EUROPEAN COMMISSION Brussels, 30.5.2018 COM(2018) 382 final 2018/0206(COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the European Social Fund Plus (ESF+) {SEC(2018) 273 final}

{SWD(2018) 289 final}



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL •Reasons for and objectives of the proposal Europe is at a crucial point in time where its relevance and success in the decades to come will be determined by its ability to remain competitive in the global economy and ensure high levels of employment, education and training, health, social inclusion and active participation in society. Making Europe competitive, cohesive and resilient in the future means investing in its people now: in their education and training, skills, creativity, potential to create businesses and to innovate, and in their health. Furthermore, a number of challenges remain significant. Despite improvements, tackling unemployment and persistently high rates of poverty remains a priority throughout the EU. Social and employment issues are a primary concern of European citizens, and an area where more is expected from the Union. Additional challenges that the Union faces are related to: ·shortfalls in skill levels, ·under-performance in active labour market policy and education systems, ·challenges arising from new technology such as automation and the related new forms of work, ·social exclusion of marginalised groups including Roma and migrants, ·and low labour mobility. There is a need both for policy initiatives and for targeted supporting actions to address these challenges. As a response to the call from our citizens to enhance the social dimension of the Union, on 17 November 2017 the European Parliament, the Council and the Commission jointly proclaimed the European Pillar of Social Rights. It is now important that the European institutions and the Member States work together to deliver on the principles and rights enshrined in the Pillar. On 2 May 2018, the Commission adopted a proposal for the next multi-annual financial framework for 2021-2027. The proposal reflects the current social and economic context and provides a concrete response to the call from the European public for a more social Europe and for greater investment in people in the European Union. In this context, this proposal includes the European Social Fund Plus (ESF+) as the EU’s main instrument to invest in people and to implement the European Pillar of Social Rights. 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); –the Employment and Social Innovation (EaSI) programme and –the Programme for the Union’s action in the field of health (the Health Programme). The aim of merging the above funds is threefold:

–To enhance coherence and synergies between complimentary EU instruments which provide important support to people and which aim to improve their standards of living, by developing more integrated approaches to programming and implementation. –To increase flexibility and to allow the funds to be more responsive to the challenges identified in the economic governance cycle and to EU-level priorities. –To allow simplification of fund programming and management thus reducing the administrative burden for authorities and beneficiaries. Therefore, the ESF+ will help build an empowering social Europe and contribute to economic, social and territorial cohesion in accordance with Article 174 TFEU, which is a necessary condition for the proper functioning of the EU as a stable and viable economic and political union. This overall proposal provides for a date of application as of 1 January 2021 and is presented for a Union of 27 Member States, in line with the notification by the United Kingdom of its intention to withdraw from the European Union and Euratom based on Article 50 of the Treaty on European Union received by the European Council on 29 March 2017. •Consistency with existing policy provisions in the policy area The ESF+ supports policies and priorities which aim to help create full employment, enhance quality and productivity at work, increase the geographical and occupational mobility of workers within the Union, improve education and training systems, and promote social inclusion and health. The overarching policy objective of the ESF+ Regulation is 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. The 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 goals) 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. Setting a minimum share and amounts for the ESF+ under shared management as one of the Structural Funds will ensure that the EU’s priorities described above are adequately reflected in the volume of investment that directly target European citizens. •Consistency with other Union policies The ESF+ aims to improve synergies and coherence with other funds investing in human capital development. The ESF+ should in particular ensure complementarities and synergies with the European Regional Development Fund, the Cohesion Fund, the European Maritime and Fisheries Fund, the European Globalisation Adjustment Fund (EGF), the Erasmus Programme and the European Solidarity Corps, the Asylum and Migration Fund (AMIF), as well as with the Horizon Europe Programme and the Digital Europe Programme, the Reform Support Programme, including the Reform Delivery Tool. The ESF+ and EGF will continue to complement each other, as the ESF+ will continue to support preventive and anticipatory measures, while the EGF will remain a reactive emergency fund outside the MFF. The ESF+ and Erasmus are active in similar fields, notably helping people gain new skills, upskilling to answer the need of industrial sectors, improving digital competences and quality of education and training. Cooperation between the ESF+ and Erasmus will therefore be enhanced. The exact nature of the cooperation will be further detailed in the work programmes and programme guides for ESF+ and Erasmus, thus allowing for effective and efficient synergies. The ESF+ will also continue to support the mid and long-term integration of third country nationals in complementarity to the AMF, which will cover short-term needs. The shared management strand of the ESF+ will continue to be part of cohesion policy and it will mainly be regulated by the Common Provisions Regulation (CPR). As such, the same rules on management, programming, monitoring, auditing, etc. will apply as for most of the other Funds under shared management. Programmes in Member States can continue to combine European Regional Development Fund (ERDF) funding and ESF+ funding through multi-fund programmes. For the Health strand, an adequate governance structure will provide strategic guidelines and technical opinions on measures to support and implement the strand. It will also help in coordinating complementary support lines of the research, digital market, regional and cohesion funds, and others. The Commission proposal for the 2021-2027 Multiannual Financial Framework set a more ambitious goal for climate mainstreaming across all EU programmes, with an overall target of 25% of EU expenditure contributing to climate objectives. The contribution of this programme to the achievement of this overall target will be tracked through an EU climate marker system at an appropriate level of disaggregation, including the use of more precise methodologies where these are available. The Commission will continue to present the information annually in terms of commitment appropriations in the context of the annual draft budget. To support the full utilisation of the potential of the programme to contribute to climate objectives, the Commission will seek to identify relevant actions throughout the programme preparation, implementation, review and evaluation processes. 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY •Legal basis

Titles IX (Employment), X (Social policy) and XIV (Public health) of the Treaty on the Functioning of the European Union (TFEU), in particular, Articles 46, 149, 153, 162 to 166, 168, 174, 175 and 349 of TFEU, provide the legal framework for the measures covered by this proposal. The ESF+ has three strands. The first strand, implemented under shared management, covers the (ex-) ESF, which is based on Articles 162 and 164 TFEU and basic material assistance to the most deprived people, under Article 175(3) TFEU. The second strand, implemented under direct and indirect management, covers actions promoting employment and social innovation (EaSI), based on Article 175(3) TFEU. The third strand, implemented under direct management, concerns incentive measures designed to protect and improve human health under Article 168 TFEU. This proposal defines the general objectives of the ESF+ and the scope of support, which is translated into specific objectives. It lays down common provisions, applicable to the three strands, and specific provisions for each strand. Additionally, the Commission adopted on 29 May 2018 a proposal for a 'Common Provisions' Regulation in order to improve the coordination and harmonise the implementation of support under shared management, with the main aim of simplifying policy delivery. The ESF+ strand under shared management is covered by these common provisions. The different Funds in shared management pursue complementary objectives and share the same management mode, therefore Regulation (EU) No [Regulation laying down Common Provisions] sets out a series of common general objectives and general principles such as partnership and multi-level governance. That Regulation also contains the common elements of strategic planning and programming, including provisions on the Partnership Agreement to be concluded with each Member State, and sets out a common approach to the performance orientation of the Funds. Accordingly, it includes enabling conditions, performance review and arrangements for monitoring, reporting and evaluation. Common provisions are also set out with regard to eligibility rules, and special arrangements are defined for financial instruments, the use of the InvestEU Fund, community-led local development and financial management. Some management and control arrangements are also common to all Funds. •Subsidiarity (for non-exclusive competence) In the areas of social and employment policy and public health, the EU has either shared competence with Member States (Article 4 TFEU), competence to lay down arrangements within which they must coordinate their action (Article 5 TFEU) or competence to carry out actions to support, coordinate or supplement the actions of the Member States (Article 6 TFEU). The ESF+ under shared management strand is underpinned by the subsidiarity principle. Under shared management, the Commission delegates strategic programming and implementation tasks to the EU Member States and regions. It also limits EU action to what is necessary to achieve its objectives as laid down in the Treaties. Shared management aims to ensure that decisions are taken as closely as possible to the citizen and that EU-level action is justified in light of the possibilities and specificities at national, regional or local level. Shared management brings Europe closer to its citizens and connects local needs with European objectives. Moreover, it increases ownership of EU objectives, as Member States and the Commission share decision-making power and responsibility. The subsidiarity principle also underpins the two strands under direct and indirect management. The EaSI strand will focus on projects with an innovative dimension in which there is clear EU added value, meaning that EU action is more effective than action taken at national, regional or local level to reach critical mass and reduce administrative burden. The Health strand recognises the EU dimension of health and complements and supports Member States health policies while respecting their competence in the area, in line with Article 168 TFEU. •Proportionality In accordance with the principle of proportionality, this proposal does not go beyond what is necessary to achieve its goals. The principle of proportionality has guided the Commission's proposal because it proposes further simplification in line with the recommendations of the High Level Group on monitoring simplification for beneficiaries of ESI Funds. The proposal is proportional as it has unified and consolidated rules and merges the Funds, therefore reducing the burden on stakeholders. The administrative burden on the Union and on the national authorities has been limited to what is necessary for the Commission to exercise its responsibility for implementing the Union budget. •Choice of the instrument The choice of instrument is a Regulation of the European Parliament and the Council to establish the European Social Fund Plus. 3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS •Ex-post evaluations/fitness checks of existing legislation –The European Social Fund (ESF) Strengths: The 2000-2006 and 2007-2013 ESF ex-post evaluations recognise ESF investment as relevant, efficient and effective. The Fund was effective in reaching a significant number of EU citizens, in particular those most in need of support. This was because the ESF provided significant financial resources to address employment and social challenges in Member States and broadened existing action by supporting policy areas or groups that would not otherwise have received support. Furthermore, the ESF has supported local/regional innovations that are then mainstreamed at national level. In 2014-2020, the intervention logics of the programmes have become more robust with clearer specific objectives, more standardised indicator definitions and sounder baselines and targets. Weaknesses: –Policy alignment: while the Fund's link to the European Semester improved significantly in the 2014-2020 programming period, it is not yet optimal.

