuropean Regional Development Fund regulation.

Local typologies

Degree o urbanisation

Cities: Local administrative units with more than 50% o their population in an urban centre;Towns and suburbs: Local administrative units with more than 50% o their population in urban clusters butless than 50% live in an urban centre;Rural area: Local administrative units with more than 50% o their population in rural grid cellsFor more inormation see:http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Degree_o_urbanisation_classification_-_2011_re-

visionhttp://ec.europa.eu/regional_policy/sources/docgener/work/2014_01_new_urban.pd

Cities and commuting zones

Cities: Same definition as above

Commuting zones: Contiguous local administrative units with at least 15% o their working population com-muting to a city.For more inormation see:http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/European_cities_%E2%80%93_the_EU-OECD_

unctional_urban_area_definitionhttp://ec.europa.eu/regional_policy/sources/docgener/ocus/2012_01_city.pd

2 Cyprus was included because it is eligible or the Cohesion Fund. Its GDP per head in PPS was 92% o the EU average in 2012 and is projectedto be below 90% in 2013.
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Degree_of_urbanisation_classification_-_2011_revisionhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Degree_of_urbanisation_classification_-_2011_revisionhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Degree_of_urbanisation_classification_-_2011_revisionhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/European_cities_%E2%80%93_the_EU-OECD_functional_urban_area_definitionhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/European_cities_%E2%80%93_the_EU-OECD_functional_urban_area_definitionhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/European_cities_%E2%80%93_the_EU-OECD_functional_urban_area_definitionhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/European_cities_%E2%80%93_the_EU-OECD_functional_urban_area_definitionhttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Degree_of_urbanisation_classification_-_2011_revision

8/10/2019 6cr_en.pdf

16/337

Lex icon

xv

8/10/2019 6cr_en.pdf

17/337

8/10/2019 6cr_en.pdf

18/337

8/10/2019 6cr_en.pdf

19/337


xviii

losses in the same period, since the on-set o the financial crisis. It invested in200,000 small and medium-sized enterprise (SME) projects and 80,000 start-ups, financed 22,000 projects involving research and business sector cooperation,provided broadband coverage to 5 million people and connected 5.5 million peo-ple to waste water treatment. In addition, EU investments under Cohesion Policy

built 3,000 km o key European transport networks (15% o the overall TEN-Tnetwork) and also doubled the volume o government unding or R&D in the lessdeveloped Member States.

Between 2007 and 2012 the European Social Fund (ESF) supported 68 millionindividual project participations. Afer receiving ESF support 5.7 million unem-ployed or inactive people entered employment, and almost 8.6 million qualifica-tions were gained through support rom the ESF. There were more than 400,000reported cases o new start-ups and people becoming sel-employed. All o thishas helped to either limit the all in GDP in many countries or to prevent urtherincreases in unemployment.

The effects o these investments will increase over the next ew years as MemberStates have until the end o 2015 to use the unds rom the 20072013 pro-grammes and there is a time lag between the moment an investment is madeand the time when its impact can be measured.

With a total budget o over EUR 450 billion (including national co-financing) orthe 20142020 programming period, Cohesion Policy will be the main invest-ment arm o the EU. It will provide the largest contribution to supporting SMEs,R&D and innovation, education, the low carbon economy, the environment, the

fight against unemployment and social exclusion, to developing inrastructureconnecting EU citizens and to modernising public administrations. Its invest-ments, combined with structural reorms, will play a key role in supporting growthand job creation and in achieving the Europe 2020 strategys objectives o smart,sustainable and inclusive growth.

The challenge is to ensure that these resources are used in the most effective andefficient way, maximising their impact, consolidating recovery and helping the EUto emerge rom the crisis stronger and more competitive than beore.

The new Cohesion Policy is ully aligned with the Europe 2020 strategy and its

headline targets on employment, research and development, climate and en-ergy, education and the fight against poverty and social exclusion, and linkedto the European Semester and the EU economic governance process. Thereore,investments under Cohesion Policy will also be used to support policies pursuedby Member States under the Integrated Guidelines and the National ReormProgrammes, as well as to address the relevant country-specific recommenda-tions (CSRs) rom the Council. The Commission can also ask Member States toamend their Partnership Agreements and operational programmes to meet newchallenges identified in the CSRs.

8/10/2019 6cr_en.pdf

20/337

Investment or jobs and growth

xix

This Communication summarises the achievements o cohesion unding in theprevious programming period. It describes the main elements o the CohesionPolicy reorm introduced or the period 201420202, and the trends emergingrom the ongoing programme negotiations between the Commission and MemberStates. It is accompanied by a Staff Working Document3, analysing the socio-

economic and governance challenges that Member States and regions are acingand assessing the impact o Cohesion Policy and public investment on economicand social disparities.

2. An evolving policy: Investing in regions

competitiveness to improve peoples lives

The EU Treaty sets as objective or Cohesion Policy to reduce economic, socialand territorial disparities, providing particular support to less developed regions.

