THE EUROPEAN SOCIAL FUND: A VERY SPECIFIC CASE INSTRUMENT OF HRD POLICY
Eduardo Tomé
Universidade Lusíada
eduardo.tome@clix.pt
Abstract: This paper reviews the ESF intervention in the European labor market as an
instrument of HRD with socio-economic concerns (we call this the economic logic) but also
with an international scope (this being the absorption logic). The analysis is divided in four
phases: 1958-71 (2.2), 1972-1983 (2.3), 1984-9 (2.4) and 1990 onwards (2.5). In the current
phase several sub-phases existed already: 1990-3, 1994-9, 2000-6, 2007-13. Each phase is
defined by some basic legislative guidelines on eligibility, type of administration, regional
scope, size of Budget (relative and absolute), supported operations and evaluation. We
conclude that an “absorption logic” dominated the economic and social intentions of the ESF
of the “economic logic”. We suggest that in 2020 an overall change in the ESF will have to take
place; more money, more flexibility, and central governance from a EU stand point compared
to the Department of Labor in the USA.
Keywords: European Social Fund, Active Labor Market Policies, European Union, Evaluation
Introduction:
The European Union (EU) is a very complex case of international integration. Indeed, the EU is
an unique case in the Human history of the making of a new socio-economic and political
reality by integrating several pre-existing countries (first 6, now 27, and counting). That
integration is made by defining “European” policies in almost all the areas of the socialeconomic spectrum. Human Resource Development (HRD) has been one of the areas in which
the EU always had a policy (European Commission, 2012).
In fact the European Social Fund (ESF) exists since the beginnings of the European integration
experience, having been created by the Treaty of Rome in 1958. The evolution of the ESF
matches the evolution of the EU itself (see section 2). It should be noted however that the EU’s
HRD policies are not carried only by the ESF itself. In fact those policies have been carried out
by three kinds of instruments:
a) the European Social Fund (ESF) itself;
b) some programs defined by the European Commission related to Education (as namely
the Socrates Program, the Erasmus Program) or Training (as the PETRA, COMMET,
EUROTECNET and HELIOS programs in the eighties, and the Socrates I and II programs
since the nineties) which were not funded by the ESF; those programs are based in
partnerships between member states, whereas the ESF relates to national operations;
c) finally, the European Commission defined some 13 specific programs due to address
problems that were felt to be common to the European Union as a whole like regional
development (INTERREG), rural development (LEADER+), urban development (URBAN),
or the integration of disabled people (EQUAL). Those programs were named
“Community Initiatives” (CI) and were funded by the three Structural Funds.
1
In this paper we decided to focus in the ESF only by a question of dimension. We think that the
ESF is specific and important enough to require a paper to be analyzed. In further studies, we
will try to analyze the ESF coupled with the other two instruments listed as b) and c). But for
now we will only deal with the ESF.
Quite significantly and importantly, all the three types of programs just mentioned were
conducted with the aim of supporting the EU labor market in the view that the market forces
would generate some troubles (unemployment, exclusion, among them) which should be
minimized by an intervention of the political powers of the EU itself. Amazingly however, in
2012 the EU is facing serious HRD problems, with high levels of unemployment and skills
shortages.
We don’t know about any work in which the already 60 years of ESF experience was analyzed
or summarized, in HRD terms. Accordingly in this paper, first we define the broad economic
theories that can be used to analyze the ESF; those theories relate to Human Resources
Development (1.1) and to International Aid (1.2). After that, we define the methodology to
analyze the evolution of the ESF, since its beginnings in 1958 to the current situation (2.1). The
history is divided in four phases: 1958-71 (2.2), 1972-1983 (2.3), 1984-9 (2.4) and 1990
onwards (2.5). In the current phase several sub-phases existed already: 1990-3, 1994-9, 20006, 2007-13 (European Commission, 1998). Each phase corresponds to a different
administrative setting but also to different eligibility rules, programs, recipients and impacts.
The findings will be discussed in section 3. Finally we present the paper’s conclusions, (4.1),
limitations (4.2) and suggest inroads to further research (4.3).
1 Basic Theories
1.1 The HRD perspective
The ESF, the Erasmus programs, the Socrates programs and the Community Initiatives, relate
to the investment in training, education, R&D and creation of employment. Those investments
are explained, from a private perspective, according to the Human Capital Theory (HCT).
