Brussels, 31/10/2014 (Agence Europe) - On Thursday 30 October, the European Commission answered a joint letter sent it from France and Germany regarding the Youth Employment Initiative (YEI) (EUROPE 11173).
The Commission has clarified its response, seen by EUROPE, to the existing rules and underlines the limitations to the current multiannual financial framework. It also highlights the inappropriateness of this initiative for responding to challenges of a cyclical nature.
Implementation has not been fast. The outgoing Commissioner, Laszlo Andor (Employment, Social Affairs and Inclusion) provided a point-by-point response to the Franco-German proposals for improving this initiative, whose sluggish implementation appears to be frustrating everybody. This problem constitutes the cornerstone of the letter from France and Germany. The Commission is not disputing the observation made of there being a certain sluggishness, particularly with regard to the fact that the initiative was proposed in February 2013 and that so far only three national operational programmes have been adopted. Nonetheless, it points out that twenty-three other programmes are expected to be adopted by the end of the year.
Andor has also underlined that, “although rules and procedures may sound complicated, the only way to develop the YEI in the 2014-2020 period was to embed it in the European Structural and Investment Funds, which are not meant to be counter-cyclical financial instruments”. He explains that it will only be possible to efficiently fight against this kind of deficit by reinforcing the Economic and Monetary Union through the introduction of an exclusive budgetary capacity for the eurozone.
The status of NEETs is the second problem underlined in the letter sent to the Commission and involves recognising the status of NEETs (young people not in employment, education or training), the young people targeted in this initiative. Although this is a crucial point in implementation, the European regulation does not contain any incentive for establishing such a status. Andor says that this is not necessarily a difficulty and, on the contrary, could even provide so much welcomed flexibility. He told the French and Italian ministers that, “I believe this allows the flexible approach you have called for. I support your suggestion to have the NEET status recognised by public and deployment services or by the organisation in charge of the specific measure”.
With regard to the question regarding the date of recognising this status for a young person, member states will also be granted a certain margin for manoeuvre, as demonstrated in the French example where young people benefitting from the “future employment” measure can also receive co-financing from being YEI initiative for their training, even though they are already on subsidised contracts.
In the letter responding to a question of simplified cost management, France and Germany called for introducing a, “more simple and flexible procedure” for reimbursing the costs incurred. The Commissioner believes this is a very good idea. It is even more so because it is easy to implement such a measure immediately because the new regulation on structural funds allows for this. It is possible to introduce a simplified calculation of indirect costs at a flat rate of up to 15% of direct staff costs without any obligation to the managing authority to justify the rate used. It also allows calculating the remaining eligible costs of an operation on the basis of a flat rate of up to 40% of the direct staff costs without the obligation of justifying this rate; standard scales can be applied for unit costs in the use of the European Social Fund (ESF), as already proposed by Sweden, Italy, Austria and France.
Pre-financing and the EIB bridging loan. The letter from France and Germany calls for this controversial question to be tackled carefully, namely that of the pre-financing levels (1% and 1.5% for countries that have been receiving financial assistance).
Andor, however, again sought to address this question in an effort to cut short a debate he deems superfluous. It seems difficult to imagine that member states will now open up the debate again on the regulations governing the way in which the European budget functions, which would be the only way of modifying this rate. He also said that, “amending the regulations at this stage would cause delays to implementation”.
The difficulties created by this low rate, a further deepening in national budget deficits because reimbursement of total costs incurred in this initiative could, in a year's time or longer, be completely circumvented. This would be possible thanks to European Investment Bank bridging loans. The EIB is able to quite swiftly lend an amount equivalent to what a member state expects from the EU budget, with the advantage that this loan is not taken into account in deficit calculations. The Commissioner said that the Commission would be prepared to propose facilitating meetings with the EIB in this connection. He subsequently pointed out that to his knowledge, Spain was the only country to have benefited from such an option. (JK)