REPORT on the European Semester for economic policy coordination: employment and social priorities – annual report 2026

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the European Semester for economic policy coordination: employment and social priorities - annual report 2026

(2025/2183(INI))

The European Parliament,

- having regard to Article 3 of the Treaty on European Union,

- having regard to Articles 9, 121, 148 and 149 of the Treaty on the Functioning of the European Union (TFEU),

- having regard to the European Pillar of Social Rights (EPSR) proclaimed and signed by the Council, Parliament and the Commission on 17 November 2017, and to the action plan thereof, adopted in 2021, in particular the proposed 2030 headline targets for employment, skills and poverty reduction,

- having regard to the Regulation (EU) 2024/1263 of the European Parliament and of the Council of 29 April 2024 on the effective coordination of economic policies and on multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97[1], in particular Articles 3, 4, 13 and 27 thereof,

- having regard to the Commission recommendation of 25 November 2025 for a Council recommendation on the economic policy of the euro area (COM(2025)0957),

- having regard to the report by the Commission entitled 'Employment and Social Developments in Europe', published in September 2025,

- having regard to the report by the Commission entitled 'Labour Market and Wage Development in Europe', published in October 2025,

- having regard to the Commission proposal of 25 November 2025 for a joint employment report from the Commission and the Council (COM(2025)0958),

- having regard to the Commission recommendation of 25 November 2025 for a Council recommendation on the economic policy of the euro area (COM(2025)0957),

- having regard to the Commission communication of 25 November 2025 entitled 'Alert Mechanism Report 2025' (COM(2025)0956),

- having regard to the Commission recommendation of 25 November 2025 for a Council recommendation on human capital in the European Union (COM(2025)0959),

- having regard to the inputs of the European social partners to the European Semester 2026 and the Autumn Package in particular,

- having regard to the report by Mario Draghi entitled 'The future of European competitiveness', published in September 2024,

- having regard to the report by Enrico Letta on the future of the single market, entitled 'More than a Market', published in April 2024,

- having regard to the report of the High-Level Group on the future of social protection and of the welfare state in the EU, published in January 2023,

- having regard to Rule 55 of its Rules of Procedure,

- having regard to the report of the Committee on Employment and Social Affairs (A10-0033/2026),

A. whereas the EU's employment target of having at least 78 % of people aged 20 to 64 in employment by 2030 is on track to be achieved; whereas in October 2025, the unemployment rate in the EU stood at 6 %, ranging from 2.6 % to 10.6 % among the Member States, while youth unemployment remains high at 13.2 %; whereas unemployment levels and precarious working conditions remain persistently high for young people, women, older workers, low- and medium-qualified third-country nationals, persons with disabilities, and Roma and other ethnic minorities, all of whom face structural barriers to employment; whereas for persons with disabilities unemployment stands at 15.1 %; whereas higher levels of employment in the EU should go hand in hand with job quality, decent salaries, wage increases and productivity gains;

B. whereas the European Semester remains a central instrument for coordinating economic, fiscal, employment and social policy across the EU, and should aim to embed social justice, environmental sustainability and intergenerational fairness more systematically into macroeconomic governance, putting the EPSR at its core and respecting the principle of subsidiarity; whereas efforts have been made to better balance the monitoring of economic and social objectives in the European Semester process with the development of the Social Scoreboard and the recent integration of the social convergence framework into the process; whereas the 2026 Autumn Package was presented without an Annual Sustainable Growth Survey setting out a holistic and balanced strategy for the EU's economic, social and employment, and environmental objectives and anchoring the European Semester in a broad vision of sustainable growth for the Union; whereas the EU must remain committed to competitiveness, sustainability and social justice, without allowing one objective to be pursued at the expense of the others;