–Programming: evidence showed that in 2014-2020 result orientation was strengthened but the performance framework has not proved to be a sufficient incentive for Member States. Programming requirements have been criticised for being administratively burdensome. –Programme implementation: studies show that, despite some progress, ESF management and delivery remains too complex. Despite improvements in 2014-2020 the shift from a logic based on inputs towards one based on results has not fully taken place. –The Youth Employment Initiative (YEI) Strengths: The YEI has increased the visibility of youth employment policies and has driven policy reforms in a number of Member States in the context of the set-up and implementation of Youth Guarantee schemes. Member States report that the YEI is of critical importance for the coverage and design of employment policy in their country. Weaknesses: The main challenges relate to its financial management (being funded from two funding sources – the YEI specific allocation and the ESF) and the additional reporting requirements. These elements have been perceived by beneficiaries and implementing authorities as increasing the administrative burden. –The Fund for European Aid to the Most Deprived (FEAD) Strengths: Preliminary results of the mid-term evaluation of the FEAD, including results of stakeholder consultations, indicate that the food, material aid and social inclusion measures it supports make a difference to the most deprived people in society, including those who otherwise may be left out by mainstream social assistance or who need immediate support. Weaknesses: The EU regulatory framework and its interpretation or national requirements can lead to difficulties in implementing the Fund. Difficulties include delays in the start-up phase of the programme and administrative obstacles mostly linked to national procurement policies and to additional requirements such as recording data/information on operations and end recipients for monitoring purposes and excessive and lengthy procedures. –The Employment and Social Innovation (EaSI) programme Strengths: The mid-term evaluation shows that in 2014-2016 the EaSI programme was efficient and effective in helping to raise awareness about EU policy inputs in the area of social inclusion and poverty reduction. The evaluation also showed that the EaSI programme improved perception of the cross-border potential for employment and contributed to a rapid testing and implementation of innovative measures and increased access to microfinance loans and support for entrepreneurship. EaSI also facilitated policy change by disseminating comparative and analytical knowledge, building capacity, mutual learning and dialogue, and by helping different stakeholders to influence the formulation and implementation of socio-economic policies. Weaknesses: More could be done to improve the relevance and impact of EaSI. The PROGRESS axis should improve the efforts to deliver social policy experimentations by revising the procedures for evaluating and selecting projects and by creating the conditions for scaling them up. For EURES, a longer implementation period combined with measures for reducing the administrative burden may enable stakeholders to properly develop, implement, measure the effectiveness and ensure the sustainability of projects.

–The Health Programme Strengths: The mid-term evaluation confirmed the EU added value of actions, notably in the form of increased capacity in the Member States to address cross border health threats, of technical guidelines and recommendations for cancer, HIV/AIDS and Tuberculosis prevention, of additional support for EU health legislation on medicinal products and medical devices, as well as the eHealth Network activities and Health Technology Assessment. The evaluation also recognised the added value of tools to control healthcare-associated infections and to step up coordinated efforts to fight against antimicrobial resistance, and of the extensive groundwork pursued through Joint Actions to identify and transfer best practices for the prevention and management of diseases. It also recognised the positive contribution of actions to increase the interoperable and standardised cross-border exchange of health data, and of those efforts to set up EU-wide digital infrastructures for that purpose. Weaknesses: In non-legislative areas where actions can be more open-ended or broadly defined, the mid-term evaluation revealed that there is a danger of those actions being less focused. There is scope to streamline the added-value criteria to focus on three key areas: addressing cross-border health threats, improving economies of scale, and fostering the exchange and implementation of best practices. There were also some inefficiencies and inadequacies with the monitoring of implementation data, which can make it harder for programme managers to keep an up-to-date overview of the programme's achievements. •Stakeholder consultations The stakeholder consultations were based on a stakeholders mapping, which covers the main EU organisations and institutions working in the field of social and employment policy and relevant investment – public authorities at all levels of government, social partners, civil society organisations, funding beneficiaries and end-users as well as citizens across the EU. The stakeholder consultation used a variety of methods and tools to reach a sufficient variety and number of stakeholders, and to cross check opinions. The consultation activities included several Open Public Consultations performed as part of the MFF, the ex-post evaluation of the ESF, the FEAD mid-term evaluation and the EaSI mid-term evaluation. The consultation also involved stakeholder conferences and meetings, focus groups, interviews, targeted online consultation and analysis of position papers. More information on the stakeholder consultations is available in the Impact Assessment. The main conclusions from the stakeholder consultations were: –The added value of the funds is linked to promoting effective and efficient public investment, streamlining the exchange of knowledge between countries and regions, improving social integration and creating a more inclusive Europe, supporting policy experimentation and innovation, reducing regional disparities and facilitating convergence. The funds also add value through the leverage effect of cohesion policy on public and private investment. –Complex procedures are seen as the most important obstacle to funds successfully achieving their objectives. –There was a call to simplify and reduce the administrative burden on beneficiaries including less burdensome requirements on collecting data from participants.

