European Social Fund – what will it bring until 2020? What Polish companies can gain?

The European Social Fund (ESF) is predominantly associated by companies with the training grants. In addition, micro entities may also have regarded ESF as a source for soft-loans and non-refundable cash injections, with the aim to support the launch of the business during the generally difficult start-up period. Given the turn of the EU’s programming periods, 2007-2013 to 2014-2020, this is the right moment to assess what went well regarding ESF in the past period, as well as what elements of the policy could be improved. In addition, an outlook on the new programming period concerning ESF is provided.

Looking back: pros and cons of ESF during 2007-2013 period

One of the major achievements of ESF was certainly the direct impact on employees’ competence development. As a result of the existence and requirements of ESF, companies, especially Small and Medium sized companies (SME’s) began shaping their human resources in a more strategic, planned and organized manner. Assuming this pattern continues in the new programming period, this can be considered as a substantial benefit of ESF.

Furthermore, worth mentioning is the fact that thanks to ESF, trainings became available for more than 1.5 million people in Poland. Participants have valued the impact of these trainings for their competences as well as employability. One of the less positive evaluations of the previous ESF-programme in Poland concerns the system adopted by PARP (Polish Agency for Enterprise and Development), which resulted into limited influence by participants on the training content. This resulted into the „seizure” of the ESF budget by training companies, developing subsidized training programs limited by their own knowledge and potential (domination of the supply market drive). Hence the system was supply-driven instead of based upon clear market demand. It was observed frequently that implemented development programs were rather ad hoc and fragmented, dominated by simple trainings, with training companies’ focus to reduce expenditures in own preparation. Especially for SME’s there were hardly any complex development projects, although the system did allow such possibility.

Looking forward: what will ESF bring in the 2014-2020 period?

Currently the Polish government is preparing the foundation for a new Partnership Agreement defining the use of the European Social Fund in two dimensions. The first is a new operational program with nationwide impact called „Knowledge Education Development „. It will offer nearly 4.5 billion euro up to2020. The second dimension will be 16 Regional Operational Programmes that will address the challenges related to development of companies and their employees in a soft aspect. These 16 regional programs will reflect the needs of each individual region.

National Programme: POWER

The Operational Programme Knowledge Education Development (in Polish Program Operacyjny Wiedza Edukacja Rozwój leads to abbreviation POWER) will concentrate on general competence development creating a strong foundation for the development of businesses aspects. The developing committee defined following goals for the program:

  • Provide a framework for effective implementation of public policies (e.g. in the area of entrepreneurship, employability, education, good governance practices)
  • Implement systemic reforms in selected areas, which are key to the realization of the objectives of the Europe 2020 strategy
  • Support the educational process in higher education
  • Support for transnational cooperation and social innovations
  • Implement the Initiative for Youth Employability – support for individuals under 25 years of age entering the labor market

Directly related to the enterprises’ operations the objectives of POWER are:

  • Improve the quality of businesses development management
  • Develop models to use ICT tools and the Internet in business
  • Support increase of the SME participation in the public procurement market
  • Improve the effectiveness of early warning and rapid response to changes in economic enterprises (including the creation of systems and tools for crisis prevention in enterprises, research and forecasting the dynamics of economic change, etc.)

How will training grants work in the regions?

Compared to the period 2007-2013 the regions in Poland will have received much more impact on focus and distribution of  EU grants. This is visible by the amount of funds shifted to the disposal of regional authorities, as well as the freedom in shaping the programmes related to support of businesses. Consequently, businesses have to deal with a large diversity in this respect, as each region will have its own smart specialization focusing upon the typical characteristics of the particular region. On the other hand, you can – interestingly – also notice some common features:

  • a minimal role for providers of educational services that will (again) only offer (supply driven) development services and will not mediate in obtaining grants as project owners. The entrepreneur will individually decide on the development services selected based on the needs of his company by realizing prepaid (with subsidy according to aid map) edu-vouchers. As such expectation is that the system operates demand-driven, with clear and individual diagnosis of needs as well as larger range of development tools with a focus on for example business consulting, mentoring or coaching and optimizing management processes.
  • a demand-driven approach and direct support to enterprises in the regional operational programs. For SME’s, the system will be based on the purchase of education vouchers from regional authorities to the value of the applicable funding ceilings in the given region as well as to the size of the company. The company will procure services (e.g. training or business consulting) from companies that are accredited in the Registry of Development Services. This registry is currently being created in a nationwide database of companies eligible to provide services financed with public money, including ESF grants.
  • Training and consulting companies that wish to provide trainings and other development services financed from the POWER will be required to obtain accreditation at this registry. Companies accredited in the Register of Development Services, administered by the PARP, will also be audited and the trainees will evaluate provided services. The pooling of such data will increase the reliability of service providers due to the uniform assessment criteria, which will facilitate search listings, ordering services, and then assess their quality. The training beneficiaries will most benefit from this new set-up of the regional programmes. As a side-effect, this system will result in verification of the training companies.

This new system is demand driven, in contrast to the previous supply driven one, which will result in the following benefits:

  • fast transfer of public funds to companies,
  • simplification of procedures from beneficiaries’ point of view,
  • greater relevance and fit of support,
  • individualization of subsidized activities,
  • maximizing the available funding by reducing expenditure on indirect costs financing related to the operation of the project.

According to the officials’ declarations, despite the greatest momentum in Poland and in contrast to other EU countries, in preparation for the new financial perspective, we can (only) expect new calls for the these grant programs earliest after Summer2014.

Should you just sit and wait? Certainly not! We would like to recommend you utilizing time anticipating the new grants by making thorough review of the company’s strategy and the resulting investments in human resources for potential fundraising and prepare in advance for the new grant calls.

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