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European Social Fund Plus

The European Social Fund (ESF) was set up under the Treaty of Rome with a view to improving workers’ mobility and employment opportunities. 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 46(d), 149, 153(2)(a), 164, 175(3) and 349 of the Treaty on the Functioning of the European Union.

Objectives

The aims of the European Social Fund Plus (ESF+) are to support Member States in tackling the crisis caused by the COVID-19 pandemic, to achieve high employment levels and fair social protection, and to develop a skilled and resilient workforce ready to transition to a green and digital economy. The ESF+ is the EU’s main instrument dedicated to investing in people.

Achievements

A. Previous programming periods

The ESF was the first structural fund. In the early years, up 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 two million people during this period. In 1971, a Council decision substantially increased the fund’s resources and in 1983, a new reform under Council Decision 83/516/EEC refocused the fund on fighting youth unemployment and helping those regions most in need. By incorporating into the Treaty establishing the European Community the objective of economic and social cohesion within the Community, the Single European Act (1986) set the scene for a comprehensive reform 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 to include ‘adaptation to industrial changes and to changes in production systems’. For the next programming period (1994-1999), the level of funding allocated to economic and social cohesion was doubled.

As part of Agenda 2000, the overall framework of the structural funds was simplified for the 2000-2006 programming period. The ESF, with a budget of EUR 60 billion, was entrusted with the dual responsibility of contributing both to cohesion policy and to the implementation of the European employment strategy (2.3.3). It also co-funded the Community initiative, EQUAL, which focused on supporting innovative transnational projects tackling discrimination and disadvantages in the labour market.

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 (allocated 81.5% of resources), regional competitiveness and employment (allocated 16% of resources), and territorial cooperation (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 structural funds to substitute domestic spending that they would have programmed anyway.

In the 2007-2013 period, the ESF, together with the other financial instruments of EU cohesion policy, played a key role in the European Economic Recovery Plan adopted by the European Council in December 2008.

B. 2014-2020 programming period

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 and the European Maritime and Fisheries Fund, were governed by a set of common rules, laid down in Regulation (EU) No 1303/2013 of 17 December 2013. In addition, fund-specific regulations defined areas of intervention and other particularities. Regulation (EU) No 1304/2013 of 17 December 2013 established the missions of the ESF, the scope of its support, specific provisions and the types of expenditure eligible for assistance.

With an allocation of EUR 74 billion, the ESF co-financed national or regional operational programmes which ran for the seven-year duration of the 2014-2020 MFF and were proposed by the Member States and approved by a Commission decision.

It focused on the following four thematic objectives:

  • promoting sustainable and quality employment and supporting labour mobility;
  • promoting social inclusion and 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 role of the ESF was reinforced for the 2014-2020 period through the introduction of a legally binding minimum share of 23.1% of total cohesion funding. Every year, the fund helped some 10 million people to find work or to improve their skills to enable them to find work in future.

2. The European Social Fund and the Youth Employment Initiative

The ESF Regulation includes the Youth Employment Initiative (YEI), which had a total budget of EUR 8.8 billion for the 2014-2020 period. It is funded from three sources: ESF national allocations, a specific EU budget 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%.

3. COVID-19 and the invasion of Ukraine

In April 2020, the Commission launched two packages of measures: the Coronavirus Response Investment Initiative and the Coronavirus Response Investment Initiative Plus to mobilise EU structural funds to respond to the crisis. Parliament and the Council quickly adopted the two proposals. No new EU financial resources were provided, but maximum flexibility is allowed in using existing, unspent resources where they are most needed. Member States can transfer funding between funds, regions and topics and are exceptionally allowed 100% co-financing for the 2020-2021 period. In May 2020, the Commission followed up on the proposal on REACT-EU (Recovery Assistance for Cohesion and the Territories of Europe), which will provide EUR 55 billion in additional investment through the ERDF, ESF and the Fund for European Aid to the Most Deprived (FEAD). The ESF played a primary role in the immediate response to the COVID-19 crisis by mobilising EUR 1.4 billion of direct support, with the total amount of support likely to be higher. It has been used to support social services, maintain employment in affected sectors, including through short-time work schemes, protect vulnerable groups and fund wages for healthcare personnel, IT equipment and personal protective equipment.

The Cohesion’s Action for Refugees in Europe (CARE, 6 April 2022) and CARE Plus (12 April 2022) packages amending the common rules and the FEAD Regulation add additional flexibility to the 2014-2020 cohesion policy, taking into account the urgency of addressing the migratory challenges resulting from the military invasion of Russia.

C. 2021-2027 programming period

1. 2021-2027 Common Provisions Regulation

On 29 May 2018, the Commission adopted the proposal for the Common Provisions Regulation (CPR) for the 2021-2027 period. The CPR was amended through a Commission proposal on 14 January 2020 to include the Just Transition Fund (JTF), and on 28 May 2020, following the COVID-19 outbreak, additional amendments were proposed. The CPR was adopted by Parliament at second reading on 23 June 2021. The final act was signed on 24 June (Regulation (EU) 2021/1060).

The CPR sets out the financial rules for eight funds that are under shared management, i.e. the ESF+, the ERDF, the Cohesion Fund, the JTF, the European Maritime, Fisheries and Aquaculture Fund (EMFAF), the Asylum and Migration Fund, the Internal Security Fund and the Border Management and Visa Instrument. It also lays down the common provisions applicable to the first five funds mentioned, including the ESF+. However, the CPR does not apply to the employment and social innovation strand of the ESF+, as it is under direct and indirect management.

