Europe is facing enormous challenges. It is all the more important now to strengthen the stability anchors of the European Union – this also includes the European Social Fund (ESF). The study “Further Development of the European Social Fund in the Funding Period 2028-2034” provides concrete recommendations for action.
Against this background, on February 5, 2025, high-ranking representatives from Germany, the EU Commission and the EU member states met in Brussels under the title Quo vadis ESF? to discuss the future of the ESF and the Multiannual Financial Framework (MFF).
Specifically, it was about the questions: What’s next for the European Social Fund (ESF)? What measures are necessary to make it fit for the future at both the national and European level? How can bureaucracy be reduced, legal obstacles removed, administrations streamlined and more digitization advanced?
The Federal Ministry of Labor and Social Affairs (BMAS) has been discussing these issues with the federal states in a joint working group for two years and commissioned the study. This study examines the strengths and weaknesses of the ESF in Germany and at the European level.
The entire report can be found here.
Download the report.
Summary of the Study on the Future of the European Social Fund (ESF) 2028-2034
Background and Objectives
The European Social Fund Plus (ESF+) is a key instrument in the European Union’s cohesion policy, aimed at promoting employment, education, and social inclusion. However, the ESF faces challenges such as decreasing funding volumes, increasing administrative complexity, and evolving legal requirements. The study evaluates how to improve the administration of ESF programs in Germany during the 2028-2034 funding period, balancing high-quality management with available resources. It also proposes recommendations to simplify processes at both European and national levels. [5]
Key Findings
- Structural Design and Implementation:
- ESF+ programs are highly heterogeneous in terms of objectives and priorities, with significant variation between federal and regional (Länder) levels. Larger funding volumes correlate with more complex administrative structures and higher management costs, often reaching 10-12% of total funding. [6][9]
- Administrative complexity stems from the need to collect extensive data, develop tailored IT systems, and manage overlapping responsibilities among stakeholders. [6][9]
- Administrative Challenges:
- Data Collection and IT Systems: Excessive data requirements, many of which lack relevance to program outcomes, increase administrative burdens. Independent systems or complex interfaces are often needed due to ESF-specific requirements. [6][9]
- Audit System: The ESF audit process is overly complex, involving multiple national and European audit bodies. This leads to “gold plating” practices where stricter-than-necessary rules are applied, creating inefficiencies. [6][9]
- Framework Conditions: Delays in providing legal regulations and IT system readiness disrupt program implementation. Lack of continuity in staff, systems, and legal frameworks further hampers efficiency and innovation. [7][11]
- Impact on Beneficiaries:
- Administrative burdens trickle down to funding recipients, increasing bureaucracy and reducing the attractiveness of ESF programs. [11][12]
- Scenarios for Change:
- Disruptive Scenario: Proposes a complete overhaul of the legal framework, simplifying data collection, auditing, and thematic focus while fostering flexibility to respond to crises. [13]
- Gradual Scenario: Suggests targeted simplifications, such as reducing data and audit requirements, while maintaining current structures. [15]
- Status Quo Scenario: Retains existing structures but risks inefficiency and stagnation. [16]
Recommendations
At the European Level:
- Focus on Core Objectives:
- Prioritize education, employment, and social inclusion while reducing links to unrelated strategies. This would streamline program management and enhance the ESF’s profile. [21]
- Simplify Administrative Requirements:
- Reduce data collection to essential elements and align IT systems across funding periods. Eliminate redundant rules and reporting obligations. [21][28]
- Streamline the audit system to focus on systemic evaluations rather than granular control, reducing duplication and fostering trust-based collaboration. [21][33]
- Increase Flexibility:
- Develop faster procedures to adjust programs during crises without creating new administrative layers. [21]
- Stabilize Key Requirements:
- Provide timely legal frameworks (at least one year before the funding period) and avoid frequent changes to regulations. Introduce a “basic regulation” that remains stable across multiple funding periods. [21][24]
- Staggered Requirements:
- Tailor audit and administrative requirements based on funding levels and regional contexts to reduce unnecessary burdens in low-intervention regions. [21][23]
At the National Level (Germany):
- Hone Program Content:
- Clearly separate federal and Länder priorities to reduce overlap and improve visibility. Introduce an “administrability check” to evaluate the cost-benefit ratio of funding measures. [34][35]
- Standardize Processes and Knowledge Management:
- Further standardize documents, procedures, and IT systems to ensure consistency and reduce administrative complexity. Foster dialogue and training to address demographic changes and staff turnover. [35]
- Enhance Coordination:
- Strengthen cooperation between federal and Länder authorities to harmonize processes and share best practices. Expand collaboration with audit authorities to ensure early alignment on audit requirements. [36]
- Support Innovation:
- Balance administrative simplicity with the need for innovative, flexible funding measures, ensuring ESF remains a driver of regional development. [34][35]
Overall Assessment
The study emphasizes that without significant simplification, the ESF’s administrative complexity may hinder its effectiveness and attractiveness. A combination of gradual simplifications at the European level and targeted adjustments at the national level offers the most realistic path forward. This approach balances the need for efficiency with the ESF’s mission to foster social and economic cohesion. [12][20][21]
