Proposal for a Regulation of the European Parliament and of the Council on the European Social Fund
Date: 2004-07-14
Institutions: European Commission
Subjects: European Social Fund, operation of the Institutions

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.7.2004 
COM(2004) 493 final 

2004/0165 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the European Social Fund 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

New challenges for the future ESF 

The European Social Fund (ESF) contributes to the economic and social cohesion objective 
set  in  article  158  of  the  EC  Treaty,  by  supporting  policies  and  priorities  aimed  to  achieve 
progress  towards  full  employment,  improve  quality  and  productivity  at  work,  and  promote 
social  inclusion  and  cohesion,  in  line  with  the  guidelines  and  recommendations  under  the 
European Employment Strategy (EES).  

In order to achieve this objective, the ESF needs to address three major challenges: addressing 
the considerable employment disparities, social inequalities, skills gaps and labour shortages 
in  an  enlarged  Union;  an  increasing  pace  of  economic  and  social  restructuring  due  to 
globalisation  and  the  development  of  the  knowledge-based  economy;  and  demographic 
changes, which have resulted in shrinking and ageing workforce.  

Enhancing  the  links  between  the  ESF,  the  European  Employment  Strategy  and  the 
agreed objectives of the Union in relation to social inclusion and education and training 

The  links  between  the  Community  financial  instrument  and  the  Union's  policy  framework 
need to be reinforced in the future programming period to better contribute to the employment 
objectives and targets of the Lisbon strategy. To this end, the ESF should support the policies 
of  Member  States  which  are  closely  in  line  with  the  guidelines  and  recommendations  made 
under the European Employment Strategy and the agreed objectives of the Union in relation 
to social inclusion and education and training.  

The  draft  ESF  Regulation  for  2007-2013  provides  a  focussed  framework  for  ESF 
interventions  throughout  the  Union.  Under  both  the  'Convergence'  and  the  'Regional 
Competitiveness  and  Employment'  objectives,  the  ESF  will  provide  support  with  a  view  to 
anticipating and managing economic and social change. Its intervention will focus on four key 
areas  for  action  endorsed  by  the  European  Council:  increasing  adaptability  or  workers  and 
enterprises; enhancing access to employment, preventing unemployment, prolonging working 
lives  and  increasing  participation  in  the  labour  market;  reinforcing  social  inclusion  by 
promoting the integration in work of disadvantaged people and combating discrimination; and 
promoting partnership for reform in the fields of employment and inclusion.  

In the least prosperous regions and Member States, the Funds will concentrate on promoting 
structural adjustment, growth and job creation. To this end, under the Convergence objective, 
in addition to the above-mentioned priorities, the ESF will also support action to expand and 
improve  investment  in  human  capital,  in  particular  by  improving  education  and  training 
systems,  and  action  aimed  at  developing  institutional  capacity  and  the  efficiency  of  public 
administrations, at national, regional and local level. 

Furthermore,  the  proposal  gives  a  greater  emphasis  to  the  Union's  commitment  towards  the 
elimination of inequalities between women and men: specific actions addressed to women are 
combined  with  a  robust  gender  mainstreaming  approach,  to  increase  participation  and 
progress of women in employment. 

Equally,  the  promotion  of  innovative  activities  and  trans-national  co-operation  will  be  fully 
integrated  in  the  scope  of  the  ESF,  and  mainstreamed  within  the  national  and  regional 
operational  programmes.  Under  both  the  'Convergence'  and  the  'Regional  Competitiveness 

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and Employment' objectives, the ESF will give priority to funding trans-national cooperation, 
including  exchanges  of  experiences  and  best  practices  across  the  Union  and  joint  actions, 
ensuring  where  appropriate,  coherence  and  complementarity  with  other  trans-national 
Community programmes. 

Finally, the proposal attaches a particular importance to the promotion of good governance. 
The  involvement  of  the  social  partners  is  of  particular  importance  in  the  programming  and 
implementation of the Fund priorities and operations. To this end, under the new Convergence 
objective,  social  partners  will  be  encouraged  to  actively  participate  in  capacity  building 
actions and to undertake joint activities in the policy areas where they play a decisive role.  