(Becker, 1993). The HCT theory may be addressed in a Microeconomic or in a Macroeconomic
perspective.
From a microeconomic point (Chapman, 1993), of view benefits (measured in wages,
employment, productivity, competences, exports…) should out-weight costs (related with
hours spent, training materials, decrease in productions, fees…). Individuals and companies
should invest in HRD when the perceived benefits out-weight the costs. The model is of course
dynamic and surprises happen. Using the HCT coupled with some complementary on
discrimination (Spence, 1975), dualization (Reynolds and al, 1993) and class struggle (Bowles
and Gintis, 1975) provide a improved microeconomic description of the HRD markets.
Specifically, some people receive more rewards and opportunities than they should because
they send the right signals; conversely the people that emit the wrong signs receive unfair
rewards and less opportunities. Also the perfectly competitive market of SMEs tends not to
value so much training as in the case of big companies that evolve in as an oligopoly; SMEs
2
invest less and reward less training than big companies; additionally big companies have a
potentially rewarding internal market with high promotion possibilities. Finally it may be said
that
The role of the state is explained because a considerable number of market failures exist that
call for the private intervention. Those market failures relate to externalities, lack or
asymmetry of information, risk, poverty, among others (Middleton and al, 1991). In order to
solve those market failures the State may have an intervention, providing funds, producing or
building private training capacity. Other fourth hypothesis is to eliminate the inefficiency in the
relevant market: labor market, capital market or technological market (Middleton and al,
1991). The benefits of any HRD intervention are scientifically evaluable by control group
methods (Heckman, Lalonde and Smith, 1999).Society should support the public policies
because they create a social good. However if public failures are bigger than the market
failures, and the cost of intervention is higher than its benefit, the public intervention should
stop.
At a macro level there the quantity of HRD investments made in different societies define low,
middle and high equilibria (Ashton and Green 1996, Schultz, 1961). In a low equilibrium, low
investments are made by people because only low skilled jobs are offered by the
organizations, and vice versa; this vicious cycle implies that productivity, skiils and investments
are all low; this pattern exists in underdeveloped countries. On the contrary in affluent
societies, the investment in skills is high and the jobs offered require high qualifications, for
highly productive people; therefore a virtuous cycle of investment exists. Finally, medium level
equilibria exist in emerging countries. In these countries, the level of investment increases and
at the same time the productivity also becomes higher; those to factors lead to an increase in
the level of skills. At a Macro level, the presence of the State in the economy is explained by
the need to break the vicious cycle which is characteristic of a low equilibrium in order to
transform the society in high equilibrium. However there is always the possibility of an over
investment by the State, which would result probably in migration to countries with a higher
level of equilibrium.
1.2 The international perspective
The ESF may be assimilated to other form of public support to HRD given that the funds come
from a public budget. We will call the theoretical ideas expressed in 1.1 that support the public
interventions in the HRD market as “economic logic”.
However a very important qualification must be made to this first idea. In fact the ESF
operations are funded by the EU budget and by the Member State (MS) the two shares have
varied considerably in time and with the MS concerned; in some countries the ESF share
attains 75%, in others it is only 33%. Anyway, the decisive element in the situation is that the
EU share is seen as a gift from abroad by the MS, and the level of the gift increases with the
increase of the level of the ESF share. Consequently at the core of the EU HRD policies there is
an element of foreign aid. It is therefore possible to assimilate the HRD EU policy to foreign aid
efforts as those implemented by the World Bank, some NGOs or even the Marshall Plan after
WWII. Furthermore that element results in the fact that the spending of the available money
3
by the MS is seen as a victory. We will call this fact the “absorption logic”. According to that
logic a higher cost of the operations means more benefits to the country.
Given that the economic logic would recommend at least a maximization of benefits
(measured in future impacts) when compared with the program costs, the two logics may
therefore collide. This collusion is the decisive fact when analyzing the EU HRD policies as
carried by the ESF.
