Social Fund [EU]

The European Social Fund from 2007

The European Commission is proposing that ESF resources be concentrated on four areas in the 2007-13 period: adaptability among workers and businesses, access to employment, reducing social exclusion, and promoting partnerships for reform. These measures will come under two of the three new objectives: “Convergence” and “Regional competitiveness and employment”.

Proposal of 14 July 2004 for a European Parliament and Council Regulation on the European Social Fund.

As part of the reform of regional policy, in July 2004 the Commission presented a package of proposals for the Structural Funds (ERDF and ESF) and the Cohesion Fund. The basic reference document for the general parts of these proposals is COM(2004) 492.

The new Regulation should enter into force on 1 January 2007, the planned date for the abrogation of the current ESF Regulation (Regulation (EC) 1784/1999). However, the proposal does not apply to any measures approved before that date. The new Regulation must be reviewed by 31 December 2013 at the latest.

Goals

The ESF is designed to foster balanced economic and social development in order to support national policies promoting full employment, improved quality and productivity at work and reduced social exclusion and regional employment disparities.

Priorities

ESF funding is disbursed under two Structural Funds objectives: “Convergence”, for less developed regions, and “Regional competitiveness and employment”, which seeks to meet the challenges of the modern world by both anticipating and promoting economic change.

The priorities of these two objectives are:

• increasing adaptability among workers and businesses. Proposals include greater investment in human resources through lifelong learning schemes, making qualifications and skills more accessible and fostering enterprise and innovation. Proactive steps must also be taken to anticipate and manage economic change;
• improving access to employment for jobseekers, the economically inactive, women and migrants. Institutions in this field, in particular employment services, need to be modernised and strengthened, and active and preventive steps taken to identify needs early. Specific measures must be taken to boost female participation in the labour market and help migrants integrate better into society;
• reduce social exclusion for the economically disadvantaged, and combat discrimination;
• create partnerships to manage reforms in employment and to combat social exclusion.

Under the “Convergence” objective, the ESF also supports the following priorities:

• greater investment in human capital, with reforms of education and training systems, greater participation in education and lifelong learning and developing human potential through research and innovation;
• boosting institutional capacity and effectiveness in order to improve governance.

Granted via public tendering procedures, ESF funding takes the form of individual or block grants, loans, interest rate subsidies, micro loans or the purchase of goods and services.

Financing rate

The ESF will finance up to 75% of public spending in areas covered by the “Convergence” objective and 50% in those covered by “Regional competitiveness and employment”.

Funding priorities

Generally speaking, ESF funding will concentrate on innovation, cooperation between regions and across borders, equal opportunities and promoting integration and employment for immigrants and minorities. Accordingly, annual and final implementation reports must contain a summary account of measures implemented in these fields.

Eligible expenditure

Although decided at national level, the following expenditure is not eligible for ESF financing:

• recoverable VAT;
• interest owed;
• purchases of equipment, depreciable movables, real estate or land.

The following expenditure is eligible, notwithstanding national legislation:

• allowances or salaries paid by a third party whenever these constitute national public matching funds;
• indirect costs incurred by an activity, at a fixed maximum rate of 20% of the declared direct costs.

Good governance and partnership

These are two further priorities for the ESF. The Fund will be required to focus particularly on specific regional and local institutional arrangements in each Member State. Unions and employers must be encouraged to participate and 2% of ESF resources under the “Convergence” objective will be earmarked for developing administrative capacity and supporting action by business jointly involving employers and employees. The Member States must also ensure that non-governmental bodies at the appropriate local level are properly consulted. Technical assistance will also be encouraged by the Commission.

Consistency and concentration

The proposal also aims to keep the ESF consistent with the objectives and priorities of the European Employment Strategy and target its resources on the most important needs of the operational programmes and those policy fields where they can genuinely help objectives to be achieved. These programmes must take into consideration areas with serious problems such as deprived urban areas, under-developed rural areas and those dependent on the fishing industry where this is in decline.