Standard Summary Project Fiche Project PL Sub-programme: Economic reform and industrial restructuring

Transcription

1 Standard Summary Project Fiche Project PL Sub-programme: Economic reform and industrial restructuring 1. Title: Alleviation of social costs from coal and steel restructuring and regional development in Silesia 2. Location The project will be implemented in Poland at the regional and local level. The regional development measures will be implemented in the new Silesia (Slask) Voivodship, as a priority region for industrial restructuring, regional and employment policies. Activities resulting from the restructuring of the coal and steel sectors will be implemented in the Silesia Voivodship and in those selected areas of Poland, where coal mines and steel works under restructuring or prior to privatisation are located. This refers to Lower Silesia (Walbrzych area), Malopolska, Podkarpacie and Staropolska regions (especially locations from the historical Central Industrial District, including Stalowa Wola, Ostrowiec Swietokrzyski; Czestochowa; and post-war steel sector development locations such as Kraków Nowa Huta). 3. Objectives: The wider objectives of the project, as identified in the Accession Partnership, are: to introduce the criteria and methods of the national policy on regional development and cohesion into the practise of socio-economic development policy and programming in Poland; to facilitate the restructuring of the coal and steel sectors in Poland. The project therefore is both regional and sectoral in its approach and in the measures that it will use, providing a framework matrix of instruments, some of which will be used within the regional development paradigm and concentrate solely on the Silesia area, while others will reflect sectoral priorities and policies, impacting in Silesia and in other locations where coal mines and steel mills are located. The immediate objectives of this project, in line with the priorities of the National Programme of Preparation for Accession, are: to implement regional policy in accordance with EU regional policy principles and mechanisms, through the practical introduction of operational and institutional solutions and co-ordinating instruments in a pilot project implementing selected measures from the regional Operational Programme currently under development; to alleviate the social and regional costs of the closures and downsizing in coal mines and steel works, including the creation of alternative workplaces. In this respect the project will contribute to the realisation of the short term priorities in the areas of steel and coal sectors restructuring which have been identified in the Accession Partnership, as well as in the National Programme of Preparation for Accession.

2 As stated above it is intended that this pilot project be implemented mainly in the Silesia Voivodship and under conditions similar to those of an Objective 1 - structural development and adjustment of regions whose development is lagging behind - approach. Under the project a co-ordinated operationalisation of instruments from the regional Operational Programme and from national sectoral policies will be tested in the Silesia region. It will therefore contribute to the implementation of the regional strategy on structural adjustment in a high priority region. 4. Description Background and Justification The project integrates a wide package of measures co-ordinated by the Ministry of Economy within the Phare 1998 and 1999 programmes, which will strongly impact on the Silesia region. They encompass actions undertaken in the area of industrial restructuring, development of national policy on regional development and cohesion, and the regional operational programme for integrated regional development in Silesia. In comparison with Phare 1998 it is proposed to introduce a modified structure of the projects, which will address to a greater extent the issue of integrating sectoral programmes (coal and steel), with Government priorities in the area of the national policy on regional development and with actions identified in the regional Operational Programme, which task as of October 1998 is being implemented under the leadership of the Ministry of Economy. The National Programme of Preparation for Accession identifies a number of key issues in the area of restructuring of the coal and steel sectors in Poland. In the medium term the NPPA identified the rationalisation of employment in the coal and steel sectors and the social measures linked with this process as one of the top priorities for Poland in the pre-accession period. In order to address these priorities, in June 1998 the Polish Government presented to the European Commission a first draft of the Restructuring Programme of the Polish Steel Industry. The Government has also put forward a new coal restructuring programme in June The project will be implemented in the new administrative environment in the country, introduced in January 1999, which aims at the widest possible introduction of the concept of subsidiarity into the administrative system. In this way the gminas (local level selfgovernment) are responsible for those tasks which address the basic needs of their inhabitants, the powiats deal with tasks whose scale requires the resources of more than one gmina, while the key task from the point of view of this project at the voivodship level is that of regional development. The first measure supporting the implementation of this programme was proposed for Phare 1998 financing, as an element of the Alleviating of social and regional costs of coal and steel restructuring in Poland project. The present subprojects are based on the instruments included in the Phare 98 project and aim at continuing and supplementing this measure, with the use of the mechanism of annual allocation of financing coming from Phare, national, regional and local budgets and participating companies, allowing for the proper financial mix.