2. Methods, and analysis
2.1 Methods
The ESF history is divided in four phases, corresponding to four different administrative
setting: 1958-71 (2.2), 1972-1983 (2.3), 1984-9 (2.4) and 1990 onwards (2.5). ). In the current
phase several sub-phases existed already: 1990-3, 1994-9, 2000-6, 2007-13. Each phase is
defined by some basic legislative guidelines on eligibility, type of administration, regional
scope, size of Budget (relative and absolute), supported operations and evaluation. The
summary of the four phases is presented in Table 1.
2.2 Phase 1: 1958-70.
In these first years the ESF was ruled by articles 123 to 128 of the original Treaty of Rome
(European Commission, 1958). The guidelines expressed by the original Treaty of Rome were
object of further legislation in 1960 (European Commission 1960), and effectively ruled the ESF
until 1971.
The main facts that define this phase are the following:
a) Eligibility: During this phase the ESF only supported unemployed people; those
people had to be enrolled in operations of reconversion of people, reinstallation of
people or reconversion of companies (European Commission, 1958).
b) Administrative setting: The support was only awarded in retrospect, meaning that
the funds were only awarded after the completion of the operations and if the
person was employed (European Commission, 1960).
c) Budget; In practice the ESF budget was amounted to a mere 400 Million ECUs for
the 14 years (European Commission 1991 ); this consisted in around 3% of the EU
budget (European Commission 1997).
d) Supported: around 2 million people were supported. The vast majority of the
operations regarded the reconversion of individuals (97% of the money and 64% of
the people) and the remaining was spent on the reinstallation of people (Coelho,
1987).
e) Main beneficiaries: Germany received 44% of the support, Italy 36% and France
13% (Coelho, 1987, 17).
f) Evaluation: The economic evaluation was made comparing the share of each
country in the awarded funds with the rates of funding; the fact that only
operations that in which the unemployed person had found a job were funded
4
guaranteed a certain measure of success in the investment. The funding of the ESF
operations was defined by a fixed rule: 32% for Germany and France, 20% for Italy,
8 for Belgium, 7 for the Netherlands and 1 for the Luxembourg . Comparing with
the shares in the benefits, we may therefore conclude that even if the ESF was
conceived to support a low income region with higher levels of unemployment
than the others (Italy with a surplus of 16%) the region who knew best how to
make proposals also profited a lot from the operations (Germany with a surplus of
12%).
Table 1 – ESF: summary of the four phases
Phas
e
Years
Eligibility
Administratio
n
Beneficiarie
s
Size of
Budget and
authorization
s
2% ;
400 Million
Euros in 14
years.
Operations
Evaluation
I
195871
Unemployment
,
Ex-post
Germany
received
44% of the
support,
Italy 36%
and France
13% (
Reconversio
n of people
(64%) and
reinstallatio
n of people
(36%).
UK, Italy in
absolute
terms;
Ireland in
relative
terms.
4%; 1973-7:
410 MEcus
1978 -1983:
1100 MEcus
Regions,
youth and
migrants
Italy (16% of
net profit)
Germany
12% of net
profit
funded by
France
(-19%. )
Horse sense
(Laffan,
1985)
II
197283
Labor force:
agriculture and
textile sectors,
migrants, adult
women; young
people.
50%
advancement,
Individual
operations
III
19849
Young people
50%
advancement,
Individual
operations
UK, Spain
Italy, in
absolute
terms;
Ireland and
Portugal in
relative
terms
UK. Italy,
Spain and a
increasing
importance
of Germany
until 2004.
Poland,
Germany
and Spain in
2007-13.
Portugal in
relative
terms.
5%;
1984-9: 2600
MEcus
Young
people
Youth
Training
Scheme (UK)
Cour de
Comptes
(EU)
IV
1990on
ward
s
Regional
objective
linked with
cohesion and
competitivenes
s for regions
with GDP per
head less than
75% of EU
average
National
Programs and
local
operations
ruled by
European
guidelines
From 7.5% to
10% of; 20
biilon in
1989-93, 40
billion in
1994-9, 60 in
2000-6 and
75 billion in
2007-13.
Multitude of
purposes
and groups.
Evaluation as
a part of
management
. Legitimistic
practices.
SOURCE: Annual Reports of the ESF and European Commission data.
2.3 Phase 2: 1972 – 1984:
When the economic crisis of the seventies of last century began, the ESF had to adapt itself.