C. whereas 93.3 million people, accounting for 21 % of the EU population, were at risk of poverty or social exclusion (AROPE) in 2024, which shows that limited progress has been made towards the 2030 EPSR target for poverty reduction, with the trend in more than half of Member States moving in the wrong direction; whereas poverty risks are much higher for women, children, older people, persons with disabilities, the LGBTI+ community, low-skilled people, third-country nationals, Roma, single-parent households, and people living in depopulated areas, and significant discrepancies persist between and within Member States, including between rural and urban areas; whereas this divergence between rising average incomes and persistent poverty levels highlights structural challenges in income distribution, labour markets and the design and coverage of social protection systems; whereas more than 40 million people in the EU, corresponding to around 9.2 % of the population, experienced energy poverty in 2024, leading to material deprivation; whereas the insufficient coverage and inadequacy of minimum income schemes, unemployment benefits and family and child benefits, as well as barriers to labour market integration and accessing quality public services such as health, education, care and housing, contribute to the persistence of poverty and social exclusion, particularly among the most disadvantaged groups; whereas without a change of approach to tackling poverty at EU and national level, it will not be possible to reverse the trend; whereas an ambitious EU anti-poverty strategy will be essential to provide responses to the multidimensional phenomenon of poverty;

D. whereas one child in four is still at risk of poverty or social exclusion in the European Union, which is a higher level than for the population as a whole; whereas insufficient progress is being made towards the objective of reducing the number of children at risk of poverty or social exclusion by 5 million by 2030, with the percentage of children AROPE having risen every year between 2019 and 2023 and remaining persistently high; whereas, according to the Commission proposal for a 2026 joint employment report, in 2024 around 19.5 million children (24.2 %) were at risk of poverty or social exclusion in the EU; whereas preventive child and family support policies and services, in line with the European Child Guarantee, are essential to addressing the socio-economic conditions that may lead to family separation and child institutionalisation; whereas a dedicated funding instrument for the European Child Guarantee, as well as synergies with other EU and national funds, are of the utmost importance, both in the current and next multiannual financial framework; whereas according to the Commission, the EU needs to invest more than EUR 11 billion additionally per year, to meet the 2030 Barcelona targets for early childhood education and care (ECEC)[2]; whereas children who can benefit most from attending ECEC, such as those from disadvantaged backgrounds, tend to participate least and continue to face barriers to access;

E. whereas there are still at least 1.4 million persons with disabilities and almost 300 000 children living in institutions in the EU; whereas residents of institutions are isolated from the broader community and do not have sufficient control over their lives and the decisions that affect them; whereas despite the fact that the EU has long been committed to the process of deinstitutionalisation, efforts are still needed at both EU and national level to enable vulnerable groups to live independently in a family or community environment;

F. whereas 1 in 12 workers (8.2 %) in the EU experienced in-work poverty in 2024, undermining social cohesion, and highlighting that employment does not per se provide full protection against poverty or translate into improved living conditions, due to rising living costs and diminished purchasing power; whereas recent increases in statutory minimum wages, often above 20 % between 2022 and 2025 and above 40 % in several Member States, have helped to protect low-paid workers' purchasing power and have supported wage growth in low-paid sectors; whereas despite real wages having exceeded pre-pandemic levels in most Member States, several large economies have not yet returned to these levels;

G. whereas climate change has exacerbated inequalities and particularly affected the most vulnerable groups, which tend to be more exposed to environmental hazards, for example high temperatures, leading to lower standards of job quality, productivity loss and greater job insecurity; whereas the transition towards climate neutrality must be socially fair and inclusive for all, and is expected to create between 1 million and 2.5 million additional jobs by 2030, if supported by the right employment and education policies; whereas strong and adequately funded social protection, as well as quality job creation policies, are a prerequisite for ensuring a fair and just transition towards climate neutrality and digital transformation;

