POLICY
The European Union faces considerable challenges in the employment and social fields. Almost 23 million people are today unemployed and over 113 million are estimated to be living at risk of poverty or exclusion8. Social and employment issues are a primary concern of European citizens and an area where more is expected from the Union. Despite a recent improvement in the economic outlook, employment prospects remain mixed in the medium term, among other things due to the uneven situation among Member States and the expected pressures on economic restructuring coming from the global economy.
Unemployment and persistently high rates of poverty call for comprehensive action. Policies that have already been put in place need to be updated and strengthened as the Union is faced with pressing challenges: shortfalls in skill levels, under-performance in active labour market policy and education systems, social exclusion of marginalised groups and low labour mobility. Many of these challenges have been exacerbated by the financial and economic crisis, demographic and migratory trends and the fast pace of technological change. Unless tackled effectively, they constitute a significant threat to social cohesion and competitiveness.
The main responsibility for modernising labour market and social policy systems lies with the Member States. However, the EU adds value to their efforts by acting as a catalyst to promote and facilitate reform, providing funding notably through the European Social Fund and by empowering social partners, civil society organisations and other stakeholders who have a crucial role to play in the delivery of reform.

INSTRUMENTS
A European employment and social inclusion initiative will be set up through joint action in the fields of education and vocational training, employment and inclusion. Funding in this area will be delivered essentially through three main instruments. These will be fully aligned with the Europe 2020 objectives and their delivery improved through enhanced complementarity with other instruments and the simplification of relevant procedures.

>The European Social Fund
The European Social Fund (ESF) will provide funding for structural actions for economic, social and territorial cohesion. Funding will be concentrated on the key priorities of the Europe 2020 strategy, in particular through four ‘investment windows’:
–employment promotion;
–investment in skills, education and life-long learning;
–social inclusion and the fight against poverty; and
–enhancing institutional capacity and efficient public administration.
Within these windows, the ESF will also contribute to other policy objectives, such as facilitating the transition to a low-carbon and resource efficient economy, promoting research and innovation, especially in the social area, strengthening gender equality and combating discrimination. It is proposed to regroup actions, in particular in favour of social inclusion, by transferring the scheme of food support for the most deprived persons to the ESF.
For the post-2013 period, the ESF will be covered by the Common Strategic Framework (CSF) for structural funds 9). Funding will be programmed as part of the Partnership Contracts which will be negotiated with the Member States. The targets set will be aligned with the National Reform Programmes and will translate the agreed objectives into decisions on investment.
To strengthen the focus on results, a conditionality mechanism, based on a comprehensive set of ex-ante defined requirements, will be put in place to maximise the impact of the EU budget and trigger and support the necessary reforms in the Member States.
In order for the ESF to make a real contribution to the Europe 2020 strategy targets, a critical mass of funding is required both at EU level and at the level of the operational programmes. The necessary minimum share of cohesion policy investments allocated to the ESF will be tailored to the different categories of region reflecting the different intensities of aid they receive and challenges that they face: this will be done by establishing minimum shares for the ESF of the structural funds support for each category of region (25% for convergence regions, 40% for transition regions, 52% for competitiveness regions, based on the Cohesion Fund continuing to represent one third of the cohesion policy allocation in eligible Member States, and excluding territorial co-operation). The application of these shares result in a minimum overall share for the ESF of 25% of the budget allocated to cohesion policy.
Within these windows, the ESF will also contribute to other policy objectives, such as facilitating the transition to a low-carbon and resource efficient economy, promoting research and innovation, especially in the social area, strengthening gender equality and combating discrimination. It is proposed to regroup actions, in particular in favour of social inclusion, by transferring the scheme of food support for the most deprived persons to the ESF.
For the post-2013 period, the ESF will be covered by the Common Strategic Framework (CSF) for structural funds 9). Funding will be programmed as part of the Partnership Contracts which will be negotiated with the Member States. The targets set will be aligned with the National Reform Programmes and will translate the agreed objectives into decisions on investment.
To strengthen the focus on results, a conditionality mechanism, based on a comprehensive set of ex-ante defined requirements, will be put in place to maximise the impact of the EU budget and trigger and support the necessary reforms in the Member States.
In order for the ESF to make a real contribution to the Europe 2020 strategy targets, a critical mass of funding is required both at EU level and at the level of the operational programmes. The necessary minimum share of cohesion policy investments allocated to the ESF will be tailored to the different categories of region reflecting the different intensities of aid they receive and challenges that they face: this will be done by establishing minimum shares for the ESF of the structural funds support for each category of region (25% for convergence regions, 40% for transition regions, 52% for competitiveness regions, based on the Cohesion Fund continuing to represent one third of the cohesion policy allocation in eligible Member States, and excluding territorial co-operation). The application of these shares result in a minimum overall share for the ESF of 25% of the budget allocated to cohesion policy.
Promoting intra-EU labour mobility and improving access to employment opportunities, in particular for young people, building on the activities of the EURES network;
•Supporting entrepreneurship and self-employment as a means of creating jobs and combating social exclusion by increasing the availability and accessibility of micro-finance for vulnerable groups, micro-enterprises and the social economy, building on the Progress Micro-finance Facility.