Over time, the policy has helped to improve the standard o living and economicopportunities in EU regions by improving skills and employability; increasing ac-cess to regions; supporting administrative capacity building; establishing linksbetween research institutions, universities and the business community; and pro-viding services to small and medium-sized businesses. By supporting the maindrivers o economic growth, Cohesion Policy helps EU regions grow more quickly.

While remaining true to its roots, Cohesion Policy has developed and progressed.In its early years, the policy had a purely national ocus, financing predeterminedprojects in Member States, with little European influence. Over time, key principles

were introduced such as multi-annual programming, more strategic investmentand greater involvement o regional and local partners.

The bulk o financial support under the policy has consistently ocused on lessdeveloped regions and Member States. There has, however, been a shif o in-vestment away rom inrastructure and towards SME support, innovation, moreinnovative employment and social policies. This shif has been made possible be-cause o inrastructure development in Member States (both those that accededafer 2004 as well as in the older Member States) supported under the CohesionPolicy in previous periods.

The proportion o investment in heavy inrastructure (transport in particular) washigh when the policy was launched and afer the 2004 enlargement, when coun-tries with a clear inrastructure gap joined the EU (Figure 3). With the creation othe Cohesion Fund (CF) in the 1990s, environmental investment became increas-ingly relevant, helping Member States and regions to comply with EU directivesand regulations in this area. Investment in the productive sector and in SMEs inparticular has remained relatively stable.

2 Regulations (EU) Nos 1299/2013 to 1304/2013.3 SWD(2014) 242 final..

8/10/2019 6cr_en.pdf

21/337


xx

Investment in people (education, employment, and social inclusion), however, hasdeclined slightly in relative terms. Nonetheless, the role o the ESF as an instru-ment or investing in human capital has grown significantly, most recently as aresult o the dramatic impact o the economic crisis on Member States labourmarkets. As a new measure to address this, the regulatory ramework or 20142020 ring-ences a minimum share (23.1%) o the Cohesion Policy budget orthe ESF. This is important to ensure the volume o investments in human capital,

employment, social inclusion, public administration reorm and institutional ca-pacity building necessary or working towards the objectives o the Europe 2020strategy.

For the first time, Cohesion Policy in particular through the ESF providedsupport during the 20072013 period to modernise and reorm public admin-istrations and judicial systems in convergence countries. This support aims toimprove the unctioning, accessibility and quality o public services, to acilitateevidence-based policy making and to deliver policy jointly with social partnersand civil society.

Finally, the proportion o resources dedicated to technical assistance has in-creased significantly since 20002006, reflecting the critical importance o well-unctioning institutions or the effective management o Cohesion Policy pro-grammes.

By tailoring investments according to levels o economic development, CohesionPolicy has been able to adjust to the changing needs o each region over time.However, the evolution o the policy has not been as decisive as might have beenexpected. Evidence suggests, or example, that the introduction in 20072013 ocompulsory earmarking o part o unding to EU priorities was a step orward, but

results have been mixed and unds are still spread too thinly.

0

20

40

60

80

100

1989-1993 1994-1999 2000-2006 2007-2013

Technical assistance

Environment

Employment, education,

social inclusion

Infrastructures (Transport,

Energy, Telecom)

Business support, R&D

and innovation

% of total

Composition of Cohesion Policy investment in lessComposition of Cohesion Policy investment in lessComposition of Cohesion Policy investment in lessComposition of Cohesion Policy investment in less

developed regions, 1989developed regions, 1989developed regions, 1989developed regions, 1989----2013201320132013

Figure 3Figure 3Figure 3Figure 3

Source: DG REGIO

8/10/2019 6cr_en.pdf

22/337


xxi

It has also become increasingly clear that the effectiveness o Cohesion Policydepends on sound macro-economic policies, a avourable business environmentand strong institutions. In some cases, inappropriate policies and administrativeand institutional weaknesses have limited the effectiveness o unding. Gapshave also remained when it comes to transposing EU legislation into national law

in areas directly related to Cohesion Policy. Although attempts have been made todefine strategic, institutional and administrative rameworks being in place, theirapplication remained discretionary and unsystematic.

Finally, implementation o the unds has ocused more on spending and compli-ance with management rules than on achieving objectives. Programme objectiveshave sometimes been vague, making it difficult to monitor and evaluate peror-mance. Setting targets is complex and some Member States have set targetswhich were not ambitious enough. This has limited the capacity to evaluate theeffects o interventions and to understand which measures were most effectiveand why.

3. Achieving results is at the core o the new

Cohesion Policy

The results o the negotiations on Cohesion Policy reorm, which ended inDecember 2013, address these shortcomings.

The reorm is ocused on delivering an investment policy. Cohesion Policy objec-tives have been brought into line with the Europe 2020 strategy, and relevant

CSRs are systematically being taken into account when planning investments.The way in which Cohesion Policy works has also been reormed, based on fivemain ideas.

3.1 Cohesion Policy programmes need to operate in a

avourable environment

The new Cohesion Policy is linked to the EU economic governance process andto the European semester, as investment under the Cohesion Policy cannot beconsidered in isolation rom the economic context in which it is undertaken.