H. whereas the EU faces persistent labour and skills shortages in several sectors, driven by different factors, such as demographic and technological change, skills mismatches, job quality and lack of attractiveness of and investment into quality public services, which has been identified as a key barrier for EU growth and competitiveness; whereas limited career prospects and precarious working conditions of young people in parts of the Union contribute to talent outflows between EU regions and third countries, further exacerbating these shortages; whereas the Commission proposal for a 2026 joint employment report highlights that addressing structural labour market weaknesses through better job quality supports higher productivity, economic performance, social fairness and cohesion; whereas improving workers' rights, collective bargaining, active labour market policies, access to social protection and skills development opportunities for all, including third-country nationals, as well as targeted activation measures for the 51 million people of working age currently outside the labour force, would help strengthen participation, inclusiveness and competitiveness; whereas by 2050, the EU working population is expected to shrink by up to 18.8 million people, which suggests that legal labour migration can help to respond to evolving labour market needs;

I. whereas in 2022, the rate of adult participation in learning stood at 39.5 %, indicating that more effort is needed across most Member States to reach the target of 60 % of adults participating in education and training by 2030; whereas the integrated approach to policy coordination within the European Semester provides the framework to guide the necessary investment in human capital development, education and training systems; whereas further substantial efforts are needed to ensure provision of, and access to, quality training policies, notably for workers in lower-skilled occupations, to promote lifelong learning and strengthen EU competitiveness, resilience and the inclusiveness of the EU workforce; whereas public spending alone may not meet the scale of upskilling and reskilling needs given the transformational challenges the EU is facing; whereas in 2022, the average score for basic skills among 15-year-olds in the Programme for International Student Assessment (PISA) declined compared to 2018, with underachievement disproportionately affecting disadvantaged learners, highlighting the need for reforms and sustained investment in education and training to support future generations and their transition from education to work;

J. whereas additional investment needs in social infrastructure have been estimated at EUR 192 billion per year, including in affordable, housing, health and long-term care, education and lifelong training[3]; whereas value must be placed on the economic return of social investments, in particular public spending on children and youth, which not only improve living standards and reduce poverty, but are also key drivers of sustainable and inclusive economic growth, higher productivity and increased employment rates; whereas underinvestment in education and research weakens long-term growth prospects; whereas for children, social investments are an investment in the future, which leads to better education and job prospects, which in turn boost economic indicators; whereas further work is needed to measure the social investment gap post-recovery in the EU, as well as social services investment and coverage and their economic returns; whereas the development of common data indicators on social services expenditure and coverage, such as the European Social Services Index, would strengthen evidence-based recommendations and effective monitoring of their implementation within the European Semester;

K. whereas housing cost pressures and high energy prices impose significant burdens on households, yet housing policy has often been under-represented in country-specific recommendations, despite its macroeconomic relevance and its central role in income security, social inclusion and cost-of-living resilience; whereas investment in social services and increasing housing supply, including social and affordable housing, as well as in energy efficiency and building renovation and addressing skills shortages, play a key role in reducing poverty, including energy poverty, and improving affordability;

L. whereas the EU gender pay gap currently stands at 12 % due to the disproportionate share of household and childcare responsibilities borne by women and the persistent undervaluation of women-dominated professions, among other factors; whereas women face a higher risk of poverty, particularly in older age, with the gender pension gap currently reaching 25 %[4];

1. Stresses the competitive advantage of investing in the EU's social model; calls for the recommendations of the High-Level Group on the future of social protection and of the welfare state, as well as the recommendations of the Letta and Draghi reports, to be integrated into the European Semester process in order to protect and reinforce the EU's social market economy; stresses the need for a balanced approach that supports social rights, public services, and collective bargaining structures and coverage as much as competitiveness; welcomes the integration of the EPSR into the economic governance framework and calls on the Member States to take advantage of the possibility of extending the adjustment period for investing in the EPSR priorities; calls for the integrated governance framework to be reflected in the internal processes of the EU institutions, with their economic and social bodies involved to equal extents;

