Structural reforms refer to significant changes in economic and political policies, aimed at enhancing a country’s growth and competitiveness, social fairness, and inclusion. The EU offers a number of tools and funding mechanisms to support Member States’ reform efforts, such as the European Social Fund+ (ESF+), Recovery and Resilience Facility (RRF), Technical Support Instrument (TSI), EU governance mechanisms such as the European Pillar of Social Rights and the European Semester, as well as the EU acquis. The aim of EU support is to help Member States achieve successful reform implementation, resulting in sustainable policy change or set of changes implemented that leads to significant and positive transformations in a country’s economic and social structure, addressing systemic issues, removing obstacles to growth, enhancing competitiveness, and promoting sustainable development.
Our study
This study was carried out to provide comprehensive evidence-based support to the European Commission for the impact assessment of the future ESF proposal. More broadly, the study aimed to expand the knowledge base on causal mechanisms and necessary conditions for successful structural change in the areas of ESF(+) intervention, feeding into policy discussion of how the Commission can more effectively support Member States in implementing European Pillar of Social Rights, country-specific recommendations, and other European Union employment and social policies.
Assessing the success of structural reforms is inherently challenging due to the absence of clear-cut distinctions between what is success and failure. Reform impacts may extend beyond initial objectives with both intended and unintended consequences; the long-term nature of reforms can obscure immediate impacts and lead to varied interpretations over time; and the use of diverse and often subjective benchmarks that reflect the priorities and values of different stakeholders, making success context-dependent and not fully captured by economic indicators alone.
Recognising the limitations of existing databases, we employed multiple methods and metrics to map reforms across Member States. Study findings rely on the following sources and methods:
- Mapping of structural reforms implemented between 2014 and 2022 across all EU Member States;
- 10 in-depth case studies of structural reforms, identified during mapping, that cover all broad ESF+ intervention areas;
- Online Survey of national authorities and key stakeholders
- A hybrid policy workshop with national policymakers and social partners
Key success factors and obstacles to structural change
Clear political commitment and vision that has support among key stakeholders was by far the most frequently cited factor enabling success. Political commitment is fundamental in the early stages of reform implementation, relying on legislators and stakeholders to maintain the necessary support through the legislative approval stage and maintaining access to resources needed for continued implementation.
Concurrently, the lack of political consensus among policymakers and key stakeholders was one of the most frequently cited challenges to successful implementation of structural change. Gaining and maintaining political support for implementing challenging reforms can be difficult because politicians and governments operate within short-term policy cycles and often prioritise policies that deliver immediate benefits or appeal to voters in the short term. This tendency towards political short-termism can undermine the pursuit of comprehensive structural change that is needed to address deeper, systematic issues.
Strong internal administrative capacities within ministries and agencies were the second most-cited factor acting as a key enabler and the lack of administrative capacities was one of the most cited challenges to success. Administrative capacities comprise the technical expertise, resources, and organisational infrastructure necessary at various stages of design, implementation, monitoring, and institutionalisation of reform, in order to develop effective policy changes, execute them well and efficiently, and ensure their long-lasting impact. Even well-designed reforms that have the political commitment and wider support to be implemented can fail if the governing institutions do not have quality administrative capacities to deliver on the reform objectives.
Implementation of comprehensive, large-scale reforms often requires policymakers and stakeholders to capitalise on “windows of opportunity”—such as periods of crisis or a strong political mandate following an election—to push through significant structural changes. However, building political consensus is generally easier for smaller, incremental policy adjustments than for sweeping, comprehensive reforms. This is because incremental changes often address specific, less controversial issues, making it easier for policymakers to find common ground.
Role of EU support and ways forward
The EU has played a positive role in supporting structural reforms in the Member States.
ESF+ support was particularly important during the design and implementation of reforms, acting as a key enabler for experimentation and piloting new approaches, and provided critical funding and capacity-building support to Member States. Without the support, many reforms would either not have been feasible at all or would have been implemented at a much slower pace and smaller scale. However, ESF(+) is used in different ways. While Member States with higher GDP per capita and receiving lower ESF+ support tend to primarily use it for experimentation and the piloting of innovative solutions, Member States that receive more ESF+ funding rely on it for full-scale roll-out and implementation of reforms, in addition to experimentation and piloting innovative solutions.
A combination of different EU policy instruments may rather well support reforms at different phases as well as address challenges faced by reformers. A significant area for complementarity is in the sequential use of TSI’s technical assistance, in the initial stages of reform through expertise in reform development, legislative drafting, and institutional strengthening. The technical support is driven by the needs of the national/regional/local authorities and can be accessed quickly and relatively flexibly compared with the long-term vision and planning required for access to structural funds. Subsequently, the ESF+ can provide the funding required to put the well-developed reform plans into action. Considering the complexity of the ESF+ funding mechanism, the rather stringent compliance requirements, and the need for long-term planning, TSI can assist less experienced Member States in preparing high-quality programmes for ESF+ funding. Technical support could help improve the design and planning of projects, ensuring that they meet ESF+ criteria and have clear, measurable objectives.
Access the full study here.
