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BackCohesion policy is not only important for economically disadvantaged regions, but also for the economic and social development of the EU as a whole. In its 9th Cohesion Report, the EU-Commission presents an assessment of the state of cohesion in the Union while pointing out its achievements. The European Economic and Social Committee emphasizes the importance of ensuring its future funding.
Cohesion policy, also known as regional policy, is a long-standing and essential component of EU policies. It is intended to counteract the economic disparities between the member states and regions. Ultimately, however, all member states should benefit from an upward harmonisation of the economically weaker member states by promoting economic demand and economic development and stability in the EU as a whole. Cohesion policy has indeed significantly contributed to boost GDP per capita. In its 9th Cohesion Report, the EU Commission emphasises that cohesion policy has made a significant contribution to increasing GDP per capita and creating jobs.
Cohesion policy and the MFF
The Multiannual Financial Framework (MFF) is the EU´s long term budget. The MFF 2021 - 2027 accounts for 1,074 trillion euros, topped up by 750 billions through Next Generation EU (NGEU) (in 2018 prices). Cohesion policy consists of the European Regional Development Fund (ERDF), the Cohesion Fund (CF), the European Social Fund (ESF+) as well as the REACT EU (a programme within NGEU). It makes up 30.7 percent of the MFF budget without NGEU and is one of the largest EU expenses, totalling over 350 billion euros. Cohesion policy refers to economic growth, job creation and competitiveness. Most spendings are dedicated to education, infrastructure, research, and SMEs. Throughout the years, cohesion policy has increasingly developed from a support policy for the economically weakest regions and states into a comprehensive economic policy instrument.
Key takeaways of the 9th report on economic, social and territorial cohesion
20 years after the EU´s Eastern enlargement of 2004, the GDP per Capita in the “new” member states has increased from 52 percent of the EU average to over 80 percent in 2023, according to the report. Unemployment was reduced from 13 to 4 percent. Upward convergence has been driven by productivity increases, that enabled social progress, such as better health outcomes and reductions in poverty rates. Eastern European regions have also shown better development paths than southern European regions, which have fallen behind, especially since the 2008 financial crisis.
There are also many regions across the EU, including regions in more developed member states, that are falling behind. Especially rural areas are affected. One third of the EUs regions has not seen a return to the 2008 GDP per capita rates. Drivers of divergence were the multiple crises, be it the financial crisis, the covid crisis, the inflation crisis or the climate crisis. Peripheral and less developed regions are typically more vulnerable when it comes to such shocks. Other factors are institutions (e.g. rule of law or administrative capacity), education disparities and brain drain as well as demographic changes.
According to the report, cohesion policy has been having significant and positive effects for the EU as a whole. Macroeconomic modelling suggests that the 2014 to 2020 and 2021 to 2027 programmes, taken together, could increase EU GDP by 0.9 percent by the end of 2030. The GDP growth is long-lasting and could reach values of up to 8 percent by 2030 in countries such as Croatia where support is concentrated. Cohesion policy is expected to create around 1.3 million additional jobs in the EU by 2027, especially in sectors needed for the green and digital transition.
The position of the EESC
The European Economic and Social Committee (EESC) acknowledges the 9th cohesion report as comprehensive and a useful starting point to gather the lessons learned. The EESC recommends boosting the manufacturing base, as productivity growth and GDP per capita is a correlation found in all regions. The Committee also stresses the importance of competitiveness in boosting economic cohesion, which is stimulated by investments. Critically, it is crucial that cohesion results are measured in territorial and social results. The EESC stresses also the importance of a functioning and inclusive labour market. Active labour market policies should be reaching the share of society at risk of being left behind and at promoting further inclusion of people outside the labour market. However, the EESC also stresses that huge inequalities remain not only between but also within regions respectively societies. This refers to the distribution on income and wealth, jobs and education.
As administration plays a central role in implementing programmes, strategic investments in local and regional administration should be promoted. Social partners and civil society organisations must be involved in discussions on the future of cohesion policy. The overall budget of the MFF should be more ambitious and adequate funding for cohesion policy must be ensured. In that context, the AK calls for allocating more financial resources to the European Social Fund. Finally, promoting upward convergence is not the exclusive responsibility of the cohesion policy itself, but should be a shared objective of many political areas.
Further Information:
European Commission: Ninth Report on Economic, Social and Territorial Cohesion
European Parliament: Cohesion, resilience and values: Heading 2 of the 2021-2027 MFF
EESC: Ninth report on economic, social and territorial cohesion
AKEUROPA: Linking EU funding to social criteria. What options are there?
AKEUROPA: Europe is not sufficiently prepared for inevitable climate disasters
Verbindungsbüro Land Kärnten: Ein Wegweiser für die Zukunft EU-Kommission veröffentlicht den 9. Kohäsionsbericht (only German)
AK EUROPA: Mid-term review of the EU Multiannual Financial Framework 2021-2027