2. Urges the Commission and the Member States to fully implement the EPSR; stresses that the updated EPRS action plan must translate political commitments into concrete and ambitious measures, supported by clear, measurable targets and robust monitoring indicators, in order to effectively address poverty and social exclusion and to support workers in managing the green and digital transitions, in particular regarding skills, VET and lifelong learning; calls for the EPSR action plan targets to be embedded at the core of the European Semester by making them benchmarks in the European Semester assessments; notes that the Commission proposal for a 2026 joint employment report focuses to a large extent on skills and labour shortages and falls short of a comprehensive assessment of the implementation of the 20 principles of the EPSR, as required by Regulation (EU) 2024/1263; calls on the Commission to ensure all EPSR principles are addressed in future cycles to ensure an accurate and complete picture of the social situation in the EU;

3. Welcomes the Commission's ambition to eradicate poverty by 2050, its European affordable housing plan, and its intention to propose a quality jobs act; welcomes, furthermore, the first EU anti-poverty strategy and the strengthening of the European Child Guarantee; emphasises the need for coherence between the European Semester, the follow-up to the EPSR action plan and these upcoming instruments, with measurable targets and corresponding country-specific recommendations;

4. Stresses the importance of eradicating child poverty and social exclusion in order to break intergenerational cycles; welcomes the inclusion of an assessment of the implementation of the Child Guarantee in all country reports in the 2025 Spring Package and encourages continued monitoring of progress within the European Semester; regrets, however, the lack of follow-up to these findings, with only two country-specific recommendations in 2025 calling for action to address child poverty; considers that the country-specific recommendations should reflect Member States' budgetary compliance with the minimum allocation requirements for tackling child poverty set out in the ESF+ Regulation[5];

5. Reiterates its call for an increase in the funding of the European Child Guarantee, with a dedicated budget of at least EUR 20 billion, and for Member States to earmark at least 5 % of their allocated ESF+ funds to fighting child poverty and promoting children's well-being, with at least 10 % earmarked for Member States with child poverty levels exceeding the EU average;

6. Is concerned about the level of youth unemployment, which remains more than twice as high as the overall EU unemployment rate; stresses that, for young people, it is essential to complement employment activation measures with sustained support, including access to integrated social services, housing and mental health support in order to ensure their continued participation in education or employment; emphasises the need for Member States to invest in the reinforced Youth Guarantee in order to ensure quality and timely support for all young people not engaged in education, employment or training (NEETs) under the age of 30; urges the Member States to strengthen  the use of the reinforced Youth Guarantee as a tool to support care leavers and prevent the 'care cliff', including through access to career guidance;

7. Considers that action at EU and Member State level is needed to prevent and address persistently high levels of poverty and social exclusion, and welcomes the announcement of the first EU anti-poverty strategy in this regard; believes that the strategy must provide a comprehensive approach to tackling the root causes and multidimensional aspects of poverty and social exclusion, with concrete actions, a robust budgetary allocation, clear objectives, milestones and structural measures, while also ensuring strong implementation and monitoring; calls on the Member States to implement the directive on adequate minimum wages[6]to fight in-work poverty and incentivise work; calls for the EU anti-poverty strategy to place the fight against child poverty at its core in order to break the cycle of poverty; urges the Member States to fully implement the Council recommendation on adequate minimum income[7];

8. Recalls the importance of improving self-employed people's access to social protection and calls on the Commission to use the European Semester process to monitor national implementation of the Council Recommendation on access to social protection for workers and the self-employed[8], including the country-specific recommendations; recalls, as the rate of self-employed professionals in the cultural and creative sectors is more than double that of the general population, the need for targeted measures for the sector; welcomes, in this context, the announcement of an EU Artists Charter aimed at highlighting the main fundamentals and commitments for fair working conditions in this sector, but urges the Commission to advance its publication to 2026, as these represent long-standing issues;

9. Calls for an EU directive on a framework for minimum income schemes, with the purpose of safeguarding the right to a decent life and ensuring that every person in need in the EU is covered by a minimum income scheme; recalls that such a directive, in compliance with the principle of subsidiarity, would address gaps in the EU social acquisby contributing to the goals of reducing poverty while fostering the active integration of people who are absent from the labour market;

