European Social Fund

The European Social Fund (ESF) was set up under the Treaty of Rome with a view to improving workers’ mobility and employment opportunities in the common market. Its tasks and operational rules were subsequently revised to reflect developments in the economic and employment situation in the Member States, as well as the evolution of the political priorities defined at EU level.

Legal basis

Articles 162-164, 174, 175, 177 and 178 of the Treaty on the Functioning of the European Union.

Following the entry into force of the Lisbon Treaty, the adoption of general rules applicable to the Structural Funds is now subject to the ordinary legislative procedure.

Objectives

According to Regulation (EU) No 1304/2013, the ESF is meant to improve employment opportunities, strengthen social inclusion, fight poverty, promote education, skills and lifelong learning, and develop active, comprehensive and sustainable inclusion policies.

In accordance with its priorities, the ESF aims to:

  • promote high levels of employment and job quality, improve access to the labour market, support the geographical and occupational mobility of workers and facilitate their adaptation to industrial change;
  • encourage a high level of education and training for all and support the transition between education and employment for young people;
  • combat poverty, enhance social inclusion and promote gender equality, non-discrimination and equal opportunities.

Achievements

a.Previous programming periods

The ESF was the first Structural Fund. During the transition period (until 1970), it reimbursed Member States 50% of the costs of vocational training and resettlement allowances for workers affected by economic restructuring. In total, it assisted more than 2 million people during this period. In 1971 a Council decision substantially increased the fund’s resources and modified the system by replacing retroactive funding with new rules requiring Member States to submit advance applications for assistance. In 1983 a new reform (under Council Decision 83/516/EEC of 17 October 1983) resulted in greater concentration of the fund’s operations, which were to be directed mainly at the fight against youth unemployment and at those regions most in need. By incorporating into the EC Treaty the objective of economic and social cohesion within the Community, the Single European Act (1986) set the scene for a comprehensive reform (under regulations of 24 June and 19 December 1988) aimed essentially at introducing a coordinated approach to the programming and operation of the Structural Funds. The Treaty of Maastricht expanded the scope of ESF support, as described in Article 146, to include ‘adaptation to industrial changes and to changes in production systems’. For the following programming period (1994-1999), the level of funding allocated for economic and social cohesion was doubled (ECU 141 billion). Following a number of pilot schemes during the previous programming period, Community initiatives were confirmed for 1994-1999 and allocated a more substantial budget (9% of the Structural Funds’ total resources). The ESF co-financed two such programmes aimed at supporting innovative transnational projects: ‘Adapt’, which was meant to help employers and workers to anticipate industrial change and deal with its effects, and ‘Employment’, whose four strands promoted labour market integration for vulnerable groups.

As part of Agenda 2000, the overall framework of the Structural Funds was simplified for the 2000-2006 programming period. The ESF, then endowed with a EUR 60 billion allocation, was entrusted with the dual responsibility of contributing both to cohesion policy and to the implementation of the European Employment Strategy (EES) (5.10.3); the scope of its intervention was redesigned accordingly. The EQUAL Community initiative focused on supporting innovative, transnational projects aimed at tackling discrimination and disadvantages in the labour market. It was the only one co-financed by the ESF in the 2000-2006 programming period.

For the 2007-2013 programming period, only three Structural Funds remained: the ESF, the European Regional Development Fund (ERDF) and the Cohesion Fund. Jointly they were to achieve the objectives of convergence (channelling 81% of resources), regional competitiveness and employment (channelling 16% of resources to non-convergence regions), and European territorial cooperation aimed at promoting harmonious development throughout the EU (2.5% of resources).

The Structural Funds’ resources are allocated among the Member States in accordance with a formula which takes into account population (and its density), regional prosperity, unemployment and levels of education; it is negotiated by the Member States at the same time as the multiannual financial framework (MFF) for a given period. One main feature of the Structural Funds is the principle of additionality, according to which Member States cannot use the Structural Funds to substitute for domestic spending on activities they had already decided to carry out anyway.

In the 2007-2013 period, the ESF, together with the other financial instruments of European cohesion policy, had a key role to play in the European Recovery Action Plan adopted by the European Council in December 2008, and in the coordinated European Economic Recovery Plan presented by the Commission in November of the same year.

b.Current programming period (2014-2020)

1.Five Structural Funds governed by common rules

The five European Structural and Investment Funds for the 2014-2020 programming period, i.e. the ERDF, the ESF, the Cohesion Fund, the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF), are now governed by a set of common rules. In addition, fund-specific regulations define areas of intervention and other particularities. Regulation (EU) No 1303/2013 of 17 December 2013 defines common principles, rules and standards for the implementation of the five European Structural and Investment Funds. Regulation (EU) No 1304/2013 of 17 December 2013 establishes the missions of the European Social Fund (ESF), including the scope of its support, specific provisions and the types of expenditure eligible for assistance.

