Much of the European Social Fund had been used to attempt to bail out the coal and steel industries in northern France, Mrs Shephard, president of the EC's social affairs council, said.
She pointed out that there were now 15 million people out of work in the Community, half of whom had been unemployed for more than a year. Initiatives should emphasise the plight of the long-term unemployed in particular.
She said that the French emphasised social problems in their programmes to help those who had been out of work for some time. These included drug and alcohol dependency and problems with literacy. Social security payments in France depended on attendance at programmes.
There was a need for a 'real shift in priorities' because the Social Action Programme placed too much emphasis on people in work, Mrs Shephard told journalists in London. She indicated that while the Social Fund already made a contribution to the Youth Training and Employment Training schemes for the unemployed, the grant could be greater.
Mrs Shephard has begun a series of negotiations with the Treasury over the budget for state training schemes in the United Kingdom next year. Along with colleagues in other government departments, she will come under pressure to cut expenditure.
She said that the number of directives passed by the EC should not be the only test of the European presidency - occupied by the United Kingdom until the end of the year. The British Government would concentrate on ensuring that existing legislation was enforced, rather than introducing new statutes.
'Legislation must not be the only test of a presidency,' she said. In particular, the United Kingdom would concentrate on health and safety at work.