Which objective(s) does the Commission pursue?

The overarching policy objective of the ESF+ Regulation is to help create a more performing and resilient ‘Social Europe’ and implement the European Pillar of Social Rights, as well as the social and employment priorities endorsed by the European economic governance process. ESF+ will contribute to implementing the Integrated Guidelines adopted in accordance with Articles 121 and 148(4) of the Treaty on the Functioning of the European Union (TFEU) and the relevant country-specific recommendations adopted in the context of the European semester, and feed into the overall objective of smart, inclusive and sustainable growth beyond 2030 (the UN’s sustainable development goals¹) and upward convergence. Furthermore, the ESF+ will help to improve employment opportunities, raise the standard of living and health, and help increase labour mobility and economic, social and territorial cohesion as set out in the TFEU and the EU Charter of Fundamental Rights. The ESF+ also aims to contribute to the Skills Agenda for Europe and the integration of third country nationals.

The ESF+ merges the following funds and programmes:  – the European Social Fund (ESF) and the Youth Employment Initiative (YEI); – the Fund for European Aid to the Most Deprived (FEAD); and the Employment and Social Innovation (EaSI) programme. By merging these funds the Commission aims to:

• Enhance coherence and synergies between complimentary EU instruments and allow more integrated approaches to implementation.

• Increase flexibility and allow the funds to be more responsive to the challenges identified in the economic governance cycle and to EU-level priorities.

• Allow simplification of fund programming and management thus reducing the administrative burden for authorities and beneficiaries

Estimated savings and benefits

The Commission proposal takes on board a great number of conclusions and recommendations of the high-level group on simplification² and relevant studies³ and evaluations, namely ESF ex-post evaluation, the FEAD mid-term evaluation and EaSI mid-term evaluation⁴. Savings and benefits will come from the following measures aiming at reducing administrative burden for authorities and beneficiaries. Some of them fall beyond the scope of the ESF+ Regulation and are reflected in the Commission proposal for the Common Provision Regulation (CPR):

• The proposals unify the rules of different funds and instruments addressing the same policy objectives to improve synergies and simplicity of management.

• The CPR includes all rules, templates and guidelines for a quicker and more simple start-up of the programmes;

• The CPR and the ESF+ simplify the requirements of programming arrangements by reducing the mandatory fields, such the strategic justification, no mandatory information on territorial features and development or special affected regions and request for information and giving a non-mandatory nature to partnership agreements avoiding burdensome adoption and amendment processes and complex management of multi-fund programmes; no Commission decision is required for technical programme modifications (such as corrections of clerical mistakes).

• The audit approach will be streamlined to focus more on risk-based audit sampling and to respect the "single audit" principle. The tasks and responsibilities of different bodies in the management and control system are set out in a clearer way (e.g. well-functioning systems are subject to the same management and control systems as other less effective systems and 'double checks');

• The requirements and assessment criteria linked to ex-ante conditionalities (in future the “enabling conditions”) are reduced, avoiding duplication of their assessment in the partnership agreement and programmes;

• A lighter designation of the authorities is proposed, in particular due to the required IT structures;

• Monitoring requirements were adapted to avoid burdensome monitoring due to complex data-collection requirements and the limited use of administrative registers for the collection of participants' data.

• There are provisions facilitating the use of the simplified cost options, as well introducing a new option to use financing not linked to costs, in order to cut the administrative burden of a system that relies mainly on real costs and the associated documentation and archiving requirements. These simplified forms of grants will streamline administrative procedures and reduce the risk of errors and irregularities from the part of the beneficiaries

•  Furthermore, flexibility is increased, as only the first 5 years will be programmed initially. Allocations for the last 2 years will be made based on a substantial and in-depth mid-term review leading to corresponding reprogramming in 2025. The content of programmes will be more streamlined and strategic.

• The governance provisions for the EaSI strand will enhance synergies and complementarities within the ESF+, though joint objectives and a joint committee, as well as with other EU Programmes and Funds, within the MFF 2021-2027. The merger of the three current axis into a single EaSI strand will increase flexbility to adapt to evolving priorities at implementation stage.

• The EaSI strand of ESF+ will provide funding (e.g. through grants, public procurement, prizes), including through simplified mechanisms such as lump sums, unit costs and flat rates, while reducing the cost of reporting by beneficiaries and of controls.

Evaluations of the previous programming period – findings regarding costs and benefits

European Social Fund (ESF) and the Youth Employment Initiative (YEI) support to youth employment

The support provided by YEI and the ESF contributed to structural changes in national systems of education and training and public employment systems.