–There is a need to strengthen the social dimension. –The rules for the various EU funds should be aligned. –There was a call to strengthen synergies and avoid duplication and overlaps between EU instruments. Merging funds was identified as the best way to achieve this goal, provided that merging also helps to simplify the EU instruments. –The policy papers show considerable interest in improving the links between the funds and the European Semester. –Current public health issues can only be effectively dealt with through collaboration at EU level. There is an added value in the EU addressing common challenges such as health inequalities, migration, an ageing population, patient safety, high quality health care, tackling health threats including non-communicable diseases, infectious diseases and antimicrobial resistance. The main proposals addressing stakeholders’ feedback are outlined below: –To enhance synergies and avoid overlaps between funding instruments investing in people and their needs, the ESF, YEI, FEAD, EaSI and the Health Programme will be merged into one Fund (the ESF+). This will make it easier for beneficiaries to access funding, help them combine different types of measures, and simplify the management of funding. –To respond to the call for strengthening the social dimension: ·The scope of support for ESF+ is aligned with the European Pillar of Social Rights. Merging different instruments under the ESF+ will make it possible to pool resources for the implementation of the principles of the Pillar. ·The social inclusion dimension of the ESF+ will be strengthened by integrating the FEAD and the ESF. This allows for an easier combination of provisions of food/material assistance with support for social inclusion and active measures. ·At least 25 % of national ESF+ resources will be earmarked for promoting social inclusion and tackling poverty. Moreover, Member States will have to allocate at least 2% of their ESF+ resources for measures targeting the most deprived. This ensures that a minimum amount of resources target those most in need. –In order to simplify the implementation of the ESF+, reduce the administrative burden on beneficiaries and shift the focus to the achievement of results, several provisions are introduced in the CPR. However, the ESF+ Regulation also provides formeasures to tackle material deprivation in order to address the stakeholders’ request to maintain lighter requirements for this type of assistance and simplified data collection and monitoring and reporting requirements. –To ensure stronger alignment with the European Semester process an adequate amount of resources from national ESF+ resources will be allocated to implementing challenges identified in the European Semester process. •Collection and use of expertise The Commission has based its decisions on expertise collected through a number of studies as well as on Member States’ reports on the implementation of the ESF. The studies used a range of methods including literature reviews, targeted surveys, interviews, focus groups, and economic modelling. The reports and studies are listed in the impact assessment. The ESF+ proposal has taken into account recommendations from the studies by enhancing synergies and complementarities between the funds, strengthening the link with EU policy priorities while increasing flexibility, and by including a number of measures to reduce administrative burden, such as enhanced simplified cost options and simplified monitoring and reporting requirements. •Impact assessment This proposal is supported by an impact assessment. The Regulatory Scrutiny Board hearing took place on the 25 April 2018, where the impact assessment received a positive opinion with reservation. The table below outlines the main comments received and how the impact assessment was amended to reflect these. Main Regulatory Scrutiny Board considerations Impact assessment report modifications (1) The policy prioritisation of actions is not clear, in particular in relation to the European Pillar of Social Rights, as well as to accommodate potential reductions of funding. The text clarifies a potential reduction of funding would be addressed by limiting the scope of the ESF+ in the area of administrative reform and by increasing the national co-financing rates. (3) The report does not sufficiently demonstrate that the monitoring and evaluation system is robust and will deliver the necessary information in a timely way. Additional information on the monitoring and evaluation system has been inserted in Section 5. Further considerations and adjustment requirements (1) The lessons learned should more comprehensively build on the main general and fund-specific challenges identified in the published evaluations and preliminary evaluations results. Published evaluations, preliminary evaluation results and stakeholder consultations have identified specific challenges to each of the funds. When analysing them, it appeared that they could be grouped in to the four overall MFF challenges, i.e. interaction and synergies between funds, alignment to policies and flexibility, simplification and performance and result orientation. The cross cutting MFF challenges find therefore a translation for each fund (Section 2.1.2.2). (2) Clarify the main rationale for merging the funds and the risks associated to the merge. Additional explanation has been included in order to explain the reasons for merging the relevant funds together and for keeping the EGF out of this new fund. In addition, the main risk raised by stakeholders that the merged fund would increase the administrative burden is mitigated as ex-FEAD and EaSI type of measures will remain subject to simpler rules (Section 4.1.1). (3) The baseline of the ESF+ programme needs to reflect the impact of Brexit. Baseline following Brexit inserted in the text under section 2.1.1. (4) Be more transparent on the prioritisation of the ESF+. Clarify the key changes in the policy priorities of the ESF+, including as regards the link to the European Pillar of Social Rights. Explain if and how the ESF+ will cover all or some of the different domains on the Pillar. Better explain the link between the structural reforms and the European Semester Process. It was clarified in the text of the report that the merged fund will not as such change the priorities of the funding instrument, which results to be an aggregation of the previously partly overlapping policy priorities of the different funds. The ESF+ will support the policy priorities of the European Pillar of Social Rights which are part of its scope. The text further clarifies which Pillar rights and principles will fall under the scope of the ESF+. The question of prioritisation is clarified on pages 30-31. (5) Clarify whether and to what extent the ESF+ will address public administration reform. Refer to possible future support from other funding programmes (e.g. Structural Reform Support Programme) The text clarifies the scope of the ESF+ regarding public administration reform to the extent possible given that at the time of writing this impact assessment, the scope of the future Reform Support Programme is not yet known. (6) Identify the key changes in the delivery mechanisms of the ESF+ The changes proposed in the delivery mechanisms address different issues and are therefore of different nature. In terms of programming for example a key change is to align the funding and policy process by streamlining the programming documents. In terms of implementation, a key change is to apply in a more flexible way the territorial rules for the ESF and to introduce continuous conditionalities (Section 4). (8) Clarify the coherence between the ESF+ and ERDF and Erasmus + Aspects of coherence between the ESF+ and ERDF and Erasmus + programme have been included in the main body of the report. Additional information is provided in annex 4. (9) Explain how the monitoring system will address the criticisms voiced during the 2007-2013 period. The evaluation planning should include an interim evaluation of each fund. Explain how the stakeholders views were taken into account On monitoring and evaluation, see Main considerations, point 3. The views of stakeholders are summarised in the main body of the report (section 1.2.2) and are more detailed in annex 2, see in particular Section 6.2 which explains how stakeholder views were taken into account. The impact assessment assessed the best way to maximise the support provided at EU level and how to improve synergies between different instruments, in particular, with the aim of better delivering on the principles of the European Pillar of Social Rights. The options assessed were the following:

Option 1: merging the ESF, YEI, FEAD, EaSI, EU Health programme. –This was the preferred option based both on the results of evaluations and on the stakeholder consultations. In the view of managing authorities, broadly integrating the funds would help streamline their strategic interventions across all areas of social policy. This would enhance flexibility when planning interventions, and facilitate the delivery of the principles of the European Pillar of Social Rights. Beneficiaries confirmed that there is still untapped potential for strengthening synergies between programmes and the projects funded. Option 2: merging the ESF, YEI, FEAD, EaSI, EU Health programme and EGF –This would only result in an artificial reduction in the number of funds. The EGF's very specific objectives, high political visibility and budgetary flexibility would be lost if it were to be merged with the ESF+. Stakeholders confirmed this during the consultation process. Option 3: merging the funds under shared management (i.e. excluding the EaSI and the EU Health programme, but including the EGF) –This would mean sacrificing the EGF’s high visibility as an EU-level emergency instrument to cushion the adverse side effects of globalisation. The potential flexibility and synergies to be gained from merging EaSI within the ESF+ would be lost. Option 4: keeping the FEAD as a separate fund, but merging material assistance and social inclusion under the FEAD programmes. –This would allow for more synergies between the types of support for basic material assistance and social inclusion measures while keeping the current implementation rules. It would not however ensure adequate demarcation vis-à-vis ESF-type social inclusion measures. Option 5: merging all ESI Funds –This would impair policy delivery, as it would not be possible to adapt implementation rules to the specific requirements of the policies supported. It would not increase synergies and coherence with other human capital funds. •Regulatory fitness and simplification The Common Provision Regulation (common to many shared management policy areas) will ensure simplification of the shared management strand of the Fund through the use of common and simplified rules regarding programming, monitoring and evaluation arrangements, management and control, information and communication and financial management. There will be provisions facilitating the use of the simplified cost options, as well as the new option to use financing not linked to costs. 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 .There will also be increased flexibility, 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. •Fundamental rights The ESF+ Regulation ensures the respect of fundamental rights and observes the principles recognised in the Charter of Fundamental Rights of the European Union. Member States must apply this Regulation in a manner consistent with these rights and principles. 4.BUDGETARY IMPLICATIONS The total budget allocated for the ESF+ amounts to EUR 101 billion (in current prices) for the 2021-2027 period, of which EUR 100 billion for the ESF+ strand under shared management. The financial envelope for the direct management strands of the ESF+ shall be EUR 1 174 million in current prices, of which EUR 761 million for Employment and Social Innovation and EUR 413 million for Health. Details on financial and staffing needs can be found in the ESF+ Legislative Financial Statements This proposal establishes a minimum amount for the ESF+ in order to ensure an appropriate amount of funding for investments in people in the Union.

5.OTHER ELEMENTS •Implementation plans and monitoring, evaluation and reporting arrangements Under shared management, targets for common output and result indicators, and if necessary, for programme specific output and result indicators, will be defined at programme level. The Member States authorities will electronically transmit data on output and result indicators to the Commission six times a year. Their consistency will be checked. The reliability of the system for collecting, recording and storing data for monitoring, evaluation, financial management and verification will be audited. In order to simplify data collection and minimise the burden on participants and beneficiaries, the authorities will be enabled, as much as possible, to collect monitoring data from existing administrative registers. Sensitive data will not be collected directly from the participants and rely on registers or informed estimations. Evaluation will remain the shared responsibility of the Member States and the Commission. In addition to evaluations carried out by Member States, the Commission will carry out a midterm and a retrospective evaluation of the ESF+ strand under shared management with the support of the Member States. Under direct and indirect management, performance frameworks will be developed building on the relevant practices of the former EaSI and Health frameworks to ensure that data are collected efficiently, effectively and on time. The Commission will evaluate the direct and indirect management strands such that this will feed into different decision-making processes. •Detailed explanation of the specific provisions of the proposal Much of the delivery and implementation of the ESF+ strand under shared management is covered by the CPR. The main elements of the Regulation should therefore be read in conjunction with the CPR. The ESF+ Regulation has the following structure: Part I – General provisions (applicable to all strands) This part includes the subject matter, definitions, general objectives and methods of implementation and the specific objectives. It also includes provisions on the principles of gender equality, equal opportunities and non-discrimination which the Commission and the Member States must respect when implementing the ESF+. This part is applicable to all strands of the ESF+. The specific objectives to be supported by the ESF+ are based on the principles set out in the European Pillar of Social Rights. Part II – Implementation under the ESF+ strand under shared management This part sets out provisions which are applicable to the strand under shared management, which includes the ex-ESF, ex-YEI and ex-FEAD. These provisions are complementary to the rules set out in the CPR. Chapter I: Common provisions on programming (under shared management) This chapter details the consistency and thematic concentration of the ESF+ strand under shared management. In particular, it provides for: –Provisions strengthening alignment with the European Semester – to strengthen the link with the European Semester, the proposal includes a new provision that if a Member State has a relevant country-specific recommendation (CSR), it should allocate an appropriate amount of its resources of the ESF+ strand under shared management to this. –Thematic concentration requirements:

