Scheme for unemployed Greeks to get EU funding though ‘further clarifications’ needed, says Commissioner Andor

The European Commission is set to approve funding for a state-run scheme to help 400,000 unemployed Greeks, although “some further clarifications are needed,” according to Employment, Social Affairs and Inclusion Commissioner Laszlo Andor, currently on an official visit to Athens.

Speaking to Kathimerini, the Hungarian economist warned however that the European Social Fund’s currently available reserves will not suffice to cover all priorities promoted by the Greek government, with some actions heading for the next ESF programming period, from 2014 to 2020.

What is the main purpose of your visit to Athens?

I regularly visit Greece to discuss with the authorities and other stakeholders what more the Commission can do to support the country, in particular through the ESF, which falls under my responsibility. Apart from this issue, which is now more important than ever as we approach the start of the new financial period, I will address a conference organized by the International Labor Organization on how to tackle the current jobs crisis in Greece. With my participation I wish to support the ILO’s efforts to help Greece on the way to job creation and to help restart social dialogue.

I understand that the Greek government has requested EU funding for a state-run scheme to help 400,000 unemployed people. Will you approve this scheme? I am asking because I get the sense that the Commission has reservations regarding the use of the ESF for public works schemes in general and that specific plan in particular.

The Commission has absolutely no reservations about the use of the ESF for public works schemes. We believe that public works schemes can be useful if they are well-thought through and time-limited. The Greek government is in fact already implementing public works schemes with the support of the ESF.

I was pleased to see that the new proposals we received in a recent letter from ministers Yiannis Vroutsis and Costis Hatzidakis take into account the fact that any schemes implemented with the support of the Structural Funds need to respect their scopes and priorities. Some further clarifications are needed on this, but I sincerely believe that there will be no major problem with this issue.

A more difficult issue which I will discuss with the ministers concerns the funding sources. We are in the last year of the 2007-13 programming period and most of the funds of the ESF have been spent or committed to operations. As the available funds remaining are not enough for all priorities promoted by the Greek government, it will be necessary to clarify which priorities are to be implemented in 2013 and which in 2014 under the new programming period 2014-20. In these reflections, we also have to reflect the risk for Greece of losing funds because of slow implementation, something we all wish to avoid.

Are you satisfied with the absorption of structural and social funds by the Greek government so far to combat unemployment? Has this money been put to the best possible use?

I would say yes. It is not an easy task to implement measures combating unemployment and promoting social inclusion at the same time as implementing the adjustment policies to get the country’s fiscal condition back on track. So taking into account the difficult situation Greece is in, I believe that the absorption and the use made of Structural Funds and in particular of the European Social Fund is satisfactory.

I am pleased with the swift reaction of the Greek government on the very important problem of youth unemployment. Following an extensive reprogramming of ESF operational programs at the end of 2012, the Greek government endorsed a national Youth Action Plan in January with EU funding of half a billion euros and which targets 350,000 young people.

The performance of the ESF in Greece is fully comparable with the performance of the ESF in other member states: The overall ESF legal commitments in Greece have reached around 88 percent of the total ESF allocation, while payments have reached 52 percent.

With a budget of 4.4 billion euros, the European Social Fund in Greece invests in actions which increase access to employment, improve the adaptability of workers and enterprises, reinforce the social inclusion of disadvantaged people, and strengthen the efficiency of administrations and public services.

The main Human Resources Development program is investing almost 3 billion euros in actions that for example aim at creating jobs in the private sector for unemployed young people. Similarly, the National Contingency Reserve, with about 187 million euros, helps unemployed young people set up a new business and provides vocational guidance to unemployed young people from sectors such as retail or construction.

Other actions co-financed by the ESF aim at the socioeconomic inclusion of vulnerable population groups or at the social inclusion of the Greek Roma population.

What more can be done in the next program period (2014-20) to improve the impact of EU funds in the fight against unemployment?

Given the financial constraints which will undoubtedly exist in the programming period 2014-20, the main challenge will be linked to enhancing the efficiency and effectiveness of EU fund investments toward the huge labor market and social needs.

Crucial and still existing problems in the labor market such as support to small businesses and the administrative efficiency of public employment services must be mirrored in the priorities of the EU programmes. The Commission has therefore set out conditions that have to be met in all member states before full EU funding is agreed.