In order to avoid unsustainable fiscal or economic policies that undermine theeffectiveness o EU support during the 20142020 period, unding may be sus-pended when a Member State does not comply with the recommendations itreceived under the EU economic governance process.

The effectiveness o investment must not be undermined by unsound policies orregulatory, administrative or institutional bottlenecks. Member States and regionsmust thereore meet a series o pre-conditions. These are designed to ensure thatinvestment eeds into a clear strategic policy ramework that ensures swif trans-

position o EU law affecting the implementation o cohesion unding, sufficient

8/10/2019 6cr_en.pdf

23/337


xxii

administrative capacity, and respect o minimum requirements on, or example,anti-discrimination, gender equality, disability, public procurement and state aid.

In particular, each area o investment must be based on a well-defined strategy.For example, no investment in transport can be made until a comprehensive na-

tional or regional transport strategy is in place. Similarly, investment in the fieldo R&D and innovation needs to be ramed within a smart specialisation strat-egy, which involves a process o developing a vision, identiying competitive ad-vantage, setting strategic priorities and making use o smart policies to maximisethe knowledge-based development potential o any region. In a nutshell, projectsshould ollow strategies and not the other way around.

3.2 Cohesion Policy programmes need to concentrate

resources on a small number o priorities and maximise their

added value

Member States and regions need to concentrate unding on a limited number oareas o EU relevance. A large share o the ERDF will be allocated to our prioritiesat the centre o the Europe 2020 strategy: innovation and research, the digitalagenda, support or SMEs and the low-carbon economy.

ESF concentration on up to five investment priorities will support the consolidationo outputs and results at European level. It will also ensure a clearer link with theEuropean Employment Strategy and the Integrated Guidelines on Employment. Atleast 20% o the ESF budget will be ring-enced or supporting social inclusion

and combating poverty and discrimination.

Given the urgent need to tackle youth unemployment, a EUR 6 billion YouthEmployment Initiative (YEI) has been launched, providing dedicated unding tohelp implement the Youth Guarantee across the EU. This ensures that everyyoung person is offered appropriate employment or training within our monthso leaving school or becoming unemployed. YEI unding will be ocused on regionswith particularly high youth unemployment rates.

Regions and Member States will have to make clear choices about their objec-tives. This will allow a critical mass o resources to be reached, ensuring a mean-

ingul impact and guaranteeing that investments are made in those areas thathave a direct and immediate impact on growth and jobs.

3.3 Cohesion Policy programmes need to define clear

objectives and results

Cohesion Policy success will be measured by its results and its impact. The re-orms thereore concentrate on ensuring greater ocus on results through betterperormance indicators, reporting and evaluation.

8/10/2019 6cr_en.pdf

24/337


xxiii

When designing programmes, Member States and regions must speciy the re-sults they intend to achieve by the end o the programming period. Programmeswill have to set out how the proposed actions will contribute to achieving theseobjectives and will establish perormance indicators with clear baselines and tar-gets to measure progress. Each programme will have a perormance ramework

to increase transparency and accountability.

To provide an additional incentive, approximately EUR 20 billion (or 6% o theCohesion Policy budget) has been set aside, to be allocated in 2019 to those pro-grammes which show they are on track to deliver their objectives.

3.4 Cohesion Policy programmes need to give a stronger

voice to cities

Cities can play a key role in Cohesion Policy and in meeting the objectives o theEurope 2020 strategy. More than two thirds o Europeans live in cities. Citiesare productive and innovative and can take the lead on achieving smart growth.They can be more resource efficient (e.g. by minimising land take, soil sealingand energy use) and can take part in realising sustainable growth, e.g. throughgreen inrastructure. Given the disparities o wealth, concentration o the sociallyexcluded and concentration o poverty in cities, they are essential to tackling thechallenge o inclusive growth.

For these reasons, it is expected that around hal o ERDF will be spent in citiesin 20142020. The new Cohesion Policy also aims to empower cities to design

and implement policies that contribute to meeting the Europe 2020 objectives,by setting a minimum amount (5% o ERDF) or integrated investment in sustain-able urban development, and by guaranteeing that cities will play the main rolein selecting projects.

The Commission will also launch calls or projects under the new InnovativeUrban Actions programme to support cities that are willing to test new ideas inurban development.

3.5 Cohesion Policy programmes need to better include

partners at all levels

The 20142020 policy ramework is based on the premise that all partners atnational, regional and local levels, respecting the principles o multi-level govern-ance and including social partners and civil society organisations, will be involvedat all stages o programming. For the first time at EU level, the European Codeo Conduct on Partnership4provides a blueprint or Member States to reach outto and engage these partners in developing programmes, throughout programmeimplementation and during monitoring and evaluation. Partnerships could also beparticularly effective in delivering community-led local development strategies.

4 See Commission delegated regulation o 7.1.2014, COM(2013) 9651 final.

8/10/2019 6cr_en.pdf

25/337


xxiv

Measures to build capacity in social and civil society partners are also embeddedin the new regulations.

4. From theory to practice: emerging evidence rom

negotiations

At the time it adopted this Communication, the Commission had received all 28Partnership Agreements (PAs) and around 150 operational programmes (OPs)5.Negotiations with Member States and regions are ongoing. Thereore, the ollow-ing only provides an indication o the extent to which the main elements o thereorm have been incorporated in the new strategies and programmes.