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2004/0165 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the European Social Fund 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
148 thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Economic and Social Committee2, 

Having regard to the opinion of the Committee of the Regions3, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty4, 

Whereas: 

(1) 

(2) 

(3) 

1 
2 
3 
4 
5 
6 

Regulation (EC) No […] laying down general provisions on the Structural Funds and 
the Cohesion Fund5 establishes the framework for action by the Structural Funds and 
the  Cohesion  Fund  and  lays  down,  in  particular,  the  objectives,  principles  and  rules 
concerning  partnership,  programming,  evaluation  and  management.  It  is  therefore 
necessary  to  define  the  mission  of  the  European  Social  Fund  (hereinafter  "ESF")  in 
relation to the tasks prescribed under Article 146 of the Treaty, and in the context of 
the  Member  States  and  the  Community  work  towards  developing  a  co-rdinated 
strategy  for  employment,  as  provided  for  under  Article  125  of  the  Treaty.  In  the 
interest of clarity, Regulation (EC) No 1784/1999 of the European Parliament and of 
the Council of 12 July 1999 on the European Social Fund6 should be replaced.  

 Specific  provisions  concerning  the  type  of  activities  which  may  be  financed  by  the 
ESF  under  the  objectives  defined  in  Regulation  (EC)  No  […]  [laying  down  general 
provisions on the Structural Funds and the Cohesion Fund] need to be laid down. 

The ESF should support the policies of Member States which are closely in line with 
the guidelines and recommendations made under the European Employment Strategy 
and  the  agreed  objectives  of  the  Community  in  relation  to  social  inclusion  and 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L […], […], p. […]. 
OJ L 213, 13.8.1999, p. 5. 

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education and training, to better contribute to the implementation of the objectives and 
targets agreed at the Lisbon and Goteborg European Councils .  

(4)  With  a  view  to  better  anticipating  and  managing  change  under  the  regional 
competitiveness  and  employment  objective,  assistance  by  the  ESF  should  focus,  in 
particular, on increasing adaptability of workers and enterprises, enhancing access to 
employment  and  participation  in  the  labour  market,  reinforcing  social  inclusion  of 
people  at  a  disadvantage  and  combating  discrimination,  and  promoting  partnerships 
for reform. 

(5) 

(6) 

(7) 

(8) 

(9) 

In addition to these priorities, in the least developed regions and Member States, under 
the  convergence  objective  and  with  a  view  to  increasing  economic  growth, 
employment opportunities for women and men and quality and productivity at work, it 
is  necessary  to  expand  and  improve  investment  in  human  capital  and  to  improve 
institutional,  administrative  and  judicial  capacity,  in  particular  to  prepare  and 
implement reforms and enforce the acquis.  

The  promotion  of 
fundamental dimension which should be integrated in the scope of the ESF.  

innovative  activities  and 

trans-national  co-operation 

is  a 

It  is  necessary  to  ensure  the  coherence  of  the  action  of  the  ESF  with  the  policies 
provided  for  under  the  European  Employment  Strategy  and  to  concentrate  ESF 
support  on 
the  guidelines  and  recommendations  on 
employment.  

implementation  of 

the 

An efficient and effective implementation of the action supported by the ESF relies on 
good  governance  and  partnership  between  all  relevant  territorial  and  socio-economic 
actors and in particular the social partners and other stakeholders including at regional 
and local level. 

The Member States  and  the  Commission must ensure that the implementation of the 
priorities financed by the ESF under the Convergence and Regional Competitiveness 
and Employment Objectives contribute to the promotion of equality and elimination of 
inequalities  between  women  and  men;  a  gender  mainstreaming  approach  should  be 
combined  with  specific  action  to  increase  sustainable  participation  and  progress  of 
women in employment. 

(10)  The  ESF  should  also  support  technical  assistance,  with  a  particular  focus  on 
encouraging mutual learning through exchanges of experiences dissemination, transfer 
of  good  practices  and  on  highlighting  the  contribution  of  the  ESF  to  the  policy 
objectives  and  priorities  of  the  Community  in  relation  to  employment  and  social 
inclusion. 

(11)  Regulation (EC) No […] [laying down general provisions on the Structural Funds and 
the  Cohesion  Fund]  provides  that  eligibility  of  expenditure  is  to  be  established  at 
national level, with certain exceptions, for which it is necessary to lay down specific 
provisions. The exceptions relating to the ESF should therefore be laid down, 

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HAVE ADOPTED THIS REGULATION: 

Article 1 

Subject 

This Regulation establishes the tasks of the European Social Fund ("ESF") and the scope of 
its  assistance  with  regard  to  the  "Convergence"  and  the  "Regional  competitiveness  and 
employment" objectives as defined in Article 3 of Regulation (EC) N° […] and the types of 
expenditure eligible for assistance. 

Article2 

Mission 

1. 

2. 

The  ESF  shall  strengthen  economic  and  social  cohesion  by  supporting  Member 
States' policies aiming to achieve full employment, improve quality and productivity 
at  work  and  promote  social  inclusion  and  the  reduction  of  regional  employment 
disparities. 