The main ruling of that phase was Decision 71/66/EEC from the European Commission on the
European Social Fund (European Commission, 1971).
5
The main facts that define this phase are the following:
a) Eligibility: specific groups of the labor force were targeted by specific decisions foressen
by article 4 of decision 71/66/EEC: workers from the agriculture and textile sectors,
migrants, adult women who wanted to be reinserted in the labor market and young
people with less than 25 years of age; these eventual groups were joined by other
permanent targets (European Commission, 1971): handicapped, groups of companies to
be reconverted, operations of technical progress and regions with low GDP per head.
b) Administrative setting: the support began to be given with an advancement of 50% and a
payment of the remaining part after the conclusion of the operation (European
Commission, 1971);
c) Budget: the annual budget of the ESF rose to attain 4% of the EU budget (European
Commission 1997) and the annual figures went up from 182 MEcus in 1973 to 1897 MEcis
in 1983 (Annual Reports on the ESF from 1973 to 1983).
d) Support: the main domains of intervention were related to regional support (40% of the
funds and 30% of the people), the young people (30% of the funds and 40% of the people)
and migrants (20% of the people) (Annual Reports on the ESF, 1973-83).
e) Main Beneficiaries: In 1975 the European Fund for Regional Development was funded and
from 1978 to 1983 those priority regions were awarded 50% of the available funds. Those
regions were the following; Ireland, Northern Ireland, the Dom-Tom Territories of France,
the Italian Mezzogiorno and Groeneland (European Commission, 1978); accordingly, the
UK and Italy received around 30% of the funds, France 17% and Ireland 8% (see Table 2,
Annual Reports). However in relative terms Ireland was far away in front with an average
per capita of 230 Ecus, followed by Italy with 50 Ecus, the UK with 42 and Denmark with
38 (Annual Reports on the ESF 1973-83);
f) Evaluation: two very important new facts occurred; firstly, there was more difficulty in
obtaining the funds: in this phase the amount of available funds was fixed annually and a
cutting procedure was performed, meaning that from 1978 to 1983 only 57% of the
demands were funded (Annual Reports); secondly, it was more difficulty to assess any
impact of the intervention; no evaluation procedure existed other than the numbering of
persons supported and funds awarded; the approval and evaluation of projects was made
having in mind the previous contact with the entities (Laffan,1983. 405).
This phase is summarized in the following Table 2:
Table 2: ESF in Phase 2 (1972-83): The Basic Numbers
Year
Authorizations
Payments
1973
182
269
1974
254
1975
372
1976
1977
Regions
Young
Migrants
UK
Italy
France
Ireland
57
44
32
10
292
62
72
50
17
360
110
96
74
23
436
177
106
146
77
32
814
325
248
233
158
65
1978
568
285
264
179
18
107
111
233
86
44
1979
774
596
322
301
32
119
196
281
135
58
1980
1014
502
424
391
38
161
236
327
195
80
1981
1000
547
422
372
30
176
248
340
141
106
1982
1531
910
608
609
49
265
445
455
267
145
6
Other
1983
1897
801
609
892
53
343
559
547
279
184
SOURCE: Annual Reports on the ESF
2.4 Phase 3 - 1984-9
From 1984 to 1989 the ESF lived through a transitional phase. The transition was due to two
fundamental facts:
1) the administrative mechanism put in place was very similar to the one that existed in
the previous period and very different from the one that would be implemented after
1990; in this phase each project was represented by a paper file, which was send to
Brussels in the candidacy phase and resent in for the payment of the final
contribution; 50% of the funds were awarded in advance (European Commission,
1983); as we will see significant changes happened with the implementation of phase
4 (see 2-5);
2) the eligibility rules that dominated the ESF were a mere extension and underlining of
the rules that were implemented in the previous phase (European Commission, 1983)The young people saw their position reinforced, up to the point in which 75% of the
available funds were given to actions in favor of young persons between 18 and 25
years of age.