The inormation available shows some very encouraging trends and some chal-lenges.

Overall, around EUR 336 billion are allocated to national and regional programmesunder the Investment or growth and jobs (IGJ) goal. The resources are divided asollows: EUR 187.5 billion to the ERDF, EUR 63 billion to the Cohesion Fund, andEUR 85 billion to the ESF which is higher than the legally required minimum ESFallocation o EUR 80 billion6.

Around EUR 124 billion is allocated to R&D and innovation, ICT, SMEs, and low-carbon economy (Figure 4). This represents an increase o almost 22% compared

5 Four PAs have already been adopted by the Commission.

6 The financial resources or the IGJ goal include the ERDF (excluding support or European Territorial

Cooperation), the ESF and the Cohesion Fund. The figures reflect the situation as o 1 June and may stillchange in the context o the programme negotiations.

0 10 20 30 40 50 60 70 80

0 10 20 30 40 50 60 70 80

01. Innovation and R&D

02. Information Communication Technology

03. SME support

04. Low-carbon economy

05. Climate change adaptation

06. Environment

07. Network infrastructure

08. Employment

09. Social inclusion

10. Education

11. Good governance

ESF ERDF CF

% of Fund total (excluding Technical Assistance)

Allocation to priorities by Fund, 2014Allocation to priorities by Fund, 2014Allocation to priorities by Fund, 2014Allocation to priorities by Fund, 2014----2020202020202020Figure 4Figure 4Figure 4Figure 4

Source: Final and draft partnership agreements as of 1 June 2014

8/10/2019 6cr_en.pdf

26/337


xxv

to 20072013. Most o this amount is financed by the ERDF (EUR 116.5 billion)and the rest by the Cohesion Fund.

EUR 98 billion will be invested in employment, social inclusion and educationmeasures. Most o this amount is financed by the ESF: employment (EUR 30.7

billion), social inclusion (EUR 20.9 billion), and education (EUR 26.3 billion).

EUR 59 billion is allocated to transport and energy network inrastructure, repre-senting a decrease o 21% compared to 20072013.

Almost EUR 4.3 billion will be invested in institutional capacity building o publicauthorities and in the efficiency o public administrations and services (goodgovernance). This represents an increase o 72% compared to the last period.

The new programming period brings thereore a clear shif in terms o undingpriorities compared to 20072013 (Figure 5). Member States and regions will in-vest more on the ERDF priorities (R&D and innovation, ICT, SMEs, and low-carboneconomy) and on the ESF priorities (employment, social inclusion, education, andgovernance). In turn, less money will be invested in network and environmentalinrastructure. The decrease o investment in inrastructure is particularly markedin more developed Member States.

The particular ocus that the Commission has placed on the low-carbon economyhas resulted in a visible increase in this type o investment: more than EUR 38billion will support the transition to a low carbon and climate resilience economy.Several countries have put particular emphasis on energy efficiency or developingrenewable energy. In some cases, however, the link between investment and the

0 5 10 15 20 25 30 35 40 45

0 5 10 15 20 25 30 35 40 45

ERDF concentration priorities

ESF priorities

Network infrastructure

Adaptation to climate change and

environment

2014-2020 2007-2013

% of total (excluding Technical Assistance)

Allocation to priorities 2014Allocation to priorities 2014Allocation to priorities 2014Allocation to priorities 2014----20 and 200720 and 200720 and 200720 and 2007----2013201320132013Figure 5Figure 5Figure 5Figure 5

Source: Final and draft partnership agreements as of 1 June 2014 and DG REGIO

8/10/2019 6cr_en.pdf

27/337


xxvi

expected results in relation to the climate change objectives needs to be madeclearer.

Given the challenges o high unemployment and increasing poverty, the ocuson inclusive growth could be stronger in some PAs. The Commission is also o

the view that the unding allocated to education is or the moment not sufficientto implement the priorities identified. In some PAs low priority is given to activemeasures or social inclusion. To ensure better social outcomes and investmentsthat are more responsive to social change, social policy reorm needs to be betterembedded in programming.

Moreover, concerning the YEI, relevant inormation in some PAs and OPs is rathergeneral and does not set out how this new initiative will be delivered and i andhow it will support the implementation o Youth Guarantee schemes. In someprogrammes the actions supported by the YEI need to be more ocused on sup-porting employment creation.

Notwithstanding the existence o a CSR on the integration o the Roma minority,some Member States do not oresee a dedicated priority or marginalised com-munities, making it more difficult to assess how much unding will be allocated tothis policy area. Some Member States do not sufficiently address the needs o thistarget group or need to urther elaborate their strategy and intervention logic.