3 Outputs: Implementation of pilot local investment projects, targeting selected components of the infrastructure which are of special relevance in view of the regional development operational programme, and in an appropriate mix of alternative job creation, SME development, innovation and technology transfer, education and labour market, environment, transport, business facilities and other measures. Practical introduction of instruments aimed at attaining sustainable regional restructuring and growth patterns and trends - in particular addressing the needs of coal mining dependent gminas - and remaining in line with national regional development priorities, selected sectoral strategies and criteria of EU Structural Funds. Regional operationalisation and co-ordination with sectoral instruments (especially in the area of the social packages for the coal and steel sector, and supports for investments in coal mining dependent gminas in the region) in a coherent fashion and under the framework of the regional operational programme. Introduction of regional development instruments under the principles of EU Structural Funds and matching financing from Phare, government and regional sources, in public partnerships and public-private sector co-operation. Up to 4,000 people trained in new skills necessary for employment outside of the core steel sector people disengaged from the steel sector by inclusion in the vocational activity payments programme leading in that period to employment outside the sector. Creation of estimated new work places or the identification of existing employment opportunities (including self-employment) for 7,000 people formerly employed in the steel sector people trained in new skills necessary to find employment or self-employment outside the coal sector. 900 people disengaged from the coal sector by inclusion in the vocational activity payments programme leading in that period to employment outside the sector. Creation of estimated new work places or the identification of existing employment opportunities (including self-employment) for people formerly employed in the coal sector. Inputs: The project includes the following inputs: Regional development measures. Small scale infrastructure The project will encompass the provision of support - on a competitive basis - as developed in the EU Flood Damage Reconstruction and STRUDER programmes towards small scale infrastructure projects in priority areas identified (taking account of criteria of relevance, urgency, project preparedness) in the regional Operational Programme, notably for coal and steel dependent gminas. The Phare grant will cover up to 50% of the net investment costs, with the minimum grant amount of ECU 20,000 and the maximum grant at ECU 500,000. The rest of the investment costs will be borne by the national budget (25%) and gmina authorities

4 (25%). The grants may be used for co-financing of construction or modernisation of facilities owned by the local or other authorities. The municipal authorities will be responsible for contracting the works and supplies, and for fulfilling all the requirements linked with receiving the grant, in particular for ensuring that the facility co-financed in this project will continue to be used for the stated purposes for at least 5 years. This will be achieved through the inclusion in the selection procedure of strict guidelines on the issues of sustainability and quality of business planning for the projects involved. In justified cases the local authorities availing of the investment grant will also be provided with support in upgrading the operations of the existing infrastructure of relevance to the aim of the project and/or the infrastructure developments co-financed through the project, especially in the area of business development related service provision and alternative job creation. Steel sector restructuring measures. In order to achieve the above-mentioned results, the following measures will be implemented: 1. Retraining programme, including: vocational retraining programmes for laid off steel sector employees; organisational and advisory support in seeking new employment; information and counselling instruments for employee-employer matching. Retraining will be open to all steel workers laid off and leaving employment in the sector. The component will include individual needs and opportunities analyses, vocational counselling and financing of retraining programmes. Full financing for one retraining programme and related counselling will be available for each person (steel worker) who will be leaving the sector and has been laid off and who is entitled to the social activity benefit (see below), according to the relevant decree of the Minister of the Economy and the steel restructuring programme. The individual training needs, related to the education, skills and employment potential of each person concerned, will be analysed by the relevant institutions, and on this basis the best retraining programme will be proposed. Group training and individual training will be available from selected regional and local training institutions according to minimum standards. Each enterprise participating in the scheme will submit monthly schedules and necessary documentation to this effect, to be verified and certified by the Regional Development Agency of the area concerned, upon which the SME Foundation will provide Phare subsidies to these institutions for training. To this effect, the Polish SME Foundation will enter into an agreement (including selection criteria) with the Regional Development Agency concerned which will be obliged to cooperate with the institutions responsible for labour relations, the unemployed and vocational training and will be responsible for the organisation, verification of trainees, monitoring of contractors, co-ordination of these actions, monitoring of the trainees, provision of regular reports and statistics on progress achieved, and who will develop a standard training contract with local qualified training providers. The signature of this agreement will be a prerequisite for any expenditure. 2. Co-financing of vocational activity benefits Phare funding will be provided for the co-financing of vocational activity benefits Retraining Contracts. These Contracts will be available only to workers laid off and leaving