Tackling poverty and promoting social inclusion: social inequalities remain a major concern. Therefore, at least 25% of the resources of the ESF+ strand under shared management will be allocated to fostering social inclusion to ensure that the social dimension of Europe as set out in the European Pillar of Social Rights is duly put forward and that a minimum amount of resources targets those most in need. Moreover, it is appropriate that Member States allocate a minimum amount of resources to measures addressing material deprivation. Improving employment opportunities for young people: although youth unemployment in the EU has decreased – from a peak of 24% in January 2013 to 15.6% in March 2018 – it is still high - more than double the overall unemployment rate (15.9% compared with 7.1% in February 2018). Notably, in all outermost regions, 40% of young people are unemployed. The rate of young people who are not in employment, education or training (NEET) was also still very high, at 13.4% in 2017. Therefore, Member States with a NEET rate (age group 15 – 29) above a given threshold should allocate 10% of their ESF+ resources of the ESF+ strand shared management to targeted actions and structural reforms to support young people. In the case of outermost regions with a NEET rate above the threshold, the allocation is increased to 15%. Chapter II: General support of the ESF+ strand under shared management This chapter applies to all support provided by the ESF+ strand under shared management except the support addressing material deprivation. It sets out rules on eligibility and monitoring, which complement the CPR. There is also a provision on ‘innovative actions’, which encourages Member States to support social innovation and social experimentation, which strengthen bottom-up approaches based on partnerships. Chapter III: ESF+ support for addressing material deprivation Chapter III focuses solely on the ex-FEAD material assistance. This is justified by the fact that these types of operations have lower thresholds for participation and thus are less administratively burdensome. Stakeholders have called for keeping this approach and not imposing more demanding ESF rules (e.g. for reporting data on indicators, or rules on the audit trail). This chapter outlines the principles for support, the rules on reporting, eligibility, the indicators and audit. Part III – Implementation under direct and indirect management Chapter I: specific rules for the Employment and Social Innovation strand This chapter focuses on the direct and indirect management strand related to the Employment and Social Innovation strand. It includes provisions on operational objectives, eligible actions and eligible entities. Chapter II: specific provisions applicable to the Health strand This chapter focuses on the direct management strand related to the Health strand. It includes provisions on operational objectives, eligible actions and entities, and governance. Chapter III: Common rules applicable to the Employment and Social Innovation and the Health strands This chapter focuses on the rules applicable to both of the direct management strands: associated third countries, forms of EU funding and methods of implementation, work programme, monitoring and reporting,evaluation,protection of the financial interests of the Union, audits, information and communication and publicity. Part IV – Final provisions Part IV outlines the provisions applicable to all: exercise of the delegation, the Committee Procedure for the ESF+ under shared management, the Committee under Article 163 TFEU, the transitional provisions and the date of entry into force. Annexes –Annex I – Common indicators for the general support of the ESF+ strand under shared management

–Annex II - Common indicators for ESF+ support for addressing material deprivation –Annex III – Indicators for the Health strand 2018/0206 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the European Social Fund Plus (ESF+) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 46(d), Article 149, Article 153(2)(a), Article 164, Article 168(5), Article 175(3) and Article 349 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee, Having regard to the opinion of the Committee of the Regions, Acting in accordance with the ordinary legislative procedure, Whereas: (1)On 17 November 2017, the European Pillar of Social Rights was jointly proclaimed by the European Parliament, the Council and the Commission as a response to social challenges in Europe. The twenty key principles of the pillar are structured around three categories: equal opportunities and access to the labour market; fair working conditions; social protection and inclusion. The twenty principles of the European Pillar of Social Rights should guide the actions under the European Social Fund Plus (ESF+). In order to contribute to the implementation of the European Pillar of Social Rights the ESF+ should support investments in people and systems in the policy areas of employment, education and social inclusion, thereby supporting economic, territorial and social cohesion in accordance with Article 174 TFEU. (2)At Union level, the European Semester of economic policy coordination is the framework to identify national reform priorities and monitor their implementation. Member States develop their own national multiannual investment strategies in support of those reform priorities. Those strategies should be presented alongside the yearly National Reform Programmes as a way to outline and coordinate priority investment projects to be supported by national and/or Union funding. They should also serve to use Union funding in a coherent manner and to maximise the added value of the financial support to be received notably from the programmes supported by the Union under the European Regional Development Fund, the Cohesion Fund, the European Social Fund Plus, the European Maritime and Fisheries Fund and the European Agricultural Fund for Rural Development, the European Investment Stabilisation Function and InvestEU, where relevant. (3)The Council of […] adopted revised guidelines for the employment policies of the Member States to align the text with the principles of the European Pillar of Social Rights, with a view to improving Europe's competitiveness and making it a better place to invest, create jobs and foster social cohesion. In order to ensure the full alignment of the ESF+ with the objectives of these guidelines, particularly as regards employment, education, training and the fight against social exclusion, poverty and discrimination, the ESF+ should support Member States, taking account of the relevant Integrated Guidelines and relevant country-specific recommendations adopted in accordance with Article 121(2) TFEU and Article 148(4) TFEU and, where appropriate, at national level, the national reform programmes underpinned by national strategies. The ESF+ should also contribute to relevant aspects of the implementation of key Union initiatives and activities, in particular the "Skills Agenda for Europe" and the European Education Area, relevant Council Recommendations and other initiatives such as the Youth Guarantee, Upskilling Pathways and on Integration of the long-term unemployed. (4)On 20 June 2017, the Council endorsed the Union response to the 'UN 2030 Agenda for Sustainable Development’ - a sustainable European future. The Council underlined the importance of achieving sustainable development across the three dimensions (economic, social and environmental), in a balanced and integrated way. It is vital that sustainable development is mainstreamed into all Union internal and external policy areas, and that the Union is ambitious in the policies it uses to address global challenges. The Council welcomed the Commission Communication on "Next steps for a sustainable European future" of 22 November 2016 as a first step in mainstreaming the Sustainable Development Goals and applying sustainable development as an essential guiding principle for all Union policies, including through its financing instruments. (5)The Union is confronted with structural challenges arising from economic globalisation, the management of migration flows and the increased security threat, clean energy transition, technological change and an increasingly ageing workforce and growing skills and labour shortages in some sectors and regions, experienced especially by SMEs. Taking into account the changing realities of the world of work, the Union should be prepared for the current and future challenges by investing in relevant skills, making growth more inclusive and by improving employment and social policies, including in view of labour mobility. (6)Regulation (EU) No […] establishes the framework for action by the European Regional Development Fund (ERDF), the European Social Fund Plus (ESF+), the Cohesion Fund, the European Maritime and Fisheries Fund (EMFF), the Asylum and Migration Fund (AMIF), Internal Security Fund (ISF) and the Border Management and Visa Instrument (BMVI) as a part of the Integrated Border Management Fund (IBMF), and lays down, in particular, the policy objectives and the rules concerning programming, monitoring and evaluation, management and control for Union funds implemented under shared management. It is therefore necessary to specify the general objectives of the ESF+, and to lay down specific provisions concerning the type of activities that may be financed by the ESF+.