>European Globalisation Adjustment Fund
Specific support to workers made redundant as a result of major structural change will be provided through the European Globalisation Adjustment Fund (EGF).
Through the EGF, the EU will continue to assist the Member States in providing tailor-made support for workers made redundant as a result of major structural changes triggered by the increasing globalisation of production and trade patterns. In addition, the EGF will address large-scale redundancies resulting from a serious disruption of the local, regional or national economy caused by a sudden and unexpected crisis. The EGF will aim to achieve a 50% rate of assisted workers finding a new and stable job after 12 months 10).
The Commission will propose to extend the scope of the EGF to provide compensation in certain cases for the consequences of globalisation on certain agricultural sectors.

>Autonomous budget lines
In addition to these instruments and by virtue of the powers conferred on it by the Treaty, the Commission will continue to implement autonomous budget lines11 in order to:
–facilitate the European social dialogue which is a crucial component of the European social model;
–analyse and evaluate major trends in national legislation on free movement of persons and promote coordination of national social security systems; and
–analyse the social situation and the impact of demographic change.

IMPLEMENTATION
The reduction in the number of financial instruments and budget lines and the streamlining of management and implementation methods and systems will allow for greater integration between instruments and bring considerable simplification, notably for the beneficiaries.

>The European Social Fund
The implementation of the ESF will focus on combining a stronger results-based approach, through the incorporation of the ESF within the Common Strategic Framework for all shared management instruments and the Partnership Contracts negotiated with Member States.
Implementation will also be simplified. More use will be made of simplified cost options, in particular for small projects, thereby reducing the administrative burden on Member States and regions and facilitating access to funding for local initiatives. Closer linkage of payments to achievement of targets pre-defined in the Partnership Contracts will also be enabled on the basis of joint action plans.
Finally, result-based incentive mechanisms will be introduced to reward successful programmes and measures and stimulate changes in those that under-perform.

>An integrated programme (direct management) for employment, social policy and inclusion
The new integrated programme for employment and social inclusion will be directly managed by the Commission. The main procedures include calls for tender, calls for proposals and joint management – in particular for implementing the microfinance facility in collaboration with the European Investment Fund. The new programme will focus on large projects with clear EU added value in order to reach critical mass and reduce administrative burden. Harmonised and simplified rules and procedures will be put in place to facilitate access to the programme, in particular for small organisations.
In addition, multi-annual programming will be put in place to set out long-term policy objectives together with annual funding, thereby ensuring that the programme is a genuine policy-driven instrument. The programme will be implemented through a results-based management approach based on regular monitoring of progress against clear indicators.

>Support for workers made redundant
The mobilisation of the EGF will continue to require a decision of the budgetary authority. The Commission will seek to ensure that the operation of the EGF becomes simpler and more responsive to changing economic circumstances.

>Autonomous budget lines
The implementation of the autonomous budget lines will be fully coordinated with both instruments to avoid overlap and to increase synergies. Their number will be reduced and larger projects will be given priority in order to achieve critical mass and reduce administrative burden.

PROPOSED BUDGET ALLOCATION FOR 2014-2020
All figures in constant 2011 prices
Total proposed budget 2014-2020 €88.3 bn
of which
•European Social Fund (based on the 25/40/52 formula per category of regions, resulting in 25% of the cohesion envelope, except the Connecting Europe Facility) €84 bn
•Integrated Policy for Employment, Social Policy and Inclusion €850 million
•European Globalisation Adjustment Fund €3 bn
•Autonomous Budget Lines €400 million

8) Eurostat unemployment report 10 May 2011 and Eurostat data on Europe 2020 indicators, 20 May 2011
9) The CSF will cover the ESF, the European Regional Development Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund.
10) Experience so far suggests that the reintegration rate is around 40 % after 12 months and further positive impact can be observed over a longer period of time.
11) As set out in the Financial Regulation, these actions do not require a specific basic act for their implementation. Their financial appropriations are allocated by the Budgetary Authority on an annual basis.