Administrative modernisation and the quality o justice are recognised as keyactors or competitiveness and inclusive growth. Many Member States are plan-ning measures to make their public institutions stronger and improve their ca-

pacity to deliver more effective policies, better administrative services, speedierjudicial proceedings, increased transparency and integrity o public institutions,and improved public participation in the different phases o policy-making. Yet, ina number o Member States where public administration reorm has been identi-fied as a challenge, a clear strategy is missing and objectives are incomplete andunclear, whilst such reorm is indispensable to support jobs, growth and competi-tiveness. Moreover, in some o these Member States a clear political commitmentto such reorm is lacking.

It is clear that the need to prepare or investment by ulfilling conditions in ad-vance o programme implementation has been taken seriously. The process has

not been easy and, in many cases, the Commission will have to agree on actionplans to ensure ull compliance with the requirements within well-defined dead-lines. Conditions, which Member States have ound particularly difficult to meet,concern areas where EU Directives need to be transposed or where EU regula-tions need to be applied effectively.

Smart specialisation strategies have been designed at national and regional levelto accelerate economic transormation and narrow the knowledge gap. More em-phasis needs to be put on sof orms o support, on supporting market-drivenresearch and cooperation with business. There is a risk o business-as-usual sup-

8/10/2019 6cr_en.pdf

28/337


xxvii

port or SMEs, instead o support being tailored to their needs and growth poten-tial to ensure a high leverage effect and a quick uptake.

Some Member States have also designed programmes that establish clear linksbetween the digital economy and innovation. This is important as investments in

high speed broadband and ICT are needed to overcome specific bottlenecks andto encourage market-driven solutions. For example, it is essential to ocus invest-ment in broadband on next-generation networks to ensure that less developedregions do not all urther behind. Synergies between Cohesion Policy, Horizon2020 and other EU programmes are also critical in the context o smart speciali-sation strategies at national and regional level.

In 20142020, some 88 programmes in 16 countries will be multi-und pro-grammes, combining resources rom the ERDF, CF and ESF. This is expected toencourage an integrated approach bringing together different policies, unds andpriorities.

To make the policy more effective, result-oriented and perormance-based,Member States and regions will have to set detailed objectives and targets. It isessential that programmes do not express aims too generally, including a largenumber o possible actions to maintain maximum flexibility in selecting pro-

jects at a later stage. This is critical: i objectives and targets are not ambitiousenough and detailed enough, it will be very difficult to evaluate the policy andto have a meaningul public debate about it. During the negotiation process, theCommission will ocus on these risks.

Partnership Agreements have largely been drafed through reasonable dialoguewith partners, although there are indications that in some cases this dialogue hasbeen insufficient, important stakeholders were not involved, or comments werenot reflected in later versions o the documents. The Commission will look verycareully at how Member States have applied the Code o Conduct on Partnershipto ensure genuine participation by stakeholders.

Last but not least, the new period requires strong governance and coordinationmechanisms at the national and regional level to ensure consistency betweenprogrammes, support to Europe 2020 and the CSRs, and to avoid overlaps andgaps. This is particularly important in view o the overall increase in the number

o regional programmes (or ESF programmes it is almost 60% compared to20072013).

5. Conclusion

In 20142020 Cohesion Policy will guide the investment o a third o the EUbudget to help achieve the EU-wide goals o growth and jobs and reduce econom-ic and social disparities. It is also the biggest investment instrument at EU levelor pursuing the objectives o the Europe 2020 strategy. It provides the largest

contribution in a number o areas, including support to SMEs, R&D and innovation,

8/10/2019 6cr_en.pdf

29/337


xxviii

investment in a skilled and competitive workorce, the fight against unemploy-ment and social exclusion, climate change adaptation and the environment.

Economic models provide an indication o the macro-economic impact. For exam-ple, thanks to Cohesion Policy it is expected that in the main beneficiary countries

GDP could be on average 2% higher and employment around 1% higher duringthe implementation period.

But the productivity-enhancing effects o the Cohesion Policy continue to buildup afer programmes have come to an end. By 2030, it is estimated that GDP inthese countries will be more than 3% above the level expected in the absence othe policy. This means that over the period 20142030, or each euro spent in themain beneficiary countries, GDP is expected to be more than three euros higher.

For these effects to be realised, however, it is essential that Member States andregions deliver on the reorms and use the policy as an effective investment tool.The outcome o the ongoing negotiations to develop robust strategies, identiy asmall number o key investment priorities, set ambitious targets, and ensure thatmicro and macro conditions maximise the impact o the investment co-financedunder the Cohesion Policy, will thereore be crucial.

The Commission will submit an initial progress report on the programmes to theEuropean Parliament and Council in 2017. This will give an overview o progressby Member States and regions towards the objectives set in their programmes,indicating whether or not they are delivering the intended results.

8/10/2019 6cr_en.pdf

30/337


xxix

8/10/2019 6cr_en.pdf

31/337xxx

Executive Summary

This report comes out at the start o a new 7-year programming period orCohesion Policy, when the situation in the EU is dramatically different rom whatit was at the start o the previous period in 2007. Then, the EU was still enjoying asustained period o economic growth. Income levels were rising, as were employ-ment rates and public investment, poverty and social exclusion were diminishingand regional disparities were shrinking. Nevertheless, despite the positive tenden-cies, disparities between regions o many different kinds remained wide.