According to the organisations, the benefits of ESF/YEI funding are mostly linked to the development of skills and qualifications and to help young people find a job, including young people not in employment, education or training and other disadvantaged individuals.

The administrative arrangements facilitated implementation, with few examples of gold plating. Bringing in the simplified costs options system helped reduce administrative burden, after initial delays and after building capacity in setting up the system.

The average unit cost per participation is around €2,000 with significant variations in costs and unit costs between types of measures, and between Member States. The cost per participant does not vary significantly between YEI and ESF youth operations. However, cost effectiveness is not determined by costs alone. Vocation education and training can involve high costs, but these measures have shown to be efficient in different contexts, when linked to work experience, thereby justifying the higher cost. By contrast, guidance is provided at a relatively low cost, but if it is not tailored to the individual, it is generally less effective in terms of generating employment results.

Fund for European Aid to the Most Deprived (FEAD)

FEAD has a notable positive effect in nearly every Member State in particular concerning new target groups, new activities, and greater territorial coverage.

Overall it can be argued that although FEAD is not in itself self-sufficient to deal with the gravity of the EU’s social problems (it receives only 1% of the funds allocated to the EU’s cohesion policy), it is still an essential response to poverty. FEAD provides support to millions of people living in poverty and in many cases unable to access any other form of assistance. In 2016, FEAD supported the food needs of 15 million people, for instance it enabled assistance for 4.4 million people in France, 1.5 million in Spain, 3.3, million in Romania and almost 2.8 million in Italy.

Due to the different types and frequency of support provided, and the nature of target groups, there are large variations in costs per food and costs per person across Member States. Rules governing FEAD are simpler in comparison with those governing the European Social Fund, which enables FEAD to address ‘social emergencies’. However, the administrative costs for monitoring, distribution and delivery are still considered to be high. There is consistent evidence of ‘gold plating’, leading to excessive requirements, such as the requirement imposed by most Member States (mostly on the partner organisation) to register end recipients.

In addition, there are many indirect effects that cannot be costed and which contribute to the benefits of FEAD (e.g. social solidarity and cohesion in local communities, increased self-esteem and sense of belonging for deprived people, prevention of social, health and humanitarian crises, leverage effects through the extensive use of voluntary action and commitment of thousands of civil society organisations).

Employment and Social Innovation (EaSI) programme

The EaSI mid-term evaluation provides insights into the match between available means and the programme’s objectives. While the financial means available were sufficient to implement PROGRESS and EURES activities, the budget for the Microfinance window of the third axis was too low. The high uptake of the EaSI guarantee instrument, part of Microfinance/Social Entrepreneurship axis, put pressure on its budget and resulted in full utilisation of the Microfinance budget. As Social Entrepreneurship window usually requires much larger loans than Microfinance window, there were fewer loans provided. This had an impact on the number of contracts signed⁵.

The third axis insufficient budget for the first implementation period was remedied in the meantime by enabling a frontloading of the EaSI budget earmarked for the later years 2017-2020 and making it available sooner in order to meet the high market demand. This frontloading was made possible by means of a guarantee under the European Fund for Strategic Investments (EFSI⁶). Indeed, in response to the strong demand for the EaSI guarantee instrument, the Microfinance/Social Entrepreneurship axis has received in December 2017 a EUR 100 m top-up from EFSI. This will lead to an increase in the overall volume of actions for the EaSI guarantee instrument and allow the EIF to implement a significant extra number of operations.

The EaSI mid-term evaluation also put forward that the efficiency of PROGRESS could be further improved by introducing changes and reducing the administrative burden in the project award and implementation stages.

Regarding EURES, larger amounts were committed to the allocation for transparency of job vacancies than originally planned, in order to introduce new IT applications; however, the development and delivery of services remained relatively stable.

Overall, the evaluation concludes that while the overall budget of the programme is sufficient, more flexible reallocation between the three axes should be enabled in order to minimise discrepancies between planned and actual commitments, and ensure optimal transfer of budgets between the three where needed.

¹ United Nations Resolution adopted 25 September 2015, http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1&Lang=E

² High Level Group on monitoring simplification for beneficiaries of the ESI funds (set up by the Commission in July 2015)

³ Study on the use of new provisions on simplification during the early implementation phase of ESI funds, European Commission (September 2017); study on the assessment of the adequacy of the ESF to support human capital development policies, European Commission (May 2018) .

