‘Local employment’ – Commission criticised by Court of Auditors, September 2002

On 20 September 2002, the European Court of Auditors (ECA) issued details of its Special Report on local actions for employment. The Report is highly critical of the European Commission's involvement with 'local employment' initiatives and makes a number of recommendations for improving its performance.

Although the European Employment Strategy is based largely on national employment initiatives, actions to develop local employment opportunities have become increasingly important. The potential of activities such as home help services, child care, information and communication technologies, local public transport and tourism for creating jobs is seen to offer a not insignificant contribution to the Union's efforts to tackle unemployment.

It is argued that such jobs are best managed at a local level, where communities' needs can be taken into account by local authorities and other community-based agencies. However, local initiatives face a number of obstacles, including financial, technical, legal and institutional problems, which national governments are best placed to resolve. The EU believes it can make a contribution by financially supporting innovative projects and 'systematic evaluation', and by aiding the dissemination and promotion of good practice, via transnational networks.

The ECA set out to examine four aspects of the Commission's role in this evolving 'local employment strategy' for the period 1994 to 2001:

• Regarding the existence of a 'clear and coherent Community policy for the promotion of local employment', the Court found 'no definition of local employment in the Commission's policy statements. While the Treaty provided for a coordinated strategy, it did not create a legally enforceable basis for a European employment policy, thus the setting of employment priorities regarding local employment actions, remained the sole prerogative of national governments.'
• Concerning information, the Court was of the opinion that 'There was a lack of information for monitoring and assessing local employment, notably in respect of ESF funding, where there was a lack of information on the extent to which operational programmes addressed the horizontal priority of local employment and in respect of the EES, where information was lacking from Member States.'
• With respect to the management of local employment projects, the ECA reported 'Shortcomings were found in the Commission's financial management procedures in the area of innovative and preparatory measures. Financial rules were not followed in some cases; some grant agreements were signed after the projects were completed and some innovative actions overlapped preparatory measures.'
• The Court of Auditors also looked at the main obstacles to the development of local employment in Member States, and concluded there were 'delays in some Member States in introducing small grant provisions under the ESF, national administrative restrictions prohibiting advance payments of ESF to final recipients and in some cases restrictions limiting the involvement of the private sector in this area.'

Based on its findings, the Court recommended that:

• a comprehensive assessment of the likely added value of a local employment policy should be undertaken;
• the Commission ensures that it has adequate information at its disposal to fulfill its facilitative and co-ordinating function by providing more precise guidance on reporting requirements to Member States and by insisting that under the EES, Member States provide more information on local employment actions;
• the Commission activity in the area of innovative projects should be rationalised and financial management procedures tightened.'

Links:

European Court of Auditors:
	20.09.02: Information note of the European Court of Auditors concerning Special Report No 4/2002 on local actions for employment [See 'Special Reports']
	20.09.02: Special Report No 4/2002 (pursuant to article 248, paragraph 4 (2), EC) on local actions for employment together with the Commission's replies [See 'Special Reports']
European Sources Online:
	European Sources Online: In Focus: Employment: European Commission publishes Employment in Europe 2002 report
	European Sources Online: In Focus: European Employment Strategy: Five year evaluation
	European Sources Online: Topic Guide: Employment and labour market policy

European Commission:
	20.09.02: Information note of the European Court of Auditors concerning Special Report N° 4/2002 on local actions for employment [ECA/02/12]
	DG Employment and Social Affairs: Local Development
	SCADplus: Local employment and development initiatives

Eric Davies
KnowEurope Researcher
Compiled: Monday, 23 September 2002

On 20 September 2002, the European Court of Auditors (ECA) issued details of its Special Report on local actions for employment. The Report is highly critical of the European Commission's involvement with 'local employment' initiatives and makes a number of recommendations for improving its performance.