1. 1 European Union Regional Policy – Employment, Social Affairs and Inclusion Commission proposals for Cohesion Policy 2014-2020 Addressing challenges of regions suffering from severe and permanent natural or demographic handicaps Peter Berkowitz Head of Unit Conception, Forward studies, Impact Assessment Directorate-General for Regional Policy

2. 2 European Union Regional Policy – Employment, Social Affairs and Inclusion Treaty on the Functioning of the European Union Art. 174 TFEU: « In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion. In particular, the Union shall aim at reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions. Among the regions concerned, particular attention shall be paid to rural areas, areas affected by industrial transition, and regions which suffer from severe and permanent natural or demographic handicaps such as the northernmost regions with very low population density and island, cross-border and mountain regions. »

3. 3 European Union Regional Policy – Employment, Social Affairs and Inclusion Regions suffering from severe and permanent natural and demographic handicaps Northernmost regions with very low population density, island, cross-border and mountain regions (Art. 174 TFEU) Mountains (relatively high share of employment in agriculture sector, relatively lower share in service sector; natural resources are major assets, availability of renewable energy sources, great diversity in economic performance) Islands (higher share of employment in service sector due to importance of tourism industry, small size of local markets, problems to reach larger mainland markets, access to basic services more difficult) Sparsely populated regions (support for extra costs for diseconomies of scale and for lack of critical mass)

4. 4 European Union Regional Policy – Employment, Social Affairs and Inclusion Regions suffering from severe and permanent natural and demographic handicaps Analysis shows that each category includes a wide variety of situations; extent of disparities within categories often compares with that observed when considering the EU-27 as a whole Although regions in a given category may share the difficulties tied to their specific geographical feature, they do not present the same socioeconomic profile and do not face the same development constraints Given difficulty to use such categories as reference for setting up specific regional development programmes, it is important to provide a flexible frame that allows to address specificities

5. 5 European Union Regional Policy – Employment, Social Affairs and Inclusion Components of demographic change at regional level Regional differences in fertility and mortality rates Main underlying causes related to socio-economic and cultural factors Variations in migration flows International migration: major flows towards Western and Southern Europe Interregional migration: outward migration of young people, influx of elderly Gender composition of regions Some regions face strong rural-urban migration of high-skilled females Health status and disability Will future gains in life expectancy be spent in good health and free of disability? Variations in changes in ethnic composition Ethnic changes arising from immigration, diverging patterns of certain minorities

6. 6 European Union Regional Policy – Employment, Social Affairs and Inclusion Demographic challenges Pressure on labour markets (shrinking labour force) Pressure on social infrastructure and public finances (increasing old-age dependency ratios) Pressure on regional planning structures (e.g. waste treatment) Pressure on the environment (e.g. urbanisation) Pressures on integration (ethnic population changes, e.g. Roma) BUT: Strong regional diversity of impact of demographic change, flexible frame needed

7. 7 European Union Regional Policy – Employment, Social Affairs and Inclusion Addressing territorial challenges in the proposed legislative frame Common Strategic Framework will set out how territorial challenges should be addressed Partnership Contract will set out integrated approach to territorial development supported by the CSF Funds Operational programmes will set out the contribution to the integrated approach for territorial development set out in the Partnership Contract

8. 8 European Union Regional Policy – Employment, Social Affairs and Inclusion Addressing territorial challenges in the proposed legislative frame Flexibility to choose the appropriate level of programming, multi-fund programmes for ERDF, ESF and Cohesion Fund or mono-fund programmes as well as multi-category programmes Implement integrated operations financed Integrated territorial investments Harmonisation of rules on community-led local development for all CSF Funds

9. 9 European Union Regional Policy – Employment, Social Affairs and Inclusion Regions suffering from severe and permanent natural and demographic handicaps Art. 111 CPR: Modulation of co-financing rate to take account of coverage of areas with severe and permanent natural or demographic handicaps defined as follows: –Island Member States eligible under Cohesion Fund and other islands (except if capital located on island or fixed link to mainland) –Mountainous areas as defined in national legislation –Sparsely (<50 inhabitants per square km) and very sparsely (<8 inhabitants per square km) populated areas Art. 10 ERDF-regulation: Operational programmes financed by ERDF shall pay particular attention to addressing specific difficulties of areas with severe and permanent and natural or demographic handicaps referred to in Art. 111 CPR

10. 10 European Union Regional Policy – Employment, Social Affairs and Inclusion Regions suffering from natural and demographic handicaps ERDF investment priorities of particular relevance for addressing natural and demographic handicaps, e.g.: Enhancing access to and use and quality of ICT (e.g. e-health) Enhancing competitiveness of SMEs (e.g. internationalisation) Supporting shift to low-carbon economy in all sectors (e.g. promotion of production and distribution of renewable energy sources) Promoting sustainable transport (to address remoteness) Promoting social inclusion and combating poverty (e.g. investment in health and social infrastructure) ESF investment priorities of particular relevance, e.g. Promoting employment (access to employment for job-seekers, active and healthy ageing) Promoting social inclusion (active inclusion, enhancing access to affordable, sustainable and high-quality services)

11. 11 European Union Regional Policy – Employment, Social Affairs and Inclusion Thank you for your attention.