In  particular,  the  ESF  shall  support  action  in  line  with  the  guidelines  and 
recommendations adopted under the European Employment Strategy. 

In  carrying  out  the  tasks  referred  to  in  paragraph  1,  the  ESF  shall  support  the 
priorities  of  the  Community  as  regards  the  need  to  reinforce  social  cohesion, 
strengthen competitiveness and promote environmentally sound economic growth. In 
particular, it shall take into account the objectives of the Community in the fields of 
social inclusion, education and training and equality between women and men. 

Article 3  

Scope of assistance 

1. 

Within  the  framework  of  the  convergence  and  the  regional  competitiveness  and 
employment objectives, the ESF shall support action under the following priorities: 

(a) 

increasing adaptability of workers and enterprises, in particular by promoting: 

(i) 

increased  investment  in  human  resources  by  enterprises,  especially 
SMEs,  and  workers,  through  the  development  and  implementation  of 
lifelong learning systems and strategies which ensure improved access to 
training of low skilled and older workers, transparency of qualifications 
and  competences,  dissemination  of  ICT  and  management  skills  and  the 
promotion of entrepreneurship and innovation; 

(ii) 

the  anticipation  and  positive  management  of  economic  change,  notably 
through the design and dissemination of innovative and more productive 
forms  of  work  organisation,  including  better  health  and  safety,  the 
identification  of  future  occupational  and  skills  requirements,  and  the 

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development  of  specific  employment,  training  and  support  services  to 
workers in the context of company and sector restructuring. 

(b) 

enhancing access to employment of job seekers and inactive people, preventing 
unemployment,  prolonging  working  lives  and  increasing  participation  in  the 
labour market of women and migrants, in particular by promoting: 

(i) 

(ii) 

the  modernisation  and  strengthening  of  labour  market  institutions,  in 
particular employment services; 

the  implementation  of  active  and  preventive  measures  ensuring  early 
identification of needs and personalised support, job search and mobility, 
self-employment and business creation;  

(iii)  specific  action  to  increase  sustainable  participation  and  progress  of 
women in employment, to reduce gender-based segregation in the labour 
market including by addressing the roots of the gender pay gaps, and to 
reconcile  work  and  private  life  including  by  facilitating  access  to 
childcare and care for dependent persons; 

(iv)  specific  action  to  strengthen  the  social  integration  of  migrants  and 
increase  their  participation  in  employment,  including  guidance  and 
language training and validation of competences acquired abroad.  

(c) 

reinforcing  social  inclusion  of  people  at  a  disadvantage  and  combating 
discrimination, in particular by promoting:  

(i) 

pathways to integration in employment for disadvantaged people, people 
experiencing social exclusion, early school leavers, minorities and people 
with  disabilities,  through  employability  measures,  including  in  the  field 
of the social economy, accompanying actions and relevant social support 
and care services;  

(ii)  diversity  in  the  workplace  and  the  combat  against  discrimination  in 
the 

through  awareness-raising  and 

labour  market 
accessing 
involvement of local communities and enterprises. 

the 

(d)  mobilising for reforms in the fields of employment and inclusion, in particular 
by promoting the development of partnerships and pacts through networking of 
relevant stakeholders at national, regional and local level.  

2. 

Within the framework of the convergence objective the ESF shall also support action 
under the following priorities: 

(a)  Expanding  and  improving  investment  in  human  capital,  in  particular  by 

promoting: 

(i) 

the  implementation  of  reforms  in  education  and  training  systems, 
especially  with  a  view  to  raising  their  responsiveness  to  the  needs  of  a 
knowledge-based  society,  improving  the  labour  market  relevance  of 
initial  education  and  training  and  continually  updating  of  skills  of 
teaching and other personnel; 

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(ii) 

(iii) 

increased  participation  in  education  and  training  throughout  the  life-
cycle,  including  through  action  to  achieve  a  significant  decline  in  early 
school  leaving  and  increased  access  to  initial  vocational  and  tertiary 
education; 

the development of human potential in research and innovation, notably 
through  post-graduate  studies  and  training  of  researchers  and  related 
networking  activities  between  universities, 
research  centres  and 
enterprises. 

(b)  Strengthening institutional capacity and the efficiency of public administrations 
and public services at national, regional and local level to embrace reforms and 
social, 
good  governance  especially 
environmental and judicial fields, in particular by promoting: 

the  economic,  employment, 

in 

(i) 

(ii) 

good policy and programme design, monitoring and evaluation, through 
studies, statistics and expertise, support to interdepartmental coordination 
and dialogue between relevant public and private bodies; 

capacity  building  in  the  delivery  of  policies  and  programmes,  including 
with  regard  to  the  enforcement  of  legislation,  especially  through 
managerial  and  staff  training  and  specific  support  to  key  services, 
inspectorates  and  socio-economic  actors  including  social  partners  and 
relevant non-governmental organisations. 

