Explanatory Memorandum to COM(2011)609 - EU Programme for Social Change and Innovation

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dossier COM(2011)609 - EU Programme for Social Change and Innovation.
source COM(2011)609 EN
date 06-10-2011

· General context

Europe's societies are confronted with multiple challenges stemming from increased global competition, the fast pace of technological progress, demographic trends, and climate change. The recent economic and financial crisis, which hit all Member States and regions in the Union, has compounded the situation. In the area of employment and social policy, the Union continues to face complex problems, such as:

– high unemployment rates, especially among the low-skilled, the young, older workers, migrants and people with disabilities;

– an increasingly fragmented labour market, in which more flexible work patterns and other challenges are emerging and which have an impact on job security and working conditions;

– a shrinking workforce and increasing pressure on social protection systems as a result of demographic change;

– difficulty in combining work and caring responsibilities and achieving a sustainable work-life balance, hampering personal and family development;

– an unacceptably high number of people living below the poverty line and in social exclusion.

The crisis also highlighted the close links and spill-over between EU-27 economies, especially in the euro area, whereby reforms or the lack of them - in one country - affect the performance of the others. This means that coordinated action at the Union level is more effective in addressing these challenges than individual actions of single Member States. To be cost-effective, reforms also need to be as far as possible based on evidence. The involvement of policy-makers and other stakeholders in a collective learning process and in developing and testing new approaches is likely to lead to greater acceptance and ownership of, and commitment to the Europe 2020 strategy. In this context, social innovation, and in particular social experimentation, can be a powerful tool for shaping the reforms and policy adjustments needed to implement Europe 2020.

However, the development and dissemination of a social innovation approach on a larger scale in the Union is hampered by a number of factors, including:

– insufficient knowledge of the needs and capabilities of civil society organisations, social enterprises and social entrepreneurs and public sector organisations;

– fragmentation of efforts and resources, lack of transparency and visibility, limited financial support and insufficient technical skills of the kind that can help organisations to develop and deliver social innovations;

– low levels of involvements of citizens and business;

– poor diffusion, and little scale-up of good practices;

– poor methods of impact evaluation of actions and policies.

While tackling socio-economic problems is primarily the responsibility of the Member States and regions and decisions have to be taken closest to the citizen, the Union has a role to play in putting the need for specific reforms on the agenda, identifying barriers to change and ways of overcoming them, ensuring that existing Union level rules are complied with, stimulating sharing of good practice and mutual learning, and supporting social innovation and Europe-wide approaches.

· Grounds for the proposal

The European Union Programme for Social Change and Innovation is based on three existing instruments:

– the Progress Programme established by Decision No 1672/2006/EC;


– the European Progress Microfinance Facility for employment and social inclusion established by Decision No 283/2010/EU.


The Progress Programme

Within the limits of its competence, the Union employment and social policy, seeks mainly to ensure collective action and effective policy co-ordination between the Member States. The framework is provided by the Treaty (TEU) which sets out two principal types of action, namely co-ordination (adoption of measures designed to encourage co-operation between the Member States) and legislation (adoption, by means of Directives, of minimum requirements).

Previous experience in fostering co-operation between Member States in the employment and social affairs field points to a number of factors which influence the success of co-ordinated policy responses, including consistent conceptualisation of key-factors and their interdependency (e.g. how to explain in-work poverty, how to tackle health inequalities), common terminology and measurement to allow to monitoring and benchmarking, comparable data, and convergence or synergies between goals, values and interests of a variety of stakeholders.

Since its inception, the Progress Programme has contributed to delivering effective policy responses. The strengthened policy framework under the new Europe 2020 strategy implies an even stronger need for evidence-based policy-making so that Union policies and legislation are responsive to the socio-economic challenges. The successor to the Progress Programme will assist the Commission in implementing its tasks:

– fact-finding and evidence-gathering about relevant policy developments;

– monitoring and reporting on progress made by Member States towards Union common priorities and objectives;

– ensuring effective and uniform application of Union law;

– modernising Union law on working conditions in line with the Smart Regulation principles.



Free movement of workers, one of the four freedoms enshrined in the Treaty, contributes to economic development and social cohesion in the Union. However, there are a number of barriers to geographical mobility in the Union, ranging from legal and administrative obstacles, housing costs, portability of pensions, and linguistic barriers to lack of transparency of job vacancies and support for matching job-seekers with job offers. EURES aims to improve labour market transparency by making job vacancies available on the EURES Job Mobility Portal and to provide support for information, advice and guidance services at national and cross-border level.

At the same time, the role of public employment services (PES) has changed as a result of the recent economic crisis and the need for more tailor-made services. PES should become life-long learning providers, offering a wide range of services (such as skills assessment, training, career guidance, matching jobs and profiles, client counselling), and catering for the needs of those furthest from the labour market. In addition, EURES should promote new working methods with private employment services.


