Explanatory Memorandum to COM(2009)333 - European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility) - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2009)333 - European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility). |
|---|---|
| source | COM(2009)333  |
| date | 02-07-2009 |
The main impact of the recession is on people: the top challenge for the EU today must be to prevent high levels of unemployment, to boost job creation and pave the way for economic renewal, sustainable recovery and growth. The EU reacted rapidly to the crisis through the European Economic Recovery Plan which highlighted the need to counter the effects of the crisis on jobs. The initial impact of the Plan is already promising, and social safety nets play their stabilising role. However, with labour markets continuing to deteriorate as they react to the economic downturn, additional action is needed.
Europe must not just tackle the recession but turn it into an opportunity to create a more productive, more innovative, better skilled and low carbon economy; one with open and inclusive labour markets, offering a more cohesive and equal society and jobs that respond to age, gender equality and work/life balance concerns and one which recognises and supports entrepreneurship i. The measures needed to combat the social and employment impact of the current crisis go hand-in-hand with the necessary structural reforms needed to address the long-term challenges of globalisation and demographic and climate change.
Europe's labour markets will be changed enormously by the crisis. Workers and companies must be given the necessary means to adjust to these changing realities: to retain sound jobs, enhance skills at all levels, get people back to work and create the conditions for new jobs.
The Commission Communication 'Driving European recovery' i outlined a number of points to help Member States design and implement appropriate and effective employment policies. Working on this basis, the Spring European Council and the three employment workshops held in Madrid, Stockholm and Prague in April 2009 defined three key priorities: maintaining employment, creating jobs and promoting mobility; upgrading skills and matching labour market needs; increasing access to employment. Finally, the Employment Summit of 7 May 2009 featured an exchange of views on these priorities, and found common ground on 10 actions i.
Building on this common effort, the Commission adopted a Communication on 3 June on 'A shared commitment for employment' i, the aim being to step up cooperation between the European Union and the Member States as well as between EU social partners, on these three key priorities, focussing on concrete initiatives and supported by all available Community instruments, in particular the European Social Fund (ESF) and the European Globalisation Adjustment Fund (EGF).
In order to alleviate the social impact of the crisis, it is essential to retain and bring more people into the labour market, especially women, older workers and other groups facing discrimination, and to prevent long-term unemployment and inactivity. The best way out of exclusion is employment: social Europe starts with jobs – yet even before the crisis, far too many EU citizens who were willing and able to join the labour market did not have access to a job.
2. CONTENT
In the Communication of 3 June, the Commission proposed a new EU microfinance facility for employment i (Progress Microfinance Facility) in order to give the unemployed the chance of a new start and to open the way to entrepreneurship for some of Europe’s most disadvantaged groups, including the young. This new Facility will extend the range of targeted financial support to new entrepreneurs in the current context of a reduced credit supply. Individual entrepreneurs and founders of microenterprises will also be assisted by way of mentoring, training, coaching and capacity building, in addition to interest-rate support from the ESF.
The Progress Microfinance Facility will add to other Community programmes by providing risk sharing instruments, debt and equity financing. It will capitalise on the experience of international financial institutions for example the EIB Group (European Investment Bank and European Investment Fund). Based on a joint management arrangement, the international financial institutions will provide further leverage by supporting banking and non banking providers of microfinance throughout the European Union.
3. SUBSIDIARITY AND PROPORTIONALITY
Given the currently reduced level of lending and the dramatic fall in outstanding loans (as demonstrated in the ex-ante evaluation accompanying the present proposal), ongoing Community and national efforts need to be strengthened to increase the supply of micro-credits to a sufficient scale and within a reasonable time-frame so as to address the high demand of those who need it most in this period of crisis i.e. unemployed or vulnerable people who want to start or develop micro-enterprises, including self-employment but do not have access to commercial bank credits.
Using Community resources is appropriate and responds to the Resolution of the European Parliament of 24 March 2009 i. Further, a single facility will concentrate leverage from international financial institutions. Finally, a pan-EU facility will avoid a dispersed approach thus increasing micro-finance supply in all Member States.
4. CHOICE OF LEGAL INSTRUMENT
The Commission proposal is to establish the Progress Microfinance Facility by a Decision which defines the roles and responsibility of the Commission only and does not create rights or obligations for Member States or individuals. A Decision is therefore the instrument best adapted to achieve the desired objective.
In line with the Inter-institutional Agreement of 17 May 2006 i between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management, the Facility is to be established by a reallocation of the existing budget. Under the terms of the 2006 Inter-institutional agreement, the EP added an additional EUR 114 million[8] to the budget for the Progress programme thus increasing the budget from EUR 628 800 000 in the Commission's initial proposal to EUR 743 250 000. This additional financing was to have been applied progressively in the later years of the programme i.e. from 2009. After examining all possible options, the funding would come from a reallocation of EUR 100 million (over 4 years) from the Progress Programme i to the new European Microfinance Facility for Employment and Social Inclusion (the Progress Microfinance Facility). This EUR 100 million from the existing budget could leverage more than EUR 500 million, in a joint initiative with international financial institutions, in particular the EIB Group.