THE EUROPEAN SOCIAL FUND AND ENTREPRENEURSHIP

SUMMARY FICHE

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IMPORTANT NOTE

The information in this brochure is taken from a broader study, produced by Bernard Brunhes

International (BBI, www.bb-international.eu) under the contract “Reporting on ESF interventions

in the EU”. The background report “The European Social Fund and Entrepreneurship” was written

by Gunther Fehlinger and Tanja El-Nemr. It is available in English at http://ec.europa.eu/esf.

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European Focus on Entrepreneurship and SMEs

New firms and small and medium enterprises (SMEs) are major sources of jobs in Europe, hence

recent EU-level policies have deemed it essential to improve the climate for SMEs and entrepreneurs.

The Lisbon Strategy for Growth and Employment and the European Charter for SMEs (2000) have

set the framework to help develop the SME sector and stimulate entrepreneurship. Both Member

States and the EU are currently working towards not only an increase in the number and quality of

new firms, but also towards removing existing impediments to starting a business, and making this

process less costly and lengthy by simplifying applicable rules and regulations.

In 2004, the European Commission published its ‘Action Plan: The European Agenda for

Entrepreneurship’ (full text available at http://eur-lex.europa.eu), which aims at encouraging more

people to start businesses and at helping entrepreneurs prosper. The Action Plan was designed

to provide a strategic framework for boosting entrepreneurship, and set out the key objectives

to be achieved by the EU and Member States’ policymakers in the following five strategic areas:

stimulating entrepreneurial mindsets, encouraging more people to become entrepreneurs,

equipping entrepreneurs for growth and competitiveness, improving the flow of finance and

creating a more SME-friendly regulatory and administrative framework.

Based on these principles, the European Union developed a set of policies culminating in 2009

with The Small Business Act for Europe (online at http://ec.europa.eu/enterprise/policies), a policy

framework that reflects the EU policy in the field of entrepreneurship and SMEs and has finally

anchored SME policy in the mainstream of EU decision making. SMEs are now considered the

backbone of the European economy, providing jobs for millions of European citizens, and the basis

for economic innovation.

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The European Social Fund in a Nutshell

The European Social Fund is devoted to promoting employment in the EU. It helps Member States

make Europe’s workforce and companies better equipped to face new and global challenges. It

co-finances interventions supported by national public and private funds. The ESF strategy and

budget is negotiated and decided between the EU Member States represented in the Council

of the European Union, the European Parliament and the European Commission. On this basis,

seven-year Operational Programmes (OPs) are planned by Member States and approved by the

European Commission.

Operational Programmes 2000-2006: total expenditure claimed (in € million) per Member State

(situation on 2 September 2008)

Member State Expenditure Member State Expenditure

Austria 1,326 Latvia 115

Belgium 2,416 Lithuania 166

Cyprus 22 Luxembourg 47

Czech Republic 297 Malta 9

Denmark 779 Poland 1,776

Estonia 71 Portugal 7,145

Finland 2,365 Slovakia 241

France 12,204 Slovenia 60

Germany 20,930 Spain 17,388

Greece 4,783 Sweden 2,661

Hungary 288 The Netherlands 2,458

Ireland 1,778 United Kingdom 13,285

Italy 12,909

The above interventions and expenditure do not cover the EQUAL Community Initiative which was

also funded by the ESF in 2000-2006.

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ESF Facts and Figures

Most information in this brochure relates to the period 2000-2006. In 2000, the ESF was open to the

then 15 EU Member States. Additional programmes started in 2004 to accommodate the priorities

of 10 new Member States. A few figures to illustrate the size of the ESF interventions:

ESF 2000-2006

Over 200 OPs together spent a total of € 105 billion (until September 2008): just over ®half (€ 54 billion) was paid for by the ESF, while the difference was invested by the public (€ 45 billion) and private (€ 6 billion) sectors in the Member States.

More than 75 million people benefited directly from ESF activities. This corresponds to 24% ®of the total population between 16 and 64 years in the EU.

The ESF is committed to equal opportunities. Overall, the involvement in ESF was balanced: ®52% of the participants were women and 48% men.

ESF helps prepare young people to find suitable work: 37% of all participants were between ®16 and 25 years old.

ESF supports initiatives to keep people in the labour market, in particular when workers are ®getting older: seven percent of ESF participants were over 55 years old.

Overall, 54% of ESF participants were unemployed, 38% were employed and 8% were inactive, ®i.e. not readily available to get and stay in a job.

Evaluations and monitoring data show that between 40 to 80% (approximately half on ®average) of the unemployed participants found employment within 12 months of completing an intervention.