5 employment in the sector and actively seeking new employment in this period, and will also be directly tied to participation in the retraining programme and vocational counselling, referred to above. The Retraining Contract is viewed as an important component of the programme for restructuring the sector, as it targets the vocationally active group, but at the same time those whose skills and education will make re-employment the most difficult. The Contract allows the beneficiary to receive over a maximum 12 month period of benefit payments, during which time the employee is mandated to retrain and leave the sector. The measure is important as it creates the possibility for workers about to leave employment with a certain level of income guaranteed for the time of searching for new employment, which in general is higher than the normal unemployment benefit. The monthly payments are stopped when the eligible former worker starts new employment outside the sector or starts a new private business, at which time the remaining benefit is paid as a lump sum (this measure is a stimulus for quick resignation from the benefit and a reward for finding employment outside the sector). Phare funding however will not be used to pay the normal unemployment benefit but only as a top-up to achieve a certain level of income and the Government will pay the amount corresponding to the normal unemployment benefit. Industry in turn will cover all of the social security costs related to the employees benefiting from the Retraining Contracts. The measures described above are designed for those workers, who are going to be dismissed by the employer and are therefore in need of support in finding a new source of income. Those workers who voluntarily decide to leave their job in the sector, are not entitled to the above benefits but are entitled to a lump-sum dismissal payment, set for the sector at digressive rates for the years In principle, Phare funding will not be provided for this measure. For the vocational activity benefits programme, described above, and similar to the retraining programme, each enterprise participating in the scheme will submit monthly schedules and necessary documentation to this effect, to be verified and certified by the Regional Development Agency of the area concerned, upon which the SME Foundation will provide Phare funding for this component. To this effect, the Polish SME Foundation will enter into an agreement with the Regional Development Agency concerned which will be obliged to co-operate with the institutions responsible for labour relations, the unemployed and vocational training and will be responsible for the organisation, verification of documentation, monitoring of enterprises, coordination of these actions, monitoring of the laid-off workers, and provision of regular reports and statistics on progress achieved. The agencies concerned will be responsible for the proper monitoring of the use of funds in order to avoid any abuse of the system and will use for this purpose the monitoring system based on relevant regulations and utilising the database already put in place. 3. Alternative job creation through SME development This component of the project will be targeted at the creation of new work places in local communities in particular need of restructuring their economies as a result of the closures or layoffs in the steel industry. Basically two schemes are envisaged: 3.1. Social security costs refinancing

6 In the case of the social security costs refinancing scheme, grants will be provided to this aim by the Polish SME Foundation for a limited duration (12 months) to employers outside the core steel sector, who take on laid-off steel workers for a minimum duration of two years. Agreements detailing the rules and mechanism of transferring the grants will be signed between the SME Foundation and Regional Development Agency or other agency in the area concerned, identified by the Government, following prior approval by the Commission. As in the case of retraining and vocational activity benefits, described above, the agencies concerned will be responsible for the organisation, verification of documentation, monitoring of enterprises, co-ordination of these actions, monitoring of the laid-off workers, and provision of regular reports and statistics on progress achieved Loan subsidies and extension of micro-credit schemes The second scheme will provide interest rate subsidies towards otherwise commercial loans from participating local banks and capital for non-banking institutions providing micro-loans, who will be identified with prior approval from the Commission, towards financing start-ups created by former steel sector employees and their spouses, as well as for existing SMEs for development leading to the employment of former steel workers, again for a certain minimum duration. For this purpose, the SME Foundation will enter into an agreement with participating banks and local financial institutions regarding eligibility and other criteria of loan award and monitoring. In order to make sure that the scheme will make an impact, funding will be provided for business services, notably counselling, consulting, information and training, in particular for SME start-ups created by former steel workers or their spouses, as well as to existing enterprises interested in employment of former steel workers. This funding will be provided on a competitive basis to existing local and regional institutions who have specialised in the provision of such services to SMEs, according to minimum criteria to be met, as part of the existing national SME services network. Coal sector restructuring measures. In order to achieve the above-mentioned outputs, the following measures will be implemented: 1. Retraining programme, including: vocational retraining programmes for laid off and leaving employment employees; organisational and advisory support in seeking new employment; information and counselling instruments for employee-employer matching. Retraining will be provided to eligible coal miners laid off and leaving employment in the sector. The component will include individual needs and opportunities analyses, vocational counselling and financing of retraining programmes. Full financing for one retraining programme will be available for each person leaving the sector, according to the relevant decree of the Minister of the Economy. The individual training needs, related to the

