[Publication] Mapping and analysing the support to employment and social policies in the proposals for the 2028–2034 Multiannual Financial Framework

Aim of the study

EU funding for employment and social objectives has long been a substantial component of multi-annual financial frameworks (MFF). The proposals for the 2028–2034 MFF will significantly recast this support, with the bulk of funding absorbed into wide-ranging National and Regional Partnership Plans (NRPPs).

This study maps and analyses the proposed changes to employment and social policies under the proposed 2028-2034 MFF, examines the implications of the shift to a performance-based architecture, assesses the likely consequences for governance and the European Pillar of Social Rights (EPSR), and offers recommendations to the European Parliament’s EMPL Committee for revising the proposals.

Social and Employment policy under the 2028-34 MFF proposal

The 2028–2034 MFF proposal represents a radically restructured, somewhat simplified, EU budget. The most consequential change for social and employment policy is placing most social programmes – notably the European Social Fund (ESF) and those in the European Regional Development Fund (ERDF), and the Just Transition Fund (JTF) – into the NRPPs. NRPPs will also include future Common Agricultural Policy (CAP) spending. The new European Competitiveness Fund (ECF) includes some funding relevant to social priorities, notably through investment in skills, training, and labour market adaptation, but to what extent the focus will be on social needs rather than labour market shortages is unclear.

The ESF will formally retain its own legal basis, albeit in a slimmed-down regulation compared with the current MFF. It will lose its dedicated budget line while being called upon to support more priorities. The disappearance of thematic earmarks – for social inclusion (25%), child poverty (5%), and youth employment (12.5%) – removes important protections for the most vulnerable groups and could weaken the visibility of social spending within national plans.

The EPSR risks losing visibility, as it is referenced principally in recitals rather than operative articles. Moreover, social priorities will compete with other NRPP objectives, including infrastructure, agriculture, industrial transition and democratic resilience. Priorities at risk of losing prominence include gender equality, the just transition and social dialogue. Under the ECF, there is a risk that social objectives, e.g. the Skills Guarantee, are subordinated to the Fund’s dominant competitiveness narrative.

Unlike its other components, a minimum of 14% of NRPP allocations (but with a denominator excluding the CAP) must be devoted to social objectives. The Commission has signalled an allocation of around EUR 100 billion over the seven years of the MFF, but this figure relies on a loan component from a new Catalyst Europe Fund. This study estimates that spending on employment, social and related programmes in the next MFF will fall in both relative and absolute terms as compared to the current MFF. Grants for social spending are likely to fall from approximately 12.5% to around 7.8%, equivalent to EUR 79.9bn in current prices. Member States will have discretion to allocate funding above the 14% minimum, and some may do so. Catalyst Europe loans offer a potential top-up, but borrowed funds carry debt servicing obligations and may not be directed towards social priorities in the same way as grants.

The proposed MFF will also introduce radical governance changes, notably through the extension of performance-based budgeting (PBB) – modelled partly on the Recovery and Resilience Facility. This study judges that adopting the PBB methodology will be more challenging for social policies than other areas. Typically, social transformations are slow-acting and hard to quantify; often the most that can be assessed is direct outputs, not the results of these outputs, let alone longer-term impacts. The definition of social ‘performance’ in the Performance Regulation will be crucial.

Specifying milestones and targets in this field will be tricky. A related concern is that factors beyond the control of programme managers may affect what is achieved and could lead to beneficiaries having funds delayed or unfairly reduced. Connecting social disbursements to Country-Specific Recommendations via the European Semester also risks penalising programmes for circumstances beyond their control.

Simplification is supposed to be central to the new governance arrangements, but the transition to the new approach will entail costs of adaptation for social actors who already struggle to cope with EU procedures.

A last governance concern is that the Commission-to-Member State nexus will dominate NRPP negotiations, potentially sidelining the Parliament, and limiting its ability to safeguard EU-level social priorities. It may also sideline social partners and civil society in programme design and oversight, and may prompt a dilution of EU added value in favour of renationalisation.

Recommendations

An overall conclusion is that there are many areas of uncertainty around the next MFF on which the EMPL Committee should seek clarifications. More specific recommendations cover three broad areas.

Adequacy and funding

While adequacy is a tricky concept, reduced funding for ‘social’ is problematic; a solution could be to raise the 14% minimum or enlarge the base of its calculation (R1). A balance needs to be struck between EU-level and Member State priorities (R2). Selective earmarking should remain to protect the most vulnerable groups, but it should be reviewed in line with evolving challenges(R3). The Just Transition Fund should be maintained as a standalone instrument outside the NRPPS to avoid dilution (R4), and the case for a separate ESF should be pursued (R5). Social provisions in the ECF should be strengthened, e.g. by reinforcing measures related to the Skills Guarantee (R6).

Performance framework and implementation

A harmonised definition of ‘satisfactory fulfilment’ should be developed to ensure consistency across Member States (R7), alongside standardised milestone and target definitions and annual reporting cycles (R8). Performance monitoring should prioritise outputs over results, favouring qualitative over quantitative indicators, and limiting incentives to select easily achievable targets (R9). Social disbursements should be protected from over-zealous CSR-related conditionalities (R10). Clear procedures are needed to prevent funding disruptions damaging ongoing programmes (R11), and complex or innovative social interventions should be exempt from PBB requirements (R12). Dedicated technical assistance is vital to avoid ‘lost years’ at the start of the MFF, especially for smaller scale entities and authorities (R13). A Commission methodological handbook on payout values should be required (R14).

The EPSR and the role of the European Parliament

The EPSR should not lose visibility or operational force, and social investment principles must be defended against the dominance of the competitiveness agenda (R15). Gender mainstreaming should be explicitly maintained, and broader social mainstreaming considered (R16). The shared interest of social partners and the EMPL Committee in programme design, implementation and monitoring should be formally recognised (R17). The EP’s overall role in legitimating the budget, and that of the EMPL Committee for ‘social’ policies, should be sustained and made transparent throughout all stages of the MFF negotiations (R18).