Government struggles to match EU in €901m jobs funding scheme

A substantial share of the €901m from the EU designed to create jobs could be in jeopardy as some government departments may not be able to raise the matching funds, the European Commission said.

A report at the halfway mark on how every EU member is spending the €347bn in structural funds suggests it has helped 2.4m people find work, created 400,000 jobs in SMEs, supported 53,000 start-ups and helped fund broadband, water, transport, and research.

However, when the projects for Ireland were first earmarked in 2007, unemployment was at an all-time low and expected to decrease further, and priorities were different.

Since then, there has been a question mark over the ability of the State to fund even the reduced sums required by the EU to match its contribution of at least 50%. The report also warns that the difference between the poorer border, midland, and west region (BMW), and the rest of the country is growing.

The operational programme was revised and approved in Oct 2009 with three main priorities: Increase activation in the labour force; increase participation and reducing inequality; and technical assistance.

Financing from the EU was increased from 41% to 50%, and €22m of BMW funding which it was having difficulty spending was transferred to the second priority of increasing participation and reducing inequality.

By the end of 2011, there was 15,400 fewer in employment than in the previous year, with 1,807,800 in work. The unadjusted unemployment rate increased from 14.1% to 14.3%.

The expectation following the revisions and the mid-term evaluation in Nov 2011 was that the funds would be absorbed in full. “However, continued funding by parent departments continue to be a worry for some of the activities,” the report said.

It warned that since we are now in the penultimate year of the bailout programme, the Government must try to keep spending on target. “Governments must hurry up and take the opportunities that these funds offer, otherwise they run the risk of losing them,” warned commission spokeswoman Shirin Wheeler.

This is the first time the commission has done such a comprehensive study on how the one-third of the EU budget is spent by member states and on how successful it is in achieving its objectives of improving growth and equality in and between member states.

Regional policy commissioner Johannes Hahn said it shows the funds are helping countries weather the crisis and produce growth, but results are patchy, and some need to speed up their efforts to use the EU funds or they may lose out.