The advent o the crisis changed all this. Since 2008, public debt has increaseddramatically, income has declined or many people across the EU, employmentrates have allen in most countries and unemployment is higher than or over20 years, while poverty and social exclusion have tended to become more wide-spread. At the same time, regional disparities in employment and unemploymentrates have widened as have those in GDP per head in many countries while inothers they have stopped narrowing. These developments mean that the Europe2020 employment and poverty targets are now significantly urther away thanwhen they were first set and it will require a substantial effort over the next 6years to achieve them in a context o significant budgetary constraints.

Chapter 1: In its first stage the crisis had a big impact on construction and manu-

acturing. In both, employment ell markedly, in construction as a result o thecollapse o a real estate bubble in some Member States and a reduction in publicinvestment and manuacturing because o a decline in global demand, especiallyor investment goods. More recently, world markets have expanded and exportshave increased giving rise to some growth o manuacturing. This is particularlyimportant or many o the Central and Eastern European Member States wheremanuacturing accounts or a large share o value-added.

The territorial impact o the crisis has been mixed. In most parts o the EU, met-ropolitan regions have been shown to be more prone to booms and busts, whileoverall rural regions have proved more resilient. In the EU-15, second-tier met-

ropolitan regions perormed near the average, while in the EU-13, they outper-ormed the other regions. Rural regions in the EU-15 had a smaller contraction oGDP than the other regions between 2008 and 2011 due to higher productivitygrowth. Also in the EU-13, higher productivity growth meant that they closed thegrowth gap with the other regions.

Despite the difficult economic context, the proportion o people with tertiary edu-cation has increased over recent years in most countries and early school leav-ing rates have declined. As a result, EU targets or both o these are likely to bereached by 2020 i not earlier. At the same time, R&D has not declined relative to

GDP during the crisis and has even started to increase slightly in the past year or

8/10/2019 6cr_en.pdf

32/337

Execut ive Su mmary

xxxi

two, though not by enough to reach the 3% target set or 2020. Innovation, how-ever, remains highly concentrated in spatial terms and shows no sign o spread-ing to lagging regions.

Investment in transport and digital inrastructure has reduced the deficiencies in

these networks in many rural areas and less developed regions. Access to the in-ternet using the next generation technology, however, creates new challenges orrural areas where this technology is almost non-existent. In addition, completingthe trans-European Transport network will require at least two more decades osubstantial investment particularly in most o the Central and Eastern MemberStates.

The onset o the crisis led to major reductions in the EU in trade and oreigndirect investment, which are important sources o growth or the less developedMember States. Fortunately, exports o the EU-13 to other EU countries haveshown significant recovery and now account or a larger share o their GDP thanbeore the crisis, while FDI has also picked up.

Competitiveness remains low in most regions in Central and Eastern MemberStates, though capital city regions are typically the exceptions. These tend to behighly competitive, but or the most part they do not as yet generate any measur-able spill-overs to benefit other regions. Most regions close to the capital in thesecountries, thereore, do not gain perceptibly rom their proximity, while in manymore developed Member States the regions neighbouring the capital also tend tohave high levels o competitiveness. Indeed, in some Member States, such as theNetherlands, Germany and Italy, other regions with an important second-tier city

have a higher level o competitiveness than the capital city region.

Chapter 2: The crisis has wiped out hal o the employment gains made between2000 and the onset o the recession, particularly in the southern Member States.As a result, in transition and less developed regions, employment rates are around10 percentage points below the national target as compared to only 3 percentagepoints below in the more developed regions. Increases in unemployment havealso been larger in these regions, averaging 5 percentage points between 2008and 2013 as against 3 percentage points in more developed regions.

Although 2013 was the first year in which the average rate o unemployment in

the EU was the same or women as or men, big disparities remain in some parts,unemployment being much higher or women than or men in many southernregions. Employment rates or women remain lower than those o men in all EUregions. While the gap is relatively small in a number o Swedish and Finnishregions, it is more than 20 percentage points in Italy, Greece, and several regionsin Romania, the Czech Republic and Poland. On the educational ront, however, innine out o ten regions more women than men aged 3034 have a tertiary-levelqualification.

Higher risk o poverty or social exclusion is another legacy o the economic crisis.

There are now around 9 million people at risk o poverty or exclusion in the EU,

8/10/2019 6cr_en.pdf

33/337


xxxii

the increase being particularly pronounced in Greece, Spain, Italy and the UK. Akey issue is the variation within countries. The risk o poverty tends to be muchlower in cities than in the rest o the country in less developed Member States,while in cities in the more developed Member States, the reverse is the case.Accordingly, in the latter, to meet the national Europe 2020 poverty targets re-

quires a major reduction in the number o people at risk o poverty or exclusionin urban centres, while in the less developed countries the main challenge is toreduce the numbers at risk in more rural areas.

The large disparities in employment, income levels and social well-being are ma-jor actors underlying population movement within the EU. In Central and EasternMember States, there has been a tendency over the past 20 years or people tomove rom rural areas to urban ones, especially to the capital city, as well as toother parts o the EU. The combination o a natural decline in population and out-ward migration has led to a significant reduction o people living in rural regionsin the EU-13 over the past decade. In the EU-15, on the other hand, the popula-tion has risen on average in rural regions because o net inward migration morethan offsetting a natural reduction in population.

