COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards Social Investment for Growth and Cohesion – including implementing the European Social Fund 2014-2020
Date: 2013-02-20
Institutions: European Commission
Subjects: European social policy, access to education, economic and social cohesion, gender equality, marginalisation, population forecast, poverty, private investment

EUROPEAN 
COMMISSION 

Brussels, 20.2.2013  
COM(2013) 83 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards Social Investment for Growth and Cohesion – including implementing the 
European Social Fund 2014-2020 

{SWD(2013) 38 final} 
{SWD(2013) 39 final} 
{SWD(2013) 40 final} 
{SWD(2013) 41 final} 
{SWD(2013) 42 final} 
{SWD(2013) 43 final} 
{SWD(2013) 44 final}

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards Social Investment for Growth and Cohesion – including implementing the 
European Social Fund 2014-2020 

INTRODUCTION 
The Europe  2020  Strategy for smart, sustainable and inclusive growth1 sets targets to  lift at 
least 20 million people out of poverty and social exclusion and  increase employment  of  the 
population aged 20-64 to 75%. The flagship initiatives of the Europe 2020 Strategy, including 
the European Platform against Poverty and Social Exclusion and the Agenda for New Skills 
and  Jobs,  support  efforts  to  reach  these  targets.  The  European  Semester  provides  the 
framework  for  steering  and  monitoring  Member  States'  economic  and  social  reforms.  The 
Open  Method  of  Coordination  on  social  protection  and  social  inclusion  has  contributed  to 
steering  Member  States'  structural  reforms  in  these  areas.  Promoting  economic,  social  and 
territorial  cohesion  and  combating  social  exclusion  and  discrimination  are  fundamental 
objectives  of  the  European  Union  identified  in  the  Treaty2.  The  Charter  of  Fundamental 
Rights of the European Union provides that EU institutions, as well as Member States when 
implementing EU law should respect personal, civic, political, economic and social rights.  

José Manuel Barroso, President of the European Commission, highlighted in his 2012 State of 
the  Union  speech:  ‘It  is  precisely  those  European  countries  with  the  most  effective  social 
protection systems and with the most developed social partnerships that are among the most 
successful and competitive economies in the world.’ 

However, the challenges posed by the crisis have led to growing risks of poverty and social 
and  labour  market  exclusion  in  many  countries.3  Divergences  within  and  between  Member 
States are also increasing. This not only threatens the prospect of reaching the Europe 2020 
targets  and  the  competitiveness  of  Europe  in  a  globalised  world,  it  also  risks  widespread 
negative  social  and  economic  consequences  as  not  just  individuals,  but  society  as  a  whole 
bears the social and economic costs of unemployment, poverty and social exclusion.4 

Welfare systems have contributed to improving social outcomes but are confronted with the 
consequences of demographic change and of the financial and economic crisis. The resulting 
pressure  on  public  budgets  and  the  risk  of  structural  labour  market  shortages  in  the  future 
reinforce the need to modernise social policies to optimise their effectiveness and efficiency, 
and the way they are financed. It is essential to ensure the best use of existing resources and to 
avoid  potential  lasting  adverse  effects  of  the  crisis,  both  in  countries  with  serious  fiscal 
constraints,  as  well  as  in  the  Member  States  that  have  more  fiscal  space.  Future  economic 

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2 
3 

4 

Communication from the Commission, Europe 2020 – A strategy for smart, sustainable and inclusive 
growth, COM (2010) 2020 of 3 March 2010; European Council Conclusions of 17 June 2010 
Article 3 of the Treaty on the European Union 
The number of people at risk of poverty and social exclusion has increased since 2008 in 18 out of the 
26 Member States for which data are available in 2011 (Eurostat) 
See European Commission Staff Working Document - Evidence on Demography and Social Trends – 
Social Policies' Contribution to Inclusion, Employment and the Economy SWD(2013)38 

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growth and competitiveness require investing in human capital, which lays the foundation for 
productivity and innovation5. 

Welfare systems fulfil three functions: social investment, social protection and stabilisation of 
the economy. Social investment involves strengthening people’s current and future capacities. 
In  other  words,  as  well  have  having  immediate  effects,  social  policies  also  have  lasting 
impacts by offering economic and social returns over time, notably in terms of employment 
prospects  or  labour  incomes.  In  particular,  social  investment  helps  to  'prepare'  people  to 
confront life's risks, rather than simply 'repairing' the consequences. Modernisation of social 
policies  requires  systematic  introduction  of  ex-ante  result  orientation  in  financing  decisions 
and a systematic approach of the role social policies play in the different stages in life: from 
education via work/unemployment to sickness and old-age. 

Social policies often have two or even all three of the functions cited above, and these can be 
mutually  reinforcing.  Typically,  the  protection  function  during  adverse  periods  enables 
previous investments made in human capital to be preserved. It would thus be misleading to 
allocate  individual  parts  of  a  budget  to  a  specific  function.  The  investment  dimension  of  a 
specific  policy  expenditure  largely  depends  on  its  design  features  (conditionality,  duration, 
etc.), on the specific national context (complementarity with other policies) and circumstances 
in time (economic cycle, growth path). For instance, childcare has a protection role, but it also 
has a significant investment dimension if well designed, i.e. enhancing the skills and inclusion 
of the individual. Sweden has one of the highest female employment rates in Europe due to 
family-friendly  employment  policies,  generous  parental  leave,  coupled  with  investment  in 
universal provision of childcare. 

Well-designed  welfare  systems  combining  a  strong  social  investment  dimension  with  the 
other two functions, protection and stabilisation, increase the effectiveness and efficiency of 
social policies, whilst ensuring continued support for a fairer and more inclusive society. In 
particular,  the  modernisation  of  social  policies  entails  giving  activation  measures  a  more 
prominent  role.  This  enables  people  to  actively  participate  to  the  best  of  their  abilities  in 
society and the economy. Support schemes should provide an exit-strategy, so they should in 
principle  be  temporary.  Conditionality  to  achieving  an  appropriate  and  specific  goal  (e.g. 
participation in training) is part of this. Support should be better targeted to those in need at 
the  times  they  need  it.  Individualised  and  integrated  services  and  benefits  (e.g.  provided 
through  one  stop  shops)  can  enhance  the  effectiveness  of  social  policies.  Simplifying 
procedures can help people in need to access benefits and services more easily, also avoiding 
overlapping schemes and costs. 

This  Communication  is  accompanied  by  a  Commission  Recommendation  on  'Investing  in 
Children:  breaking  the  cycle  of  disadvantage'  and  a  series  of  Staff  Working  Documents. 
Together  they  form  the  'Social  Investment  Package'.  This  provides  a  policy  framework  for 
redirecting Member States' policies, where needed, towards social investment throughout life, 
with a view to ensuring the adequacy and sustainability of budgets for social policies and for 
the government and private sector as a whole as also expressed by the European Parliament in 
its  resolution  on  the  'social  investment  pact'6.  This  is  in  line  with  the  AGS  encouragement 
towards Member States to "invest in job-rich and inclusive growth" and the call to pursue the 
modernisation  of  social  protection  systems, ensuring  their  effectiveness,  adequacy  and 

5 

6 

As underlined in the Communication from the Commission, A stronger European Industry for Growth 
and Economic Recovery, COM(2012) 582 of 10 October 2012. 
European Parliament resolution of 20 November 2012 on Social Investment Pact – as a response to the 
crisis 

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sustainability.  The  Package  provides  guidance  to  help  reach  the  Europe  2020  targets  by 
establishing  a  link  between  social  policies,  the  reforms  as  recommended  in  the  European 
semester  to  reach  the  Europe  2020  targets  and  the  relevant  EU  funds.  This  also  calls  for 
improved  measurement  of  poverty  and  greater  timeliness  of  EU-wide  social  statistics  that 
monitor trends and performance.7 
The  Package  is  fully  complementary  to  the  Employment  Package8,  which  sets  out  the  way 
forward  for  a  job  rich  recovery,  the  White  Paper  on  Pensions9,  presenting  a  strategy  for 
adequate, sustainable and safe pensions, and the Youth Employment Package10, which deals 
specifically  with  the  situation  of  young  people.  It  also  builds  on  the  regulatory  framework 
proposed  for  the  implementation  of  Cohesion  policy  in  the  next  financial  period  2014-2020 
and in particular the scope of the European Social Fund (ESF) and the proposal to earmark at 
least 20% of the ESF in each Member State to promote social inclusion and confront poverty. 

1. 

THE CHALLENGES 

Changing demographics 

From  2013  onwards,  for  the  first time,  the  size  of  the  population  of  working  age  in  Europe 
will  shrink,  whilst  the  proportion  of  older  people  will  expand  rapidly.  There  are  now  four 
people to support one person over the age of 65, and this ratio is set to halve by 2040. 

There are differences between countries, regions and sectors. Overall, the EU has experienced 
modest population growth in recent years, but a number of Member States, all in the Eastern 
part of the EU, have seen consistent declines in their populations over the past decade. Some 
disadvantaged regions, in which the population of marginalised communities is growing, face 
particular challenges. 