7 education, skills and employment potential of each person concerned, will be analysed by the Vocational Counselling Office created in each coal mine by the Mining Labour Office, and on this basis the best retraining programme will be proposed. Group training and individual training will be available from selected regional and local training institutions according to minimum standards. Each enterprise participating in the scheme will submit monthly schedules and necessary documentation to this effect, to be verified and certified by the Government Agency for the Restructuring of Coal upon which the SME Foundation will provide Phare subsidies to these institutions for training. To this effect, the Polish SME Foundation will enter into an agreement with the Government Agency for the Restructuring of Coal and the Mining Labour Office in warranted cases, which will be obliged to co-operate with the institutions responsible for labour relations, the unemployed and vocational training and will be responsible for the organisation, verification of trainees, monitoring of contractors, co-ordination of these actions, monitoring of the trainees, provision of regular reports and statistics on progress achieved, and who will develop a standard training contract with local qualified training providers. 2. Co-financing of vocational activity benefits Phare funding will be provided for the co-financing of two year vocational activity benefits. These will be available only to workers laid off and leaving employment in the sector and actively seeking new employment in this period, and will be tied to the retraining programme and vocational counselling, referred to above. This measure is viewed as an important component of the programme for restructuring the sector, as it targets the vocationally active group, but at the same time those whose skills and education will make re-employment the most difficult. The measure is important as it creates the possibility for workers to leave employment with a certain level of income guaranteed for the time of searching for new employment, which in general is higher than the normal unemployment benefit. The monthly payments are stopped when the eligible former worker starts new employment outside the sector or starts a new private business. Phare funding however will not be used to pay the normal unemployment benefit but only as a top-up to achieve a certain level of income and the Government will pay the amount corresponding to the normal unemployment benefit. After the beneficiary of the vocational activity benefit starts new employment he/she is entitled to receive an additional dismissal payment, which is digressive, with the exact amount dependent on the date of dismissal. This measure is a stimulus for quick resignation from the activation benefit and a reward for finding employment outside the sector. The measures described above are designed for those workers, who are dismissed by the employer and are therefore in need of support in finding a new source of income. Those workers who voluntarily decide to leave their job in the sector, are not entitled to the above benefits but are entitled to a lump-sum dismissal payment. In principle, Phare funding will not be provided for this measure. For the vocational activity benefits programme, described above, and similar to the retraining programme, each enterprise participating in the scheme will submit monthly schedules and

8 necessary documentation to this effect, to be verified and certified by the Government Agency for the Restructuring of Coal upon which the SME Foundation will provide Phare funding for this component. To this effect, the Polish SME Foundation will enter into an agreement with the Government Agency for the Restructuring of Coal which will be obliged to co-operate with the institutions responsible for labour relations, the unemployed and vocational training and will be responsible for the organisation, verification of documentation, monitoring of enterprises, coordination of these actions, monitoring of the laid-off workers, and provision of regular reports and statistics on progress achieved. The Government Agency for the Restructuring of Coal will be responsible for the proper monitoring of the use of funds in order to avoid any abuse of the system and will use for this purpose the monitoring system based on relevant regulations and utilising the data-base already put in place. 3. Alternative job creation through SME development This component of the project will be targeted at the creation of new work places in local communities in particular need of restructuring their economies as a result of the mine closures or layoffs in the steel and coal industry. Basically two schemes are envisaged: 3.1. Social security costs refinancing In the case of the social security costs refinancing scheme, grants will be provided to this aim by the Polish SME Foundation for a limited duration to employers outside the coal sector, who take on laid-off coal workers for a certain minimum duration, on the basis of an agreement between the SME Foundation and the Government Agency for the Restructuring of Coal, following prior approval by the Commission. As in the case of retraining and vocational activity benefits, described above, the Government Agency for the Restructuring of Coal will be responsible for the organisation, verification of documentation, monitoring of enterprises, co-ordination of these actions, monitoring of the laid-off workers, and provision of regular reports and statistics on progress achieved Loan subsidies and extension of micro-credit schemes The second scheme will provide interest rate subsidies towards otherwise commercial loans from participating local banks and capital for non-banking institutions providing micro-loans, who will be identified with prior approval from the Commission, towards financing start-ups created by former coal sector employees and their spouses, as well as for existing SMEs for development leading to the employment of former coal workers, again for a certain minimum duration. In order to make sure that the scheme will make an impact, funding will be provided for business services, notably counselling, consulting, information and training, in particular for SME start-ups created by former coal workers or their spouses, as well as to existing enterprises interested in employment of former coal miners or steel workers. This funding will be provided on a competitive basis to existing local and regional institutions who have specialised in the provision of such services to SMEs, according to minimum criteria to be met, as part of the existing national SME services network.

