EU earmarks €19-billion for job creation

The European Commission has initiated a new strategy to tackle unemployment caused by the global crisis with a fund support of  €19 billion euros (about $26.99 billion).

Under the plan, called Shared Commitment for Employment, the commission would make available €19 billion ($26.99 billion) of a planned European Social Fund (ESF) expenditure to support people hit by the economic crisis in 2009-2010 alone, to assist EU member states in putting in place together with social partners rapid reaction packages focusing on job creation.

With this scheme, the commission says its key priorities are to preserve jobs and help those facing difficulties, while also paving the way for recovery.

The commission said that ESF co-funding by member states would not be required during 2009 and 2010.

It added that a new EU microfinance facility for employment would also be set up jointly with the European Investment Bank and other international financial institutions, though he did not name the institutions.

The microfinance facility, it said, would spend approximately €500 million in loans to promote the creation of small businesses, strengthen the "social economy' and provide access to apprenticeships for 5 million young Europeans.

The commission plans to focus on creating opportunities for the unemployed and to some of Europe's most disadvantaged groups to start their own businesses.

''Today the Commission is taking a further step towards a shared commitment and coordinated action by the EU member states and social partners to save and create jobs," said EU President Jose Manuel Barroso. "For example, we are accelerating billions of euros in EU support for retraining under the European Social Fund, which already helps more than 9 million people a year find jobs.''

"This crisis started in the financial sector but its effects are now being felt by everyone," said Vladimír Špidla, EU commissioner for employment. ''The Shared Commitment for Employment is a strong, forward looking and coordinated agenda to fight unemployment, boost job creation and pave the way for a sustainable recovery."

The commission has put forwarded three key priorities: maintaining employment, creating jobs and promoting mobility; upgrading skills and matching labour market needs; and increasing access to employment.

The commission envisages that this scheme will work complementary to recent proposals on financial supervision and the proposal to make the European Globalisation Fund work better in times of crisis.

They are also consistent with the EU's longer term strategies to reform labour markets including the Lisbon Strategy.

Under the current rules for EU social fund and regional aid necessitates the involved national or regional actors to co-finance the approved projects by up to 50 per cent.

The other factor is that the allocated funds become forfeit if authorities cannot use them within three years, which has aggravated the regional and national authorities as they are struggling to meet EU funding conditions in times of crisis.

Under Commission plans presented today, the need to co-finance new EU social fund projects would be postponed to 2011 which has come as a relief.

The Commission proposes a series of actions, including:

• Accelerating €19 billion of planned funding to help people to stay in work or move towards new jobs, through upgrading skills, encouraging entrepreneurship and improving public employment services under the European Social Fund. For the period 2009-2010, the Commission can reimburse Member States' declared expenditure at a rate of 100 per cent. That means there is no need for national co-funding so that projects that help people can be put in place more quickly.
• Reallocate €100 million from the existing EU budget which - when combined with funding from international financial institutions, particularly the European Investment Bank Group - will provide more than €500 million for the creation of a new EU microcredit facility. These micro-credits will support those at-risk of not obtaining funds to set up a business such as the recently unemployed and reinforce employment in micro businesses facing the credit crunch.
• A commitment to provide at least 5 million apprenticeships across the EU for young people facing unemployment; and the setting of targets to provide young unemployed with early opportunities for training or work.
• Support for schemes – including through the ESF - to maintain viable employment through short-time work and training.
• Immediate help for the unemployed to avoid the risk of long-term unemployment and the loss of relevant skills, including proposals that an early opportunity for training or work should be provided to each unemployed person: within 1 month for young people under 20 years old, within 2 months for those under 25 years old, and within 3 months for over 25 year olds. The ESF should support the achievement of these "new start" targets.
• Help to get the most disadvantaged back into jobs, for example, through lower non-wage labour costs, recruitment incentives and the promotion of low-skilled job opportunities in household and care services.
• New online 'match and map' service to help jobseekers match their skills with job vacancies throughout Europe via the existing European jobs portal EURES and a commitment that unemployed people looking for a job in another Member State should be eligible to receive, for at least 6 months, the unemployment benefits they were entitled to in their country of residence.
• A focus on skills upgrading and a better match with labour market needs, with a Commission sector-by-sector analysis of EU labour market needs today and for the future including green skills.
• A practical toolkit to help companies, workers and their representatives better manage and anticipate business restructuring.
• A guide for training in small businesses to help SMEs maintain and obtain the skills they need.

The global financial crisis saw unemployment rate increasing at a fast pace in recent months which forced the EU to work out a strategy to fight joblessness at the Employment Summit in Prague on May 7.

The Commission is expected to present a legislative proposal at the European Council on 18-19 June, which has to be approved by EU Member States and the European Parliament in order to become law.