Ageing,  rising  dependency  ratios  and  a  smaller  productive  population  threaten  the 
affordability and sustainability of public budgets for social policies.11 The economic crisis has 
raised unemployment, decreased tax revenues and increased the number of people who need 
benefits, further threatening the sustainability of our social protection systems.  

While  the  demographic  challenge  affects  all  Member  States,  there  are  large  differences  in 
healthy life years and life expectancies across the EU. This is due to a number of factors that 
determine  health,  including  variations  in  living  and  working  conditions,  as  well  as  in 
lifestyles. Differences in the accessibility to and quality of health care also contribute to this. 

Room for efficiency gains in social policies 

The challenges posed by changing demographics have been aggravated by the crisis, putting 
pressure  on  Member  States’  budgets  at  a  time  when  efforts  to  meet  the  Europe  2020 
objectives need to be stepped up. 

Since public spending on social policies, largely covering pensions and healthcare, comprises 

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11 

See European Commission Staff Working Document - Evidence on Demography and Social Trends – 
Social Policies' Contribution to Inclusion, Employment and the Economy SWD(2013)38 
Communication from the Commission, Towards a job-rich recovery, COM(2012)173, 18 April 2012  
White  Paper  from  the  Commission,  An  Agenda  for  Adequate,  Safe  and  Sustainable  Pensions, 
COM(2012) 55, 16 February 2012 
Communication from the Commission, Moving Youth into Employment, COM(2012)727, 5 December 
2012  
For a detailed assessment of the budgetary implications of an ageing population please refer to the 2012 
Ageing Report – at http://ec.europa.eu/economy_finance/publications/european_economy/2012/pdf/ee-
2012-2_en.pdf  

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around 29.5% of GDP on average in the EU, it is scrutinised closely in consolidation efforts. 
Many reforms must focus on making efficiency gains, paying attention that reforms are well-
designed  in  order  to  avoid  negative  repercussions  on  poverty  levels,  productivity  and 
economic growth, health of the population and social cohesion. 

Securing the sustainability and adequacy of social policies requires that Member States find 
ways  to  raise  efficiency  and  effectiveness,  whilst  addressing  key  demographic  and  societal 
changes.12 In some cases, the multiplicity of benefits, agencies, and conditions for entitlement 
leads to extra administrative costs and low take-up by those most in need. Also insufficient 
monitoring  leads  to  unnecessary  spending.  Some  cash  benefits  and  social  services  are  also 
poorly targeted and do not reach the people in need of assistance.13 

Member  States  with  similar  levels  of  spending  on  social  policies  achieve  varying  results  in 
terms  of  poverty,  employment  and  health  outcomes.  This  suggests  there  is  room  for 
improvement in the way resources are used.14 

The Annual Growth Survey (AGS) launching the 2013 European Semester stipulates that the 
on-going  process  of  restructuring  our  economies  is  disruptive,  politically  challenging  and 
socially  difficult,  but  that  it  is  necessary  to  lay  the  foundations  for  future  growth  and 
competitiveness  that  will  be  smart,  sustainable  and  inclusive.  The  AGS  also  underlined  the 
need  for  reforms  of  healthcare  systems  with  the  twin  aim  to  ensure  access  to  high  quality 
healthcare  and  to  use  public  resources  more  efficiently.  The  need  to  step  up  reform  has 
already  been  reflected  in  the  2012  country  specific  recommendations  (CSRs)  calling  for 
prolonging working lives and incentives to work, providing better (employment) opportunities 
for women and young people, improving the effectiveness of social transfers and assistance 
systems, and ensuring access to quality services.  

Private and third sector resources to complement public efforts 

Resources for social policies are not limited to those from the public sector. A non-negligible 
part  comes  from  people  and  families.  In  addition,  non-profit  organisations  provide  social 
services  on  a  substantial  scale.  These  range  from  homeless  shelters,  support  for  the  elderly, 
people  with  disabilities,  to  advice  centres  on  social  benefits  in  general.  Social  enterprises15 
can  complement  public  sector  efforts,  and  be  pioneers  in  developing  new  markets,  but  they 
need  more  support  than  they  are  receiving  now16.  The  for-profit  parts  of  the  private  sector 
would  need  to  be  further  encouraged  to  use  the  potential  of  social  investment  through,  for 
instance,  a  healthy  and  secure  social  and  working  environment.  This  is  not  limited  to 
Corporate Social Responsibility alone and includes for example on the job training, in-house 
childcare facilities, health promotion and accessible and family-friendly workplaces.  

12 

13 

14 

15 

16 

See European Commission Staff Working Document – Evidence on Demography and Social Trends – 
Social Policies' Contribution to Inclusion, Employment and the Economy SWD(2013)38 
See European Commission Staff Working Document – Report on Follow-up on the Implementation by 
the Member States of the 2008 European Commission Recommendation on Active Inclusion of People 
Excluded from the Labour Market – Towards a social investment approach SWD(2013)39 
See European Commission Staff Working Document - Evidence on Demography and Social Trends – 
Social Policies' Contribution to Inclusion, Employment and the Economy SWD(2013)38 
The  social  economy,  also  referred  to  as  the  'third  sector',  refers  to  non-government  actors  such  as 
community  organisations,  voluntary  organisations,  and  social  enterprises  that  undertake  activities  for 
social  benefit.  Social  enterprises  are  businesses  with  primarily  social  objectives,  and  where  surpluses 
are usually reinvested into the business or in the community, rather than maximising profit for owners 
and shareholders. 
As underlined in the Social Business Initiative Communication from the Commission, Social Business 
Initiative, Creating a favourable climate for social enterprises, key stakeholders in the social economy 
and innovation COM(2011)682 of 25 October 2011 

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In the social area, Member States still make insufficient use of more innovative approaches to 
financing,  including  by  using  participation  of  the  private  sector  and  financial  engineering 
through  instruments  such  as  micro-finance,  policy  based  guarantees  and  Social  Investment 
Bonds17 which should strive for budgetary savings. 

Need to invest in human capital throughout life and ensure adequate livelihoods 

If the Europe 2020 targets are to become a reality, remedial action needs to be taken across a 
broad front, and to cover the challenges faced at various stages of people's lives.  

Children  who  grow  up  in  poverty  often  stay  in  poverty  for  their  entire  lives.  For  example, 
significant disadvantages faced in childhood in education18 and health are often compounded 
over  life.  Addressing  health  determinants  throughout  people’s  lives  is  therefore  important. 
Poor  performance  in  school  translates  directly  into  reduced  future  job  opportunities  and 
earnings.  For  example,  Roma  children  are  particularly  at  risk  of  being  socially  and 
economically marginalised and discriminated against. Only half of them have access to early 
childhood education and care (ECEC), around half of the EU average, and in several Member 
States  less  than  10%  complete  secondary  school,  resulting  in  low  employment  rates.  In  the 
Czech  Republic,  only  2  in  10  Roma  living  in  marginalised  localities  have  some  formal 
training or secondary education that predestine their career path.19 

The  need  for  investment  in  human  capital  starts  at  very  early  age  and  continues  throughout 
life. The youth unemployment rate currently stands at 23.4% and is rising. At the same time, 
there is lack of progress in reducing early school leaving and failure to complete third level 
education. Furthermore, a worryingly high proportion of young people are not in employment, 
education or training (NEET), representing 12.9% of young Europeans (15-24) or 7.5 million 
in  total  in  2011.  The  result  is  that  in  some  Member  States  young  people  are  becoming 
relatively more at risk of poverty than the elderly. Such risks and lack of employment are also 
a serious concern in many rural areas in the EU where young people find it more difficult to 
enter  the  labour  market  or  find  jobs  compared  to  their  contemporaries  living  in  urban  areas 
and big cities.20 

Prime-age and older workers are affected by the rapid rise in long-term unemployment. This 
puts them at risk of poverty and presents a danger to their employability, the stability of their 
families, and their mental and physical health. 

In  addition  to  the  young,  (older)  women,  unemployed  people,  disabled  people,  and  also 
migrants living in Europe face hardship. They experience very high levels of unemployment 
(19.6%  in  2011,  compared  to  9.7%  on  average).  The  employment  rate  of  people  with 
disabilities is about 25% lower than for people without disabilities. Furthermore, the risk of 
poverty  and  social  exclusion  of  foreign-born  people  aged  25-54  exceeds  on  average  that  of 
others by more than 10 percentage points across the EU as a whole21. The gap in the risk of 
poverty  after  social  transfer  between  migrants  and  EU  citizens  is  also  significant,  with  8 

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19 

20 
21 

With a social impact bond, typically a private investor funds a social service provider to implement a 
social  programme  in  return  for  a  promise  ('bond')  from  the  public  sector  to  reimburse  the  initial 
investment and pay a rate of return if the programme achieves predefined social outcomes. 
For example limited access to high quality education, limited access to additional learning support, lack 
of parental support or access to additional (non-formal) learning opportunities etc. 
World Bank, Human Development Sector Unit, Europe and Central Asia Region : Europe and Central 
Asia  Roma  Inclusion:  An  Economic  Opportunity  for  Bulgaria,  Czech  Republic,  Romania  and  Serbia 
Policy Note , (September 30, 2010) 
See Commission Staff Working Document SWD(2012)44 final of 7.3.2012 
Source: Eurostat, EU-SILC 2008  

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percentage points22. Further, children with a migrant background have a higher risk of leaving 
school early. 

