Positive steps for future cohesion policy objectives are not enough for a true social “triple A” across Europe

During the past week, the European Commission released a series of budgetary proposals under the so-called cohesion and values cluster, setting out priorities for future regional development, cohesion and investing in people. Against the background of this major release and our first reaction to the future European Social Fund (ESF+), this time we will look more closely at the overarching Common Provision Regulations (CPR), which lay down the rules for seven different funds including ESF+ and the future European Regional Development Fund (ERDF), thus being of overarching importance for investing in people and social cohesion.

Before coming to the key elements of this legislative proposal, a quick reality check may help us to put things in the right context. Results from the current funding period of European Structural and Investment (ESI) Funds, based on an impact assessment and stakeholder consultation suggest, among others, a strong call for simplification, limitation to fewer priorities, the strengthening of ex-ante conditionalities, and the reviewing of funding allocation mechanisms beyond GDP criteria. In addition, current deliberations on the future of cohesion policy also take place in a context where ‘doing less more efficiently’ is considered a realistic scenario for the future of the European Union at 27. This is far from ideal for civil society stakeholders advocating for an EU ‘doing more together’, yet the current budget proposals also need to be assessed in the context of the current political climate and divergent positions of Member States as regards the future EU budget.

Against this background, the CPR proposal comes out as positive overall, while a few caveats remain. On a positive side, the European Pillar of Social Rights figures prominently as a key thematic priority in the CPR, building a strong link to a ‘more social Europe’, followed by an objective on sustainable development through local initiatives. These objectives represent a strong window of opportunity for civil society organisations in all their diversity, which are also, for the first time given a more prominent role in monitoring committees with voting rights. The CPR article 6 explicitly refers to “relevant bodies representing civil society environmental partners, and bodies responsible for promoting social inclusion, fundamental rights, rights of persons with disabilities, gender equality and non-discrimination”. In addition, the CPR promotes an intervention logic that emphasizes social inclusion and sets out a set of “enabling conditions” which include horizontal principles such as the application of the European Charter of Fundamental Rights and the United Nations Convention on Persons with Disabilities (UNCPD), as well as conditions at the level of actual programming linked to more elaborate fulfilment criteria which can be considered helpful for a stronger implementation of the Pillar. For example, the enabling condition requiring a national strategic policy framework for social inclusion and poverty reduction is paired with fulfilment criteria that include evidence-based diagnosis of poverty and social inclusion, measures to combat segregation and shift from institutional to community-based care, as well as arrangements for implementation and monitoring in close cooperation with social partners and civil society organisations. Overall, enabling conditions carry on the logic of ex-ante conditionalities, but favour more effective monitoring and faster implementation on the ground, with simplification elements aiming to reduce the gap between allocation and spending (a persisting problem particularly in the Southeastern Member States), which is to be welcomed as increased spending levels could also benefit social programmes co-finaced by the EU.

A risk for an effective implementation of the future cohesion policy, which already foresees a reduction of 7% in the overall budget envelope (counting inflation in) and includes a reduction of a maximum EU co-financing ceiling from the current 95% to max. 40-70%, are macro-economic conditionalities, which have been further strengthened in the current budget proposal. This could present a risk and discourage productive public investments, such as investments in health, education and early childhood development in Member States where public investment is not back to pre-crisis levels. The set of current budget proposals, including the proposal for the Eurozone, does not further include provisions for public social investments which could be exempt from the 3% deficit rule under the Stability and Growth Pact (SGP). In addition, the new European Investment Stabilisation function (an explanatory factsheet on it can be found here) which could help Member States in time of economic hardship with loans is paired with very strict eligibility criteria such as a two-year track record of respecting EU’s fiscal and deficit rules. With a budget of €30 billion, the stabilisation function is also a far-cry from a real Eurozone budget.

To sum up, while the future proposal for cohesion policy contain good priorities for investing in social cohesion, a real social convergence is still a far-fetched endeavour. While positive elements to encourage social investments may additionally be included in the future InvestEU proposal (release date June 6) under which a social investment window is foreseen, financial instruments such as loans or guarantees cannot adequately replace investments in social and sustainability projects. In the context of a highly volatile political climate with Italy, the European third largest economy, threatening to leave the eurozone, more flexibility to allow for productive public spending coupled with a more ambitious reform of the eurozone are both urgently required.