(7)Regulation (EU, Euratom) No [the new FR] (the ‘Financial Regulation’) lays down rules on the implementation of the Union budget, including the rules on grants, prizes, procurement, indirect implementation, financial assistance, financial instruments and budgetary guarantees. In order to ensure coherence in the implementation of Union funding programmes, the Financial Regulation is to apply to the actions to be implemented in direct or indirect management under the ESF+. (8)The types of financing and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. For grants, this should include consideration of the use of lump sums, flat rates and unit costs, as well as financing not linked to costs as envisaged in Article 125(1) of the Financial Regulation. To implement measures linked to the socio-economic integration of third country nationals, and in accordance with Article 88 of the Common Provisions Regulation, the Commission may reimburse Member States using simplified cost options including the use of lump sums. (9)In order to streamline and simplify the funding landscape and create additional opportunities for synergies through integrated funding approaches, the actions which were supported by the Fund for European Aid to the Most Deprived ('FEAD'), the European Union Programme for Employment and Social Innovation and the Programme for the Union's action in the field of health should be integrated into one ESF+. The ESF+ should therefore include three strands: the ESF+ strand under shared management, the Employment and Social Innovation strand, and the Health strand. This should contribute to reducing the administrative burden linked to the management of different funds, in particular for Member States, whilst maintaining simpler rules for simpler operations such as the distribution of food and/or basic material assistance. (10)In view of this wider scope of the ESF+ it is appropriate to foresee that the aims to enhance the effectiveness of labour markets and promote access to quality employment, to improve the access to and the quality of education and training as well as to promote social inclusion and health and to reduce poverty are not only implemented under shared management, but also under direct and indirect management under the Employment and Social Innovation and Health strands for actions required at Union level. (11)The integration of the Programme for the Union's action in the field of health with the ESF+ will also create synergies between the developments and testing of initiatives and policies to improve the effectiveness, resilience and sustainability of health systems developed by the Health strand of the ESF+ Programme and their implementation in the Member States by the tools provided by the other strands of the ESF+ Regulation. (12)This Regulation lays down a financial envelope for the ESF+. Parts of this financial envelope should be used for actions to be implemented in direct and indirect management under the Employment and Social Innovation and Health strands. (13)The ESF+ should aim to promote employment through active interventions enabling (re)integration into the labour market, notably for youth, the long-term unemployed and the inactive, as well as through promoting self–employment and the social economy. The ESF+ should aim to improve the functioning of labour markets by supporting the modernisation of labour market institutions such as the Public Employment Services in order to improve their capacity to provide intensified targeted counselling and guidance during the job search and the transition to employment and to enhance workers’ mobility. The ESF+ should promote women's participation in the labour market through measures aiming to ensure, amongst others, improved work/life balance and access to childcare. The ESF + should also aim to provide a healthy and well-adapted working environment in order to respond to health risks related to changing forms of work and the needs of the ageing workforce. (14)The ESF+ should provide support to improving the quality, effectiveness and labour market relevance of education and training systems in order to facilitate the acquisition of key competences notably as regards digital skills which all individuals need for personal fulfilment and development, employment, social inclusion and active citizenship. The ESF+ should help progression within education and training and transition to work, support lifelong learning and employability, and contribute to competitiveness and societal and economic innovation by supporting scalable and sustainable initiatives in these fields. This could be achieved for example through work-based learning and apprenticeships, lifelong guidance, skills anticipation in cooperation with industry, up-to-date training materials, forecasting and graduate tracking, training of educators, validation of learning outcomes and recognition of qualifications. (15)Support through the ESF+ should be used to promote equal access for all, in particular for disadvantaged groups, to quality, non-segregated and inclusive education and training, from early childhood education and care through general and vocational education and training and to tertiary level, as well as adult education and learning, thereby fostering permeability between education and training sectors, preventing early school leaving, improving health literacy, reinforcing links with non-formal and informal learning and facilitating learning mobility for all. Synergies with the Erasmus programme, notably to facilitate the participation of disadvantaged learners in learning mobility, should be supported within this context. (16)The ESF+ should promote flexible upskilling and reskilling opportunities for all, notably digital skills and key enabling technologies, with a view to providing people with skills adjusted to digitalisation, technological change, innovation and social and economic change, facilitating career transitions, mobility and supporting in particular low-skilled and/or poorly qualified adults, in line with the Skills Agenda for Europe. (17)Synergies with the Horizon Europe programme should ensure that the ESF+ can mainstream and scale up innovative curricula supported by Horizon Europe in order to equip people with the skills and competences needed for the jobs of the future. (18)The ESF+ should support Member States’ efforts to tackle poverty with a view to breaking the cycle of disadvantage across generations and promote social inclusion by ensuring equal opportunities for all, tackling discrimination and addressing health inequalities. This implies mobilising a range of policies targeting the most disadvantaged people regardless of their age, including children, marginalised communities such as the Roma, and the working poor. The ESF+ should promote the active inclusion of people far from the labour market with a view to ensuring their socio-economic integration. The ESF+ should be also used to enhance timely and equal access to affordable, sustainable and high quality services such as healthcare and long-term care, in particular family and community-based care services. The ESF+ should contribute to the modernisation of social protection systems with a view in particular to promoting their accessibility. (19)The ESF+ should contribute to the reduction of poverty by supporting national schemes aiming to alleviate food and material deprivation and promote social integration of people at risk of poverty or social exclusion and the most deprived. With a view that at Union level at least 4% of the resources of the ESF+ strand under shared management supports the most deprived, Member States should allocate at least 2% of their national resources of the ESF+ strand under shared management to address the forms of extreme poverty with the greatest social exclusion impact, such as homelessness, child poverty and food deprivation. Due to the nature of the operations and the type of end recipients, it is necessary that simpler rules apply to support which addresses material deprivation of the most deprived. (20)In light of the persistent need to enhance efforts to address the management of the migration flows in the Union as a whole and in order to ensure a coherent, strong and consistent support to the solidarity and responsibility-sharing efforts, the ESF+ should provide support to promote the socio-economic integration of third country nationals complementary to the actions financed under the Asylum and Migration Fund. (21)The ESF+ should support policy and system reforms in the fields of employment, social inclusion, healthcare and long-term care, and education and training. In order to strengthen alignment with the European Semester, Member States should allocate an appropriate amount of their resources of the ESF+ strand under shared management to implement relevant country-specific recommendations relating to structural challenges which it is appropriate to address through multiannual investments falling within the scope of the ESF+. The Commission and the Member States should ensure coherence, coordination and complementarity between the shared-management and Health strands of ESF+ and the Reform Support Programme, including the Reform Delivery Tool and the Technical Support Instrument. In particular, the Commission and the Member State should ensure, in all stages of the process, effective coordination in order to safeguard the consistency, coherence, complementarity and synergy among sources of funding, including technical assistance thereof. (22)To ensure that the social dimension of Europe as set out in the European Pillar of Social Rights is duly put forward and that a minimum amount of resources is targeting those most in need Member States should allocate at least 25% of their national ESF+ resources of the ESF+ strand under shared management to fostering social inclusion. (23)In the light of persistently high levels of youth unemployment and inactivity in a number of Member States and regions, in particular affecting young people who are neither in employment, nor in education or training, it is necessary that those Member States continue to invest sufficient resources of the ESF+ strand under shared management towards actions to promote youth employment including through the implementation of Youth Guarantee schemes. Building on the actions supported by the Youth Employment Initiative in the 2014-2020 programming period targeting individual persons, Member States should further promote employment and education reintegration pathways and outreach measures for young people by prioritising, where relevant, long-term unemployed, inactive and disadvantaged young people including through youth work. Member States should also invest in measures aimed at facilitating school-to-work transition as well as reforming and adapting employment services with a view to providing tailor-made support to young people. Member States concerned should therefore allocate at least 10% of their national resources of the ESF+ strand under shared management to support youth employability. (24)Member States should ensure coordination and complementarity between the actions supported by these funds. (25)In accordance with Article 349 TFEU and Article 2 of Protocol No 6 to the 1994 Act of Accession, the outermost regions and the northern sparsely populated regions are entitled to specific measures under common policies and EU programmes. Due to the permanent constraints these regions require specific support. (26)Efficient and effective implementation of actions supported by the ESF+ depends on good governance and partnership between all actors at the relevant territorial levels and the socio-economic actors, in particular the social partners and civil society. It is therefore essential that Member States encourage the participation of social partners and civil society in the implementation of the ESF+ under shared management.