Therefore the main facts that define this phase are the following:
a) Eligibility: 75% of the funds for young people (European Commission, 1983);
b) Administrative setting: individual actions included in guidelines (European
Commission, 1983);
c) Support: young people (75%), adults (25%), priority regions (40 to 45%) of the funds;
training (80%); employment creation (15%); the eligibility guideline which received
more funds related to the adaptation of those youngsters to the new technologies;
other important guidelines related to the support of SMEs , the reconversion of
companies, the support of the handicapped, and the direct creation of employment
(Annual reports 1984-9);
d) Budget: As a whole, the ESF continued to grow in importance, as attested by the
increase, in absolute and relative terms of the Budget values: raising to 5% of the EU
budget (European Commission, 1997) and to 13000 MEcus from 1984 to 1988, an
increase of two times and a half in relation to 1978-83 alone (Annual Reports, 1984-8);
e) Main Beneficiaries: UK and Italy continued to be large beneficiaries of the support but
were followed by Spain and Portugal, Ireland and Italy. The share of France decreased
quite significantly; In relative terms Portugal (93 Euros) became second to Ireland (326
Euros) as the main receiver of funds per capita (the average being 40 Euros); Ireland
(281, Greece (128) and Portugal (72) were also the countries in which the share of ESF
trainees in the population per thousand was higher (Annual Report 1984-8);
f) Evaluation: The difficulty in obtaining the funds was also increased because in this
phase the level of rejections of demands attained 60% in some of the years (Annual
Reports 1984-8). The evaluation of the operations was made by counting the money
awarded (financial indicator) and the number of people supported (physical indicator);
also the promoters should indicate an estimate of the number of persons that were
employed after the operations (Annual Reports 1984-8). Some specific actions, made
by the ESF administration to evaluate its own way of functioning had almost no impact
7
in the ESF. More important were the Integrated Programs of the Mediterranean (IPM)
promoted in Greece, Ireland and France, in which a pluri-annual and multifund
management of programs was tried (European Commission, 1989). In this context the
Court de Comptes of the EU produced in 1988 a very critical report on which many
lapses in the control of the expenses were indicated and in which a refoundation of
the management of the ESF was suggested (Cour de Comptes, 1988). No evaluation
studies were performed on these programs with the exception of the Youth Training
Schemes implemented in the UK; quite significantly for these programs the impact of
wages was found to be very small or negative and the impact of the employment was
found to be positive and significant (Bradley, 1995).
This phase is summarized in the following Table 3:
Table 3: Phase 3 (1984-9): The Basic Numbers
Year
Authorizations
Payments
UK
Italy
Spain
1984
1854
1116
587
1985
2228
1413
533
1986
2554
2533
414
554
356
1987
3150
2542
593
649
453
1988
3179
2298
607
592
496
Portugal
Greece
France
Ireland
418
95
214
220
601
140
388
269
224
143
379
240
353
182
387
209
331
243
373
214
SOURCE: Annual Reports
2.4 Phase 4: - 1990 onwards: A new fund and old problems.
In 1988, and following the European Single Act of 1986, the EU decided to change drastically
the organization of the Structural Funds (SFs). From then on the three SFs were managed by
programming phases. Up to now three main programming phases existed (1990-3, 1994-9 and
2000-6) and we are currently living the second part of the fourth phase (2007-13). It will not be
surprising if the fifth phase will last from 2014 to 2020.
Each one of the programming phases was administrated submitted to a set of principles, which
were named the Principles of the Structural Funds Reform (PSFR). The PSFR were the
following: 1) pluriannual programming; 2) coordination; 3) partnership; 4) control; 5)
evaluation; 6) subsidiarity; 7) additionally (European Commission, 1988a, b and c). As whole
those principles had the following three-fold meaning:
a) The support should come in last resort and should not imply the reduction of a preexistent effort;
b) The support should be defined by all the relevant economic agents, and should be
performed in a pluri-annual base, with coordination between the funds;
c) Finally the support should be submitted to audits, evaluation ex-ante, evaluation expost and monitoring.
These new guidelines had the following repercussion in the ESF:
a) Eligibility: the ESF become to be focused in the Structural Funds (SFs) objectives. Those
objectives changed over time. Basically there were two major kinds of objectives: 1) a
very specific regional objective related with the “Social Cohesion”, or with the Regional
Competitiveness which was in fact an extension of the regional preference that
already was prevailing in the ESF in the seventies (European Commission 1988a, and
European Commission 2007); 2) an European wide objective linked to the promotion
8
b)
c)
d)
e)
of Human Resources; this objective relates to the increase of human capital ,
promotion of entrepreneurship and sustainability, social inclusion, adaptability,
strengthening of institutional capability (European Commission, 2007).
