EXPLANATORY MEMORANDUM
1.CONTEXT OF THE DELEGATED ACT
1.1. General background and objective
The outbreak of the COVID-19 pandemic has had a significant impact on the economic and social situation in the European Union. The coronavirus crisis has put a halt on a six-year positive employment progress, with an employment rate of 72.4% by the third quarter of 2020, and many Europeans have seen their livelihood and employment prospects put at risk. As some sectors of the economy may not be able to fully recover from the crisis, unemployment and inactivity may rise in the longer term, which could have scarring effects for the individuals concerned and the economy as a whole, and would also imply a loss of skills. The risk of long-term scarring effects is particularly substantial for younger generations. While in other periods of recession, the impact of a difficult economic and social situation may be somewhat mitigated by staying longer in education, the COVID-19 crisis has also disrupted skills formation through school closures and the broad switch to online teaching. Additionally, the social and health care sectors have been at the forefront of the crisis and risk to continue being negatively affected in the future. While the immediate effects of the crisis have been cushioned by short-term measures put in place at national and EU level, massive investments and reforms will be needed in the medium to long-term to recover from the crisis and build a more sustainable, resilient and fairer Europe for the next generations. To live up to this challenge, the European Union adopted a European Recovery Plan in December 2020, consisting of a reinforced multiannual financial framework for the period 2021-2027 and a new recovery package called Next Generation EU. Together, these instruments will unlock EUR 1.85 trillion (in 2018 prices) to support Member States in their efforts to address the crisis, kick-start the EU economy and put it on a more sustainable and resilient path.
Regulation (EU) 2021/241 of the European Parliament and of the Council 1 establishing the Recovery and Resilience Facility (the ‘RRF Regulation’) was adopted in February 2021 as the largest programme under Next Generation EU. With a budget of EUR 672.5 billion, distributed in non-repayable financial support and loan support, the Recovery and Resilience Facility (‘the Facility’) will support large-scale public investments and reforms undertaken by Member States to recover from the COVID-19 crisis and promote the Union’s economic, social and territorial cohesion. A central objective of the Facility is to mitigate the social and economic impact of the crisis, in particular on women, children and youth.
In doing so, the Facility will notably support Member States in implementing measures in line with EU initiatives in the employment and social area, in particular the Recommendation on an effective active support to employment following the COVID-19 crisis (EASE) 2 , the Communication on Youth Employment Support 3 and the Recommendation on A Bridge to Jobs – Reinforcing the Youth Guarantee 4 , the Recommendation on vocational education and training (VET) for sustainable competitiveness, social fairness and resilience 5 , the Recommendation establishing the European Child Guarantee 6 , the Strategy for the Rights of Persons with Disabilities 2021-2030, 7 the European Skills Agenda for sustainable competitiveness, social fairness and resilience 8 , the European Education Area 9 and the Digital Education Action Plan 10 , the EU Anti-racism Action Plan 2020-2025 11 , the EU Roma strategic framework for equality, inclusion and participation 12 , the Gender Equality Strategy 2020-2025 13 , the LGBTIQ Equality Strategy 2020-2025, 14 the Communication on Building a European Health Union 15 , the Pharmaceutical Strategy for Europe 16 , and Europe’s Beating Cancer Plan 17 . Thereby it will also contribute to the achievement of the EU 2030 headline targets on employment, skills and poverty as welcomed by EU leaders at the Social Summit in Porto in May 2021 and the European Council in June 2021.
The Facility will support reforms and investments put forward by Member States in their recovery and resilience plans under all pillars 18 of the RRF Regulation. Several of these reforms and investments will contribute to the implementation of the European Pillar of Social Rights and all its principles. This notably includes investment in human capital, for instance through upskilling, reskilling and requalification of the labour force. It could also include reforms aimed at enhancing the effectiveness of integration programmes for the unemployed. The Facility will also support reforms and investments aimed at strengthening social and territorial cohesion and convergence within the Union. Lastly, the Facility will aim to ensure that the next generation of Europeans will not be permanently affected by the crisis. It will therefore also support reforms and investments aimed at enhancing access and opportunity for children and the youth related to education, employment, health, nutrition, jobs and housing. These priorities are reflected in three of the six pillars of the scope of the Facility set out in Article 3 of the RRF Regulation, namely: social and territorial cohesion; health, and economic, social and institutional resilience; and policies for the next generation, children and the youth.
In order to ensure adequate reporting on the implementation of measures that have a social dimension, Article 29(4) empowers the Commission to adopt a methodology on reporting social expenditure, including on children and the youth. The objective of the methodology for reporting on social expenditure, including on children and the youth, is to provide in a transparent and accountable manner synthetic information on the social expenditure under the Facility.
A specific reporting on social expenditure that include a focus on gender equality was also deemed essential in view of the emphasis on this matter in the RRF Regulation.
Each reform and investment included in the plans and which has a primary social dimension will be associated to one of nine social “policy areas” outlined in the Annex of this Regulation. These social policy areas are to be aggregated into four broader social categories, namely: i) employment and skills, ii) education, iii) health and long-term care and iv) social policies. Additionally, each measure of a social nature that includes a focus on children and the youth, and on gender equality will be flagged, allowing for a specific reporting on RRF expenditure focusing on children and the youth, and on gender equality.
This Delegated Regulation sets out the methodology for reporting social expenditure, including on children and the youth, and on gender equality, included in the recovery and resilience plans of the Member States.
2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT
In line with the Common Understanding of 2016 between the European Parliament, the Council and the Commission, the Commission consulted Member States’ experts on this Delegated Regulation in two meetings on 28 May 2021 and 14 July 2021. Representatives of the European Parliament and the Council participated in the meeting as observers. Member States experts welcomed the proposed methodology and made a number of technical suggestions and requests for clarifications. The experts notably enquired about the process to keep Member States informed when the Commission applies the methodology set out in this Delegated Regulation to report social expenditure under the Facility.
3.LEGAL ELEMENTS OF THE DELEGATED ACT
The right to adopt Delegated Acts is provided for under Article 29(4), point (b) and Article 30(2) of Regulation 2021/241.
Article 1 lays down the methodology for reporting social expenditure. This methodology is further specified in the Annex to this Delegated Regulation.
Article 2 specifies the date of entry into force of this Delegated Regulation.
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