Furthermore,  labour  markets  are  not  yet  inclusive.  In  some  countries,  the  rise  in  the  rate  at 
which  women  and  those  with  a  migrant  background  are  entering  the  labour  market  is  very 
slow  and  average  hours  worked  remains  low.  Labour  market  segmentation  and  polarisation 
give  rise  to  significant  market  inequalities  in  a  number  of  countries,  and  tax  and  benefit 
systems can create disincentives to work, especially for those on low incomes or for second-
earners. Practices of early retirement and gaps between effective and statutory retirement age 
lower economic activity. 

For  many  people,  their  current  job  is  not  enough  to  lift  their  families  out  of  poverty.  The 
working poor represent a third of adults of working age at risk of poverty.23 

Despite  efforts  to  modernise  welfare  systems,  progress  is  uneven  across  the  EU,  and  in  a 
number  of  Member  States  social  policies  too  often  fail  to  prevent  parts  of  their  populations 
from slipping into poverty and social exclusion, and/or becoming long-term unemployed. In 
the  absence  of  social  protection,  poverty  levels  could  be  up  to  twice  as  high;  nonetheless, 
more and more people either receive inadequate benefits or are not covered at all. More and 
more households are experiencing financial distress,24  

living  standards 

Inequalities  in  disposable  income  have  widened  in  some  countries,  while  at  the  same  time 
absolute 
fallen 
disproportionately. This is at odds with the social rights of citizens to live a life in dignity.25 
For  example,  according  to  an  estimate  for  200926,  there  could  be  as  many  as  410.000 
homeless people in the EU on any given night. This figure is rising in most Member States 
and many more people are at imminent risk of eviction.27  

in  vulnerable  positions  have 

for  many  already 

Addressing the gender dimension 

The particular challenges posed by continued gender disadvantage must be tackled in a more 
coherent manner.28 Overall 12 million more women than men in the EU are living in poverty. 
In  addition  to  women  earning  lower  wages,  they  also  have  a  lower  participation  rate  in  the 
labour force and work fewer hours, partially caused by unpaid household, childcare and long-
term care tasks, specifically: 

• 

• 

22 
23 
24 

25 

26 
27 
28 

Women's activity rate is still 16.4% below that of men, reflecting persistent gender 
divisions  in  household  responsibilities  (64.9%  against  77.6%  for  the  15-64  age 
bracket in 2011); 

A  higher  proportion  of  women  working  part  time  leading  to  17.0%  lower  average 
weekly hours worked by women (33.7 hours as against 40.6 in 2011); 

Source: Eurostat, EU-SILC 2008 
EU Employment and Social Situation Quarterly Review, December 2012 
Financial distress is defined as households having to draw on savings or run into debt to cover current 
expenditures 
Also see the Charter of Fundamental Rights of the European Union which in its Chapter III on Equality 
establishes  the  rights  of  the  child  (Art  24)  and  of  the  elderly  (Art  25)  and  refers  too  to  the  equality 
between men and women (Art 23) and to the integration of persons with disabilities (Art 26) 
Following the ETHOS definition: http://www.feantsa.org/files/freshstart/Toolkits/Ethos/Leaflet/EN.pdf 
“A social inclusion roadmap for Europe 2020”, H. Frazer, E. Marlier, I. Nicaise, 2010 
See European Commission Staff Working Document – Evidence on Demography and Social Trends – 
Social Policies' Contribution to Inclusion, Employment and the Economy SWD(2013)38 

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• 

A gender pay gap of 16.2% (2010, in average hourly earnings), which is partly due to 
women earning lower pay for work of equal value, and partly due to women being 
concentrated in jobs that pay less.  

Taking this into consideration, women's total earnings gap can be estimated to be more than 
40%  below  those  of  men  on  average.29  As  gender  inequality  runs  through  an  individual's 
entire life and its negative effects cumulate over time, this results in for instance lower GDP, 
lower  social  security  contributions  and  higher  poverty  among  older  women,  with  18%  of 
women of 65 years and over being at risk of poverty, compared with 13% of men. Having a 
disadvantaged  background  or  belonging  to  an  ethnic  minority  compounds  these  gender 
inequalities.  

2. 

WHAT  IS  NEEDED?  FOCUS  ON  SIMPLE,  TARGETED  AND  CONDITIONAL  SOCIAL 
INVESTMENT 

Despite  large  differences  between  Member  States,  all  are  confronted  with  structural,  social 
and  demographic  challenges.  Those  that  moved  towards  a  growth  model  including  a  social 
investment  approach  in  their  social  policies  early,  consistently,  and  before  the  crisis  have 
more inclusive growth than the others.30 Modernising social policies is a matter of common 
concern at EU level, as ineffective social policies in one country can have consequences for 
others,  particularly  within  the  Eurozone.  Insufficient  investment  in  social  policies  that 
strengthen human capital development, for instance in early childhood education and care, is 
manifested in lower educational levels and overall lower skill development in some Member 
States.31 This can contribute to explaining differences in economic competitiveness between 
Member States and the current disequilibria observed in the EMU as poor education and skills 
lead  to  a  lower-quality  and  less-productive  workforce.  In  Member  States  with  reduced 
economic competitiveness, this may also result in a tendency for the high skilled to leave their 
country of origin to find work elsewhere, further reducing productive potential. 

Faced  with  structural  long-term  challenges,  Member  States  need  to  adapt  to  ensure  the 
adequacy  and  sustainability  of  their  social  systems  and  their  contribution  to  stabilising  the 
economy. If a person can temporarily not find work, the focus should be on improving their 
capabilities with a view to them returning to the labour market. This needs to be done through 
a targeted approach focused on the individual needs and delivered in the most cost-effective 
way. 

Enabling individuals to live up to their full potential to take part in social and economic life in 
society entails supporting people at critical junctions in their lives. This starts with investing 
in children and youth, and continues thereafter. Social innovation must be an integral part of 
necessary adjustments by testing new policy approaches and selecting the most effective ones. 

2.1. 

Increase 
simplification and better targeting 

the  sustainability  and  adequacy  of  social  systems 

through 

To  meet  the  Europe  2020  targets,  a  new  approach  is  needed,  recognising  the  budget 
constraints and demographic challenges that Member  States  face.  Social  policies  need  to  be 
both adequate and fiscally sustainable, as these are two sides of the same coin. This implies 

29 
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31 

Based on Commission calculations 
See European Commission Staff Working Document – Evidence on Demography and Social Trends – 
Social Policies' Contribution to Inclusion, Employment and the Economy SWD(2013)38 
See  OECD  (2012)  Starting  Strong  III:  A  quality  toolbox  for  Early  Childhood  Education  and  Care", 
OECD, Paris - for evidence on how pre-primary education policies affected PISA results (2009), and 
the divergence between Member States in investing in these policies 

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first of all using the available resources more efficiently and effectively, through simplifying, 
better  targeting  and  considering  conditionality  when  designing  policies.  Both  universalism 
and  selectivity  need  to  be  used  in  an  intelligent  way.  For  example,  the  pre-school  that  is 
widely accessible to children, as for instance in France, has demonstrated to have a sizeable 
and persistent positive effect on a child’s ability to succeed in school and, in the long term, 
obtain higher wages in the labour market. 
The  Staff  Working  Document  on  Investing  in  Health32  presents  how  smart  investments  in 
health can lead to better health outcomes, productivity, employability, social inclusion and the 
cost-efficient  use  of  public  resources,  contributing  to  the  fiscal  sustainability  of  health 
systems33, investing in human capital and equity in health.34  

The impact of spending should be further maximised by increased efforts to reduce fraud and 
administrative  burdens  for  users  and  providers.  The  financing  structure  can  be  strengthened 
through improving tax collection, broadening tax bases, critically reviewing tax expenditure 
items  and  making  the  tax  structure  more  growth-friendly,  e.g.  through  environmental  taxes. 
Lastly,  social  policies  should  be  better  targeted  towards  those  most  in  need,  ensuring  better 
take-up rates to improve adequacy and sustainability at the same time. 

