EU Cohesion and Structural Policy

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. For the ongoing 2014-2020 programming period, approximately €454 billion is available from the ESI funds. 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 regional policy. 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 Europe 2020 Strategy, 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.

All of these areas are found as concrete thematic objectives in the programmes of the reformed EU cohesion and structural policy.

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 cohesion policy is of great importance for Germany in the field of economic policy. Germany is receiving a total of nearly €29 billion from the European structural and investment funds in the current programming period (2014-2020). More than 60% of this funding is going directly into investment into growth and jobs, primarily via the European Regional Development Fund and the European Social Fund. In principle, all of the Länder benefit from funding from the EU’s structural funds, whilst these funds are making a particularly great contribution towards regional employment and gross value added in the eastern part of Germany in particular.

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 European Territorial Cooperation (ETC). Germany is receiving close to €11 billion from the ERDF in the current programming period. With its particular focus on research and innovation, the competitiveness of SMEs and the low-carbon economy, the ERDF aims to encourage investment which makes a key contribution to the competitiveness of the regions in the face of globalisation. The ERDF is of the utmost importance for the implementation of the efforts of the Länder to promote innovation, and for orienting their regional strategies more towards innovation.

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.

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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 EUcountries 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.

Legal basis

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 Directorate-General for Regional and Urban Policy 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.

To access information on any EU institution, please access the website of the European Commission.

According to Article 175 TFEU, the European Commission must report to the European Parliament, the European Council, the European Economic and Social Committee, and to the Committee of the Regions every three years on the progress being made with respect to the attainment of the goals of the structural policy. The seventh cohesion report was published in October 2017, and offers a good and comprehensive review of the economic, social and territorial development in Europe’s regions.

Future development of European cohesion policy after 2020

In joint comments from the Federal and Länder governments on future cohesion policy (in German) (PDF, 95 KB), 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.

In addition to the proposal for the Multiannual Financial Framework (MFF), the European Commission has also proposed a legislative package for the EU structural funds for the 2021-2027 programming period. This package consists of five draft regulations governing the funding framework for the ERDF, the ESF and European Territorial Cooperation. The Federal Government particularly welcomes the fact that all regions are to continue to receive funding from the EU structural funds. The EU’s cohesion policy will again focus on key policy goals like innovative and intelligent economic change, mitigating climate change, and environmental protection. In the Member States with stronger economies, like Germany, 85% of the ERDF funding is to be spent on these areas. The legal framework will be substantially simplified and there will be fresh positive approaches to flexibilisation, differentiation and the reduction of bureaucracy. In the ongoing talks on the MFF at EU level, the Federal Government wants a strong cohesion policy that continues to take due account of all regions while giving better support to necessary structural reforms in the Member States.