UVAL

1. Methodology for Assessing the Impact of Major Projects on Employment UVAL • Sara Savastano, UVAL • sara.savastano@tesoro.it

2. Methodology for Assessing the Impact of Major Projects on Employment • OBJECTIVES • To make and ex ante evaluation of employment impact of Major Projects (COUNCIL REGULATION 1260/1999 Art. 25/26) • To take better account of employment impact of major projects at the early stage of the decision making process during the preparation of the project proposal • To help member states and/or the managing authorities, by means of an user friendly procedure, estimating and evaluating the composition of the labour demand in a major project financed by the EU. UVAL

3. MOTIVATIONS • Lack of information, on the feasibility studies prepared by Italian managing authorities, upon the relation between major projects and job creation • Delay in the approval process by the services of the European Commission: request of comments and integrations especially on this topic • As a matter of fact, in the Special Issue of the Annual Report 12/2001 of the European Court of Auditors, there is evidence of difficulty in evaluating impact of communitarian programmes on employment UVAL

4. Major Projects • Definition Major Projects: • Art. 25 of the Council Regulation 1260/1999 of June 21st states: • The Structural Funds may finance expenditure in respect of major projects, i.e. those: • a) which comprise an economically indivisible series • of works fulfilling a precise technical function and • which have clearly identified aims; and • b) whose total cost taken into account in determining • the contribution of the Funds exceeds 50 Million EURO. UVAL

5. Different type of MP Infrastructureinvestment Productive investment Transport Infrastructure UVAL Private Structure for services and goods production Other Public Infrastructure

6. Major Projects • 30 MP presented by MA to EU from 2002 • 9 part of the Transport National Operational Program • 7 part of Regional Operational Program SICILY • 6 part of Regional Operational Program CAMPANIA • 5 part of Regional Operational Program PUGLIA • 2 part of Regional Operational Program CALABRIA • 1 part of Regional Operational Program SARDEGNA • At April 2006 only 7 fully approved UVAL

7. Iter of Approval UVAL

8. Iter of Approval • Comments on the procedural aspect (lack of documentation • on specific topics, authorizations, concerning • the implementation of the project) • Technical Comments: (Demand Analysis, • Sensitivity and risk Analysis, Economic Analysis, Financial • Analysis, Environmental Impact, Territorial Impact Analysis • Employment Impact Analysis) UVAL

9. MP and Employment (2) • Impact of Major Projects on employment: • Art. 26 ….the member states or the managing authorities shall provide an ex ante evaluation of the contribution to the major project on employment. In particular: • a) the direct and indirect effects on the employment • situation, as far as possible in the Community; • b) The Commission shall appraise the project, • consulting the EIB if necessary, in the light of the • expected economic and social benefits, particularly in • terms of employment, having regard to the financial • resources deployed UVAL

10. Employment Data and MP: Theory versus Practice • THEORY: • Specific surveys on construction firms: data on demand and supply of labour in each sector of interest • Example: Survey on construction firms of public infrastructure: • Past employment conditions • Individual characteristics of employees (age, sex, education) • Average wages received (actual and past) • Sector of origin • Geographical mobility (on the local, national and European market) • Sectoral mobility • Recruitment strategy of the firms involved in the project UVAL

11. Employment Data and MP: Theory versus Practice • PRACTICE • Unavailability of firm data and labour data at the sector level (construction of roads, railways, airports, container terminals, etc…) • Italian Institutions who collect data on construction firms do not have data disaggregated on specific public infrastructures • Construction sector in Italy encompasses public work and building construction: difficulty to compute the relative contribution to employment. UVAL

12. Employment Data and MP:Proposed Solution • In our methodology we use the national quarterly labour force survey (RTFL) carried out by the Istat - the national statistics institute -, • RTFL provides population estimates for the main labour market characteristics, such as employment, unemployment, inactivity, hours of work… UVAL

13. Active Population Employed persons are all persons who during the reference week worked at least one hour for pay or profit, or were temporarily absent from such work. Unemployed persons are all persons who were not employed during the reference week, had actively sought work during the past four weeks and were ready to begin working immediately or within two weeks Inactive Population are all persons who are classified neither as employed nor unemployed. RTFL and ILO UVAL

14. The matrix reports the entrance, exit, and permanence of the labour force in the labour market. It is therefore possible to compute the probability of transition between employment state. It summarizes the composition of the labour demand (employed at a specific date where previously employed, unemployed or inactive) The strongly underline assumption is that the project under analysis has only marginal effect on the overall economy, and therefore, the composition of the employment follows the aggregate level of employment Italian Quarterly Labour Force Survey UVAL

15. Italian Quarterly Labour Force Survey UVAL

16. Italian Quarterly Labour Force Survey ·N1/TOt+1= % of employed in t+1 already employed; ·N2/TOt+1= % of employed in t+1 previously unemployed ·N3/TOt+1= % of employed in t+1 previously inactive. UVAL

17. Italian Quarterly Labour Force Survey1998-2002 UVAL

18. Methodology Procedure (1) • Based on RTFL we have prepared an excel spreadsheet that MC/MA will complete. • User friendly procedure to compute employment composition during the construction and operational phases • Common methodology for all MP => advantage of comparability • MC/MA have to fill only few cells and comment the results based on territorial, sectoral and labour market context UVAL

19. Methodology Procedure (2) • What does the methodology compute: • Direct and Indirect Employment Composition of skilled and unskilled workers based on their previous employment activity (employed, unemployed or inactive) • The hypothesis is that skilled workers were already employed in other activities. • Unskilled workers are divided into previous employed, unemployed and inactive workers based on the share computed from the RTFL UVAL

20. Methodology Procedure (3) • What and Where are the data to use: • Engineers and technical project analysts will estimate the amount of workers needed divided into skilled and unskilled workers during the construction and the operational period. • By filling a few cells of the excel spreadsheet the results are computed automatic UVAL

21. Methodology Procedure Example UVAL From RTFL From RTFL Only cells to fill

22. UVAL

23. POTENTIAL User friendly procedure Use the best data available Comparability Discussed with EU LIMITATIONS Use national data instead of regional ones Same procedure for direct and indirect job creation Potential and Limitations UVAL

24. Specific Next Steps • Use Input Output Procedure to compute indirect effect • At the moment we have the procedure using national input output matrix • We are involved in a project for the regionalization of the input output matrix UVAL