Introduction

The financial and economic crisis that has plagued many countries worldwide and in Europe for the past several months is far from over. Regions are directly concerned by the budgetary restrictions that the situation requires. In this context, if one can welcome the setting up of the European Stability Mechanism as a key element, it will not be sufficient on its own. Restoring public finances and relaunching growth imply taking into more account policies implemented at regional level, which have shown to be efficient in a time of crisis.

The Pescara Summit allowed for an in-depth exchange of views among participants in four key fields for economic development, namely:

• education and training
• eco-innovation
• support to SMEs
• the link between culture, demographic change and economic revival

In those four fields, the following Recommendations have been adopted:

Recommendations

We, representatives of European Regions, gathered in the presence of national and EU representatives, of private stakeholders and associations in Pescara, Abruzzo, on 21-22 September 2012, convinced about the key role of regional authorities in the setting up of the growth objectives of the European Union, have adopted the following Recommendations:

• Education and training: a motor for regional development

Education and training have a key role to play to prepare young people for working life, by helping them to develop competences and knowledge which will help them to find employment and improve their employability in the long term so that young people can better meet the demands of a changing world. In this context, Regions have an important role to play:

1. It is important that the regions realize that combating youth unemployment also implies the transmitting of appropriate values. Therefore regions should consider ways of embedding generic employability skills in the school curriculum so that all young people are taught the core values and basic attitudes required by all employers, regardless of the particular profession they choose. This could include a work experience/placement programme for young people still in school or a raising of awareness for the value of work itself through early career guidance.
2. Regions should have a more active approach towards young people who are Not in Education, Employment or Training (NEETs) and those at risk of early school leaving. They should 1) Take early measures to prevent early school leaving by establishing a long term monitoring system of those at risk of early school drop-out and those who are already falling behind; 2) Introduce an individual educational path for those mostly endangered, which will involve cooperation between a teacher, a psychologist, a pupil and parents. 3) Provide a second chance to return to school for those who have dropped out by establishing second chance schools.
3. Regions should avoid a possible mismatch between the curriculum and the employers’ needs. As a consequence, regions should help voice the needs of their local enterprises towards the national authorities responsible for the design of the school curricula. Regions, if competent in this field, should also directly take the employers need into account when drafting their schools curricula.
4. At the same time, it is necessary that regions encourage their schools to additionally focus on general, transferable skills (e.g. communication, teamwork, initiative, etc) so that young people can better adapt to various occupational areas and can be more flexible to meet the demands of a changing labour market.
5. Regions should not underestimate the importance of vocational training to reduce youth unemployment. It is advisable for them to sustain incentives for employers to offer or support vocational training positions. In order to avoid precarious situations for the youth, regions should ensure that all students have suitable conditions for attending practical training with responsible employers, and that the students are paid in accordance with the law. Additionally, the vocational programmes should be as inclusive as possible and therefore aim at all unemployed young people (especially the long-term unemployed) to pursue further qualification or self-employment in order to prevent their de- professionalization.
6. Traineeships or internships might be an alternative way into the labour market. Regions should raise awareness of these possibilities and improve young people’s perceptions of these employment-related steps that currently seem to be underevaluated. In order to reach this goal, regions could develop more specific, tailored interventions for young people – like an internship programme for secondary school graduates or an apprenticeship programme to create a ‘first step’ into the labour market.
7. Mobility of young people must be enhanced. A traineeship or internship will have an even more beneficial impact if it is undertaken abroad. In this context, the AER Eurodyssey programme which allows each year more than 600 young people to undertake an internship abroad represents a major tool of the mobility policy of European Regions.
8. Also, regional authorities should encourage employers in both the public and private sectors to provide more opportunities for paid internships, apprenticeships, and other forms of work engagement. In this context it is important that the regions recognise the significance of small enterprises, which carry out a lot of “training” informally. Regions should consider whether the training and workplace learning needs of small and very small enterprises are being adequately understood and monitored and seek ways to improve or augment such training.
9. Internships, traineeship and apprenticeship can be successful means to reduce the youth unemployment rate. However, regions should take steps to ensure that these schemes are not abused and that trainees receive appropriate training by defining the rights of trainees, apprentices and interns. They have to confirm that precarious conditions are avoided, and that there are clearly defined conditions for internships (in respect of internship duration, remuneration, and full social protection), and clear indications of expected skills to be acquired.
10. Although internships might facilitate the labour market entry for some young professionals, there is the risk that they are used to serve as substitutes for regular job positions. Regions have to make sure that employers do not use apprentices to replace regular employees. Also, regions have to pay attention that young people participating in such schemes do not become locked into a pattern of recurrent short term unpaid work placements.

