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Before the end of 2015, the European Commission adopted a Communication on the contribution of the European Structural and Investment Funds (ESIF) to the European Union’s main priorities set for the period 2014-2020. In particular, it highlights the main results of negotiations between Member States, their partners and the Commission.

The first striking element that emerges is that in the majority of Member States ESIF are the main source of public investments; overall across the EU, public investment decreased by around 15% between 2008 and 2014. In 14 Member States (all the new Member Sstates except for Slovenia, plus Portugal and Greece), ESIF represent the main source of funding for public investments with a percentage that ranges from around 80% in Portugal to 35% in Malta. In the remaining countries, it ranges from around 25% in Slovenia to 1% in Luxembourg.

The Communication also acknowledges that the employment and poverty targets of the Europe 2020 strategy haven’t been met. At the same time, the allocation foreseen for the European Social Fund (ESF) has been exceeded. In fact, for the first time in the history of structural funds, a minimum share of the cohesion policy budget (23.1%) was assigned to the ESF. The real share amounts to 24.8%. In addition the ESF budget devoted to social inclusion amounts to 25.6%, exceeding the 20%.

At first sight, the fact that the ESF shares previously agreed have been increased might seem like good news. However, if one considers that in many Member States, especially those with higher levels of unemployment, poverty and social exclusion, the ESF is the main, if not the only source of public expenditure to tackle these problems, Member States’ disinvestment is indeed very worrying. ESIF and in particular the ESF are also used to a certain extent to support asylum seekers and refugees.

The Commission is seeking to develop synergies between ESIF and the European Fund for Strategic Investments, and to encourage the increased use of financial instruments (loans, guarantees and equity) rather than grants in ESIF. Until now, the use of financial instruments to support social projects has been very limited and difficult, due to the very nature of social interventions that are less profitable (or not profitable at all) compared to other investments.

ESIF and other EU funds should complement, not replace national budgets in the social and health sectors. In a context of shrinking public finances, beyond looking at ways by which to attract private sources, the Commission should drive reforms of Member States’ taxation systems to make them more efficient and re-distributive, including fighting tax evasion and avoidance and corruption in public administration. These are still the main reasons why public finances are insufficient and unsustainable.

In 2013 the Social Investment Package showed the benefits of investing in social policies and services for the well-being of people, better social inclusion and cohesion, as well as increased employment and economic growth. The study “Social Investment in Europe – A study of national policies” undertaken by the Commission reported that the implementation of social investment approaches by Member States has generally been limited. Only two years after, also at EU level, everyone seems to have forgotten about it. By contrast, it remains a very valuable tool.