The role of the EU’s Common Agricultural Policy in creating rural jobs

Mauro Vigani, John Powell and Eleanor Hawketts were involved in this study, which analysed the EU’s CAP’s role in creating rural jobs. Starting at the EU level, a thorough systematic literature review and a statistical analysis prepared the ground for more detailed Member State reviews and Case studies. When discussing the findings, the study concludes that the CAP supports the survival of small scale farms and contributes to sustain and develop rural economies. However, Pillar I payments have contradictory effects on employment and its ability in creating jobs appears to be limited. Pillar II is effective in supporting diversification, but concrete evidences of direct effects on employment are difficult to assess due to missing systematic reporting on job creation.


The study at hand deals with “The Role of the European Union’s Common Agricultural Policy in Creating Rural Jobs”. This document was requested by the European Parliament’s Committee on Agriculture and Rural Development, which adopted in 2016 an initiative report on ‘How can the CAP improve job creation in rural areas?’ (Procedure 2015/2226(INI))1 .

Thus, the report outlines the potential of the CAP with regards to creating rural employment by using a systematic literature review, which is complemented by statistical analyses conducted at the EU level, as well as Member State reviews and case studies reported by national experts.

Based on the literature review findings, the reform of the CAP and decoupling has had a negative impact overall on employment within the agricultural sector. The evidence suggests that overall Pillar I is preventing out-migration of small and family farms from the sector, and is at best maintaining jobs in the agricultural sector but not creating new jobs. Further, Pillar I initiates more intensive and higher productivity thus gradually reduces the size of the agricultural workforce.

Pillar II can be successful in creating new jobs in other areas such as tourism, food processing and associated sectors but implementation is highly dependent on Member State and regional implementation approaches. Where resources are highly focused and integrated (e.g. through supply chain focus or linking training with grant support) Pillar II can be more effective. Where resources are spread thinly over wide areas the impacts are minimal and limited in the face of market and other driving forces.

Evidence also suggests that there is a significant amount of deadweight associated with Pillar II programmes in some Member States, and doubt about the long-term sustainability of jobs beyond funding periods. Statistical figures show that as a general trend the agricultural labour decreased all over Europe as well as the number of farm holdings. However, the employment rate in rural areas did not necessarily diminish, which hints to the fact that diversification of the rural economy helped to maintain jobs in the region, i.e. facilitated a shift from farm work to other fields of employment.

The results from the Member State review and the case studies emphasise this picture. There is a rather weak correlation between CAP and employment regarding Pillar I, but Rural Development is seen as having a positive effect on jobs. The diversification of agriculture and the regional niche markets are regarded as positive impulse for employment in the regions. It is important to point out that the array of examined Member States reflects the diversity of Europeans agricultural systems and economies depending to different extent on CAP funding. The degree of dependency on agriculture as well as the absolute level of financial aid influence the leverage effect of CAP. Further it has to be noted, that apart from EAGF and EAFRD, other policies and national schemes are directly and indirectly targeting employment in rural areas, thus it is difficult to trace newly created and safeguarded jobs back to CAP interventions. This holds especially true for the special cases of the New Member States, which have benefited from pre- accession programmes.

The full report is available on the European Parliament website.