The Commission urges Member States to: 

• 

• 

Better  reflect  social  investment  in  the  allocation  of  resources  and  the  general 
architecture  of  social  policy.  This  means  putting  greater  focus  on  policies  such  as 
(child)care,  education,  training,  active  labour  market  policies,  housing  support, 
rehabilitation and health services. Improve the sustainability of the health systems.35 
Financing  structures  should  be  improved,  for  instance,  through  efficient  revenue 
collection,  broadening  of  tax  bases  and  making  the  tax  structure  more  growth-
friendly, avoiding negative impacts on labour demand. Progress should  be  reported 
on in National Reform Programmes (NRPs); 

Simplify  benefit  systems  and  their  administration  for  users  and  providers,  reduce 
administrative burdens as well as fraud and increase take up. This could be achieved, 
for  example,  by  setting  up  one-stop-shops  and  avoiding  a  proliferation  of  different 
types  of  benefits  for  a  single  contingency.  Improve  targeting  of  social  policies  to 
ensure that those most in need receive adequate support while reducing the burden on 
public finances. 

The Commission will support Member States by: 

• 

32 
33 

34 

35 

36 

Monitoring,  in  the  framework  of  the  European  Semester,  the  efficiency  and 
effectiveness of social systems and their emphasis on social investment, with a view 
to  also  improving  adequacy  and  sustainability.  Following  the  mandate  from  the 
Council36  and  as  announced  in  its  2013  Work  Programme,  the  Social  Protection 
Committee  (SPC)  will  work  on  the  financing  of  social  protection  systems  and 

See European Commission Staff Working Document – Investing in Health SWD(2013) 43 
Council  Conclusions,  3054th  Council  meeting  Economic  and  Financial  Affairs  Brussels,  7  December 
2010 
Council  Conclusions  on  Common  Values  and  Principles  in  European  Union  Health  Systems  (2006/C 
146/01) 
This should be based on the Joint Report on Health Systems by the Economic Policy Committee and the 
Commission  and  on  the  Member  States’  cooperation  in  the  Council’s  Reflection  Processes  on  health 
systems and on chronic disease  
EPSCO  Council  of  17-02-2012:  "undertake  work  on  the  financing  of  the  social  protection  systems, 
inviting other relevant committees to take part in this important work". 

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efficiency  and  effectiveness  of  social  protection  expenditure.  This  will  include 
developing  a  methodology  to  assist  in  this  by  the  end  of  2013.  This  work  will  be 
based on analysing and sharing best practices in the context of the Open Method of 
Coordination on social protection and social inclusion (Social OMC); 

Setting up, in the course of 2013, an expert panel to provide independent advice on 
effective ways of investing in health37. 

Pursue activating and enabling policies through targeted, conditional and more 
effective support 

• 

2.2. 

Action  is  needed  by  both  governments  and  employers  in  Member  States  to  further  increase 
labour force participation specifically by removing remaining obstacles to full participation , 
and to increase job creation and demand for labour.  

In  addition  to  the  policy  lines  set  out  in  the  Employment  Package  and  in  the  ‘Rethinking 
Education’  Package38  focusing  on  the  demand  and  supply  sides  of  the  labour  market,  this 
means investing in social policies, services and cash benefits which both activate and enable. 
Social investment should focus on the outcome for the individual and society at large. Support 
must offer individuals an exit strategy, be granted for as long as needed, and so in principle be 
temporary in nature. In certain cases, social services are more supportive than cash benefits. 
In  addition,  certain  kinds  of  support  should  be  reciprocal:  conditional  upon  the  individual 
achieving  an  appropriate  and  specific  goal  to  the  best  of  his/her  abilities,  as  often  done  e.g. 
regarding unemployment benefits. 
The implementation of the Active Inclusion Recommendation39 and guidance provided in this 
Package40 is key in this respect. Measures must match the need of the individual rather than 
be tied to the nature of the benefit or the ‘target group’ a person happens to be in. One-stop 
shops  and  individual  contracts  are  examples  of  a  simplified  approach  that  matches  people’s 
needs. Setting reference budgets can support the implementation of this Recommendation.41  

Tax  and  benefit  systems  should  make  work  pay  and  social  policies  should  also  secure 
adequate livelihoods. Barriers to women’s and other underrepresented workers’ participation 
in the labour market should be addressed. There needs to be early intervention, complemented 
by  enabling  access  to  basic  services,  such  as  basic  payment  accounts,  internet,  transport42, 
childcare,  education  and  health.  Stimulating  "best-offer  pricing"43  options  for  consumer 
products  and  services  and  improving  financial  inclusion  is  another  part  of  this  effort. 
Implementation  of  the  legislative  “Bank  account”  package  including  measures  to  provide  a 

37 

38 

39 

40 

41 

42 

43 

Commission  Decision  2012/C  198/06  of  5  July  2012  on  setting  up  a  multisectoral  and  independent 
expert panel to provide advice on effective ways of investing in health. 
Commission  Communication  –  'Rethinking  Education:  Investing  in  skills  for  better  socio-economic 
outcomes'. COM(2012)669, 20 November 2012. 
Commission Recommendation of 3.10.2008 on the active inclusion of people excluded from the labour 
market (2008/867/EC published in the OJ L. 307/11 of 18.11.2008 
See European Commission Staff Working Document – Report on Follow-up on the Implementation by 
the Member States of the 2008 European Commission Recommendation on Active Inclusion of People 
Excluded from the Labour Market – Towards a social investment approach SWD(2013)39 
Reference budgets contain a list of goods and services that a family of a specific size and composition 
needs to be able to live at a designated level of wellbeing, along with the estimated monthly or annual 
costs thereof. Source: European Consumer Debt Network (2009). Handbook of reference budgets, pp. 
5. 
See  also  the  EU  regulatory  framework  concerning  passenger  rights  and  public  transport  services, 
Regulation (EU) No 1177/2010 
The  lowest  price  that  a  consumer  could  pay  for  a  specified  good  or  service,  including,  where 
appropriate, by purchasing 'bundled' goods or services 

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payment  account  with  basic  features  for  all  consumers  in  the  EU,  which  follows  the  2011 
Recommendation on access to a basic payment account,44 will be key. 

Social investment plays a particular role for those people that are disproportionally affected 
by  unemployment,  poverty,  bad  housing  and  poor  health  conditions  and  discrimination.  For 
example,  many  Roma  live  in  extreme  marginalisation  and  in  very  poor  social-economic 
circumstances.  This  requires  policies  that  target  their  needs  and  offer  integrated  support. 
Confronting  homelessness  with  a  focus  on  prevention  and  early  intervention  can  result  in 
considerable savings on emergency housing provision, healthcare and preventing crime. This 
also entails reviewing regulations and practices on eviction.  

Innovation  is  an  essential  element  of  social  investment  policy  since  social  policies  require 
constant  adaptation  to  new  challenges.  This  means  developing  and  implementing  new 
products,  services  and  models,  testing  them,  and  favouring  the  most  efficient  and  effective. 
Social policy innovators need an enabling framework for testing and promoting new finance 
mechanisms, for instance, and measuring and evaluating the impact of their activities. 

Social policy innovation needs to be upscaled, embedded into policy making, and connected 
to  priorities  such  as  the  implementation  of  Country  Specific  Recommendations,  including 
through the use of the ESF. 

Social enterprises together with the third sector can complement public sector efforts, and be 
pioneers in developing new services and markets for the citizens and public administrations, 
but  they  need  skilling  and  support.  It  is  important  for  Member  States  to  provide  social 
entrepreneurs  with  support  schemes,  incentives  for  start-ups  and  put  in  place  an  enabling 
regulatory environment45. Examples of successful projects and orientations for further use of 
EU funds, notably the ESF, are included in this Package.46 

The Commission urges Member States to: 

• 

• 

44 
45 

46 

47 

Fully  implement  the  Commission  Recommendation  on  Active  Inclusion  (2008) 
without  further  delay,  including  where  applicable  through  the  use  of  the  ESF  and 
ERDF,  integrating  its  three  pillars:  adequate  income  support,  inclusive  labour 
markets  and  enabling  services.  Put  in  place  legal  frameworks  that  ensure  access  to 
efficient, high quality and affordable social services that respect the EU rules. Based 
upon  the  methodology  that  the  Commission  in  cooperation  with  the  SPC  will 
develop, establish reference budgets to help designing efficient and adequate income 
support that takes into account social needs identified at local, regional and national 
level47. Progress on all of these should be reflected in the NRPs; 

Close  the  gender  pay  gap  and  address  other  barriers  to  women’s  and  other 
underrepresented  workers’  participation  in  the  labour  market,  including  by 
encouraging employers to address workplace discrimination and offer reconciliation 
measures  (such  as  childcare  services),  adapted  workplaces,  including  ICT-based 
solutions,  eAccessibility,  diversity  management,  programmes  for  up-skilling  and 
training,  for  the  recognition  of  skills  and  qualification  as  well  as  mobility  and 

Commission Recommendation 2011/442/EU on access to a basic payment account, 18.7.2011,  
The  EU  State  aid  rules  need  to  be  respected  (and  the  possibilities  offered  e.g.  by  the  General  block 
exemption Regulation 800/2008 or de minimis aid Regulation 1998/2006 could be used) 
See  Commission  Staff  Working  Document  –  Social  Investment  through  the  European  Social  Fund 
SWD(2013)44 
As  stipulated  in  the  common  principles  on  active  inclusion  adopted  by  the  Council  on  12  December 
2008. 