9 5. Institutional Framework The project will be implemented under the co-ordination and leadership of the Ministry of Economy as an integrated programme, especially in the areas of industrial restructuring and the national policy on regional development and cohesion, and in co-ordination with the Operational Programme for integrated regional development in Silesia. A Project Monitoring Committee (PMC) will be established to co-ordinate actions at the national level with respect to this project. The PMC will be part of the Monitoring Committee of the Alleviation of Social and Regional Costs of the Coal Sector Restructuring Phare project. The PMC will especially be responsible for setting up the criteria for granting assistance to the small scale infrastructure projects in the regional subproject. Decisions on small scale infrastructure project selection will be reached at the regional level (Regional Committee in the Silesia Voivodship). The Regional Committee is being established under the SPP programme. Support to the operations of the measure (including on the spot verification and monitoring actions) will be provided through an appropriate regional development body, with a proven track record and institutional capacity (such as the existing Regional and Local Development Agencies), and selected by the Regional Monitoring Committee. On the basis of PMC decisions the Polish SME Foundation will enter into a grant agreement with the gminas at the local level, whose projects will receive the grants. The agreement will specify the mechanism and conditions for transferring the funds, their use, reporting, monitoring and auditing. The gmina authorities will be responsible for all contracting under supervision of the Polish SME Foundation, under the detailed provisions as developed under existing Phare programmes. In the Steel Sector Subproject (Subproject 2) the Ministry of Economy is the lead ministry responsible for the restructuring of the sector. Project implementation mechanisms developed under the Phare 1998 intervention will be used, subject to modifications resulting from the experiences gained. Decisions on specific project arrangements within the schemes will be made by the Programme Authorising Officer, based on PMC recommendations. The project will also involve the selection of appropriate regional operators (Regional Development Agencies, Business Support Organisations, local social and business partners), who will be responsible for the implementation of specific actions in co-operation with regional and local authorities, administrations (labour, social security), existing local and regional development structures. Services for SMEs will be provided in line with the National SME Services Network quality standards. Regional partners will be selected on a competitive basis and provided grants towards the specific costs of the projects. The Ministry of Economy is responsible for the restructuring of the coal sector in Poland. Under the Coal Sector Subproject (Subproject 3) project implementation mechanisms developed under the Phare 1998 intervention will be used, subject to modifications resulting from the experiences gained. Decisions on specific project arrangements within the schemes will be made by the Programme Authorising Officer, based on PMC recommendations. At the regional level the specific actions of the project will be implemented by the Government Agency for the Restructuring of Coal (located in Katowice) and the Mining Labour Offices, in close co-operation with the enterprises and coal mines under restructuring, appropriate regional, local governmental and other administrations (Voivodship offices, Labour Offices, Social Security Offices and others). 6. Budget (MEUR):

10 Investment Institution Building Total Phare Poland - Government Poland- Regions and industry 1. Regional Development Subproject Small scale infrastructure Alleviation Social Costs - Steel Sector Sub-project 2.1. Retraining Vocational Activity Benefits Alternative Job Creation SMEs Alleviation Social Costs - Coal Sector Sub-project 3.1. Retraining Vocational Activity Benefits Alternative Job Creation SMEs Total Total 7. Implementation Arrangements Phare DIS procedures for tendering, contracting and payments will be followed by the Polish SME Foundation as an Implementing Agency under the Phare programme. 8. Implementation Schedule Start of tendering Start of project activity Completion 1. Regional Development Sub- project Small scale infrastructure Alleviation Social Costs - Steel Sector Sub-project 2.1. Retraining Vocational Activity Benefits Alternative Job Creation SMEs Alleviation Social Costs - Coal Sector Sub-project 3.1. Retraining Vocational Activity Benefits Alternative Job Creation SMEs Total 9. Equal Opportunity The issue of gender equality - and in justified and appropriate cases affirmative action towards minorities and groups of special concern - will be integrated into all levels of the objectives and actions under the project. 10. Environment Environmental Impact Assessment procedure will be applied, as appropriate, with respect to the investments supported within the scope of this project, according to the Council Directive EEC/85/337 issued on 27 June 1985 with amendments introduced by the Council Directive EC/97/11. Investments that fail the EIA test, as well as those that do not meet the standards of EU environmental acquis will not be eligible for support. Furthermore, investments that

11 improve environmental quality especially through public-private partnership in development of the environmental infrastructure and services will be given a high priority. 11. Investment criteria The criteria governing EU regional policy will be tested within the Polish institutional and regulatory set-up, with the resulting tasks being addressed by the Ministry of Economy, other departments and regional/local self-government and partners. Specifically this relates to the following criteria: Catalytic - Phare support will strengthen the regional development orientation of the new Polish administrative and institutional arrangements, and the social components of the sectoral restructuring programmes, which otherwise would have been taking place over a much more extended time frame and more modest scale. In addition the Phare project will strengthen the active social policy of the Government. Co-financing - the project is co-financed by the Polish partners - the national budget, regions and industry. IFIs are considering the co-financing of restructuring actions in the sectors involved. Additionality - the Phare project is not displacing other financing sources, especially from the private sector and IFI system. Project readiness and size - the project encompasses actions on the regional level, building on the capacities and capabilities established through earlier interventions. Therefore the project is ready for contracting and disbursement. Sustainability - the project will contribute to the creation of viable regional and sectoral (coal and steel) solutions beyond the date of accession and the measures involved will be continued over the next years in the region and potentially in other similar industrialised and urbanised areas. Competition: state aid provisions of the Europe Agreement will be respected. 12. Conditionality and sequencing The Phare funding foreseen for alleviation of social costs regarding steel restructuring (10 million EUR) will not start untill: The revised steel restructuring plan, to be prepared by the Polish authorities and promised by 15 September 1999, has been received and evaluated by the Commission and been presented to the Council. All individual viability plans of Polish steel companies have been received and evaluated by the Commission Complete information regarding the audited accounts for 1996, 1997 and 1998 has been provided by the Polish authorities to the Commission in order to enable it to assess state aids in the steel sector. The Polish legal instruments related to the social package for the steel sector have been adopted by the Polish Government. Furthermore: Funding will be conditional on: The project will be non-discriminatory, i.e. all coal and steel workers of the region who are laid off from all companies will be able to benefit from the social protection package.

