In Your Own Words: EU Structural Funds have to support self-management

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17/03/2017

When we talk about Structural Funds, three key phrases stand out above all others: excessive bureaucracy, dependence on aid, and increased competitiveness.

Although two of these phrases have rather negative connotations, it is clear that the effect of Structural Funds on increasing the competitiveness of the state and business has been remarkable in Estonia, although underestimated at times.

Nevertheless, it has been and continues to be important to keep a close rein on negative reactions. To prevent such negativity from resurfacing, we need to ask for constant feedback from both aid recipients as well as non-governmental organisations which represent the general interests of an industry.

The amount of bureaucracy linked to the funds is something that entrepreneurs claim has been growing over time. If more than 20 % of project expenditure is spent on reporting and related costs, then that is clearly too much. It would make much more sense to direct these resources towards achieving the main objectives of various measures. It is essential to focus more on impact objectives and the evaluation of each project’s final results than on constant reporting. For smaller enterprises in particular, this can be too much and can lead to much frustration.

More trust should be placed in grant recipients as it is unreasonable to check and audit everything since that increases the costs for both the entrepreneur and the state.

Developing a dependence on grants has been a problem in all countries, regardless of the actual source of the funding. This should be avoided as the money will eventually dry up, so the resources should be used to boost development rather than as operating subsidies.

There are a few sectors in which dependence has become a significant problem, and not only in Estonia. One of the most complex fields is agriculture, for instance, but there are others, too. The main trap to avoid is causing the ‘learned helplessness syndrome’ by creating an illusion of omnipotent and never-ending assistance.

Structural Funds should help the economy as a whole become more competitive – this should be the primary objective. In the case of receiving aid, it is important to treat major companies and small enterprises equally, and to give more support to those that have been in the market for a while and are seemingly managing well on their own. Competition in the business world is a tough game, and to succeed in international markets a player must be willing to put in a lot of work and money.

Larger companies are willing to contribute more themselves, so if we add EU Structural Funds to that, the results could be much better. In turn, we must not forget that major businesses provide work for dozens of smaller ones. In some cases, the number of subcontractors could reach hundreds, and their success is often dependent on their larger partner. Directing assistance in a more sensible way would also bring considerable savings on administrative expenses. 

MAIT PALTS

Director General

Estonian Chamber of Commerce and Industry

Panorama Magazine

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