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development of consecutive careers. This should be achieved through means such as 
labour  market  regulations,  parental  leave  regulations,  and  fiscal  incentives.  Action 
should be taken to ensure that taxation and benefit systems are aligned to make work 
pay  (tapered  benefit  thresholds  or  targeted  in-work  fiscal  incentives).  The  ESF, 
ERDF,  the  European  Integration  Fund  (EIF),  and  European  Migration  and  Asylum 
Fund should be made use of to achieve this; 

Confront  homelessness  through  comprehensive  strategies  based  on  prevention, 
housing-led  approaches  and  reviewing  regulations  and  practices  on  eviction,  taking 
into account the key findings of the guidance on confronting homelessness provided 
in this Package;  

Make use of the Fund for European Aid to the Most Deprived (FEAD) as appropriate 
to  address  material  deprivation  and  homelessness,  including  through  the  support  of 
accompanying measures promoting social inclusion; 

Implement  the  Commission  Recommendation  on  access  to  a  basic  payment 
account.48  Stimulate  best-offer  pricing  options  for  consumer  products  and  services 
and improve financial inclusion; 

financial  support, 

Develop concrete strategies for social innovation, such as public-private-third sector 
including 
partnerships,  ensure  adequate  and  predictable 
microfinance, and provide for training, networking and mentoring in order to support 
evidence-based  policies.  Fully  take  advantage  of  ESF,  ERDF,  EAFRD,  EIF  and 
PSCI funding opportunities to do this and to scale up successful projects. Prioritise 
social  policy  innovation  in  the  implementation  of  relevant  CSRs  and  report  this 
through the NRPs; 
Support social entrepreneurs49 by providing incentives for start-ups, and their further 
development, by expanding their knowledge and networks and providing them with 
an enabling regulatory environment in line with the Social Business Initiative50 and 
the Entrepreneurship 2020 Action Plan51; 

Explore  and  develop  innovative  ways  of  securing  additional  private  financing  for 
social investment, for instance through public private partnerships. 

• 

• 

• 

• 

• 

• 

The Commission will support Member States by: 

• 

48 

49 

50 

51 

52 

Monitoring  reforms  towards  active  inclusion52  in  the  framework  of  the  European 
Semester, developing a methodology for reference  budgets  in  2013  and  monitoring 
the  adequacy  of  income  support,  using  the  abovementioned  reference  budgets  once 
these are developed together with the Member States; 

Commission  Recommendation  2011/442/EU  on  access  to  a  basic  payment  account,  18.7.2011, 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:190:0087:01:EN:HTML 
The  'Social  Entrepreneurship  Axis'  of  the  Programme  for  Social  Change  and  Innovation  (worth 
EUR 90 m) supports the development of social investment market and facilitates access to finance for 
social enterprises by making available equity, quasi-equity, loan instruments and grants. 
Communication  from  the  Commission,  Social  Business  Initiative,  Creating  a  favourable  climate  for 
social  enterprises,  key  stakeholders  in  the  social  economy  and  innovation  COM  (2011)  682  of  25 
October 2011  
Communication from the Commission, Entrepreneurship 2020 Action Plan, COM(2012) 795, 9 January 
2013. 
See footnotes 38 and 39 

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• 

• 

• 

• 

• 

• 

Clarifying  to  public  authorities  and  service  providers  how  EU  rules  on  State  aid, 
internal  market  and  public  procurement53  apply  to  social  services,  through  an 
updated Guide54 and regular exchanges of information with stakeholders; 

Preparing  a  Recommendation  on  best  practices  for  Roma  inclusion,  building  on 
the 
Member  States'  experiences  and 
implementation  of  National  Roma  Integration  Strategies  within  the  European 
Semester. Facilitating the inclusion of Roma through the exchange of good practices, 
as  well  as  the  development  of  transnational  cooperation,  through  the  Network  of 
National Roma Contact Points; 

reporting  annually  on  progress 

in 

Presenting  a  legislative  initiative  to  improve  access  to  basic  payment  accounts, 
enhance the transparency and comparability of bank fees and facilitate bank account 
switching; 

Making  people  more  informed  of  their  social  rights  through  more  user-friendly 
Social  Protection  Guides,  and  help  setting  up  services  for  people  to  keep  track  of 
their pension rights. In addition the Commission will help to prevent discrimination 
on  the  basis  of  nationality,  reduce  the  obstacles  mobile  workers  face  through  a 
Directive that aims at a better application and enforcement of free movement rights;  

Providing guidance in 2013 to Member States on how to use social policy innovation 
in  implementing  CSRs.  This  guidance  will  include  examples  of  how  to  use  the 
European Structural and Investment (ESI) Funds; 

Presenting a report in 2013 on the implementation of the Communication ‘Solidarity 
in Health: Reducing Health Inequalities in the EU’55. 

2.3. 

Social Investment throughout the individual's life 

Support should target specific needs arising in life: from childhood, youth and the transition 
from  school  to  work,  parenthood,  from  the  beginning  to  the  end  of  one’s  career  to  old  age. 
This means adapting integrated services, cash benefits and assistance to the critical moments 
in the life of a person, and preventing hardship from materialising later. 

The  Commission  Recommendation  on  "Investing  in  Children:  breaking  the  cycle  of 
disadvantage"56, part of this Package, is a clear illustration of how targeted social investment 
can  be  part  of  a  rights  based  policy  founded  on  universality  and  increase  equality  of 
opportunity. 

Focusing on children is vital for a sustainable, efficient and competitive knowledge economy 
and an intergenerational fair society. The adequacy of future pensions depends on the human 
capital of those who are today children. The increase in life expectancy and a shrinking active 
population,  if  unbalanced,  could  lead  to  a  structure  of  spending  skewed  towards  old-age 
benefits, to generally higher government budgets and fewer resources for children and youth. 
There is broad consensus that early and good quality childhood education and care (ECEC) is 

53 

54 

55 

56 

The proposals of the Commission for a directive on public procurement (COM(2011) 896 final) and for 
a  directive  on  procurement  by  entities  operating  in  the  water,  energy,  transport  and  postal  services 
sectors (COM(2011) 895 final) are currently under negotiation. 
Guide to the application of the European Union rules on state aid, public procurement and the internal 
market to services of general economic interest, and in particular to social services of general interest 
Commission  Communication:  "Solidarity  in  Health:  Reducing  Health  Inequalities  in  the  EU"; 
COM(2009) 567 final. 
See  Commission  Recommendation  –  Investing  in  Children  –  Breaking  the  Cycle  of  Disadvantage 
C(2013) 778 

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an  efficient  means  of  preventing  early  school  leaving  and  improving  future  academic 
performance, health, future employment outcomes and social mobility. 

Breaking the cycle of disadvantage across generations implies mobilising a range of policies, 
supporting  children  themselves,  but  also  their  families  and  communities.  Addressing  this 
involves  a  combination  of  cash  and  in  kind  benefits,  equal  access  to  quality  education, 
reducing early school leaving, eliminating school segregation and the misuse of special needs 
education.  

Investing in health, starting from an early age, allows people to remain active longer and in 
better  health,  raises  the  productivity  of  the  work  force  and  lowers  the  financial  pressure  on 
health  systems.  Health  promotion  and  preventive  health  care  are  particularly  important 
throughout life. In this context, it is also important to highlight the advantages deriving from 
investing in health and safety at work.57 
The European Commission's Youth Employment Package58 responds to the current situation 
of high youth unemployment. It proposes schemes ensuring that every young person receives 
a good quality offer of employment, continued education and training, an apprenticeship or a 
traineeship within four months from becoming unemployed or leaving formal education. This 
'Youth  Guarantee'  improves  employment  security  at  young  age  through  fostering  school-to-
work  transitions.  It  should  be  complemented  by  opportunities  to  improve  skills  through 
lifelong  learning  policies.  The  proposed  Erasmus  for  All  programme59  will  also  help  young 
people get training and skills that can increase their personal development, gain new skills and 
language abilities and improve their overall job prospects. 

Later  in  life,  health  and  active  ageing  policies  enable  people  to  make  the  most  of  their 
potential.  The  contributions  of  older  people  to  society  as  carers  for  others  or  volunteers  are 
often  overlooked,  and  they  should  be  given  adequate  support  to  pursue  this.  The  2012 
European  Year  on  Active  Ageing  and  Solidarity  between  Generations  has  increased 
awareness  of  the  contribution  that  older  people  make  to  society  and  has  given  political 
momentum  to  policy  initiatives,  for  example  the  new  Federal  Plan  for  Senior  Citizens  in 
Austria. 

This  Package  includes  examples  of  how  the  need  for  long-term  care  can  be  confronted 
through prevention, rehabilitation and the creation of more age-friendly environments, and by 
developing more efficient ways of delivering care60 . The widespread shortage of a health and 
long-term  care  workforce  should  also  be  addressed  through  incentives  for  boosting 
employment in  ‘white coat  jobs’  and improving working conditions in this  area.  Accessible 
and  affordable  transport  and  adapted  housing  opportunities  also  allow  older  and  disabled 
people to remain in charge of own lives for as long as possible and reduce the need for long-
term care. 