12 Adherence to the implementation schedule of individual restructuring plans regarding the social measures and layoffs. State aid rules under the provisions of the Europe Agreement will be respected. Effective cofinancing by the Government and the industry as proposed and effective monitoring and reporting by the agencies concerned. Commitment and effective participation by the Government in the SME development component

13 ANNEX 1 LOGFRAME PLANNING MATRIX FOR PROJECT Date Project Number Project Title Alleviation of social costs from coal and steel restructuring and regional development in Silesia Period Budget 31 MEUR Wider Objective Indicators of Achievement Sources of Information Assumptions and Risks (1) (2) (3) (4) To introduce the criteria and methods of the national policy on regional development and cohesion into the practise of socio-economic development policy and programming in Poland To facilitate the restructuring of the coal and steel sectors in Poland Fully developed concept of national policy on regional development formulated and accepted within the Government Co-ordination mechanism within the central Government in the area of regional policy put into practice Mechanism of regional contract between the central Government and the region implemented Criteria for selection of priority regions to receive increased support developed and accepted within the Government Public-private partnerships and co-operation in the area of regional strategies development and implementation introduced Number of sector-dependent gminas supported in diversifying economic base Number of coal mines closed Number of coal mines restructured / privatised Number of persons laid-off in coal Number of steel enterprises privatised Number of persons laid-off in steel sector Central and regional government documents, Government policy papers Studies and analyses Media reports National and international surveys Statistical reports Monitoring reports prepared by agencies participating in the project Regional development maintained as key focus of Government socio-economic policy Line ministries efficiently co-operate in the Government Committee for Regional Policy and Sustainable Development Government policy of decentralisation maintained Polish budget and other financing available in full programme period Sustained growth of the Polish economy Continued political stability Negotiations on accession to EU progressing Continuation of governmental policy regarding steel and coal restructuring Agreement with employers and trade unions Securing sufficient funds for sectoral restructuring in national budget and cofinancing by industry Immediate Objectives Indicators of Achievement Sources of Information Assumptions and Risks To implement regional policy in accordance with EU regional policy principles and mechanisms To introduce in a co-ordinated manner operational and institutional instruments from the regional Operational Programme and from national sectoral strategies To alleviate the social and regional costs of the closures and downsizing in coal mines and steel works Continued economic development of regions concerned To minimise unemployment as a result of coal and steel restructuring, including the creation of new workplaces To provide support under conditions similar to those of an Objective 1 Structural Funds approach to the implementation of the integrated regional development operational programme in the Silesia region Effective operations of Regional and Joint Project Monitoring Committees Co-financing arrangements including central, regional and local sources implemented Regional public-private partnerships introduced Objectives of the regional operational programme targeted in the project achieved Level of unemployment in region (Silesia) and other locations (steel) does not increase Economic growth of region (Silesia) and other locations (steel) continues at same level as before New jobs created in regions concerned Government policy papers Programme level monitoring data and information Studies and analyses, national and international surveys Evaluation reports Minutes of the Project Committees Reports of relevant regional and local institutions Statistical reports Local and regional organisations effectively involved in actions New administrative bodies in new regions effectively put in place Local and regional administration disposes of adequate financing Establishment of legal framework Agreement on full social packages with trade unions Continued promotion of foreign investment for regions concerned Proper co-operation between institutions involved