ESF 2007-2013

Preliminary data available on the current programmes show that at least 18 million people ®have already benefited from ESF supported interventions in 2007, 2008 and 2009.

17% of these participants belong to vulnerable groups, such as migrants, minorities, people ®with disabilities, Roma, former convicts, etc.

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ESF Action on Entrepreneurship and SMEs – An Overview

The European Social Fund has been emphasising the importance of strengthening entrepreneurship

for the last decade, and has taken concrete action in supporting it. In the 2000-2006 programming

period, entrepreneurship was targeted by promoting job creation, an adaptable workforce,

innovation and adaptability in work organisation. The current 2007-2013 period has built on the

results of the previous one, and furthers the support to business creation, entrepreneurship and

SMEs. The ESF interventions on entrepreneurship can be clustered around three main categories:

Entrepreneurial Spirit, Support to SMEs and Social Entrepreneurship.

ESF-funded initiatives to promote Entrepreneurial Spirit consisted of providing subsidies for

start-ups, career advice, promoting enterprise culture and training for the self-employed and

entrepreneurs. 20 Member States implemented such actions through 249 measures between 2000

and 2006.

During the same period 23 Member States supported SMEs in 299 measures. The interventions

concerned assistance to the unemployed and to persons interested in self-employment,

promoting organisational change and innovation in SMEs and subsidies to existing SMEs and the

self-employed.

Social Entrepreneurship was addressed in 44 ESF measures, as well as through the Community

Initiative EQUAL in 2000-2006. Actions in this area of intervention focused more on supporting

vulnerable groups, and often featured a social inclusion dimension, with an emphasis on self-

employment, employment and business creation.

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Fostering Innovation and Creativity Leads to Job Creation

The support to entrepreneurship is vital for allowing young entrepreneurs to fulfil their potential in

innovation and creativity. In the 2000-2006 period, Finland for instance supported the development

of business incubators. The ESF co-funded actions included networking between universities with

the purpose of generating business incubator operations, as well as promoting entrepreneurial

culture among students and co-operating with enterprises. Another aspect in stimulating

innovation and job creation is related to managing the generational change in businesses.

Insight:

Generational transfer in SMEs in Finland In Finland ESF supported the ViestinVaihto (“Generational Changeover”) programme, which

assisted businesses in preparation for generational transfer and/or change of ownership.

This support was provided through the Finnish Employment and Economic Development

Centres (FEEDCs), which offered consultations on important decision-making processes such

as: examinations of suitable conditions for successors, determining the value of the business,

legal aspects and different financing options for the transfer of the business. At the end of

the programme, the participating entrepreneurs received a comprehensive transfer plan with

recommendations for action. The project was launched in 2002 and it assisted 800 SMEs, of which

most had less than 50 employees. Following the success of the project, this new consulting

service for firms was incorporated into the offer of FEEDCs and continues to be provided on a

regular basis.

ESF continues to actively support innovation and creativity. For example, ESF is currently co-funding

the Next Generation project in Denmark. This project features the largest collaboration ever between

universities and growth-promoting organisations in Copenhagen. It aims to strengthen students’

skills and knowledge within the field of entrepreneurship and innovation, with the ultimate goal

of developing a healthy culture for entrepreneurship where students, companies and teachers

co-operate in order to help future generations become more efficient at creating growth.

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425 measures from 173 Operational Programmes in 24 Member States targeted ®entrepreneurship and SMEs.

ESF has taken up the challenge of making the entrepreneurial market more open ®to the vulnerable and discriminated and has made a noteworthy contribution to reaching the objective of full employment promoted by the Lisbon Strategy: ESF supported 13 million individuals, as well as the creation of over 14,000 firms, of more than 223,000 jobs and over 7,000 business start-ups.

There are as many women as men among the participants benefiting from ®measures addressing entrepreneurship. Half of participants have at best a lower secondary degree.

In addition to providing support to individual entrepreneurs or potential ®entrepreneurs, ESF supported a wide range of interventions to the benefit of organisations. These were reported to reach almost 336,000 companies. Most of them were SMEs.

Significant resources were provided to back up SMEs and promote ®entrepreneurship: € 23.5 billion (22% of the total ESF expenditure) was claimed for the selected 425 measures. The ESF contribution amounted to € 11.9 billion.

Thanks to this strong support to entrepreneurship, ESF enabled many people, ®often with businesses in remote areas and/or excluded from the labour market, to become active on an entrepreneurial market which is more open to the vulnerable.