In the EU-15, over the past decade the contribution o net inward migration topopulation growth was three times larger than that o the natural increase. Bycontrast, in the EU-13, net outward migration contributed twice as much to popu-lation decline as the natural reduction.

Wide variations remain across the EU in lie expectancy and mortality rates. Lieexpectancy differs by more than 9 years between the 10 regions where it is high-

est and the 10 where it is lowest. Equally, inant mortality and deaths rom roadaccidents in relation to population differ by a actor o our between the 10 bestand worst perorming regions.

Chapter 3: The crisis has had mixed effects on the environment. The reduction ineconomic activity and income has made it easier to reduce greenhouse gas emis-sions; though energy efficiency has not increased greatly so that this reductionmay well be reversed when demand picks up. The crisis has also reduced the costo allowances or greenhouse gas emissions in the European Trading Scheme,so depressing the economic incentives to invest in energy efficiency and renew-able energy and delaying the transition to a low-carbon economy. The European

Commission has postponed the auction o some allowances in response to theselow prices.

Some progress has been made across the EU in improving the treatment o urbanwastewater and solid waste. More towns and cities now meet the quality stand-ards set in the EU Directive on urban wastewater treatment and more solid wasteis recycled, or incinerated with energy recovery, and less is dumped in landfills. Inboth cases, however, more needs to be done and substantial investment is stillrequired particularly in many o the less developed Member States and regions.

8/10/2019 6cr_en.pdf

34/337

Execut ive Su mmary

xxxiii

The quality o the services provided by the eco-system differs substantiallyacross the EU. The services concerned can ulfil important unctions such ascleaning air and water, retaining water to reduce flood risks and removing carbon.The recent floods in many parts o the EU and the low air quality in many citiesunderline the need or them. The advantage o investing in such services is that it

can ofen be cost-efficient while helping to limit the loss o bio-diversity.

The urban dimension o sustainable growth is one o many contrasts. On the onehand, air quality is poor in many cities, made worse by traffic congestion, and cit-ies are more vulnerable to heat waves, due to the heat island effect, as well asto flooding because o their proximity, in many cases, to rivers and the sea andthe large expanse o sealed suraces.

On the other hand, cities offer major advantages in terms o eco-efficiency, sincethe close proximity o different locations reduces the need to travel long dis-tances. Public transport is also more available in cities, offering a more energy-efficient means o travel, and people living in cities on average use less energyto heat their housing. Equally, cities use land much more efficiently than othersareas where population density is much lower and built-up land per inhabitant ismuch higher.

Chapter 4: In most Member States, the government budget has been in signifi-cant deficit over the crisis period and public debt levels have risen dramatically,in some cases well above 100% o GDP. The deterioration in public finances hasled to the widespread implementation o fiscal consolidation measures and manygovernments have cut back public investment markedly. On average, public in-

vestment in the EU declined by 20% in real terms between 2008 and 2013,in Greece, Spain and Ireland, by over 60% and in the EU-12 countries, whereCohesion Policy unding is particularly important, by 32%. This could well depressgrowth rates over the medium-term.

As a result o the cut-backs in national expenditure, there is increased relianceon Cohesion Policy to finance growth-enhancing investment. In 20102012,Cohesion Policy unding was equivalent to 21% o public investment in the EUas a whole, to 57% in the Cohesion countries taken together and to over 75% inSlovakia, Hungary, Bulgaria and Lithuania. Without this unding, public investmentin the less developed Member States would have declined even urther.

Local and regional governments in the EU are responsible or almost two thirds oall public investment and, accordingly, the reductions which have occurred havehad a big impact on them. The political autonomy (or sel-rule) o regions hastended to grow over the past ew decades, with substantial increases in manyMember States. In Italy, in particular, the degree o sel-rule in regions is nowhigher than in the Federal states o Germany, Austria and Belgium.

Chapter 5: The EU has given increasing attention to the importance o govern-ance and the quality o public institutions over the past ew years, including in

relation to Cohesion Policy programmes. For example, an anti-corruption report

8/10/2019 6cr_en.pdf

35/337


xxxiv

has been adopted in 2014 and many o the country-specific recommendationsmade as part o the European Semester concern issues o administrative ca-pacity. Initiatives, such as e-Government and e-Procurement, can help both toincrease efficiency and reduce the opportunities or abuse o power. In additionthe development o national anti-corruption and anti-raud strategies is likely to

strengthen administrative capacity and lead to unds being used more effectively.

As regards Cohesion Policy, improving institutional capacity and public adminis-tration is one o the 11 key thematic objectives or the period 20142020. Oneo the reasons or this is the observed link between low levels o governmentefficiency and the absorption rate o Cohesion Policy unding or the 20072013period, which is so low in some cases that there is a serious risk that MemberStates will lose significant amounts o the unds available to them.