(27)With a view to rendering policies more responsive to social change and to encourage and support innovative solutions, support for social innovation is crucial. In particular, testing and evaluating innovative solutions before scaling them up is instrumental in improving the efficiency of the policies and thus justifies specific support from the ESF+. (28)The Member States and the Commission should ensure that ESF+ contributes to the promotion of equality between women and men in accordance with Article 8 TFEU to foster equality of treatment and opportunities between women and men in all areas, including regarding participation in the labour market, terms and conditions of employment and career progression. They should also ensure that the ESF+ promotes equal opportunities for all, without discrimination in accordance with Article 10 TFEU and promotes the inclusion in society of persons with disabilities on equal basis with others and contributes to the implementation of the United Nations Convention on the Rights of Persons with Disabilities. These principles should be taken into account in all dimensions and in all stages of the preparation, monitoring, implementation and evaluation of programmes, in a timely and consistent manner while ensuring that specific actions are taken to promote gender equality and equal opportunities. The ESF+ should also promote the transition from residential/institutional care to family and community-based care, in particular for those who face multiple discrimination. The ESF+ should not support any action that contributes to segregation or to social exclusion.Regulation (EU) No [future CPR] provides that rules on eligibility of expenditure are to be established at national level, with certain exceptions for which it is necessary to lay down specific provisions with regard to the ESF+ strand under shared management. (29)In order to reduce the administrative burden for the collection of data, Member States should, where such data are available in registers, allow managing authorities to collect data from registers. (30)With regard to the processing of personal data within the framework of this Regulation, national data controllers should carry out their tasks for the purposes of this Regulation in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council. (31)Social experimentation is a small-scale project testing which allows gathering evidence on the feasibility of social innovations. It should be possible for feasible ideas to be pursued on a wider scale or in other contexts with financial support from the ESF+, as well as from other sources. (32)ESF+ lays down provisions intended to achieve freedom of movement for workers on a non-discriminatory basis by ensuring the close cooperation of the central employment services of Member States with one another and with the Commission. The European network of employment services should promote a better functioning of the labour markets by facilitating the cross-border mobility of workers and a greater transparency of information on the labour markets. The ESF+ scope also includes developing and supporting targeted mobility schemes with a view to filling vacancies where labour market shortcomings have been identified. (33)Lack of access to finance for microenterprises, social economy and social enterprises is one of the main obstacles to business creation, especially among people furthest from the labour market. The ESF+ Regulation lays down provisions in order to create a market eco-system to increase the supply of and access to finance for social enterprises as well as to meet demand from those who need it most, and in particular the unemployed, women and vulnerable people who wish to start up or develop a microenterprise. This objective will also be addressed through financial instruments and budgetary guarantee under the social investment and skills policy window of the InvestEU Fund. (34)Social investment market players, including philanthropic actors, can play a key role in achieving several ESF+ objectives, as they offer financing as well as innovative and complementary approaches to combatting social exclusion and poverty, reducing unemployment and contributing to the UN Sustainable Development Goals. Therefore, philanthropic actors such as foundations and donors should be involved, as appropriate, in ESF+ actions in particular in those aimed at developing the social investment market ecosystem. (35)In accordance with Article 168 TFEU, a high level of human health protection is to be ensured in the definition and implementation of all Union policies and activities. The Union is to complement and support national health policies, encourage cooperation between Member States and promote the coordination between their programmes, in full respect of the responsibilities of the Member States for the definition of their health policies and the organisation and delivery of health services and medical care. (36)Keeping people healthy and active longer and empowering them to take an active role in managing their health will have positive effects on health, health inequalities, quality of life, productivity, competitiveness and inclusiveness, while reducing pressures on national budgets. The Commission has been committed to help Member States to reach their sustainable development goals (SDG), in particular SDG 3 "Ensure healthy lives and promote well-being for all at all ages". (37)Evidence and the common values and principles in European Union Health Systems as set out in the Council Conclusions of 2 June 2006 should support the decision-making processes for planning and managing innovative, efficient and resilient health systems, promoting tools for ensuring universal access to quality healthcare, and the voluntary wider scale implementation of best practices. (38)The Health strand of the ESF+ should contribute to disease prevention throughout the lifetime of the Union's citizens and to health promotion by addressing health risk factors such as tobacco use and passive smoking, harmful use of alcohol, consumption of illicit drugs and reduction of drugs-related health damage, unhealthy dietary habits and physical inactivity and foster supportive environments for healthy lifestyles in order to complement Member States action in line with the relevant strategies. The Health strand of the ESF+ should mainstream effective prevention models, innovative technologies and new business models and solutions to contribute to innovative, efficient and sustainable health systems of the Member States and facilitate access to better and safer healthcare for European citizens. (39)Non-communicable diseases are responsible for over 80 % of premature mortality in the Union and an effective prevention entails multiple cross border dimensions. In parallel, the European Parliament and the Council underlined the need to minimise the public health consequences of serious cross-border threats to health such as communicable diseases and other biological, chemical, environmental and unknown threats, by supporting preparedness and response capacity building. (40)Reducing the burden of resistant infections and healthcare associated infections and securing the availability of effective antimicrobials is essential for the efficiency of health systems and for the health of citizens. (41)The Commission has recently made a proposal on Health Technology Assessment (HTA) to support cooperation on health technology assessment at Union level to improve the availability of innovative health technologies to patients across the Union, make better use of available resources and improve business predictability. (42)Given the specific nature of some of the objectives covered by the Health strand of the ESF+ and by the type of the actions under that strand, the respective competent authorities of the Member States are best placed to implement the related activities. Those authorities, designated by the Member States themselves, should therefore be considered to be identified beneficiaries for the purpose of Article [195]of [the new Financial Regulation] and the grants be awarded to such authorities without prior publication of calls for proposals. (43)The European Reference Networks (ERNs) are networks involving healthcare providers across Europe to tackle rare, low prevalence and complex diseases and conditions that require highly specialised treatment, and concentrated knowledge and resources. The ERNs are approved as Networks by the Board of Member States of the European Reference Networks, following the approval procedure set out in Commission Implementing Decision 2014/287/EU of 10 March 2014. Those networks, should therefore be considered to be identified beneficiaries for the purpose of Article [195] of [the new Financial Regulation] and the grants to the ERNs be awarded without prior publication of calls for proposals. (44)EU health legislation has an immediate impact on the lives of citizen, on the efficiency and resilience of the health systems and the good functioning of the internal market. The regulatory framework for medical products and technologies (medicinal products, medical devices and substances of human origin), as well as on tobacco legislation, patients' rights on cross-border health and serious cross-border threats to health is essential to health protection in the EU. Regulation, as well its implementation and enforcement, must keep pace with innovation and research advances and with societal changes in this area, while delivering on health objectives. It is therefore necessary to continuously develop the evidence base required for implementing legislation of such a scientific nature. (45)In order to maximise the effectiveness and efficiency of actions at Union and international level, cooperation should be developed with relevant international organisations such as the United Nations and its specialised agencies, in particular the World Health Organisation (WHO), as well as with the Council of Europe and the Organisation for Economic Co-operation and Development (OECD) to implement the Health strand. (46)Reflecting the importance of tackling climate change in line with the Union's commitments to implement the Paris Agreement and the United Nations Sustainable Development Goals, this Regulation will contribute to mainstream climate action in the Union's policies and to the achievement of an overall target of 25 % of the EU budget expenditures supporting climate objectives. Relevant actions will be identified during the preparation and implementation, and reassessed in the context of the mid-term evaluation.

(47)Pursuant to Article [94 of Council Decision 2013/755/EU], persons and entities established in Overseas Countries and Territories (OCTs) are to be eligible for funding subject to the rules and objectives of the Employment and Social Innovation and Health strands and possible arrangements applicable to the Member State to which the relevant OCTs are linked. (48)Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the EEA agreement, which provides for the implementation of the programmes by a decision under that agreement. A specific provision should be introduced in this Regulation to grant the necessary rights for and access to the authorising officer responsible, the European Anti-Fraud Office as well as the European Court of Auditors to comprehensively exert their respective competences. (49)In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council, Council Regulation (EC, Euratom) No 2988/95, Council Regulation (Euratom, EC) No 2185/96 and Council Regulation (EU) 2017/1939, the financial interests of the Union are to be protected through proportionate measures in accordance with the Financial Regulation and other applicable rules, including the prevention, detection, correction and investigation of irregularities and fraud, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, the imposition of administrative sanctions. In particular, in accordance with Regulation (EU, Euratom) No 883/2013 and Regulation (Euratom, EC) No 2185/96, the European Anti-Fraud Office (OLAF) may carry out administrative investigations, including on-the-spot checks and inspections with a view to establishing whether there has been fraud, corruption or any other criminal offences affecting the financial interests of the Union. In accordance with Regulation (EU) 2017/1939, the European Public Prosecutor's Office (EPPO) may investigate and prosecute EU-fraud and other criminal offences affecting the financial interests of the Union, as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council. In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, to grant the necessary rights and access to the Commission, OLAF, the EPPO and the European Court of Auditors (ECA) and to ensure that any third parties involved in the implementation of Union funds grand equivalent rights. (50) Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 of the Treaty on the Functioning of the European Union apply to this Regulation. These rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also concern the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, as the respect for the rule of law is an essential precondition for sound financial management and effective EU funding. (51)Since the objective of this Regulation, namely enhancing the effectiveness of labour markets and promoting access to quality employment, improving the access to and the quality of education and training, promoting social inclusion and health and reducing poverty as well as the actions under the Employment and Social Innovation and Health strands, cannot be sufficiently achieved by the Member States but can rather, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective. (52)In order to amend certain non-essential elements of this Regulation, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amending and supplementing the annexes on the indictors. It is of particular importance that the Commission carries out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. (53)In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. The implementing powers relating to the model for the structured survey of end recipients should be exercised in accordance with the advisory procedure of Article 4 of Regulation (EU) No 182/2011 of European Parliament and of the Council given the nature of this model. HAVE ADOPTED THIS REGULATION: Part I General provisions Article 1 Subject matter This Regulation establishes the European Social Fund Plus (ESF+). It lays down the objectives of the ESF+, the budget for the period 2021-2027, the methods of implementation, the forms of Union funding and the rules for providing such funding. Article 2 Definitions 1. For the purposes of this Regulation, the following definitions shall apply: (1) 'accompanying measures' means activities provided in addition to the distribution of food and/or basic material assistance with the aim of addressing social exclusion such as referring to and providing social services or advice on managing a household budget;