In implementing the objectives and priorities referred to in paragraphs 1 and 2, the 
ESF shall support the promotion and mainstreaming of innovative activities as well 
as  trans-national  and  inter-regional  cooperation  in  particular  through  sharing  of 
information,  experiences,  results  and  good  practices,  and  through  developing 
complementary approaches and coordinated or joint action. 

In  implementing  the  social  inclusion  priority  referred  to  in  paragraph  2  (c)  (i),  the 
financing  by  the  ESF  of  actions  within  the  scope  of  the  Regulation  (EC)  N°  […] 
[ERDF] may amount to a maximum of 10% of the priority axis concerned. 

Article 4 

Coherence and concentration 

The Member States and managing authorities shall ensure that the action supported 
by  the  ESF  is  consistent  with  and  underpins  the  implementation  of  the  European 
Employment  Strategy.  In  particular,  they  shall  ensure  that  the  action  set  out  in  the 
strategic  frame  of  reference  and  in  the  operational  programmes  promote  the 
objectives,  priorities  and  targets  of  the  Strategy  in  each  Member  State  and 
concentrate  support  in  particular  on  the  implementation  of  the  employment 
recommendations made under Article 128(4) of the Treaty as well as of the relevant 
objectives of the Community in the field of social inclusion. 

Within  operational  programmes,  resources  shall  be  directed  towards  the  most 
important  needs  and  focus  on  those  policy  areas  to  which  ESF  support  can  bring 
about  a  significant  effect  in  view  of  the  attainment  of  the  objectives  of  the 

3. 

4. 

1. 

2. 

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programme.  To  maximise  the  efficiency  of  ESF  support,  operational  programmes 
shall  take  particular  account  of  the  regions  and  localities  facing  most  serious 
problems,  including  deprived  urban  and  declining  rural  and  fisheries  dependent 
areas. 

The relevant elements of the Member States' annual report referred to in Article 19 of 
regulation (EC) No […] [laying down general provisions on the Structural Funds and 
the  Cohesion  Fund],  shall  be  integrated  respectively  in  the  corresponding  national 
action plans for employment and national action plans for social inclusion.  

The  quantified  objectives  and  indicators  selected  to  monitor  the  implementation  of 
the national strategic frame of reference defined in Article 18 of regulation (EC) No 
[…]  [laying  down  general  provisions  on  the  Structural  Funds  and  the  Cohesion 
Fund],  shall  be  those  used  in  the  implementation  of  the  European  Employment 
Strategy and in the context of the agreed objectives of the Community in the fields of 
social inclusion and education and training. The monitoring indicators of operational 
programmes should be coherent with these quantified objectives. 

Evaluations  undertaken  in  relation  to  the  action  of  the  ESF  shall  also  assess  the 
contribution  of  the  action  supported  by  the  ESF  to  the  implementation  of  the 
European Employment Strategy and to the objectives of the Community in the fields 
of social inclusion and education and training in the Member State concerned. 

Article 5 

Good governance and partnership 

The  ESF  shall  promote  good  governance  and  partnership.  Its  support  shall  be 
designed  and  implemented  at  the  appropriate  territorial  level,  with  particular 
attention to the regional and local level, according to the institutional arrangements 
specific to each Member State.  

The Member States and the managing authority of each operational programme shall 
ensure  the  involvement  of  the  social  partners  and  adequate  consultation  of  non-
governmental  stakeholders,  at  the  appropriate  territorial  level,  in  the  programming, 
implementation and monitoring of ESF support.  

The  managing  authorities  of  each  operational  programme  shall  encourage  adequate 
participation and access of social partners to the activities funded under Article 2 of 
this Regulation. 

Under  the  "Convergence"  Objective,  at  least  2%  of  the  ESF  resources  shall  be 
allocated to capacity-building and activities jointly undertaken by the social partners, 
in particular as regards adaptability of workers and enterprises referred to in Article 2 
(1) (a). 

The  managing  authority  of  each  operational  programme  shall  encourage  adequate 
participation and access of non-governmental organisations to the funded activities, 
notably in the domain of social inclusion and equality between women and men. 

3. 

4. 

5. 

1. 

2. 

3. 

4. 

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5. 

When responsibility for implementation is delegated, support in the framework of a 
programme may be provided through global grants. 