⁴ COMMISSION STAFF WORKING DOCUMENT MID-TERM EVALUATION of the European Union Programme for Employment and Social Innovation (EaSI) Accompanying the document REPORT FROM THE COMMISSION Report from the Commission on the mid-term evaluation of the European Union Programme for Employment and Social Innovation (EaSI) - SWD/2019/182.

⁵ While 2014 was spent negotiating the new funding instruments with the European Investment Fund (EIF), by September 2016, 33 contracts had been signed with microfinance intermediaries for EUR 50.3 million, which resulted in 13.021 microloans for a total of EUR 152.288 million. A leverage factor of 3 times the initial funding was achieved. In addition to supporting the microcredit sector, in 2015-2016 EaSI also released the first funding for social enterprises and the first 7 contracts with financial intermediaries were signed, for EUR 9 million.

⁶ EFSI is an initiative launched jointly by the EIB Group - European Investment Bank (EIB) and EIF – the European Commission to help overcome the current investment gap in the EU by mobilizing private financing for strategic investments.http://www.eif.org/what_we_do/efsi/index.htm

Outcome of Legislative Procedure

The European Social Fund Plus (ESF+) is the EU’s main fund for investments in people. The ESF+ aims to support Member States to achieve high employment levels, fair social protection and a skilled and resilient workforce ready for the future world of work, as well as inclusive and cohesive societies aiming to eradicate poverty and deliver on the principles set out in the European Pillar of Social Rights.

The adopted Regulation reflects the changing circumstances caused by the COVID-19 pandemic and aims to help Member States to recover in the mid-/long-term from the ongoing crisis, with a particular focus on those groups most affected by the crisis such as the most deprived, young people and children in poverty. 

The Commission also issued two statements which underline the Commission’s commitment to ensure that Member States dedicate an appropriate amount of their ESF+ resources to tackle youth unemployment and child poverty, and also use other EU funding instruments and national resources available to support adequate investments in these areas.

In April 2022, the legislators adopted Regulation (EU) 2022/562 as regards Cohesion’s Action for Refugees in Europe (CARE) and Regulation (EU) 2022/613 as regards increased pre-financing from REACT-EU resources and the establishment of a unit cost.

The Commission proposed amendments to the legal framework of the Funds under cohesion policy and the Fund for European Aid to the most Deprived, in response to the invasion of Ukraine by the Russian Federation and the resulting impact on the European Union as well as the extended impact of the COVID-9 pandemic on the EU as a whole.

The amendments simplify the legal framework of the Funds in order to facilitate the implementation of measures for refugees, for instance by providing flexibility for Member States to use interchangeably the ESF, ERDF and CF to support actions addressing these migratory challenges, by introducing a unit cost at Union level which can be used by Member States for claiming costs with basic needs and support provided to refugees.

With regard to the FEAD, specifically, these amendments introduced flexibility for Member States to amend programmes supported by the FEAD by way of notification to the Commission (amendment of Article 9 of Regulation (EU) No 223/2014) and also with a retroactive start date of eligibility of support set at 24 February 2022 (amendment to Article 22 of Regulation (EU) No 223/2014).

In addition, the amendments also provided more liquidity for Member States to use the FEAD to address this crisis, by extending the temporary increase of the co-financing rate of 100% until 30 June 2022 and introducing an additional payment of pre-financing to FEAD programmes which had received REACT-EU resources for the year 2021.

Estimated savings and benefits

The agreement reached on the European Social Fund Plus generally preserves the overall objectives of the Commission’s original proposal. In comparison to the original Commission proposal, the final text of the Regulation agreed by the co-legislators increases the amounts of thematic concentration (i.e. mandatory percentages of the funding which must be spent with a focus on specific areas e.g. youth employment, children in poverty, the most deprived and social inclusion), thus allowing more targeted support.

Implementation by Commission

The Commission has adopted EU-level simplified cost options and financing not linked to costs amounts for ESF+ operations promoting the implementation of the active inclusion ALMA (Aim, Learn, Master, Achieve) initiative with the goal of empowering disadvantaged young persons aged 18 to 29 to find a job, apprenticeship or re-start education and thus re-integrate into society.

Different amounts have been established per Member State. Using these reimbursement tools significantly simplifies the management process, streamlines administrative procedures, reduces the risk of errors and administrative burden for both public authorities and beneficiaries. It also allows administrations to shift the focus from collecting and verifying financial documents to achieving policy objectives.