If one compares unemployment and growth rates in Europe with the rest of the developed world (e.g. the USA, Japan, Australia etc), one can conclude that there’s something wrong in the way we are dealing with the crisis. That criticism would also include the Commission, and its country-specific recommendations, don’t you think?

The Commission’s country-specific recommendations are meant to support fiscal consolidation, economic competitiveness as well as social cohesion, and they are very important to put our economies back on track. I do however agree that we need systemic reforms also to the way EMU functions. To explain the different recovery of the US or Japan, you also need to look at the role and power of monetary policy. Europe should have moved faster to break the vicious circle of bank debt and sovereign debt. We need reforms to restore the growth potential of our economy and a concerted effort to boost investment and aggregate demand in order to spur enterprise and job creation.

Another political crisis is unfolding in Greece, this time because of the closure of the country’s public broadcaster. Some would argue that the strict adjustment policies, enforced by the Commission, have put too much strain on societies and democratic governments, and they fuel extremism. To put it in Commission President Jose Manuel Barroso’s words, Europe’s austerity policy “has reached its limits” in terms of its social acceptance. Would you agree that adjustment has gone too far? And is there an alternative?

There is no question that public service media are an essential pillar of democratic and pluralistic societies across Europe. The European Commission is fully aware of the situation and hopes that the Greek government will find a way to allow public broadcasts to go back on air very soon.

I agree that it is time for the reforms to start paying off not only from the point of view of fiscal stabilization but also growth and job creation. This is precisely what I want to discuss during my visit – how we can help Greece to ensure that the painful reforms can now be used as a springboard for growth. We need to find new sources of growth. The EU funds need to be part of this.

Following the collapse of the Cypriot banking sector, employment conditions on the island are rapidly deteriorating. Does the Commission have an “emergency plan,” so to speak, to alleviate the social consequences of the crisis in Cyprus?

The Commission is fully aware of the challenges posed by the current economic and financial crisis in Cyprus in terms of poverty and social cohesion. It has committed to do everything possible to assist Cyprus in its efforts to develop a more diversified and sustainable economic model, alleviate the social consequences of the economic shock and mitigate the impact on the most disadvantaged people, including with the establishment of the Support Group of Cyprus.

The Support Group’s mandate, with its strong focus on employment, competitiveness and growth, is to help the Cypriot authorities attenuate the negative consequences of the current crisis by mobilizing EU funds and to support the Cypriot government’s efforts to restore financial, economic and social stability. It will also bring in further expertise to facilitate the emergence of new sources of economic activity and thus new jobs.

Existing resources from the European Social Fund are already being reoriented to support interventions which aim to promote the creation of new jobs, to facilitate the employment (re)integration of the unemployed, in particular the young, as well as to ease the labor market transitions through the adequate re-skilling and up-skilling of the labor force. In doing this, ESF support is targeting in particular the needs of those at risk of poverty and social exclusion.

The Cypriot government has requested additional assistance from EU structural and social funds for the next program period in order to deal with the crisis. Do you support this request?

In his letter to Cypriot President Nicos Anastasiades on April 16, 2013, President Barroso highlighted that this is an issue that must be taken up first and foremost with the other member states since it was the European Council’s decision of last February, which has fully allocated the related amounts to member states in a very precise way, without leaving any unallocated margin in this respect. President Barroso also signaled the openness of the Commission to seeking additional support from the EU budgetary authority if necessary. The president also proposed exploring the possibility of frontloading future MFF [multiannual financial framework] assistance for Cyprus.

Let me also stress the consistent efforts undertaken by the Commission to ensure that the decisions reached by the European Council take account of the particular needs of Cyprus. Cyprus will be receiving an additional allocation of 150 million euros under cohesion policy to “recognize the challenges posed by the situation of island member states and the remoteness of certain parts of the European Union” and 7 million euros under rural development. Moreover the Commission ensured that the provisions which apply in the current period to program countries will also apply in future to Cyprus. Thus, for its future funding allocations, Cyprus will be able to request higher prefinancing rates. Under cohesion policy and rural development, Cyprus will be able to request a 10 percent “top-up” co-financing rate. Moreover, there will be a review in 2016 of the cohesion allocations with a view to adjusting the results when there are significant divergences between the statistical data used to determine the agreed allocations and developments in the real economy.