14 Results of Projects Indicators of Achievement Sources of Information Assumptions and Risks (9) (10) (11) (12) Implementation of pilot local investment projects, targeting selected components of the infrastructure which are of special relevance in view of the regional development operational programme Practical introduction of instruments aimed at attaining sustainable regional restructuring and growth patterns and trends, in line with national priorities on regional development, selected sectoral strategies and EU Structural Funds criteria Regional operationalisation and coordination with sectoral instruments (including social packages for coal and steel workers) Introduction of regional development instruments under principles of EU Structural Funds and matching financing In the steel sector: 4,000 people retrained 1,800 people on vocational activity benefits Investments finalised in time and within specified budgets Projects supported operational and contributing to the implementation of targeted priorities, identified in the regional operational programme Sectoral instruments and priorities included in the operational goals and activities of relevant regional and local institutions Institutions participating in the project trained in the rules of operations of EU Structural Funds Improvement of selected regional socioeconomic characteristics Number of training courses organised and number of participants in training courses Number of vocational activity payments made National and international surveys Government monitoring reports Programme level monitoring data and information Documents and reports of regional and local authorities and institutions Regional and local statistics on the economy Company specific comparative data Regional labour statistics Regional unemployment figures Media reports General economic trends remain in growth mode General economic situation does not deteriorate Quality of TA services provided stimulates expected results Supports accessed by beneficiaries utilised to ends foreseen in project design Measures proposed for coal and steel sectors under Phare 98 project introduced SME Foundation is able to conclude agreements with national, regional agencies and participating banks for effective delivery of inputs Proper co-ordination between agencies concerned 8,000 new jobs created Number of interest rate subsidies accorded and Demand from former coal and steel In the coal sector: number of SME loans workers for measures proposed and 1,000 people retrained Number of social security reimbursements sufficient demands from SME sector 900 people disengaged from the sector by inclusion made and number of people employed as a of the vocational activity payments result new jobs created Inputs (13) Local infrastructure development project grants Training courses, vocational payments, social security reimbursements, interest rate subsidies, grants for micro-credit schemes Total PHARE funds: 31 MECU; POLAND co-financing: 53 MECU (STATE BUDGET 38.5 MECU; REGIONAL AND LOCAL BUDGETS and INDUSTRY 14.5 MECU)

15 ANNEX 2 Cost Breakdown (MEUR) Investment Institution Total Phare Poland - Poland- Total Building Government Regions and industry 1. Regional Development Sub- project Small scale infrastructure 2. Alleviation Social Costs Steel Sector Sub-project 2.1. Retraining Vocational Activity Benefits 2.3. Alternative Job Creation SMEs 3. Alleviation Social Costs Coal Sector Sub-project 3.1. Retraining Vocational Activity Benefits 3.3. Alternative Job Creation SMEs Total

16 ANNEX 3 Detailed implementation chart IMPLEMENTATION CHART: Alleviation of social costs from coal and steel restructuring and regional Date of drafting development in Silesia Planning period Subprojects Implementation chart (by quarter) Budget allocation Cost Estimate Phare PLANNED Oct. 00 Dec. 00 Oct.99- Dec. 99 Jan. 00 March 00 April 00 June 00 July 00 Sept. 00 Jan. 01 March 01 April 01 June 01 July 01 Sept. 01 Oct. 01 Dec Regional development sub-project Investment Grants D/C C/I I I I I I Alleviation social Costs Steel 10.0 Sector Sub-project 2.1. Retraining D/C I I I I I I I I Vocational Activity Benefits D/C I I I I I I I I Alternative Job Creation SME D/C I I I I I I I Alleviation Social costs Coal 12.0 Sector sub-project 3.1 Retraining D/C I I I I I I I I Vocational Activity Benefits D/C I I I I I I I I Alternative Job Creation SME D/C I I I I I I I 6.6 TOTAL PROGRAMME 31 MEUR Legend D design of sub-projects C tendering & contracting I contract implementation & payment ANNEX 4

17 COMMITMENT (CONTRACT) SCHEDULE Project Title Alleviation of social costs from coal and steel restructuring and regional development in Silesia Projects Expected Cumulative ontractual Commitments (quarters) Sub-Projects Date of Drafting Planning Period Budget Allocation Cost Estimate Total Phare (1) Oct.99- Dec. 99 Jan. 00 March 00 April 00 June 00 July 00 Sept. 00 PLANNED Oct. 00 Dec. 00 Jan. 01 March 01 April 01 June 01 July 01 Sept. 01 TOTAL PHARE MEUR Oct. 01 Dec. 01 (3)

18 DISBURSEMENTS (PAYMENTS) SCHEDULE Projects Sub-Projects Expected Disbursements (quarters) Date of Drafting Planning Period Budget Allocation Cost Estimate Total Phare MEUR PLANNED Oct.99- Dec. 99 Jan. 00 March 00 April 00 June 00 July 00 Sept. 00 Oct. 00 Dec. 00 Jan. 01 March 01 April 01 June 01 July 01 Sept. 01 Oct. 01 Dec. 01 (1) (2) (3) TOTAL PHARE