1. Impact on the EU Labor Market
- Administrative Complexity as a Barrier to Employment Policy Implementation
The report highlights that the administrative complexity and high management costs of the ESF (10-12% of total funding) restrict the efficient allocation and utilization of funds. This has the following effects:- Reduced Policy Implementation Efficiency: Delays in providing legal frameworks and IT system readiness lead to postponed project approvals and implementation, affecting the timely launch of employment promotion initiatives. [7][11]
- Decreased Fund Attractiveness: Burdensome administrative requirements and an overly complex audit system discourage potential beneficiaries (e.g., businesses, educational institutions) from applying for ESF funding, weakening its impact on the labor market. [11][12]
- Decreasing Funding Volumes
The steady decline in ESF funding, coupled with unchanged administrative burdens, leads to:- Weakened Support for Vulnerable Groups: Projects targeting unemployed individuals, low-skilled workers, and migrants may face cuts, hindering goals of social inclusion and employment promotion. [6][9]
- Regional Development Imbalances: Reduced funding may concentrate resources in more developed regions, exacerbating employment challenges in less developed areas. [18][20]
- Stifled Innovation
The report notes that to ensure “audit compliance,” project managers tend to adopt “low-risk” strategies, prioritizing standardized projects over innovative ones. This results in:- Stagnation in Labor Market Innovation: Reduced support for emerging industries and digital skills training, limiting the labor market’s adaptability and competitiveness. [6][34]
2. Impact on Individual Professionals
- Reduced Career Development Opportunities
- Fewer Training and Education Programs: With funding cuts and administrative complexity, skill development programs, especially for low-skilled workers, may be reduced, limiting opportunities for professionals to acquire new skills and enhance their employability. [10][11]
- Narrower Program Coverage: Funding may focus on large-scale, standardized projects, leaving fewer opportunities for tailored programs targeting specific groups, such as migrants or long-term unemployed individuals. [6][34]
- Administrative Burden on Individuals
- Complex Application Processes: The report highlights that the burdensome application and data collection requirements may deter SMEs, educational institutions, and individuals from participating in ESF programs, causing professionals to miss opportunities for skill enhancement or entrepreneurship. [6][28]
- Regional Disparities in Career Opportunities
- Fewer Opportunities in Underdeveloped Regions: With funding allocations favoring more developed regions, professionals in less developed areas may face reduced support and job opportunities, increasing regional employment inequalities. [18][20]
3. Mitigation Measures
- At the EU Level
- Simplify Administrative Processes: Reduce data collection and audit requirements, streamline IT systems, and ensure efficient and transparent fund allocation. This would increase the attractiveness of funding and expand project coverage, benefiting the labor market as a whole. [21][28][33]
- Focus on Core Objectives: Prioritize education, employment, and social inclusion, while minimizing links to unrelated strategies. This would ensure that funds are directly used for projects that promote employment and skill development. [21]
- Enhance Flexibility: Develop mechanisms to quickly adjust programs during crises (e.g., economic recessions or rising unemployment), avoiding the creation of unnecessary administrative layers. [21]
- Stabilize Key Requirements: Provide timely legal frameworks (at least one year before the funding period begins) and avoid frequent regulatory changes. Introduce a “basic regulation” that remains stable across multiple funding periods. [21][24]
- Staggered Requirements: Tailor audit and administrative requirements based on funding levels and regional contexts, reducing unnecessary burdens in low-intervention regions. [21][23]
- At the National Level (e.g., Germany)
- Clarify Program Content: Clearly separate federal and regional (Länder) priorities to reduce overlaps and improve visibility. Introduce an “administrability check” during program design to evaluate the cost-benefit ratio of funding measures. [34][35]
- Optimize Project Design: Focus on funding scalable, easy-to-implement programs while reserving a portion for innovative pilot projects. [34][35]
- Standardize Processes and Knowledge Management: Unify documents, procedures, and IT systems to reduce administrative complexity and improve implementation efficiency. [35]
- Strengthen Coordination: Enhance cooperation between federal and regional authorities to harmonize processes and share best practices. Expand collaboration with audit authorities to align audit requirements early. [36]
- For Individual Professionals
- Proactively Engage in Skill Development: Professionals should actively seek ESF-related training and education programs, particularly in digital and green economy sectors, which are expected to dominate future labor market demands.
- Stay Informed on Policy Changes: Keep track of ESF policy adjustments and funding directions to seize opportunities that align with career development goals.
- Explore Alternative Resources: If ESF programs are insufficient, professionals can seek other national or regional career support initiatives offered by local governments or NGOs.
Conclusion
The report demonstrates that the administrative complexity and declining funding of the ESF have significant impacts on both the EU labor market and individual professionals. However, by simplifying processes, focusing on core objectives, and increasing flexibility, these challenges can be mitigated. At the same time, professionals must adapt proactively, leveraging available resources to enhance their competitiveness in an evolving labor market.