Administration: The first decisive document was the Council Ruling 2052/88, on the
Structural Funds, coupled with Ruling 4253/88 on the Coordination of the Structural
Funds and Ruling 4255/88 on the ESF itself. Those three documents ruled the ESF in
the period 1989-93. Quite logically, they were followed by similar documents in 1993,
1999 and 2006, which themselves ruled the Structural Funds in the phases 1990-3,
1994-9, 2000-6 and 2007-13 (European Commission 2012). Following 1989 Reform,
the ESF began to be organized by National Operational Programs. Each program
should address a specific region, target group or problem within a country. Brussels
only controlled and evaluated the programs; the national administration should
control the projects existing in each program.
Support: Each country could decide in each phase what were the main specific
programs and target groups. Since 1990 the ESF effectively supported a multitude of
persons for a objectives in a growing number of countries.
Size: In relative terms, the ESF continued to raise almost steadily in importance, in the
EU budget, from 6.6% in 1990, to 7.7 in 1993, from 6.1% in 1994 to 9.1.% in 1998, and
to an expected 10% in the period 2007-13 (EC, 2007). This evolution follows the rate of
national expenditures in the years of the programming phases, with accelerations from
the first to the last years due to the learning process and to the urgency in spending
the funds. In absolute terms since 1990 the annual dotation of the ESF increased
every year almost without exception; this was a reflection of the increasing number of
countries that constituted the EU, a fact that increased the number of problems to be
addressed. This evolution corresponds to the perception that for solving the economic
problems HRD policies were of paramount importance.
Main Beneficiaries: From 1990 to 2004 UK, Italy, Portugal, Spain and Germany
(because of the reunification) received 80% of the funds. Portugal replaced Ireland as
the main relative recipient, with a rate of six times the EU average. Following the
adhesion in 2004, the Eastern countries began to receive around 30% of the funds (EC,
2009) Furthermore, Hungary and the Czech Republic almost matched Portugal and
Greece as the main recipients of funds in relative terms (EC, 2007). The number of
people supported was also augmented, being 13 millions in the period 1990-3, and
with all the assurance, even more in the periods 1994-9, and 2000-6, respectively.
Table 4: ESF Phase 4 – Main recipients
Countries 1989-93 a) 1994-9 b) 2000-6 c)
Italy
2950
4879
7980
UK
2900
5402
7300
France
2270
4885
6535
Spain
3666
8535
11401
Portugal 2000
3149
4415
Greece
1728
2561
4214
Germany 1200
6732
11108
Ireland
1400
1953
Poland
9
2007-13 d)
6930
4475
5395
8057
6843
4364
9381
10005
Czech R.
3764
Hungary
3629
Romania
3684
Source: European Commission (EC) 1993 a), EC 1997b b), EC 2004 c), ESF 2012a)
f)
Evaluation: Since the Structural Funds reform, the European Commission promoted a
mechanism of evaluation, for each one of the programing phases; 1989-93, 1994-9,
2000-6 and 2007-13. The most up to date version of this methodology is found in EC
2006. This methodology of evaluation should not be confounded with audit, and is
divided in three phases: ex-ante evaluation (diagnostics), on-going evaluation
(management) and ex-post evaluation (impact assessment). This evaluation system
was based in two main documents: EC 1999 and EC 2009. Due to the long length of
each programing phase, an “interim evaluation” was made each time. The ex-post
evaluation is usually performed in the last years of each period and in the next one or
two. Basic elements of analysis are the following: a) financial and physical indicators;
b) difference between expected and real occurrences; c) inquiry on the situation of
trainees and organizations involved. Some econometric studies have been made
namely for Ireland, Germany, Portugal and Spain. It can be argued that those studies
essentially
3. Discussion: What will happen around 2020?
As a HRD policy mechanism, the ESF was for many years a labor market instrument of the
regional policy of the EU. This characteristic prevailed at least until 1990, and even in the new
phase it is present in the regional objective. In the evaluation of that instrument, the most
important and the prevailing characteristic was that funds were awarded to be spent and
success was measured by that expenditure. This characteristic will probably continue to exist
given was is being foreseen for the period 2014-2020, namely the allocation of minimum share
of the budget to each category of regions of at least 25% for less developed regions (less that
75% of the EU average), 40% for transition regions (between 75% and 90%) and 52% for more
developed ones (more than 90%) (EC , 2012b).