• Eco-innovation: a pool for employment in the territories

In the context of the current crisis, the declining industrial base of many European regions, the difficulty to create jobs through innovation and the difficult access to finance faced by enterprises, in particular SMEs, are not an unchangeable fate.

The green economy has the potential to restructure our industry towards future-oriented sectors and foster employment in Europe. These are undeniable challenges but regions, strongly aware of territorial realities and close to economic actors, can take them up. Eco-innovation is a fully-fledged example of the regions’ capacity to adapt to policies and global challenges. Still, they need the resources required. In that context, Regions underline the need to :

1. Invest significantly in a cluster policy that is tailored according to the territorial capital of the different regions and focusing, depending on the different stakeholders present in the territory. Only regions have sufficient knowledge of the area as well as a critical size to act as a relay and evaluate the suitability of one action or another in accordance with a region’s territorial identity. This cluster policy must aim at enhancing the links between research, innovation and market. It can only be successful if the triple helix model is applied, thereby involving the local and regional universities.
2. Improve SMEs’ access to applied and fundamental research, through an increased cooperation between SMEs and bigger corporations, cluster policy. Easing the participation of SMEs to European projects in the framework of Horizon 2020 via simplification measures is also a way to streamline the link between SMEs and the academic sphere.
3. Promote new financial instruments to encourage the financial institutions to support SMEs that invest into the greening of their activities or create eco-innovative products. Those projects create less immediate profitability but prove more sustainable than traditional economic activities: there is therefore a lack of appropriate mechanisms to support those investments.
4. Provide targeted funding opportunities for regions at European level, and therefore retaining and strengthening a regional programme in Horizon 2020. Cohesion policy alone cannot support all regional investments in green economy: Horizon 2020, aiming for excellence, should be designed in a way to better support triple helix players at territorial level.
5. Foster interregional cooperation and partnership in European regions. In order to innovate and set up ambitious eco-innovation strategies, experience-sharing, mutual learning, peer reviews, benchmarking are central instruments. In difficult times for regional budgets and finances, regional governments should not underestimate the added-value of interregional and international partnerships.

• Small businesses –being small is not necessarily a liability

Small and Medium-sized Enterprises (SMEs) are at the backbone of European economy: SMEs represent 99% of EU companies and provide 67% of all jobs.[1] Yet, uncertainties about the economic outlook, high international raw materials and energy prices and on-going difficulties in access to finance, threaten their survival.

With their tailored strategies, regions answer specific needs of SMEs within their territories that are otherwise not sufficiently addressed at the European or national levels. While national recovery plans mainly target large companies and the financial system, regions focus on the real economy. In fact, by supporting entrepreneurship and SMEs and by boosting their innovation capacity, regional actions can contribute to to strengthen regional economies and safeguard jobs.