10. Regrets that the objectives of the EU Roma strategic framework are not being more actively pursued by Member States and are not receiving sustained attention in the European Semester process, particularly in the country-specific recommendations; emphasises the strategic framework's goal of halving the employment gap between Roma and the general population and ensuring that at least 60 % of Roma are in paid work by 2030; urges Member States to adopt an integrated, equality-focused approach and to ensure that public policies and services effectively reach all Roma, including those in remote and rural areas;

11. Recalls with concern the persistent disability employment gap of around 24 %, and, on the other hand, the EU's objective of transitioning from institutional to community- or family-based care for all people concerned; calls on the Commission to address the disability employment gap through the European Semester, including in the country-specific recommendations, and to update the EU strategy for the rights of persons with disabilities 2021-2030 in line with the UN Convention on the Rights of Persons with Disabilities, with new flagship initiatives, including a European disability employment and skills guarantee; reiterates its call on the Commission to put forward an action plan on deinstitutionalisation covering all groups still living in institutions, including children, persons with disabilities, people with mental health issues and people experiencing homelessness; stresses that progress on deinstitutionalisation should be monitored within the European Semester, and calls on Member States to make full use of ESF+ and other EU and national funds to finalise this process, develop community-based services and invest in prevention;

12. Welcomes the permanent inclusion of the social convergence framework in the European Semester; stresses its importance, together with the Social Scoreboard, for identifying risks and tracking progress on upward social convergence, reducing inequalities, strengthening social protection systems and promoting decent working conditions and supportive measures to ensure fairness in the transition; calls on the Commission to further develop innovative quantitative and qualitative analysis tools under this new framework in order to make optimal use of it in future cycles of the European Semester; calls on the Commission to analyse the risks to upward social convergence highlighted in its 2025 joint employment report, including employment outcomes of under-represented groups, early school leaving and adult learning, and poverty, in the second stage of the analysis, and to discuss with the Member States concerned the measures undertaken or planned to address these risks; notes that addressing the challenges identified in the joint employment report will contribute to achieving upward social convergence;

13. Calls on the Commission to improve and update the Social Scoreboard, making sure it reflects the drivers and impacts of inequality, including equal opportunities, quality employment, wealth distribution, access to public and social services, adequate pensions, housing and homelessness, mental health, discrimination and the social impacts of environmental degradation and climate change; calls on the Commission to treat in-work poverty as a warning signal within the Social Scoreboard and to propose country-specific recommendations where such trends persist; stresses the need to address challenges flagged as 'critical' or 'to watch' in the Scoreboard, including early school leaving, housing cost overburden, the impact of social transfers, the disability employment gap, self-reported unmet needs for medical care, childcare, basic digital skills and child poverty; calls for the inclusion of a social progress index and the Gender Equality Index to better measure inequality, access to opportunities and well-being using disaggregated data; stresses the need for timely, harmonised and transparent data and methodologies to improve evidence-based policymaking and targeted social investments, and for aligning the Social Scoreboard with all 20 principles of the EPSR;

14. Recalls that the AROPE indicator does not sufficiently capture the root causes of poverty and complex inequalities, in particular the inclusion of persons living outside private households, qualitative aspects of poverty and the lived experiences of marginalisation, while also considering that poverty extends beyond insufficient income or material deprivation; calls on the Social Protection Committee to work on renewing the AROPE statistical measure in order to expand it towards a stronger, disaggregated and more multidimensional understanding of poverty and social exclusion;

15. Recalls that social investment can have a positive impact on economic growth, productivity and competitiveness, while contributing to fiscal sustainability and promoting upward social cohesion, living and working conditions, and the inclusion of vulnerable groups; calls on the Commission and the Member States to treat social investment as foundational to sustainable growth and to focus on investments that have proven their effectiveness in terms of growth, productivity, job quality and increased labour market participation; calls on Member States to make full and targeted use of the Recovery and Resilience Facility until 31 December 2026 to address the challenges identified in the country-specific recommendations; requests that the Commission provide guidance on leveraging private investment and public-private partnerships to close social infrastructure gaps; welcomes the launch of the Social Investment Knowledge Hub to enhance mutual learning and technical assistance, continue improving the timeliness and availability of social indicators, reduce delays in assessing poverty and inequality trends, and enhance Member States' access to data for policy evaluation and impact assessment;