Article 6 

Gender equality 

The  Member  States  and  the  managing  authorities  shall  ensure  that  operational  programmes 
include  a  description  on  how  gender  equality 
the  programming, 
implementation and monitoring including any specific indicators, and in the evaluation.  

is  promoted 

in 

Article 7 

Innovation 

In  the  framework  of  each  operational  programme,  Member  States  and  managing  authorities 
shall  pay  particular  attention  to  the  promotion  and  mainstreaming  of  innovative  activities. 
After consulting the Monitoring Committee referred to in Article 47 of Regulation (EC) N° 
[…]  [laying  down  general  provisions  on  the  Structural  Funds  and  the  Cohesion  Fund],  the 
managing authority shall choose the themes for the funding of innovation and shall define the 
appropriate modalities of implementation.  

Article 8 

Trans-national co-operation 

1. 

2. 

The Member States and managing authorities shall ensure that programming of trans-
national and inter-regional co-operation activities takes the form of a specific priority 
axis within an operational programme or a specific operational programme.  

The Member States shall ensure coherence and complementarity between the action 
of  the  Fund  and  actions  supported  through  other  Community  trans-national 
programmes, in particular in the field of education and training, through appropriate 
co-ordination mechanisms, to optimise the use of Community resources in support of 
education and life-long learning. 

Article 9 

Technical assistance 

The  Commission  shall  promote  in  particular  exchanges  of  experiences,  awareness  raising 
activities, seminars, networking and peer reviews to identify and disseminate good practices 
and  encourage  mutual  learning  with  the  aim  of  enhancing  the  policy  dimension  and 
contribution  of  the  ESF  to  the  objectives  of  the  Community  in  relation  to  employment  and 
social inclusion. 

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Article 10 

Annual and final reports 

The annual and final implementation reports referred to in Article 49 of regulation (EC) No 
[…] [laying down general provisions on the Structural Funds and the Cohesion Fund], shall 
contain a synthesis of the implementation of : 

(a) 

(b) 

(c) 

(d) 

gender mainstreaming as well as of any gender specific action;  

action to strengthen social integration and employment of migrants; 

action to strengthen social integration and employment of minorities; 

innovative activities, including a justification of the themes selected for innovation, a 
presentation of their results and of their dissemination and mainstreaming; 

(e) 

trans-national and inter-regional co-operation activities. 

Article 11 

Eligibility 

1. 

The ESF shall provide support towards public expenditure which takes the form of 
non-reimbursable  individual  or  global  grants,  reimbursable  grants,  loan  interest 
rebates  and  micro-credits  and  the  purchase  of  goods  and  services  through  public 
tenders. 

2. 

The following expenditure shall not be eligible for ESF support: 

(a)  Reimbursable VAT;  

(b) 

Interests on debt;  

(c)  Purchase of infrastructure, depreciable movables, real estate and land.  

3. 

4. 

Notwithstanding paragraph 2 of this Article, the eligibility rules set out in Article 6 
of regulation (EC) No […] [on the ERDF] shall apply to actions co-financed by the 
ESF which fall within the scope of Article [2] of [Regulation on the ERDF].  

Notwithstanding  national  eligibility  rules,  the  expenditure  declared  under  the 
operational programmes co-financed by the ESF can include:  

(a) 

the  allowances  or  salaries  disbursed  by  a  third  party  to  the  benefit  of  the 
participants  in  an  operation  and  certified  to  the  beneficiary,  on  condition  that 
such disbursements constitute the national public co-financing to the operation, 
in conformity with national rules in force. 

(b) 

the indirect costs of an operation fixed on a flat-rate basis, up to 20 % of the 
directs costs declared for this operation, according to the type of operation, the 
context in which it is implemented and its location. 

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Article 12 

Transitional provisions 

This  Regulation  shall  not  affect  neither  the  continued  implementation  nor  the  modification, 
including  the  total  of  partial  cancellation,  of  measures  approved  by  the  Council  or  by  the 
Commission on  the basis of Regulation  (EC) No 1784/99, which applied prior to 1 January 
2007. 

Applications made under Regulation (EEC) No 1784/94 shall remain valid. 

Article 13 

Repeal 

Regulation (EC) No 1784/99 is repealed with effect from 1 January 2007. 

References to Regulation (EC) No 1784/99 shall be construed as reference to this Regulation. 

Article 14 

Review clause 

Acting in accordance with the procedure laid down in Article 251 of the Treaty, the European 
Parliament and the Council shall review this Regulation by 31 December 2013 at the latest. 

Article 15 

Entry in force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

It shall apply from 1 January 2007. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, [….] 

For the European Parliament 
The President 
[…] 

For the Council 
The President 
[…] 

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