Summit jobs pledge thrown into doubt

Date: 26/06/1997

By Tim Jones

A PLAN agreed at the Amsterdam summit to reassign 670 million ecu in unused coal and steel subsidies to job-creation schemes is unlikely to get past first base.

The idea of channelling the financial surplus of the European Coal and Steel Community (ECSC) into research activities when this oldest of the EU Communities expires in 2002 is a key element of the employment strategy approved by EU leaders in Amsterdam.

In the run-up to last week's summit, the European Commission and the Dutch EU presidency searched desperately for ways to appease the new French government as it threatened to block a centrepiece of economic and monetary union - the 'stability pact'.

They came up with new spending mandates for the European Investment Bank (EIB) and the reallocation of the ECSC's surplus in a bid to give an employment-friendly gloss to the fierce discipline of the pact.

However, behind the scenes, those governments which traditionally contribute more to the Union's budget than they get out of it are insisting that the surplus be repaid to their treasuries rather than put into a new research pool for coal and steel.

This view, shared by Germany, the UK and the Netherlands, was also that of France before the left took power recently in Paris. But EIB officials hope they might yet change their minds.

The ECSC is administered by the Commission and is funded both by a levy on firms working in the sector and by income from its loans and investments.

Subsidies are mainly paid to firms which set up plants in declining coal and steel areas or re-employ workers made redundant by changes in production methods or market conditions.

But ECSC finances have been boosted by a drop in spending, even though the industrial levy is being gradually reduced and the Community's borrowing activities in the international capital markets are tailing off. The levy, which is fixed at the end of each year, has been reduced from 0.19&percent; of company sales revenue in 1996 to 0.17&percent; for 1997 and is due for abolition next year.

Four years ago, the Commission was asked to establish guidelines for what would happen as the treaty approached extinction. As a result, aid for training and staff redeployment schemes in areas most affected by plant closures is gradually being transferred to the EU's structural funds.

The Commission is committed to making the largest possible cuts in the industrial levy and finding ways in which ECSC research activities can be brought within the EU's R&D framework.

About 28&percent; of the current budget is spent on research into areas such as reducing manufacturing costs, improving product quality, extending the applications of steel, finding new markets and developing clean-coal technology.

The net budgetary contributors claim that the surplus should be repatriated and, moreover, it should go to governments rather than back to the companies which paid it. “We would say that this is the same as tax income,” said one member state official. “Once it has been levied from the companies, it becomes the responsibility of the state.”