(2) ‘associated country’ means a third country which is party to an agreement with the Union allowing for its participation in the Employment and Social Innovation and Health strands of the ESF+ in accordance with Article 30; (3) 'basic material assistance' means goods which fulfil the basic needs of a person for a life with dignity, such as clothing, hygiene goods and school material; (4) 'blending operation' means actions supported by the Union budget, including within blending facilities pursuant to Article 2(6) of the Financial Regulation, combining non-repayable forms of support and/or financial instruments from the Union budget with repayable forms of support from development or other public finance institutions, as well as from commercial finance institutions and investors; (5) ‘common immediate result indicators’ means common result indicators which capture effects within four weeks as from the day the participant leaves the operation (exit date); (6) ‘common longer term result indicators’ means common result indicators which capture effects six months after a participant has left the operation; (7) 'costs of purchasing food and/or basic material assistance' means the actual costs linked to the purchase of food and/or basic material assistance by the beneficiary and not limited to the price of the food and/or basic material assistance; (8) 'end recipient' means the most deprived person or persons receiving the support as laid down in point (xi) of Article 4(1); (9) ‘health crisis’ means any crisis commonly perceived as a threat, having a health dimension and which requires urgent action by authorities under conditions of uncertainty; (10) 'legal entity' means any natural person, or any legal person created and recognised as such under national law, Union law or international law, which has a legal personality and which may, acting in its own name, exercise rights and be subject to obligations; (11) 'microfinance' includes guarantees, microcredit, equity and quasi-equity, coupled with accompanying business development services such as in the form of individual counselling, training and mentoring, extended to persons and micro-enterprises that experience difficulties accessing credit for the purpose of professional and/or revenue-generating activities; (12) micro-enterprise' means an enterprise with fewer than 10 employees and an annual turnover or balance sheet below EUR 2 000 000; (13) 'most deprived persons' means natural persons, whether individuals, families, households or groups composed of such persons, whose need for assistance has been established according to the objective criteria set by the national competent authorities in consultation with relevant stakeholders, while avoiding conflicts of interest and which are approved by those national competent authorities and which may include elements that allow the targeting of the most deprived persons in certain geographical areas; (14) 'reference value’ means a value to set targets for common and programme specific result indicators which is based on existing or previous similar interventions; (15) 'social enterprise' means an undertaking, regardless of its legal form, or a natural person which (a)in accordance with its Articles of Association, Statutes or with any other legal document that may result in liability under the rules of the Member State where it is located, has as its primary social objective the achievement of measurable, positive social impacts rather than generating profit for other purposes, and which provides services or goods that generate a social return, and/or employs methods of production of goods or services that embodies social objectives; (b)uses its profits first and foremost to achieve its primary social objective, and has predefined procedures and rules covering any distribution of profits that ensure that such distribution does not undermine the primary social objective; (c)is managed in an entrepreneurial, accountable and transparent way, in particular by involving workers, customers and stakeholders impacted by its business activities; (16) 'social innovations' mean activities that are social both as to their ends and their means and in particular those which relate to the development and implementation of new ideas (concerning products, services and models) that simultaneously meet social needs and create new social relationships or collaborations, thereby benefiting society and boosting its capacity to act; (17) 'social experimentations' mean policy interventions that offer an innovative response to social needs, implemented on a small scale and in conditions that enable their impact to be measured, prior to being implemented in other contexts or on a larger scale, if the results prove convincing; 18) 'key competences' means the knowledge, skills and competences all individuals need, at any stage of their lives, for personal fulfilment and development, employment, social inclusion and active citizenship. The key competences are: literacy; multilingual; mathematics, science, technology and engineering; digital; personal, social and learning to learn; citizenship; entrepreneurship; cultural awareness and expression;

(19) 'third country' means a country that is not member of the European Union. 2. The definitions in Article [2] of [the future CPR] shall also apply for the ESF+ strand under shared management. Article 3 General objectives and methods of implementation 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, in line with the principles set out in the European Pillar of Social Rights proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. The ESF+ shall support, complement and add value to the policies of the Member States to ensure equal opportunities, access to the labour market, fair working conditions, social protection and inclusion, and a high level of human health protection. It shall be implemented: a) under shared management, for the part of the assistance which corresponds to the specific objectives indicated in Article 4(1) (the ‘ESF+ strand under shared management’), and (b) under direct and indirect management for the part of the assistance which corresponds to the objectives indicated in Articles 4(1) and 23 (the ‘Employment and Social Innovation strand’) and for the part of the assistance which corresponds to the objectives indicated in Articles 4(1) and (3) and 26 (the ‘Health strand’). Article 4 Specific objectives 1. The ESF+ shall support the following specific objectives in the policy areas of employment, education, social inclusion and health and thereby also contributing to the policy objective for “A more social Europe - Implementing the European Pillar of Social Rights” set out in Article [4] of the [future CPR]: (i) improving access to employment of all jobseekers, in particular youth and long-term unemployed, and of inactive people, promoting self-employment and the social economy; (ii) modernising labour market institutions and services to assess and anticipate skills needs and ensure timely and tailor-made assistance and support to labour market matching, transitions and mobility; (iii) promoting women’s labour market participation, a better work/life balance including access to childcare, a healthy and well–adapted working environment addressing health risks, adaptation of workers, enterprises and entrepreneurs to change, and active and healthy ageing; (iv) improving the quality, effectiveness and labour market relevance of education and training systems, to support acquisition of key competences including digital skills; (v) promoting equal access to and completion of, quality and inclusive education and training, in particular for disadvantaged groups, from early childhood education and care through general and vocational education and training, and to tertiary level, as well as adult education and learning, including facilitating learning mobility for all; (vi) promoting lifelong learning, notably flexible upskilling and reskilling opportunities for all taking into account digital skills, better anticipating change and new skills requirements based on labour market needs, facilitating career transitions and promoting professional mobility; (vii) fostering active inclusion with a view to promoting equal opportunities and active participation, and improving employability; (viii) promoting socio-economic integration of third country nationals and of marginalised communities such as the Roma;

(ix) enhancing the equal and timely access to quality, sustainable and affordable services; modernising social protection systems, including promoting access to social protection; improving accessibility, effectiveness and resilience of healthcare systems and long-term care services; (x) promoting social integration of people at risk of poverty or social exclusion, including the most deprived and children; (xi) addressing material deprivation through food and/or basic material assistance to the most deprived, including accompanying measures. 2. Through the actions implemented under the ESF+ strand under shared management to achieve the specific objectives referred to in paragraph 1, the ESF+ shall also contribute to the other policy objectives listed in Article [4] of [the future CPR], in particular those related to: 1. a smarter Europe through the development of skills for smart specialisation, skills for key enabling technologies, industrial transition, sectorial cooperation on skills and entrepreneurship, the training of researchers, networking activities and partnerships between higher education institutions, vocational and educational training (VET) institutions, research and technological centres and enterprises and clusters, support to micro, small and medium sized enterprises and the social economy; 2. a greener, low carbon Europe through the improvement of education and training systems necessary for the adaptation of skills and qualifications, the upskilling of all, including the labour force, the creation of new jobs in sectors related to the environment, climate and energy, and the bioeconomy. 3. Under the Health strand, the ESF+ shall support health promotion and disease prevention, contribute to effectiveness, accessibility and resilience of health systems, make healthcare safer, reduce health inequalities, protect citizens from cross-border health threats, and support EU health legislation. Article 5 Budget 1.The total financial envelope for the ESF+ for the period 2021-2027 shall be EUR 101 174 000 000 in current prices. 2.The part of the financial envelope for the ESF+ strand under shared management under the Investment for Jobs and Growth goal shall be EUR 100 000 000 000 in current prices or EUR 88 646 194 590 in 2018 prices of which EUR 200 000 000 in current prices or or EUR 175 000 000 in 2018 prices shall be allocated for transnational cooperation supporting innovative solutions as referred to in Article 23(i) and EUR 400 000 000 in current prices or EUR 376 928 934 in 2018 prices as additional funding to the outermost regions identified in Article 349 TFEU and the NUTS level 2 regions fulfilling the criteria laid down in Article 2 of Protocol No 6 to the 1994 Act of Accession. 3.The financial envelope for the Employment and Social Innovation strand and the Health strand for the period 2021-2027 shall be EUR 1 174 000 000 in current prices. 4.The indicative distribution of the amount referred in paragraph 3 shall be: (a)EUR 761 000 000 for the implementation of the Employment and Social Innovation strand; (b)EUR 413 000 000 for the implementation of the Health strand. 5.The amounts referred to in paragraphs 3 and 4 may also be used for technical and administrative assistance for the implementation of the programmes, such as preparatory, monitoring, control, audit and evaluation activities including corporate information technology systems. Article 6 Equality between men and women and equal opportunities, and non-discrimination 1. All programmes implemented under the ESF+ strand under shared management, as well as the operations supported by the Employment and Social Innovation and Health strands shall ensure equality between men and women throughout their preparation, implementation, monitoring and evaluation. They shall also promote equal opportunities for all, without discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation throughout their preparation, implementation, monitoring and evaluation.