The Assembly of European Regions and its members are following closely the implementation of the Small Business Act for Europe, and the development of the COSME and HORIZON 2020 programme and underline the need to: :

1. Promote entrepreneurship by supporting an entrepreneurial spirit and providing concrete information, training and coaching for business starters and entrepreneurs in specific situations such as business take-overs, innovation or financial difficulties. In this context focus should not only be on innovative, technology oriented or knowledge based businesses but all types of viable company creations should be encouraged.
2. Improve the environment for SMEs by reducing regulatory and bureaucratic burden in order to facilitate processes such as company creation or transfer, taxation, accounting or recruitment of employees.
3. Facilitate access of SMEs to international markets and public procurement and provide alternatives to traditional loan financing, offering guarantees and tailor small loans for micro enterprises. In this context regions can play a role in helping SMEs in trouble to find solutions by offering mediation activities with the involved stakeholders.
4. Improving SME’s access to European funding by cutting red tape and streamlining regulations in order to seize the full potential of SME’s involvement in COSME and HORIZON 2020, but also by making make it easier for Managing Authorities of Structural Funds to give support to SMEs.

• Demographic change and culture: two sectors with growth potential

The future of European health systems depends on the degree to which regions can change mindsets, foster innovation and introduce new procedures or models. European policy and funding programmes should support regions to make these changes, be it at organisational level or by supporting the deployment of ICT. In this context, Regions make the following recommendations:

1. The successor to the current European Public Health Programme should be entitled “More Health for Sustainable Growth” to demonstrate that quality services accessible to all citizens contribute to social cohesion and thereby to Europe’s economic recovery and sustainable growth. It should be clearly stated that cutting investment in health will hinder sustainable economic recovery to some extent. This programme should expressly acknowledge and target regions as key actors in shaping future health.
2. The EU should complement AER’s actions to inform regions about the potential for health-related investment in the future EU Cohesion Policy and to encourage regions and member states to include health as a spending priority in the future Operating Programmes.
3. The EU should support AER in implementing a leadership programme targeting regional decision-makers and looking at how to introduce innovation and change management in health. Europe needs open-minded individuals who are prepared to transcend the traditional boundaries of the health sector and implement innovative public procurement models, work with SMEs to develop new tools and services and introduce change.

AER welcomes the fact that the European Commission seems to have identified culture as a sector worth investing into with the proposed culture programme for the period 2014-2020 “Creative Europe” seeing its budget increase by 37% compared to current spending level. AER would like to remind all political leaders that the cultural and creative sector represents 4,5% of EU GDP and 3,8% of EU workforce with higher than average growth rates than other sectors. These rates could be even higher if we really started considering culture as a sector with high return potential. In this context, Regions make the following recommendations:

1. Cultural and creative industries need to be supported but tend to be more and more identified as the tree of economic profitability hiding a forest of cultural bodies living from grants and subsidies with no return whatsoever. This vision of the sector is outdated. All types of activities within the cultural sector can be profitable. Cultural heritage protection can help boost tourism in a region; a thriving cultural life will help a region attract multi-national companies which need to offer a good quality of life for their employees; a respected cultural scene will increase the soft power of a region. The European Commission must take the diversity of the cultural opportunities into account.
2. AER and the European Commission to work together to help deliver this message to European regions. A study to evaluate the return potential of the sector as a whole, must be jointly organised.
3. AER and the European Commission to help regions accompany their cultural sector in order to make the most of all economic growth opportunities.

Conclusions

Europe is at a crossroads: If we do not make reforms in a series of key areas, then the European Union, and Europe in general, will suffer;

The expertise gathered at AER proves it : The Regions, through their projects and strategies, are already helping to deliver solutions in response to the crisis in many of the various sectors requiring reform.

There are therefore no major challenges that the European Union can tackle without the help of the Regions. But Regions cannot act on their own. They need the support of national governments and European institutions in the setting up of their growth policies, in the spirit of multilevel governance.

In this context, European Regions reiterate their attachment to cohesion policy, which they consider as the main tool to achieve the objectives of an inclusive, intelligent and sustainable growth. Lastly, rather than a “democratic federation of nation states”, Regions call for a change in political culture, and for the respect of the principles of subsidiarity and partnership which would allow them to fully play their role of key actors in the revival of the European Union and of Europe in general.

[1] http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/12/395