ESF Support to Entrepreneurship and SMEs at a Glance: 2000-2006

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ESF Support to Entrepreneurship and SMEs at a Glance: 2000-2006 ESF Support to Entrepreneurship and SMEs at a Glance: 2007-2013

Actions in support of entrepreneurship are found under 213 priority axes ®covering 101 Operational Programmes in 24 MS.

€ 65.3 billion (ESF funds, national and private contributions) has been allocated ®to these 213 priority axes. The ESF contribution represents 64% of the total.

Over 9.1 million participants have been reported to benefit from ESF-supported ®actions related to entrepreneurship in 2007, 2008 and 2009. The highest numbers of participants have been reported in Italy and France. Preliminary data indicate that 37% of these participants were employed (of whom 8% self-employed), 32% were unemployed, and 31% inactive. 50% of participants were women. 47 % of the participants had first level of education.

ESF continues to support a wide range of interventions to the benefit of SMEs as ®well. The available data from 2007 and 2008 show that there have been almost 9,800 companies set up with ESF support so far.

In addition to business creation, self-employed persons remain an important ®target group: over 260,000 self-employed benefited from ESF interventions between 2007 and 2009.

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Promoting Entrepreneurial Spirit

The promotion of entrepreneurship should start early in life. Raising awareness among young

people and introducing entrepreneurial education in schools and universities are crucial. This has

been widely implemented in various Member States, as the following insights from the previous

and current programming period illustrate.

Insight:

ESF helps to promote entrepreneurship among university students in PolandThe Adam Mickiewicz University Foundation has been promoting entrepreneurship among

students and university staff since 2000 through its Poznań Science and Technology Park. The

Foundation has actively encouraged the setting-up of new firms through, for example, business

plan competitions. In 2005, ESF started to support its activities and co-funded two editions of

the competition in the Wielkopolska region: An idea to start a new business and Promotion of

academic entrepreneurship. The competition included a consultancy stage with 116 admitted

participants, which covered legal aspects of running a business, creating a business plan and

identification of funding sources, and workshops on bookkeeping and taxes, sales and marketing

strategies. There were 28 contest winners, all of whom started their own businesses. 24 entrants

were also awarded investment funding, which constituted 75% of the cost of the entire

investment. 60% of the participants in the second edition were people under 25 years of age.

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Insight:

Germany – Embedding the entrepreneurial culture in educationIn Germany, ESF helps raising awareness of entrepreneurship as a career option in the field of

higher education in co-operation with the Federal Ministry of Economics and Technology. This is

done through the EXIST programme, which is instrumental in the implementation of 63 projects

aiming to embed an entrepreneurial culture in universities and research institutes. The goal is to

make entrepreneurship an attractive professional alternative at an early stage. This also implies

an increased scientific knowledge with economic added value among participants, a demand-

oriented qualification and more support to people interested in starting their own businesses.

EXIST also strives to rise the success rate of start-ups in the field of higher education. EXIST helped

foster entrepreneurial spirit in 46 universities and research institutes between 2006 and 2008.

ESF also helps active entrepreneurs and self-employed persons maintain and develop up-to-date

entrepreneurial knowledge. An example of this, and of ESF’s response to the economic crisis,

comes from Spain, where ESF is co-funding a regional initiative that aims to become a platform

for training and consulting for entrepreneurs. The programme aims to create companies that are

better educated and better placed to withstand economic crisis. Consequently, the key motivating

principle applied in the programme is that participants will receive a diploma only after they

develop their own business plan for internationalising their activities.

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ESF Assists Small and Medium Enterprises

ESF has provided assistance to SMEs through a variety of ways, such as incentives for business-start-

ups, activities to support organisational change and innovation and subsidies for self-employed

persons and SMEs. Spain and Slovakia reported extensively on the results of their investment: there

were over 143,000 jobs created in Spain and over 10,000 in Slovakia.

ESF continues to support both SMEs and persons planning to start their own businesses through

for instance subsidies and counselling.

Insight:

Subsidies for entrepreneurs in ItalyESF is currently helping young persons and others in Sardinia to develop or start up their

businesses with a micro credit initiative. The amount of the loan is between €5,000 and €25,000.

The loan can be received without having to put forward guarantees and is interest-free, with a

repayment period of up to six years. The programme is particularly advantageous for persons

belonging to vulnerable groups who have a feasible plan for a successful business but find it

difficult to secure a regular bank loan.

Insight:

Creative Launchpad, United KingdomThe Creative Launchpad project is an innovative business support scheme aimed at aiding

businesses and individuals to fulfil their potential in the creative industries in the West Midlands.

The project was funded through the Learning and Skills Council ESF regional Co-financing Plan.