Even more intriguingly, the proposals for the ESF regulations in 2014-20 (Eurdiaconia, 2012)
contain as evaluation mechanism only Immediate result indicators on participants (inactive
participants newly engaged in job searching upon leaving, participants in education/training
upon leaving, participants gaining a qualification upon leaving, participants in employment
upon leaving) and also longer-term result indicators on participants (participants in
employment 6 months after leaving, participants in self-employment 6 months after leaving,
participants with an improved labor market situation 6 months after leaving”). This is the
“same old story” that already existed in the eighties (see 2.3). Sound, large and deep
econometric techniques like those used in many other countries (Heckman 1999, Tomé 2001
and Tomé 2008) are not foreseen.
Furthermore the EU defined a new set of objectives to 2020 (EC, 2012c) “In a changing world,
we want the EU to become a smart, sustainable and inclusive economy. These three mutually
reinforcing priorities should help the EU and the Member States deliver high levels of
employment, productivity and social cohesion.” and the ESF will be only of the main
instruments of this policy.
10
However, we reckon that “Europe 2020” will be “more of the same, again”. And what the ESF
needs is a radical change.
The change should be done in order to increase the quality of the support, even if the quantity
should also be drastically increased as a whole:
a) In quantity terms, the ESF budget is only 10% of the EU budget, which in turn is 1% of
the EU income (EC, 2007). This barely compares with the budget of other similar
institutions. The Department of Labor of the USA has a budget of around 1% of the
USA income (DOL, 2011).
b) In qualitative terms, the ESF needs to assess its policies at a global level as the other
national states do, meaning with fine econometric and global procedures. The ESF has
to define European policies to be evaluated at an European level, by an European
methodology. As it stands, the evaluation is based in national programs and only a few
are analyzed in due scientific terms.
c) Finally given the dynamic of the labor market the pluri-annual programming
mechanism should be eliminated as it stands. The pluari-annual programming induces
rigidity, and promotes a logic of expenditure which leads to more absorption and less
efficiency.
d) The HRD policies should be defined with great flexibility by a European body that could
be compared to the European Central Bank (ECB) in the European Monetary Union
(EMU). In fact, only an European Social Union can balance the chaos created by the
EMU. In that ESU the ESF programs can compare to the Euro, and the DG for
Employment, Social Affairs & Inclusion to the ECB.
4 Conclusions
The ESF is an organism of the European Union (EU) put forward as early as 1958, to try to solve
the economic and social problems originated in the labor market by the instauration of the
Common Market. Mainly the ESF acted through subsidies, funded by the EU budget. Those
funds were awarded to regions defined as prioritary. In those regions the operations (mostly
related to training) were funded by the EU budget in 75% and by the Member States (MSs) in
the remaining 25%. That funding circumstance implied that the ESF began to be seen as a gift
to the recipient MSs. Therefore the absorption of funds began to be seen as a problem, a goal
and a method of evaluation of policies. In consequence a qualitative absorption aspect of coexisted in the ESF along with the social-economic and more qualitative aspects related with
the eligibility of the programs. We conclude that the absorption aspect, which is deeply rooted
in the ESF own essence limits drastically the efficiency of the ESF support.
We also suggest that a fundamental change is needed in the way of conceiving the ESF in order
to achieve its own goals: the ESF has to be transformed in the essential instrument of Active
Labor Market Policy (ALMP) of a very powerful European Ministry of Employment. The
Ministry policies’ should have an importance similar to the Eurozone. Those policies would be
essential to balance the EU. Therefore as a final word, we believe that the ESF is an essential
part of the EU but as the organization changed: from a small regional organization with few
policies in six countries in 1957, to a big world power in 27 members with a common currency
and policies in all the aspects of the economic and social areas. Therefore, in 2020, the ESF
must change from a department of funding foreign aid (compared to the World Bank) to a
Ministry of management of the Employment policies in Europe (as the Department of Labor in
the US).
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