Structural and cohesion policy is one of the central policy areas of the European Union. The European Union’s structural and investment funds (ESI funds) aim to reinforce economic, social, and territorial solidarity (or “cohesion”) in the EU, mainly by fostering growth and employment in those regions whose development is lagging behind (“structurally weak regions”). Around a third of the EU’s public funds are being used for it. This means that the EU’s cohesion policy is not merely the EU’s most important investment policy: it is also an expression of solidarity between the EU and its Member States.
Objectives and tasks
Cohesion and structural policy is a part of the general area of economic policy. Its main task is to enable structurally weak regions to minimise their disadvantages and to help them benefit from developments in the wider economy. The ESI funding is intended to make Europe’s regions and towns and cities more competitive. New jobs are created, sustainable development is fostered, and the quality of life of the EU’s citizens is improved. The EU’s cohesion and structural policy supplements national . It is also the counterpart to countercyclical policy. Countercyclical policy is concerned with the current economic situation, i.e. with cyclical fluctuations.
The EU’s cohesion and structural policy is very much guided by the objectives of the , which sets out a framework for the funding that is needed for Europe to be able to reach its strategic objectives of ensuring smart, sustainable and inclusive growth. European cohesion and structural policy is a very specific political area, one which has a number of very practical and positive implications:
- It helps people find work and lead a better life in their countries, their regions, their towns and cities, or in their villages.
- It also fosters the investment activities of small and medium-sized enterprises (SMEs).
- Regional innovativeness is improved, as is the development of new products and production processes via the technology transfers resulting from greater cooperation between research institutions and the private sector.
- Some funds are being invested in projects to clean up the environment and some are being used to improve educational and professional qualification standards. Other funds are flowing into the areas of energy efficiency and combating climate change.
The Federal Ministry for Economic Affairs and Energy is the ministry in Germany responsible for coordinating EU cohesion and structural policy and for administering the European Regional Development Fund (ERDF).
The five ESI funds
The European Regional Development Fund (ERDF) supports regions whose development is lagging behind and regions with structural problems. It primarily finances investments aimed at strengthening the competitiveness of commercial enterprises and at creating jobs in small and medium-sized companies. It also finances activities in the areas of energy efficiency, research, technological development, and environmental protection. Further to this, the ERDF provides roughly €1 billion in funding for . Germany is receiving close to €11 billion from the ERDF in the current programming period.
The European Social Fund (ESF) is the most important EU instrument in the area of labour policy. Its primary aim is to help unemployed individuals re-enter the job market. The education and training it funds facilitates access to better jobs, develops skills, and fosters social inclusion. The ESF focuses mainly on:
- improving the adaptability of employees and commercial enterprises;
- improving access to the job market;
- fostering social integration by combating discrimination and by helping disadvantaged groups of people gain access to the job market; and
- fostering partnerships for reform measures in the areas of employment and integration.
Within the Federal Government, the Federal Ministry of Labour and Social Affairs is responsible for the ESF. Germany is receiving around € 7.5 billion from the ESF in the current programming period.
Both the ESF and the ERDF operate according to the co-financing principle: whenever a project is to receive funding from the structural funds, the member state in question must also provide funding from its own budget. Another principle that applies is the following: EU regional funding is always granted in addition to funding provided by the member states themselves (so-called principle of additionality). It can never be used to replace national funding. An important aspect of EU structural policy is the partnership relationship between the European Commission and the Member States on all administration levels and with business partners, social partners, and other partners from civil society.
The Cohesion Fund provides support exclusively to environmental projects and to Trans-European Transport Networks. It is deployed in the less developed Member States of the European Union and, together with the ERDF, contributes to decentrally administered investment programmes extending over several years. Those EU countries whose per capita income is below 90 % of the EU average are eligible for support. The Cohesion Fund covers those Member States which joined the EU in 2004, plus Greece and Portugal. Some 167 million Europeans (30 % of the population in the 28 EU Member States) live in regions that receive cohesion funding. Due to its level of economic development, Germany no longer receives any funding from this fund.
The main aims of the European Agricultural Fund for Rural Development (EAFRD) are to improve sustainable management of natural resources, to combat climate change, and to foster economic and social development in rural areas. Germany is receiving around € 9.5 billion from the EAFRD in the current programming period.
The European Maritime and Fisheries Fund (EMFF) helps the fisheries industry to move towards sustainable fishing. It helps coastal communities to develop new fields of economic activity and funds projects which create new jobs and improve the quality of life on Europe’s coasts. Within the Federal Government, the Federal Ministry of Food and Agriculture is responsible for the EAFRD and the EMFF. Germany is receiving around €220 million from the EMFF in the current programming period.
The statutory basis for the European structural policy includes, in addition to Articles 174 to 178 of the Treaty on the Functioning of the European Union (TFEU), the European Structural and Investment Funds Regulations (which were adopted pursuant to ordinary legislative procedures) and the implementing acts, delegated acts, and guidance adopted for the purposes of implementing structural funding.
The publishes the legislative texts as well as the Commission decisions concerning the actual implementation of these regulations. It also publishes reports, communications, and other working papers of the Commission.
Future development of European cohesion policy after 2020
The European Commission is currently working on the new package of legislation for cohesion policy after 2020. The proposal for this new package is to be presented in spring 2018 following the proposal of the future multiannual financial framework of the EU (MFF). In , the Federal Government and the Länder set out their priorities for post-2020 European cohesion policy. The central demand is that all regions within the European Union to continue to be eligible for support under cohesion policy, depending on each region's state of structural development and on the region's individual needs. At the same time, the funding should be made more efficient and the money used more for necessary structural reforms in EU Member States. The management of the funds should be simplified, and more use should be made of synergies with other funding instruments.
According to Article 175 TFEU, the European Commission must report to the , the , the , and to the every three years on the progress being made with respect to the attainment of the structural policy objectives. The was published in October 2017, and offers a good and comprehensive review of the economic, social and territorial development in Europe’s regions.