2. The Member States and the Commission shall also support specific targeted actions to promote the principles referred to in paragraph 1 within any of the objectives of the ESF+, including the transition from residential/institutional care to family and community-based care. Part II – Implementation under the ESF+ strand under shared management Chapter I Common provisions on programming Article 7 Consistency and thematic concentration 1. Member States shall concentrate the ESF+ resources under shared management on interventions that address the challenges identified in their national reform programmes, in the European Semester as well as in the relevant country-specific recommendations adopted in accordance with Article 121(2) TFEU and Article 148(4) TFEU, and take into account principles and rights set out in the European Pillar of Social Rights. Member States and, where appropriate the Commission, shall foster synergies and ensure coordination, complementarity and coherence between the ESF+ and other Union funds, programmes and instruments such as Erasmus, the Asylum and Migration Fund and the Reform Support Programme, including the Reform Delivery Tool and the Technical Support Instrument, both in the planning phase and during implementation. Member States and, where appropriate the Commission, shall optimise mechanisms for coordination to avoid duplication of effort and ensure close cooperation between those responsible for implementation to deliver coherent and streamlined support actions. 2. Member States shall allocate an appropriate amount of their ESF+ resources under shared management to address challenges identified in relevant country-specific recommendations adopted in accordance with Article 121(2) TFEU and Article 148(4) TFEU and in the European Semester falling within the scope of the ESF+ as set out in Article 4. 3. Member States shall allocate at least 25% of their ESF+ resources under shared management to the specific objectives for the social inclusion policy area set out in points (vii) to (xi) of Article 4(1), including the promotion of the socio-economic integration of third country nationals. 4. Member States shall allocate at least 2% of their ESF+ resources under shared management to the specific objective of addressing material deprivation set out in point (xi) of Article 4(1). In duly justified cases, the resources allocated to the specific objective set out in point (x) of Article 4(1) and targeting the most deprived may be taken into account for verifying compliance with the minimum allocation of at least 2% set out in the first subparagraph of this paragraph. 5. Member States having a rate of young people aged 15 to 29 not in employment, education or training above the Union average in 2019 on the basis of Eurostat data, shall allocate at least 10% of their ESF+ resources under shared management for the years 2021 to 2025 to targeted actions and structural reforms to support youth employment and school-to-work transition, pathways to reintegrate into education or training and second chance education, in particular in the context of implementing Youth Guarantee schemes. When programming the ESF+ resources under shared management for 2026 and 2027 at mid-term in accordance with Article [14] of [the future CPR], Member States having a rate of young people aged 15 to 29 not in employment, education or training above the Union average in 2024 on the basis of Eurostat data, shall allocate at least 10% of their ESF+ resources under shared management for the years 2026 to 2027 to these actions. Outermost regions meeting the conditions set out in the first and second subparagraphs shall allocate at least 15% of the ESF+ resources under shared management in their programmes to the targeted actions set out in the first subparagraph. This allocation shall be taken into account for verifying compliance with the minimum percentage at national level set out in the first and second subparagraphs. When implementing such actions, Member States shall give priority to inactive and long-term unemployed young people and put in place targeted outreach measures. 6. Paragraphs 2 to 5 shall not apply to the specific additional allocation received by the outermost regions and the NUTS level 2 regions fulfilling the criteria laid down in Article 2 of Protocol No 6 to the 1994 Act of Accession.

7. Paragraphs 1 to 5 shall not apply to technical assistance. Article 8 Partnership 1. Each Member State shall ensure adequate participation of social partners and civil society organisations in the delivery of employment, education and social inclusion policies supported by the ESF+ strand under shared management. 2. Member States shall allocate an appropriate amount of ESF+ resources under shared management in each programme for the capacity building of social partners and civil society organisations. Article 9 Addressing material deprivation The resources referred to in Article 7(4) shall be programmed under a dedicated priority or programme. Article 10 Support to youth employment Support in accordance with Article 7(5) shall be programmed under a dedicated priority and it shall support the specific objective set out in point (i) of Article 4(1). Article 11 Support to relevant country-specific recommendations The actions addressing the challenges identified in relevant country-specific recommendations and in the European Semester as referred to in Article 7(2) shall be programmed under one or more dedicated priorities. Chapter II General support of the ESF+ strand under shared management

Article 12 Scope This Chapter applies to ESF+ support under points (i) to (x) of Article 4(1) when implemented under shared management (the ‘general support of the ESF+ strand under shared management’). Article 13 Innovative actions 1. Member States shall support actions of social innovation and social experimentations, or strengthen bottom-up approaches based on partnerships involving public authorities, the private sector, and civil society such as the Local Action Groups designing and implementing community-led local development strategies. 2. Member States may support the upscaling of innovative approaches tested on a small-scale (social experimentations) developed under the Employment and Social Innovation strand and other Union programmes. 3. Innovative actions and approaches may be programmed under any of the specific objectives set out in points (i) to (x) of Article 4(1). 4. Each Member State shall dedicate at least one priority to the implementation of paragraphs 1 or 2 or to both. The maximum co-financing rate for these priorities may be increased to 95% for the allocation of maximum 5% of the national ESF+ allocation under shared management to such priorities. Article 14 Eligibility 1. In addition to the costs referred to in Article [58] of [the future CPR], the following costs are not eligible under the general support of the ESF+ strand under shared management: (a)the purchase of land and real estate, and the provision of infrastructure, and (b)the purchase of furniture, equipment and vehicles except where the purchase is necessary for achieving the objective of the operation, or these items are fully depreciated, or the purchase of these items is the most economic option. 2. Contributions in kind in the form of allowances or salaries disbursed by a third party for the benefit of the participants in an operation may be eligible for a contribution from the general support of the ESF+ strand under shared management provided that the contributions in kind are incurred in accordance with national rules, including accountancy rules, and do not exceed the cost borne by the third party. 3. The specific additional allocation received by the outermost regions and the NUTS level 2 regions fulfilling the criteria laid down in Article 2 of Protocol No 6 to the 1994 Act of Accession shall be used to support the achievement of the specific objectives set out in paragraph 1 of Article 4. 4. Direct staff costs shall be eligible for a contribution from the general support of the ESF+ strand under shared management provided that their level is not higher than 100% of the usual remuneration for the profession concerned in the Member State as demonstrated by Eurostat data. Article 15 Indicators and reporting 1. Programmes benefitting from the general support of the ESF+ strand under shared management shall use common output and result indicators, as set out in Annex 1 to this Regulation to monitor progress in implementation. The programmes may also use programme-specific indicators.

2. The baseline for common and programme-specific output indicators shall be set at zero. Where relevant to the nature of the operations supported, cumulative quantified milestones and target values for those indicators shall be set in absolute numbers. The reported values for the output indicators shall be expressed in absolute numbers. 3. The reference value for common and programme-specific result indicators for which a cumulative quantified milestone for 2024 and a target value for 2029 have been set, shall be fixed using the latest available data or other relevant sources of information. Targets for common result indicators shall be fixed in absolute numbers or as a percentage. Programme-specific result indicators and related targets may be expressed in quantitative or qualitative terms. The reported values on common result indicators shall be expressed in absolute numbers. 4. Data on the indicators for participants shall only be transmitted when all data required under point (1a) of Annex 1 relating to that participant are available. 5. Member States shall, when data are available in registers or equivalent sources, enable the Managing Authorities and other bodies entrusted with data collection necessary for the monitoring and the evaluation of the general support of the ESF+ strand under shared management to obtain those data from data registers or equivalent sources, in accordance with points (c) and (e) of Article 6(1) of Regulation (EU) 2016/679. 6. The Commission is empowered to adopt delegated acts in accordance with Article 38 to amend the indicators in Annex I where considered necessary to ensure effective assessment of progress in the implementation of programmes. Chapter III ESF+ support for addressing material deprivation Article 16 Scope This Chapter applies to ESF+ support under point (xi) of Article 4(1). Article 17 Principles 1. The ESF+ support for addressing material deprivation ma