The Commission urges Member States to: 

• 

57 
58 

59 

60 

Implement  the  Recommendation  on  'Investing  in  Children:  breaking  the  cycle  of 
disadvantage'  in  an  integrated  way  through  a  combination  of  cash  and  in  kind 

COM(2007) 62 final of 21 February 2007 
Communication  from  the  Commission,  Moving  Youth  into  Employment,  COM  (2012),  727,  5 
December 2012 
Commission Communication – "Erasmus for All: The EU Programme for Education, Training, Youth 
and Sport" COM(2011) 787, 23 November 2011 
See  Commission  Staff  Working  Document  –  Long-Term  Care  in  Ageing  Societies  -  Challenges  and 
Policy Options SWD(2013)41 

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benefits,  and  access  to  quality  early  education,  health  and  social  services.  Address 
childhood  inequalities  through  eliminating  school  segregation  and  the  misuse  of 
special  needs  education.  Make  early  childhood  education  and  care  (ECEC)  more 
visible  and  available,  in  line  with  the  Barcelona  targets61  on  childcare  and  the  EU 
targets  on  ECEC62.  Report  on  progress  in  NRPs.  Use  the  ESF,  ERDF  and  the 
EAFRD to promote access to health and social services and to ECEC; 

Implement the Recommendation on ‘Policies to Reduce Early School Leaving’ and 
develop  evidence-based  and  comprehensive  policies  against  early  school  leaving 
which encompass prevention, intervention and compensation measures63; 
Use the Guiding Principles for Active Ageing and Solidarity between Generations64 
and  the  active  ageing  index65,  which  monitors  older  people  in  employment,  their 
social  participation,  and  independent  living  and  the  opportunities  offered  by  the 
European Innovation Partnership on Active and Healthy Ageing66 to assess the extent 
to which older people can realise their potential. 

• 

• 

The Commission will support Member States by: 

• 

• 

• 

61 

62 

63 

64 
65 

66 

Improving  longitudinal  data  collection,  with  a  special  focus  on  children,  to  better 
inform  the  development  and  monitoring  of  social  policies  with  a  life  course 
approach.  Reporting  on  progress  in  the  Employment  and  Social  Developments  in 
Europe report; 

Testing the effectiveness of conditional cash transfers for supporting ECEC , through 
a research project financed by PROGRESS; 

Working  together  with  the  SPC  in  2013  on  a  report  on  long-term  care  policies  to 
support  healthy  and  active  ageing  and  raise  the  capacity  for  independent  living  of 
people of all ages, using all the potential of new technologies, including e-health, and 
monitoring  progress  towards  sustainable,  adequate  social  protection  against  long-
term  care  risks.  The  Commission  will  also  develop  a  "policy  makers'  manual"  for 
Member States to assist in designing long-term care strategies, based upon work that 
will  be  carried  out  in  2013-2014  by  the  Institute  for  Prospective  Technological 
Studies (IPTS) of the European Commission's Joint Research Centre (JRC).  

In 2002, at the Barcelona Summit, the European Council set the targets of providing childcare by 2010 
to (1) at least 90% of children between 3 years old and the mandatory school age and (2) at least 33% of 
children under 3 years of age 
By 2020, at least 95 % of children between four years old and the age for starting compulsory primary 
education should participate in early childhood education. Council Conclusions of 12 May 2009 on a 
strategic  framework  for  European  cooperation  in  education  and  training  (ET  2020),  Annex  I  to  the 
conclusions (OJ C 119, 28.5.2009, p. 7) 
Council  Recommendation  of  28  June  2011  on  policies  to  reduce  early  school  leaving,  OJ  2011/C 
191/01 
Council conclusions of 6 December 2012  
European Commission and UNECE (2013 forthcoming) Policy brief - Active Ageing Index, available 
from: http://europa.eu/ey2012 
The European Innovation Partnership on Active and Healthy Ageing’s target is to increase the average 
healthy  lifespan  of  EU  citizens  by  two  years  by  2020.  It  is  part  of  the  flagship  initiative  Innovation 
Union’ of the Europe 2020 strategy. 

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3. 

GUIDANCE FOR THE USE OF EU FUNDS 2014-2020 

The  EU  budget  should  be  "a  catalyst  for  growth  and  jobs  across  Europe,  notably  by 
leveraging productive and human capital investments".67 However, the share of EU resources 
allocated  by  Member  States  on  employment,  human  capital  development,  health  and  social 
policies - notably through the ESF - has decreased since 1989. This is why the Commission 
has proposed for the period 2014-2020 that at least 25% of cohesion policy funding should be 
allocated  to  human  capital  and  social  investment,  i.e.  investment  in  people  by  the  ESF. 
Moreover, it has proposed that at least 20 % of the total ESF resources in each Member State 
should  be  allocated  to  the  thematic  objective  ‘promoting  social  inclusion  and  combating 
poverty’. 

Over the 2007-2013 programming period, the European Social Fund has so far reached over 
50  million  people,  including  over  4.5  million  unemployed  and  5  million  inactive  people  in 
2011 alone. It did so by providing €
 75 billion to help people fulfil their potential by giving 
them  better  skills  and  better  job  prospects.  Its  programmes  have  helped  to  cushion  the 
negative impacts of the crisis, to preserve jobs and to prepare for an upswing. € 18 billion has 
been made available for social inclusion measures from the European Regional Development 
Fund, principally supporting education, health and social infrastructure investments. 
The  European  Structural  and  Investment  (ESI)  Funds68,  in  particular  the  ESF,  as  well  as 
PROGRESS 2007-2013, the Programme for Social Change and Innovation (PSCI) 2014-2020 
and the Fund for European Aid to the Most Deprived (FEAD) are important instruments for 
the  Member  States  in  implementing  the  strategy  set  out  in  the  Social  Investment  Package. 
Financial  support  from  cohesion  policy,  which  has  as  its  objective  the  strengthening  of 
economic,  social  and  territorial  cohesion  throughout  the  Union,  will  continue  to  be  an 
important  tool  during  the  programming  period  2014-2020  for  meeting  the  Europe  2020 
objectives,  together  with  the  necessary  reforms  and  modernisation  identified  in  this 
Communication. 

To  support  inclusive  growth,  the  Commission  has  urged  Member  States  to  ensure  that  their 
employment,  human  capital  development,  modernisation  of  public  services,  territorial 
investment and social inclusion policies reflect the CSRs and the  underlying analysis  of the 
main challenges identified in the SWDs that assess national reform programmes and stability 
programmes69.  Funding  under  the  European  Social  Fund70  can  be  complemented  by  further 
financing  from  the  ERDF,  notably  for  investing  in  health,  social,  childcare,  housing  and 
education  infrastructure,  as  well  as  support  for  physical  and  economic  regeneration  of 
deprived  urban  and  rural  communities.  These  investments  can  impact  social  policy  reform, 
like  the  desegregation  of  educational  facilities,  the  shift  to  community  based  care  and 
integrated housing policies. 
The Common Provisions Regulation71 (CPR) sets out the priorities to be financed from ESI 
Funds.  The  ESI  Funds  will  support  the  implementation  of  relevant  CSRs  and  of  national 

67 
68 

69 
70 

71 

Conclusions of the European Council (7-8 February 2013) 
European  Social  Fund  (ESF),  European  Regional  Development  Fund  (ERDF),  Cohesion  Fund, 
European Agricultural Fund for Rural Development (EAFRD), European Maritime and Fisheries Fund. 
http://ec.europa.eu/europe2020/index_en.htm  
See  Commission  Staff  Working  Document  –  Social  Investment  through  the  European  Social  Fund 
SWD(2013)44 
Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL, 
laying  down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social 
Fund,  the  Cohesion  Fund,  the  European  Agricultural  Fund  for  Rural  Development  and  the  European 
Maritime and Fisheries Fund covered by the Common Strategic Framework and laying down general 

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reform  programmes.  Progress  in  achieving  the  policy  objectives  will  be  followed  up  in  the 
framework of the European Semester. 

Member States can use the ESI funds to support the implementation of the policy orientations 
set  out  in  this  Communication,  including  through  social  innovation,  social  economy  and 
social entrepreneurship.72 A specific focus by the ESF – accompanied with ERDF support – 
on  social  innovation73  to  support  testing  of  innovative  approaches  and  their  up-scaling  will 
contribute to the development of more effective social policies. 