2. ESF+

On 2 May 2018, the Commission presented its proposal for the 2021-2027 MFF. The proposal included a renewed ESF+ with a budget of EUR 101 billion. The ESF+ was to merge the ESF, the YEI, the FEAD, the EU Programme for Employment and Social Innovation (EaSI) and the EU health programme. In the context of the COVID-19 crisis, the Commission announced that a separate health programme would be introduced in the next MFF: the EU4Health programme. On 28 May 2020, as part of the revised 2021-2027 MFF and the recovery package, the Commission released an amended proposal for the ESF+ Regulation that did not include the health programme in its scope. Parliament concluded its position at first reading on 4 April 2019 and adopted its position at second reading on 8 June 2021. The final act was signed on 24 June (Regulation (EU) 2021/1057). The total budget for the ESF+ amounts to almost EUR 99.3 billion.

The specific objectives of the ESF+ include:

  • supporting the policy areas of employment and labour mobility, education and social inclusion, namely by helping to eradicate poverty, and thereby contributing to the implementation of the European Pillar of Social Rights;
  • supporting the digital and green transitions, job creation through Skills for Smart Specialisation, and improvements to education and training systems;
  • supporting temporary measures in exceptional or unusual circumstances (e.g. financing short-time work schemes without requiring them to be combined with active measures, or providing access to healthcare, including for people who are not immediately socio-economically vulnerable).

The provisions of the ESF+ include the following:

  • All Member States have to address youth unemployment in their spending programmes. In Member States where the number of NEETs is above the EU average, 12.5% of the fund will be spent on combating youth unemployment.
  • At least 25% of the budget is to be spent on promoting social inclusion, including the integration of non-EU nationals.
  • At least 3% of the budget is to be spent on food aid and basic material assistance for the most deprived.
  • All Member States must allocate an appropriate amount of their ESF+ resources to the implementation of the Child Guarantee through targeted actions to combat child poverty. Member States with a level of child poverty above the EU average must use at least 5% of their ESF+ resources to address this issue.
  • Adequate funding must be allocated to capacity-building for social partners and civil society in Member States, and at least 0.25% of the fund should be allocated when required by the country-specific recommendations.
  • An article on respecting fundamental rights emphasises that all operations should be selected and implemented according to the Charter of Fundamental Rights of the European Union.

In order to benefit from cohesion policy funding, each Member State has to prepare a partnership agreement. This is a strategy document for programming investments setting out national authorities’ plans for how to use the ERDF, the ESF+, the Cohesion Fund, the JTF and the EMFAF. It includes the indicative annual financial allocation for each programme.

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 support workers made redundant as a result of major structural changes in world trade caused by globalisation. While the ESF+ supports programmes aimed at achieving the long-term structural objectives of keeping people in work or reintegrating them into the labour market, the EGF responds to specific emergencies, such as mass redundancies resulting from globalisation, for a limited period of time.

In view of the economic and financial crisis, the EGF Regulation (Regulation (EC) No 1927/2006) was temporarily amended at the end of 2011 to cater for the resulting redundancies, providing co-financing rates ranging from 50% to 65%. This change was carried over into the EGF Regulation for the 2014-2020 period (Regulation (EU) No 1309/2013) and the EGF covered redundancies resulting from global financial and economic crises in addition to redundancies stemming from globalisation. For the 2014-2020 period, the scope was also extended to cover new categories of beneficiaries such as self-employed persons, temporary workers and fixed-term workers. In view of a possible hard Brexit, the EGF Regulation was amended in 2019 to help workers and self-employed persons in the remaining EU-27 who would lose their jobs if the UK withdrew without an agreement (Regulation (EU) 2019/1796).

On 30 May 2018, the Commission proposed a new, revised EGF for the post-2020 period with a maximum annual amount of EUR 200 million outside of the 2021-2027 MFF ceilings. The proposal extends coverage to workers who lose their jobs because of restructuring as a result of the transition to the low-carbon economy, automation or digitalisation, and lowers the threshold for the activation of the EGF from 500 to 250 redundancies.

On 27 May 2020, in the framework of the Recovery Plan for Europe, the Commission suggested increasing the maximum annual amount to EUR 386 million. On 27 January 2021, Parliament’s Committee on Employment and Social Affairs approved a text that had been agreed upon at early second reading in the interinstitutional negotiations and requested in particular to lower the threshold for displaced workers from 250 to 200. Parliament approved the text at second reading on 27 April, and the final act was signed on 28 April (Regulation (EU) 2021/691). The EGF has an annual budget of EUR 210 million for 2021 to 2027.

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. Since the entry into force of the Lisbon Treaty, the adoption of general rules has been subject to the ordinary legislative 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, in order to improve the effectiveness and quality of ESF assistance.

Over the years, Parliament has expanded the scope of the ESF to include efforts to combat gender inequalities, discrimination and social exclusion by facilitating access to employment for vulnerable groups. It supported the Commission proposal on the ESF’s contribution to tackling the economic crisis and 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.

Thanks to Parliament, in the 2014-2020 programming period, the ESF accounted for 23.1% of total EU cohesion funding, and 20% of each Member State’s ESF allocation had to be spent on social inclusion.

Following the influx of refugees starting in 2014, 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 EU labour markets. The Commission took these concerns on board in its ESF+ proposal for 2021 to 2027 by adding a specific reference to migrants and their integration into labour markets to the ESF+ objectives.

In addition, for the 2021-2027 ESF+, amendments by Parliament include ring-fencing more funding for food and material aid, adequate funding for capacity-building for social partners and safeguards to ensure that projects funded by EU money fully respect fundamental rights.

For more information on this topic, please see the website of the Committee on Employment and Social Affairs.

 

Monika Makay