16. Recalls that the social economy is a key component of social investment, playing a unique role in developing inclusive and innovative solutions at the local level, contributing to quality job creation, the provision of affordable and accessible social and proximity services, and the green and digital transitions; notes that public support for the social economy is strong, with 88 % of Eurobarometer respondents supporting strategies and legislation to promote it; calls on the Commission and the Member States to strengthen its framework conditions by facilitating access to finance, providing capacity building opportunities and ensuring its visibility, and to reflect the objectives of the social economy action plan in the European Semester, including through country-specific recommendations and the targeted use of EU funds;

17. Emphasises that the Commission's affordable housing plan should be integrated better into the European Semester, with a stronger focus in country-specific recommendations on affordable, decent and sustainable housing, in particular for low and middle income groups, as well as for persons with disabilities and older persons; calls for strengthened monitoring of Member States' progress in ensuring access to adequate, safe and non-segregated housing for Roma communities experiencing extreme poverty; reminds the signatories to the Lisbon Declaration on the European Platform on Combatting Homelessness about the goal to eradicate homelessness by 2030; calls on Member States to combine measures that increase supply, lower building costs and address labour shortages in the construction and housing sector with demand-side support that enables people, in particular households in vulnerable situations, to access affordable, decent and sustainable housing; stresses that national medium-term fiscal-structural plans and investment strategies should support social and affordable housing, the prevention and reduction of homelessness and building retrofits to reduce energy poverty and improve housing conditions, in particular for vulnerable households; recalls that the Social Climate Fund will provide funding to Member States from 2026 to support vulnerable households and micro-enterprises, and stresses the importance of monitoring its use during this cycle of the European Semester; calls for measures to combat speculation and regulate short-term rentals in areas under housing stress;

18. Emphasises that investment in high-quality, accessible education and lifelong learning is a strategic social investment that is essential for cohesion, inclusion, and preparing the workforce for the green and digital transitions and the defence-related needs of the EU, including through vocational education and training and apprenticeships; welcomes the proposal for a Council recommendation on human capital in the EU and its focus on addressing skills shortages, the use of skills intelligence for the design of skills strategies and the development of a broad set of basic skills, including digital, citizenship and AI literacy, to prepare individuals for modern life; recognises that insufficient investment in human capital hampers innovation, competitiveness and people's ability to reach their full potential;

19. Highlights the need for EU initiatives on skills shortages to provide stronger support for comprehensive, inclusive education and training systems, including through active labour market policies, individual learning accounts and micro-credentials, and the strengthening of procedures for the validation of non-formal and informal learning; further stresses the importance of improving and facilitating fair labour mobility within the EU and of the role of legal migration and the recognition of foreign qualifications to address skills shortages; is concerned that adult participation in training remains well below the 60 % target in most Member States, particularly among low-skilled workers, older workers, non-EU nationals and persons with disabilities; calls on the Commission to put forward concrete solutions to skills shortages and to address persistent challenges in the upcoming Fair Labour Mobility Package, ensuring that the forthcoming Skills Portability Initiative addresses current obstacles to skills recognition;

20. Strongly believes that an individual right to training for workers during working hours, which addresses the main barriers to pursuing training, can ensure quality upskilling and reskilling, employee training and career development support in order to ensure a predictable and stable supply of skilled workers for employers; stresses the need for tackling the cost barrier by ensuring cost-free training for workers, supported by funding, tax incentives and partnerships; stresses that national institutions and social partners are responsible for the training of employees, and highlights their essential role in the implementation of the right to training; calls, in this regard, on Member States to prioritise and promote training schemes developed jointly by workers and their employers, ensuring that upskilling and reskilling respond to real market demand and contribute to career progression; calls on the Commission to explore and issue guidance on how public-private partnerships between Member States and enterprises can fund the training, reskilling and upskilling of workers, in particular the right to training for individual workers;