The  Commission  will  present  more  detailed  orientations  in  the  context  of  operational 
guidance to be published by mid-2013 on how Member States can best use the ESI funds to 
achieve  the  agreed  thematic  objectives.  This  guidance  will  contribute  to  the  realisation  of 
policy reform and sustainable and efficient public services. For example, in the area of child 
poverty, it will highlight which kind  of  interventions  would  be required in a country with a 
large  Roma  population,  low  provision  of  child  care  and  large  inequalities  in  educational 
outcomes.  Other 
childcare,  health, 
desinstitutionalisation, and active inclusion.  
In addition to the ESI Funds, the PSCI, Horizon 2020, COSME74 and the Health Programme 
also contain specific provisions to financially support social policy innovation. The ESF can 
scale up successful social policies tested in both the public and private sectors to mainstream 
policies. The FEAD will help Member States ensure that adequate livelihoods are secured by 
addressing  food  deprivation,  homelessness  and  material  deprivation  of  children.  Lastly,  EU 
resources can be complemented by resources from for instance the World Bank, the Council 
of Europe Development Bank and the European Investment Bank group. 

themes  will 

example  be 

innovation, 

for 

The Commission urges Member States to: 

• 

• 

• 

• 

72 

73 

74 

including  employment, 

Allocate  cohesion  policy  and  rural  development  resources  to  human  capital 
territorial 
development, 
inequalities,  active  and  healthy  ageing,  accessibility  of  social,  education  and  health 
services,  and  lifelong  learning.  Resources  should  be  adequate  to  implement  the 
structural  changes  as  proposed  by  the  CSRs,  taking  into  account  the  Europe  2020 
targets.  Ensure  that  the  interventions  supported  by  the  funds  duly  reflect  relevant 
CSRs and follow a social investment approach; 

inclusion, 

reducing 

social 

Address  the  multiple  needs  of  disadvantaged people, including those living in poor 
and isolated areas, with coordinated action by ESI funds; 

Seek  ways  to  complement  EU  resources  with  funding  from  the  World  Bank,  the 
Council of Europe Development Bank and the European Investment Bank group; 

Test  new  approaches  (such  as  ICT-enabled  innovation)  to  social  policies  including 
through  the  PSCI,  and  then  scale-up  the  most  effective  innovations  using  the  ESI 
Funds; 

provisions on the European Regional Development Fund, the European Social Fund and the Cohesion 
Fund and repealing Council Regulation (EC) No 1083/2006. 
See  Commission  Staff  Working  Document  –  Social  Investment  through  the  European  Social  Fund 
SWD(2013)44 
The  Commission  proposed  an  investment  priority  dedicated  to  the  social  economy  and  social 
enterprises in the Cohesion Policy Regulation 2014-2020. 
Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises  

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• 

Involve  stakeholders,  particularly  civil  society  organisations  close  to  the  target 
groups  for  social  interventions,  in  programming  and  implementation  and  facilitate 
their access to funds. 

The Commission will support Member States’ efforts by: 

• 

• 

• 

Developing  operational  policy  guidance  for  the  ESI  Funds  fully  reflecting  a  Social 
Investment  approach  by  mid-2013.  On  the  basis  of  information  sent by  Member 
States  in  compliance  with  the  arrangements  set  out  in  the  structural  funds 
Regulations, the Commission will monitor outputs and results in the implementation 
of  Programmes.  Should  implementation  give  rise  to  concern,  the  Commission  will 
take the matter up with Member States, within the procedural framework set by the 
CPR; 

Enabling more sharing of knowledge. In particular, the Commission will develop a 
knowledge  bank  with  Member  States  and  Eurofound  to  help  share  lessons  learned, 
including both policy lessons and good practices from the ESI Funds. It will support 
through  the  ESF  the  development  of  “poverty  maps”,  identifying  local  areas  of 
multiple  and  severe  disadvantage  to  ensure  that  interventions  impact  on  the  target 
population;  

Supporting  capacity  building,  through  the  ESF,  of  national  and  regional  authorities 
for 
social 
entrepreneurship. 

implementing  effective  policies 

the  promotion  of 

including 

4. 

TARGETED EU INITIATIVES 

In  this  section  the  Commission  presents  a  set  of  initiatives  that  are  referred  to  in  this 
Communication  and  that  are  key  to  ensure  a  targeted  and  integrated  approach  of  social 
investments. 

4.1.  Measures to stimulate funding in social investment 

The Commission will continue to provide support from the structural funds, notably the ESF, 
but new financing tools can be used and should be exploited with a view of easing budgetary 
consolidation by greater involvement of private funding: 

• 

Supporting 
Entrepreneurship Funds 

social  enterprises'  access 

to 

finance:  European  Social 

As  laid  out  in  the  Social  Business  Initiative,  social  entrepreneurs  play  a  crucial  role  in 
promoting social inclusion and investment in human capital. Social businesses need however 
easier access to private finance, to help support their activities and allowing them to expand. 
In  addition  to  proposing  a  support  fund  for  social  enterprises  as  part  of  the  Programme  for 
Social  Change  and  Innovation  starting  in  2014,  the  Commission  has  also  proposed  a 
regulation75 setting out a European Social Entrepreneurship Fund label to help investors easily 
identify funds that support European social businesses and access key information about the 
social  entrepreneurship  funds.  The  proposed  regulation  will  break  down  barriers  to 
fundraising  across  Europe  and  make  investments  simpler  and  more  efficient.  Further,  the 
Commission will develop a methodology to measure the socio-economic benefits created by 

75 

Commission Legislative Proposal – 'Proposal for a regulation of the European Parliament and Council 
on Social Entrepreneurship Fund.' COM(2011) 862, 7 December 2011 

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social  enterprises  and  organise  a  high-level  conference  early  2014  to  disseminate  good 
practices in supporting social entrepreneurship.  

• 

Exploring the use of new financial instruments 

Innovative financing of social investment from private and third sector resources is crucial to 
complement public sector efforts. Micro-financing can play an important role in this regard. 
The establishment of new small businesses is key for achieving the employment and inclusion 
targets of the Europe 2020 Strategy. However, one of the major obstacles to business creation 
is  lack  of  access  to  finance,  especially  microcredit.  The  Commission  has  proposed  a 
continuation  of  the  Progress  microfinance  facility  under  the  Programme  for  Social  Change 
and Innovation with a budget of around EUR 92 million, starting in 2014. This will finance 
capacity-building for microcredit providers and facilitate financial support to people wanting 
to start their own small business, but having difficulties securing a traditional loan.  

• 

Social Impact Bonds 

Social  Impact  Bonds,  which  incentivise  private  investors  to  finance  social  programmes  by 
offering  returns  from  the  public  sector  if  the  programmes  achieve  positive  social  outcomes, 
are amongst other avenues to be explored. The Commission will support Member States by 
facilitating the exchange of experiences.  

4.2. 

Support adequate livelihoods/ Improve awareness of social rights 

The Commission will make sure that the provisions to protect those who are most in need are 
implemented  and  will  improve  information  to  vulnerable  consumers  and  provide  targeted 
assistance to people in disadvantaged situations to make informed choices: 

• 

Ensuring adequate livelihoods 

Most  Member  States  have  some  sort  of  minimum  income  scheme.  The  adequacy  of  these 
schemes can, however, often be improved. The level should be high enough for a decent life 
and  at  the  same  time  help  people  to  be  motivated  and  activated  to  work.  The  Commission 
will, as part of the European Semester, monitor the adequacy of income support and use for 
this  purpose  reference  budgets  once  these  have  been  developed  together  with  the  Member 
States. 

• 

Administrative capacity building and streamlining to provide one-stop shops 

The one-stop-shop model contributes to the efficiency and effectiveness of social protection 
systems. 'one-stop shops’ simplify the organisation, enhance delivery and increase take-up of 
services.  This  approach  improves  accessibility  of  user-friendly  information,  coordination 
among  different  levels  of  government  and  capacity  that  could  reduce  the  administrative 
burden on both customer and provider. The Commission will support Member States through 
facilitating  the  exchange  of  good  practices  amongst  others  through  the  "knowledge  bank" 
developed  together  with  Eurofound.  Funding  from  the  ESF  will  be  available  under  the 
Thematic Objective of "Enhancing institutional capacity and efficient public administration". 
The Commission will pay a particular attention to these approaches when further assessing the 
implementation of active inclusion strategies by the Member States.  

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• 

Enhancing financial inclusion 

Payment  accounts  are  a  vital  tool  for  people  to  participate  in  the  economy  and  society. 
Salaries,  benefits  and  utility  bills  are  more  and  more  often  paid  via  bank  accounts.  A  bank 
account is also essential for access to other basic financial services, such as consumer loans, 
mortgages, life insurance, electronic payments and investment. To this end, the Commission 
is proposing a Directive on access to payment accounts with basic features. 

• 

Protecting people against financial difficulty 

The financial crisis has shown the damage that irresponsible lending and borrowing practices 
can  cause  to  consumers  and  lenders.  Consumers  purchasing  a  property  or  taking  out  a  loan 
secured  by  their  home  need  to  be  adequately  informed  about  the  possible  risks,  and  the 
institutions  engaging  in  these  activities  should  conduct  their  business  responsibly.  The 
Commission  has  published  a  working  paper  on  national  measures  and  practices  to  avoid 
foreclosure procedures76. In addition, the Commission is seeking to enhance the protection of 
consumers through a proposed directive on credit agreements related to residential property. It 
will also publish in early 2013 a study identifying and analysing the different legal techniques 
and best practices to enhance the protection of the consumers. These initiatives are all part of 
a preventive approach to mitigating financial distress and confronting homelessness.  