2.European Social Fund and Youth Employment Initiative

The role of the ESF has been reinforced for the 2014-2020 period through the introduction of a legally binding minimum share of 23.1% of total cohesion funding. With an overall allocation of EUR 74 billion (compared with the planned sum of EUR 75 billion for the 2007-2013 period), the ESF co-finances national or regional operational programmes which run for the seven-year duration of the multiannual financial framework and are proposed by the Member States and approved by a Commission decision.

The new ESF Regulation for the 2014-2020 period was adopted in December 2013. It focuses on the following four thematic objectives:

  • promoting sustainable and quality employment and supporting labour mobility;
  • promoting social inclusion, combating poverty and discrimination;
  • investing in education, training and vocational training for skills and lifelong learning;
  • enhancing the institutional capacity of public authorities and stakeholders and efficient public administration.

The ESF thus benefits people, including young people, women and people from disadvantaged groups, with a view to fostering social inclusion. The ESF also supports workers, enterprises and entrepreneurs. Finally, the ESF helps Member States improve the quality of their public administration and governance.

The current ESF Regulation includes the Youth Employment Initiative (YEI), which is funded from three sources: ESF national allocations (EUR 3.2 billion), a specific EU budget (EUR 3.2 billion) and national co-financing of the ESF part. It supports young people not in education, employment or training (NEETs) in regions experiencing youth unemployment rates above 25%. In February 2015, the Commission proposed an amendment to the ESF Regulation to increase the YEI pre-financing rate to be paid after the adoption of the Operational Programmes in its 2015 budget allocation from 1-1.5% to up to 30% in order to speed up implementation in the Member States.

Celebrating the 60th anniversary of the Fund in early 2017, the Commission reported that during the 2007-13 period alone it had helped almost 10 million Europeans to find a job. Commissioner Marianne Thyssen spoke of the ESF as being ’60 years of success stories’ and emphasised that it represented direct investment in people. This occasion also marked the start of reflections on the EU’s human capital funding beyond 2020.

3.Instruments for labour market integration complementing the ESF

The European Globalisation Adjustment Fund (EGF) was created as an instrument of competitiveness — not cohesion — policy for the 2007-2013 MFF in order to provide support for workers made redundant as a result of major structural changes in world trade patterns caused by globalisation. While the EGF responds to specific emergencies, such as mass redundancies resulting from globalisation, for a limited period of time, the ESF supports multiannual programmes aimed at achieving the long-term structural objectives of keeping people in the labour market or reintegrating them into it.

In view of the crisis, the EGF Regulation (Regulation (EC) No 1927/2006) was temporarily amended until the end of 2011 to cater for the resulting redundancies, providing co-financing rates ranging from 50% to 65%. The new EGF Regulation for the 2014-2020 period (Regulation (EU) No 1309/2013) was adopted by Parliament and the Council in December 2013, with a budget of up to EUR 150 million. In addition to redundancies caused by structural changes stemming from globalisation, it includes redundancies resulting from global financial and economic crises.

The new EU Employment and Social Innovation (EaSI) programme has incorporated the previous Progress programme as one of its three axes. With a budget of EUR 550 million, it aims to promote a high level of quality and sustainable employment, guaranteeing adequate and decent social protection, combating social exclusion and poverty and improving working conditions.

Role of the European Parliament

Parliament’s influence over the ESF has grown over the years. Under the Treaty of Maastricht it had to give its assent to the general provisions governing the funds, whereas under the Treaty of Amsterdam the adoption of implementing rules for the ESF is subject to the codecision procedure. Parliament regards the ESF as the EU’s most important instrument for combating unemployment. It has therefore always advocated the efficient operation of the fund and called for simpler legislation and procedures, which could improve the effectiveness and quality of ESF assistance.

For the 2007-2013 programming period, Parliament supplemented the Commission’s proposal for a regulation on the ESF with amendments which helped to redesign the fund as a major tool aimed at facilitating the implementation of the EES. Parliament amended the text of the draft regulation to expand the scope of ESF assistance to include efforts to combat inequalities between men and women, discrimination and social exclusion by facilitating access to employment for vulnerable groups.

Parliament supported the Commission proposal on the ESF’s contribution to tackling the economic crisis and approved the relevant legislation aimed at accelerating access to the fund. In its resolution of 7 October 2010, Parliament called for the ESF to be strengthened as the main driver for implementing the Europe 2020 objectives, for example through greater flexibility and the simplification of checks and procedures.

Thanks to Parliament, in the current 2014-2020 programming period the ESF will account for 23.1% of total EU cohesion funding, and 20% of each Member State’s ESF allocation will have to be spent on social inclusion. Parliament also insisted that the EGF be made available to new categories of beneficiaries such as self-employed people.

Faced with the recent influx of refugees, Parliament, in its resolution of 5 July 2016, noted that professional integration is a stepping stone to social inclusion, and emphasised the availability of the ESF for measures to facilitate the integration of refugees into European labour markets, while calling for the Fund to be given greater importance.

Stefan Schulz

06/2017