The Cohesion Policy is the European Union’s Strategy to support the “overall harmonious development” of its regions. It contributes to the strengthening of economic, social and territorial cohesion in the European Union. The legal basis can be found in article 174 of the Treaty on the Functioning of the European Union (TFUE).
The 8th report of Cohesion Policy can be found here.
Opportunities and challenges generated by the green and digital transition
Within the introductory part, the Communication outlines that “Cohesion in the European Union has improved, but gaps remain”. To this extent, the Cohesion Policy report assessed the evolution of the regional disparities on a long-term level, but also the short-term negative consequences of the Covid-19 pandemic. The report outlines that the pandemic has had an asymmetric impact on the EU regions, while displaying the differences that exist among regions in terms of the healthcare capacities and economic structures.
The pandemic has reportedly generated the largest recession since 1945. While significant improvement has been made regarding social inclusion and the raising of employment rates, several structural challenges continue to pose threats. While there have been registered improvements in terms of increasing the employment rates, regional disparities remain more rampant compared to the period preceding the 2008 financial crisis. Nonetheless, the report highlights that the Cohesion Policy has contributed to the reduction of disparities. Economic research shows that in 2023, GDP per capita will be 2.6% higher in less developed regions, as a result of the support offered by the cohesion policy throughout the 2014-2020 programming period.
Furthermore, amid the context generated by the pandemic, the cohesion policy helped regions respond to the crisis. For instance, additional funding was mobilized and co-financing rates were increased. Nonetheless, the report states that the cohesion policy should now return to its core mission: contribute to the reduction of disparities among the EU regions and promote regional development on a long-term basis.
Furthermore, the report emphasizes that further investments in infrastructure, skills, innovation and governance have considerably contributed to driving convergence on regional level throughout the recent years. Nevertheless, one particular challenge is represented by the fact that growth drivers are concentrated within the more developed EU regions. Throughout the 2014-2020 programming period, approximately 50% of the cohesion policy investments supported infrastructure. In order to ensure long-term sustainability and competitiveness.
Another challenge is represented by the fact that skills endowment tends to remain unequally distributed throughout the EU regions, with a higher concentration in the more developed regions. On the opposite side, less developed EU regions tend to leg behind in terms of digital and life-long learning skills. Furthermore, the skills gap is also visible on the urban versus rural environments.
Analogous to the distribution of skills, entrepreneurship also tends to be concentrated in larger cities and the more developed regions. In addition, the regional innovation divide has increased in the European Union. One of the main causes which accounts for the discrepancies among EU regions in terms of innovation lies into the weaknesses of regional innovation ecosystems. One of the ways in which this issue can be addressed lies in continuing to invest into the smart specialisation strategies.
As far as governance is concerned, there have been significant improvements in the EU. The improvement of institutions can increase the efficiency of investments, the levels of innovation and entrepreneurship, which on a long-term basis contribute to economic growth.
Throughout the upcoming decades, the economic growth in the EU will be driven by the green and digital transitions. The twin transition will bring across a significant number of opportunities, but the transition process will also encounter several challenges. As such, the Cohesion Policy report proposes the enhanced promotion of job-to-job transitions to green and digital sectors, in addition to bridging the gap between the new specificities of the job market and the required skills. Within the upcoming years, the job offers will be boosted in fields such as recycling, renewable energies, ecosystem services.
Solutions to address causes of disparities among regions
Amid the array of challenges generated by the green, digital and geographic transformations, the report proposes several ways in which the Cohesion Policy can bring a contribution to the addressing of these challenges. First of all, the Cohesion Policy aims to bring European citizens economic perspectives for each region. Secondly, it wants to address the citizens’ concern about their quality of life and employment perspectives. Thirdly, the Cohesion Policy aims that the costs of the new challenges are shared in a just and fair manner.
Furthermore, the Cohesion Policy proposes several ways in which the new causes of disparities among EU regions can be addressed. As such, the report highlights the importance of ensuring a fair transition. To this extent, the report outlines that the Just Transition Mechanism could be extended in order to address the social costs of the climate change mitigation. In addition, partnering with civil society actors from all territorial levels can contribute to a fair transition.
Secondly, the report proposes that the strengthening of resilience to asymmetric shocks as a way to contribute to the addressing of the new causes of disparities to asymmetric shocks. Thirdly, the Cohesion Policy proposes to help the regions address the challenges derived from the changes taking place at demographic levels.
Strengthening the role of regions in shaping EU’s future
The 8th Cohesion Policy report comes up with specific proposals regarding how the regions could hold an enhanced role in shaping EU’s future. As such, the report outlines that innovation should be embedded at the level of all EU regions. Furthermore, the role of the regions could be enhanced by consolidating cross-border and interregional cooperation, through better governance of functioning border areas, efficient coordination of services, improved infrastructure at cross-border level.
In addition, the role of the regions in shaping EU’s future could be enhanced by consolidating the links between the urban and rural, to the mutual benefit of the residents from both categories. Last but not least, the needs of left behind places shall be addressed. Due to the fact that in some regions the traditional patterns of employment have been affected, there is currently a gap between the job market and the skills that are necessary to respond to the new transformations. Hence, bridging the gap between the skills and the realities on the job market would help these regions and stop the process of lagging behind.
Developing tools to deliver cohesion by 2050
According to the report, one of the ways of developing tools for the cohesion policy towards 2050 would be the enhancing of place-based approaches, that need to be correlated with the structural policies adopted at national levels and with the policy objective of “Europe closer to citizens”. Furthermore, multi-level governance and the partnership principle should be consolidated. In line with the simplifications introduced in the framework of the 2021-2027 programming period, additional beneficiary-friendly improvements in the process of delivering the cohesion policy shall be explored.
The report highlights the importance of consolidating the role of the cohesion policy in unlocking private and public investment in the green, digital and demographic transitions. To this extent, public and private actors shall be equipped with the necessary capacities in order to support such investments, through means such as tax revenues, fees and other sources of income.
Furthermore, the 8th Cohesion Policy report outlines the importance of increasing investments in citizens throughout their life. Specifically, it is of paramount importance to invest more in people’s education and training, as well as into skills that would contribute to developing the citizens’ ability to innovate and their potential to develop businesses. In addition, the complementarity between the Cohesion Policy and other EU policies shall be enhanced.
8th Cohesion Forum
The 8th Cohesion Forum will be held between 17th-18th March 2022 and it will foster debate among stakeholders on the lessons that can be drawn from the Covid-19 crisis, in order to ensure that no territory is left behind.