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20 Annex 5 Relation of project with previous Phare activities and with ongoing projects financed from other sources 1. Previous Phare activities Previous Phare Programme activities have included many actions in these sectors and regions, either specifically sector and region oriented or impacting horizontally. Some of the most important input has been in the following areas: Phare 1991 and 1993 sector related Technical Assistance, training, sectoral studies, individual company development projects, restructuring programmes, market analyses, information systems development - Industrial Development Agency for the steel sector Phare 1991 and 1993 sector related Technical Assistance, training, sectoral studies, individual company development projects, restructuring programmes, market analyses, information systems development - Industrial Development Agency for coal mining sectors regional development programmes in Katowice and Walbrzych areas including local infrastructure development and SME development (financial instruments and training) - Polish Agency for Regional Development, Katowice, Walbrzych and Nowa Ruda Regional Development Agencies under the Phare Struder Programme (Phare 1992) SME development programmes (business advice and counselling, training and information services, credit guarantee funds) - Polish SME Foundation, regional members of National SME Services Network, under Phare 1990, 1991, 1995 and 1996 SME programmes. These actions financed through Phare have been supplemented by other programmes, including: in the area of counteracting unemployment - World Bank project of support to micro enterprise development (TOR 10) in the area of regional development - World Bank support in the preparation of the regional development strategy for the Katowice region 2. Ongoing projects and actions 2.1. The main actions planned by the Polish Government in the steel sector dominated regions have been developed under the concept of the Restructuring Programme for Polish Steel Industry. It includes a social component (mainly paid vacation leaves for non-mobile employees nearing retirement age) and a pro-active employment component targeting increased vocational mobility and the creation of new work places The main actions planned by the Polish Government in the coal sector sector dominated regions have been developed under the concept of the The Reform of the Coal Mining Industry in Poland during the years The Government Programme It includes a social component (mainly paid vacation leaves for non-mobile employees nearing retirement age) and a pro-active employment component targeting increased vocational mobility and the creation of new work places In both sectors the programmes include differing mixes of the following measures, tailored to the needs and available financing for each sector: paid vacation leave activating social benefits free retraining lump sum vocational activisation payment lump sum unconditional payment

21 preferential credits or loans provided by banks or local and regional institutions for former employees from the coal sector for starting their own businesses preferential credits or loans to employers from outside of the coal mining sector, who will create new jobs for employees leaving coal mining refinancing of the Social Security (ZUS), Labour Fund and Guaranteed Employee Benefits Fund costs to those employers from outside of the coal mining sector, who will employ on a permanent contract former coal sector employees for a period of at least two years In the Katowice region it is planned to strengthen these actions by additional, regionally based activities, taking advantage of selected instruments available in the Katowice area through the Regional Contract. A key role will be played in this by the regional and SME development institutions and networks established on the regional basis (Upper Silesian Fund, Upper Silesian Regional Development Agency, Upper Silesian Agency for Enterprise Restructuring); those linked to the Local Communities (Local Development Agencies, Business Support Organisations) and the business community (Chambers of Commerce, business associations); and taking advantage of tools and instruments available through the relevant national and international networks (National Association of Regional Development Agencies, National SME Services Network, European networks). The Polish Government is in the process of introducing supports for the Integrated Regional Development Programme for Silesia, which will include specific instruments targeting local and regional sustainable development. Thus the Polish Government has or is currently introducing a number of measures which have had a direct impact on the Silesia region, the most important of which were in the areas of the following policies: unemployment - grants towards new jobs creation, re-training coal mining and steel sectors - special social programmes for employees leaving the sector, including package of social benefits, re-training and lump sum payment; unconditional (voluntary) dismissal payments; social security costs re-financing for new employers; preferential loans support for regional restructuring programmes - financing made available on a competitive basis to regional and local operational level institutions and organisations for regionally selected mix of preferential loans and grants for enterprises, and institution building measures grants for coal dependent gminas 2.5. Under the project actions will also be undertaken in other regions (steel sector) in a coherent manner with the existing regional development programmes, and locally (especially in some of the one company towns, in urgent need of restructuring their local economies and labour markets). Furthermore important social impact targets linked with steel restructuring in the region will be attained through investments in environment protection and quality of operations; privatisation actions; upgrading management; diversification in the mother companies and spinoff actions These measures will help the local authorities in defining and beginning to implement local restructuring programmes; and to take advantage of special financing and tax related tools open to areas with structural unemployment problems, targeting increased investments in local economic restructuring efforts. Actions will also be designed to address the needs of steel company related business spin-offs as potential sub-contractors and employers (with an estimated level of 20,000 jobs targeted in the initial period in the steel sector).