The project was set up in 2003 and has since provided advice and guidance to 900 people,

helped a further 100 entrepreneurs to start up their own businesses and assisted 300 established

enterprises gain funding for business development. Following its success, the project was granted

a further financing of £120,000 to help an additional 400 entrepreneurs and businesses.

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ESF and Social Entrepreneurship

In 2000-2006, interventions regarding social economy were addressed through the Community

Initiative EQUAL, which was launched to promote equal opportunities and combat discrimination

in working life and society in general and was funded as a separate ESF programme. ESF supported

business creation, creation of social enterprises and self-employment by providing training to

women, older people, people with disabilities and other disadvantaged groups. The training

covered entrepreneurial and management skills and was extended to include courses to assist the

assimilation of innovation in SMEs, microenterprises and the self-employed sector.

ESF continues to promote social entrepreneurship in the 2007-2013 programming period, by also

building on the experience gained from the EQUAL programme. For example, ESF is funding a

“Together for a Better Society” project in Romania to help set up 8 regional resource centres for

social economy, which will provide counselling and job training to 2,000 people. The project will

also focus on developing firms and cooperative units. The target groups include the Roma, persons

with disabilities and persons on low income.

Insight:

Social entrepreneurship – career options for people with disabilities in Wales, UK A project named “Vision 21” was born from the idea of an individual, Barry Shiers, who had the

desire to treat people with disabilities with respect and give them access to vocational training

and supported employment. The “Vision 21” project included a café, a garden centre, a retail

outlet, a pottery and a carpentry workshop. The project involved students with disabilities who

could choose from a wide range of training options, from gardening to office administration. Of

the 80 students who completed their training between July 2001 and December 2002, 75 gained

a qualification and 20 entered work on leaving the project. Following the successful end of the

project, the founder of Vision 21 helped establish a network of social enterprises in Wales.

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Member State Budget Member State Budget

Austria 1,184 Latvia 657

Belgium 2,320 Lithuania 1,210

Bulgaria 1,395 Luxembourg 50

Cyprus 150 Malta 132

Czech Republic 4,436 Poland 11,420

Denmark 510 Portugal 9,210

Estonia 462 Romania 4,335

Finland 1,420 Slovakia 1,764

France 10,275 Slovenia 889

Germany 15,666 Spain 11,426

Greece 5,726 Sweden 1,383

Hungary 4,270 The Netherlands 1,705

Ireland 1,360 United Kingdom 8,598

Italy 15,321

European Social Fund 2007-2013: Investing in People

In the current programming period of 2007-2013, the ESF has a budget of € 76 billion to co-finance

117 Operational Programmes in all 27 Member States. National public and private funds amount to

a further € 41 billion. The interventions supported are in the fields of:

(i) adaptability of workers and enterprises;

(ii) access to employment and inclusion in the labour market;

(iii) social inclusion of disadvantaged people;

(iv) reform in education and training systems;

(v) good governance, partnership and the involvement of social partners.

The map shows that ESF supports activities across all 27 Member States under two Objectives.

Additional priorities in the so-called Convergence regions are:

(i) lifelong learning and research and innovation;

(ii) capacity building of public administrations and services.

Operational Programmes 2007-2013: total budget (in € million) per Member State

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ESF 2007-2013 Investing in your Future

The level of ESF funding differs from one region to another depending on their relative wealth. EU regions are divided into four categories, based on their regional GDP per head compared to the EU average (EU with 27 or 15 Member States).

Convergence regions: with a GDP per head of less than 75% of the EU-27 average

Phasing-out regions: with a GDP per head of more than 75% of the EU-27 average but less than 75% of

the EU-15 average

Phasing-in regions: with a GDP per head of less than 75% of the EU-15 average (in the period 2000-2006)

but more than 75% of the EU-15 average (in the period 2007-2013)

Competitiveness and employment regions: applies to all other EU regionsPosition as of January 2007

© EuroGeographics Association for the administrative bounderies

What ESF does for youESF: active labour market policies and public employment services

ESF: adaptability of enterprises and continuing training of workers

ESF: developing human potential in research and innovation

ESF and labour mobility

ESF: education and lifelong learning

ESF: women, gender mainstreaming and reconciliation of work and private life

ESF and Roma

ESF: sustainable development and eco–technologies

ESF: migrants and minorities

ESF: urban areas and local employment

ESF and older workers

ESF and health

ESF and entrepreneurship

ESF and young people

ESF and disability

ESF and institutional capacity

ESF and social inclusion

ESF and equality mainstreaming

ESF and social partners

ESF support to building partnerships

ESF: culture and tourism

Check the latest on these publications at http://ec.europa.eu/esf