While countries in the North o Europe score well in surveys o governance andease o doing business, there are still too many Member States where the stand-ard o public authorities is perceived to be low and significant numbers o peoplereport paying bribes. New research has revealed that the ease o doing businessand the quality o institutions also vary in many cases within countries, whichimplies that more targeted interventions may be needed to bring the situationin lagging regions up to standard. Research has also indicated that governanceproblems can act as a brake on social and economic development and limit theimpact o Cohesion Policy investment.

Recognising the key role o regional and local authorities in public investment,the OECD has recently adopted principles on the effective management o public

investment which apply across all levels o government.

Chapter 6: Cohesion Policy was born out o concerns that obstacles to economicdevelopment, such as a lack o innovation, labour orce skills, inrastructure orinstitutional quality, will permanently depress growth and productivity and leadto lower standards o living. Over the years, the financial support under the policy,which has consistently ocused on less developed regions, has shifed away rominvestment in hard inrastructure towards business support and innovation, em-ployment and social inclusion to overcome these obstacles.

The nature o Cohesion Policy and its objectives have also evolved. The geograph-

ical coverage has been simplified, with all regions being eligible or a measure osupport, while in addition to its ocus on reducing economic disparities, the policyhas become more closely aligned with the overall strategy o the EU. Accordingly,in the 1990s, unding was extended to environmental and trans-European trans-port inrastructure and in the 2000s, Cohesion Policy was directed towards thepursuit o the Lisbon and Gothenburg strategies or growth and sustainable de-velopment. In the new period, Cohesion Policy is an integral part o the Europe2020 strategy with a strong ocus on employment, innovation, sustainability andreducing poverty and social exclusion.

8/10/2019 6cr_en.pdf

36/337

Execut ive Su mmary

xxxv

Successive enlargements o the EU have changed the challenges which CohesionPolicy has to conront and increased the difficulty o tackling them. Not only havethey led to a much greater number o regions with low levels o development butthey have also increased the territorial diversity o the EU.

With the introduction in the Lisbon Treaty o territorial cohesion as an explicitobjective o Cohesion Policy, a stronger emphasis has been given to access toservices, unctional geography, territorial analysis and sustainability. This shif ismirrored in the increased ocus on sustainable growth in Europe 2020 and in therecognition o the importance o moving beyond GDP when assessing territorialdevelopment. The debate on how to measure progress and the role o CohesionPolicy in this respect is still ongoing.

Chapter 7: Cohesion Policy in the 20072013 period made a substantial con-tribution to growth and jobs. It is estimated to have increased GDP by 2.1% ayear on average in Latvia, 1.8% a year in Lithuania and 1.7% a year in Polandin relation to what it would have been without the investment it has unded. Itis also estimated to have increased the level o employment, by 1% a year inPoland, 0.6% in Hungary, and 0.4% in Slovakia and Lithuania. The estimates othe longer-term effects are larger because o the impact on the developmentpotential o economies. In both Lithuania and Poland, GDP in 2020 is estimatedto be over 4% above what it would be without the investment concerned and inLatvia, 5% higher.

Over the same period, Cohesion Policy has been important in sustaining publicexpenditure in vital areas, such as R&D, support or SMEs, sustainable energy, hu-

man resource development and social inclusion. In some Member States, it alsohelped urther national reorm efforts, especially as regards education systems,the labour market and public administration.

There is clear evidence that the policy is producing tangible results in many ar-eas. Support had been provided to over 60,000 RTD projects by the end o 2012,over 21,500 cooperation ventures between enterprises and research centres, andalmost 80,000 business start-ups. In addition, the unds had provided over 5 mil-lion more people with access to broadband, 3.3 million with an improved supplyo drinking water and 5.5 million with main drainage and a connection to wastewater treatment acilities.

Between 2007 and 2012, the policy has supported up to 68 million individual par-ticipations in labour market programmes1, 35 million o them involving women,21 million young people, 22 million unemployed and nearly 27 million o thosewith low levels o education (compulsory schooling or below). The ESF helped 5.7million people find employment and almost 8.6 million to obtain qualifications,while Member States reported that it had contributed to over 400,000 businessstart-ups or people becoming sel-employed.

1 Reporting counts all instances o participation and many people may have participated several times.Participations can range rom a short interview, to counselling, training or work experience.

8/10/2019 6cr_en.pdf

37/337


xxxvi

Major results are still expected rom the 20072013 programmes over the re-maining months up to the end o 2015. The payments data however underlinethe need to step up the completion o these programmes. Although there is aninevitable delay between expenditure on the ground and Commission paymentsbeing made, there is evidence o serious delays in a number o countries in pro-

jects being selected or support and being carried out. This is especially the casein areas such as RTDI, rail, ICT and broadband and investment in both renewableenergy and energy saving, where authorities have limited experience or projectsare relatively complex.

Chapter 8: In 20142020, a third o the EU Budget will be invested under CohesionPolicy to help address disparities between regions while at the same time contrib-uting to the achievement o the Europe 2020 goals. The two objectives are ullycompatible with each other. Indeed, the pursuit o the Europe 2020 goals can beseen as a means o urthering regional development aims and o strengtheningthe various elements which determine

6cr_en.pdf

Documents