• 

Energy Efficiency 

The  new  directive  on  energy  efficiency77  encourages  Member  States  to  include  socially-
oriented requirements in their national schemes and takes into account the specific needs of 
disadvantaged people and helps addressing energy poverty by providing for smart meters and 
informative bills offering vulnerable consumers with clear, credible and timely information on 
their energy consumption as well as on concrete opportunities to reduce it.  

• 

Improving access to information for citizens  

Accessible  information,  such  as  on  job  search  services,  unemployment  benefits,  child 
allowances,  healthcare,  or  student  grants,  is  essential  for  equal  opportunities  and  citizens' 
participation in the economy and society. To facilitate citizens' access to such information, the 
proposed  Directive  on  the  accessibility  of  public  sector  bodies'  websites78  will  ensure  full 
accessibility  of  a  set  of  public  sector  websites  to  all  citizens,  including  persons  with 
disabilities and the elderly. Further, the Commission will provide people with more accessible 
information on their social rights through user-friendly Social Protection Guides and will help 
set up services  for  people to keep track of their pension rights. In  addition the  Commission 
will support better application and enforcement of free movement rights through a proposed 
Directive to be presented in the first half of 2013. 

4.3. 

Investing in Children / Early Childhood Education and Care 

Further  develop  the  potential  of  early  childhood  education  and  care  (ECEC),  using  it  as  a 
social  investment  to  address  inequality  and  challenges  faced  by  children  through  early 
intervention: 

76 

77 

78 

Commission Staff Working Paper – 'National  measures and practices to avoid foreclosure procedures 
for residential mortgage loans'. SEC(2011) 357, 31 March.2011. 
Art.  7(7a)  and  Art.  10  in  Directive  2012/27/EU  of  the  European  Parliament  and  of  the  Council  on 
energy  efficiency,  amending  Directives  2009/125/EC  and  2010/30/EU  and  repealing  Directives 
2004/8/EC and 2006/32/EC. 
Commission  Legislative  Proposal  -  "Proposal  for  a  Directive  of  the  European  Parliament  and  of  the 
Council  on  the  accessibility  of  public  sector  bodies'  websites".  COM(2012)  721  final,  3  December 
2012. 

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• 

Improving access to childcare 

Access to early childhood education and care (ECEC) has positive effects throughout life, for 
instance  in  terms  of  preventing  early  school  leaving,  improving  employment  outcomes,  and 
facilitating  social  mobility.  ECEC  is  key  to  addressing  challenges  faced  by  disadvantaged 
children by providing early intervention. Furthermore, it is essential in removing barriers to 
the  labour  market  participation  of  parents.  The  Recommendation  on  Investing  in  Children 
calls for making ECEC more accessible as part of an integrated strategy to improve children’s 
opportunities,  in  order  to  reach  the  Barcelona  targets.  Further  to  this,  the  Commission  is 
launching  a  study  reviewing  how  conditional  cash  transfer  schemes  can  support  the  use  of 
ECEC.  The  European  Commission  and  the  Organisation  for  Economic  Co-operation  and 
Development (OECD) are stepping up their co-operation on policy initiatives to improve the 
quality  and  accessibility  of  early  childhood  education  and  care  across  Europe  through 
identification of best practices.  

• 

Reducing early school leaving 

Early school leavers are far more likely to end up unemployed or at risk of poverty and social 
exclusion. The Europe 2020 Strategy sets out a target to reduce early school leaving to below 
10%. However, 13.5% of young people still leave school prematurely. Reducing early school 
leaving  is  amongst  the  investment  priorities  of  the  European  Social  Fund,  which  Member 
States  can  use  to  develop  policies  in  line  with  the  integrated  strategy  set  out  in  the  Council 
Recommendation79  of  2011,  including  through  prevention  measures,  intervention  measures 
and  measures  aimed  at  re-engaging  people  who  have  dropped  out  of  education.  The  new 
“Erasmus for All” programme80 for education, training, youth and sport reflecting the need for 
increased EU investment in education and training and its further implementation can support 
inclusive education initiatives. 

5. 

CONCLUSION – THE WAY FORWARD  

The  crisis  has  underlined  both  the  interdependence  of  EU  economies  as  well  as  the  great 
divergence  in  the  capacity  of  labour  market  institutions  and  welfare  systems  to  respond  to 
shocks. It also confirmed the role of social policy and budgets for the overall stability of the 
EU. Although social policies are primarily the competence of Member States, the EU supports 
and complements the activities of the Member States. 

Stronger economic governance and enhanced fiscal surveillance in Member States is now in 
place. This must be accompanied by improved policy surveillance in the social areas which 
over time contributes to crisis management, shock absorption and an adequate level of social 
investment across Europe. This also needs to be addressed in the on-going discussions on the 
social dimension of the EMU. 

The  Social  Investment  Package  aims  at  reorienting  Member  States'  policies  towards  social 
investment where needed,  with  a  view to ensuring the adequacy and sustainability of social 
systems  while  linking  these  efforts  to  the  best  use  made  of  the  EU  funds,  notably  the  ESF. 
The Commission calls on Member States to pursue the actions and directions set out in this 
Package along the following three main axes: 

79 
80 

Council Recommendation (2011/C 191/01) on policies to reduce early school leaving  

Commission Communication – 'Erasmus for All: The EU Programme for Education, Training, Youth 
and Sport' COM(2011)787 final, 23 November 2011. 

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1. Strengthening social investment as part of the European Semester 

• 

• 

• 

Member States are urged to strengthen the involvement of relevant stakeholders at all 
levels,  most  notably  social  partners  and  civil  society  organisations,  in  the 
modernisation of social policy as part of the Europe 2020 Strategy. 

Member  States  are  urged  to  reflect  in  their  National  Reform  Programmes  the 
guidance provided in this Social Investment Package with a particular attention to: 

• 

• 

Progress  on  putting  an  increased  focus  on  social  investment  in  their  social 
policies, particularly on policies such as (child)care, education, training, active 
labour market policies, housing support, rehabilitation and health services. 

The implementation of integrated active inclusion strategies, including through 
the  development  of  reference  budgets,  increased  coverage  of  benefits  and 
services, and simplification of social systems through for instance a one-stop-
shop approach and avoiding proliferation of different benefits.  

The  Commission  will  address  social  protection  reform  and  the  increased  focus  on 
social  investment  and  active  inclusion  in  Country  Specific  Recommendations  and 
subsequent  European  Semesters.  The  Commission  will  moreover  support  Member 
States  through  enhanced  monitoring  of  outcomes,  and  will  underpin  this  together 
with  the  European  Statistical  System  through  improved  and  timelier  statistics81  on 
poverty and outcomes of social and health82 policies.  

2. Making the best use of EU funds to support social investment 

• 

• 

Member States are urged to duly take into account the social investment dimension 
in the programming of the EU funds and the ESF in particular for the period 2014-
2020.  This  includes  exploring  innovative  approaches  to  financing  and  financial 
engineering,  drawing  lessons  from  experiences  such  as  those  on  Social  Investment 
Bonds, microfinance and support to social enterprises.  

The  Commission  will  actively  support  Member  States  in  their  programming  based 
upon  the  guidance  contained  in  this  Package  and  further  operational  thematic 
guidance e.g. on social innovation, deinstitutionalisation, and health. 

3. Streamlining governance and reporting 

• 

81 

82 

Member  States,  through  the  relevant  Committees,  are  urged  to  make  proposals  for 
strengthening  the  social  dimension  of  the  Europe  2020  Strategy,  with  a  better 
connection  to  existing  processes  such  as  the  open  method  of  coordination  and 
enhanced  reporting  on  the  performance  of  Member  States'  social  systems.  The 
Commission will further strengthen guidance and monitoring instruments, taking into 
account the existing macroeconomic, fiscal and employment governance tools, with 
a view to limit and address divergences related to social policies. Benchmarking and 

Improving the standard SILC data delivery, delivering variables on deprivation and financial situation 
assessment  at  the  end  of  the  reference  year,  collecting  data  on  monthly  household  income  faster  and 
possibly on an intra-annual basis, and exploring the possibility to develop a yearly module on coping 
strategies. 
By using the European Community Health Indicators (ECHI) 

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performance  monitoring  will  be  part  of  this  exercise,  building  on  the  Social 
Protection Performance Monitor.83  

• 

The Commission will work closely together with Member States in the context of the 
relevant Council formations, the SPC and other relevant committees to support these 
reflections  and  will  continue  the  dialogue  with  all  relevant  stakeholders,  notably  in 
the context of the Annual Convention of the Platform against Poverty and Exclusion. 

83 

Council  document  13723/12:  The  Social  Protection  Performance  Monitor  depicts  statistically 
significant annual deviations ('social trends to watch') in key indicators agreed as part of a dashboard of 
social protection indicators and triggers thematic surveillance on social trends to watch 

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