European Progress Microfinance Facility

Becoming self-employed is one of the avenues for unemployed people to get into a job. Job creation through the establishment and consolidation of new businesses plays a key-role in achieving the Europe 2020 objectives: a significant number of new jobs in the Union are created by newly established firms and almost 85% of these jobs are created in micro-firms. However, the Union is far from exploiting its full potential in this respect. One of the major obstacles to business creation is lack of access to finance, and especially micro-credit, which has been exacerbated by the recent economic crisis. Europe's micro-finance sector has not yet reached maturity. In order to grow, Union micro-finance institutions would need to build and maintain adequate funding models. Therefore, there is a clear need to strengthen institutional capacity-building (especially of non-banking microfinance institutions) in order to cover start-up costs and funding for lending to high-risk target groups.

The European Union Programme for Social Change and Innovation aims to increase coherence of EU action in the employment and social areas by bringing together and building on the implementation of the Progress Programme, EURES and the European Progress Microfinance facility. In addition, the Programme provides for an opportunity to simplify implementation through common provisions covering, inter alia, common general objectives, common typology of actions and rationalisation of reporting and evaluation. At the same time, the Programme provides for a limited set of specific provisions applying to the three axes (Progress, EURES and Microfinance and Social Entrepreneurship) in order to take account of legal requirements (including comitology rules which only applies to the Progress axis, geographical coverage and specific reporting and evaluation requirements in the case of the Microfinance and Social Entrepreneurship axis).

· Objective of the proposal


The Programme will seek to achieve the following general objectives:

(a) Strengthen ownership of the Union objectives in the employment, social and working conditions fields among key Union and national policy-makers, as well as other interested parties in order to bring about concrete and coordinated actions at both Union and Member State level;

(b) Support the development of adequate, accessible and efficient social protection systems and labour markets and facilitate policy reform, by promoting good governance, mutual learning and social innovation;

(c) Modernise Union law in line with the Smart Regulation principles and ensure that Union law on matters relating to working conditions is effectively applied;

(d) Promote workers’ geographical mobility and boost employment opportunities by developing Union labour markets that are open and accessible to all;

(e) Promote employment and social inclusion by increasing the availability and accessibility of microfinance for vulnerable groups and micro-enterprises and by increasing access to finance for social enterprises.

The ‛gender equality’ and ‛non-discrimination’ sections of the Progress Programme will be incorporated into new instruments in the area of justice. However, in pursuing its objectives, the European Union programme for Social Change and Innovation promotes gender and non-discrimination mainstreaming.



· Consultation with the interested parties

As part of the review of the current Progress programme, the Commission organised a two-step consultation:

1. A working group comprising the programme’s key stakeholders representatives was set up to provide the Commission with a set of recommendations on the future instrument’s design, objectives, implementation and funding.

2. A public online consultation on a successor instrument to the Progress programme was carried out between 4 April and 27 May 2011.

The EURES Working Party and Heads of Public Employment Services (PES) held specific discussions on the future of EURES during 2011.

With regard to microfinance, the Commission collected the views of the European Microfinance Network (EMN), which represents the Union microfinance sector, the managing authorities of the European Social Fund and the European Investment Fund (which implements the Progress Microfinance Facility on behalf of the Commission) and the European Investment Bank. In addition, the findings of two workshops organised by the Commission's services, which covered both micro-finance and support to social entrepreneurship, were taken into account.

· Impact assessment

A composite impact assessment of the financial instruments under the responsibility of the Directorate-General ‛Employment, Social Affairs and Inclusion’, covering the European Social Fund, the European Globalisation Adjustment Fund, the Progress Programme, EURES and the Progress Microfinance Facility was carried out. The impact assessment considered three options:

– option 1: no policy change: under this option, the Progress programme, EURES and the Progress micro-finance facility, would continue to exist as separate instruments running alongside the European Social Fund.

– option 2: a new integrated programme for social change and innovation: the new programme is made up of three separate albeit complementary axes: Progress, EURES and microfinance and social entrepreneurship.

– option 3: a single instrument for employment and social affairs: such an instrument would have a shared management strand (the European Social Fund) and a direct management strand.

The impact assessment has concluded that option 2 is the preferred option that would bring about the most benefits in terms of efficiency gains, critical mass, coherence and effectiveness, while avoiding political and institutional risks.



· Legal basis

The proposal is based on Article 46(d), Article 149, Article 153(2)(a) and the third paragraph of Article 175 of the Treaty.

· Subsidiarity and proportionality principles

As the objectives of the proposed Programme for Social Change and Innovation cannot be sufficiently achieved by the Member States, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.



The financial appropriations for implementing the Programme for the period from 1 January 2014 to 31 December 2020 will amount to EUR 958.19 million (in current prices).