21. Emphasises that intergenerational fairness must become a structural component of the European Semester; calls on the Commission, as part of its intergenerational fairness strategy, to integrate indicators on youth and old-age well-being, access to quality jobs, housing affordability, availability, physical accessibility, adequacy of minimum income and pensions, access to quality mental health services, and high quality education and skills into the European Semester's assessment framework, and to evaluate long-term and distributional impacts of fiscal and reform recommendations; calls on the Commission to assess the long-term economic, environmental and social impacts of policy recommendations, including underinvestment, on future generations; stresses the need to better integrate the impact of demographic transformation and increased longevity into the European Semester; stresses that the demographic change requires policies to increase labour force participation; highlights the need for measures that support active ageing and ensure the long-term sustainability of pension and care systems; considers that country-specific recommendations should promote pensions that ensure a life of dignity, well-being, and access to quality, affordable healthcare and preventive services for all;

22. Stresses that, within the framework of the European Semester, defence spending must be planned in a coordinated, efficient, transparent and European manner to maximise societal benefits; underlines that security-related investment should include societal resilience, including infrastructure with high civilian benefits, social protection, civic education, democratic resilience and protection against disinformation, recognising that social stability and democratic trust are important components of Europe's security architecture and must be reflected in the Semester's analysis of long-term reform and investment needs;

23. Underlines that the European Semester recommendations in 2026 will be crucial in shaping the next multiannual financial framework; believes that reforms and investments should be selected for their efficiency and effectiveness in addressing the relevant country-specific recommendations; warns that if EU funding is to be tied to Semester guidance, that guidance must be socially balanced in full alignment with the EPSR, and regional and local actors must play an important role in the disbursement of funds; notes with concern, in this regard, the Commission's proposal for social spending, which risks diluting focus on employment and social objectives, and calls for a stand-alone and reinforced ESF+ with thematic concentrations;

24. Considers that the EU's social model is an integral part of its competitiveness and that efforts to simplify administrative burdens for businesses must preserve and ensure social rights; emphasises that job quality and non-cost competitiveness, such as the quality of products and services, can also support productivity and wage growth; highlights the importance of providing greater clarity, proportionality and legal certainty, in particular for small and medium-sized enterprises and self-employed professionals, and emphasises that such approaches should respect the diversity of labour market models across Member States, while supporting sustainable economic activity and quality job creation;

25. Supports a more democratic European Semester process, with Parliament strongly involved in setting economic and social policy priorities and taking economic governance decisions; insists that the formulation, monitoring and follow-up of national reforms must systematically involve social partners, civil society organisations, and regional and local actors, with adequate time and transparency; urges the Commission and Member States to ensure their proper involvement at all stages of the analysis, including within the social convergence framework, in order to strengthen ownership and ensure that EU social rights are a reality on the ground; emphasises that respect for the principle of subsidiarity and national competence remains central to the European Semester; recalls the need for the Commission to ensure that the European Semester and the EU economic governance framework assess the impact of recommended reforms on gender equality and women's integration into the labour market, and to promote investment in quality public services and care infrastructure;

26. Draws attention to the lack of a transparent methodology for the formulation of country-specific recommendations and of clarity on the criteria used for their selection; warns that this undermines accountability and risks unequal treatment of Member States; calls on the Commission to ensure full transparency on procedures and internal decision making, including the directorates-general involved, and to strengthen accountability and information-sharing with Parliament; is concerned that compliance with country-specific recommendations remains persistently low; calls on Member States to better address recommendations in the fields of employment and social policies; calls on the Commission to reinforce its dialogue with Member States on the implementation of existing recommendations and the Employment Guidelines, including follow-up on current and planned policy actions;

27. Instructs its President to forward this resolution to the Council and the Commission.

EXPLANATORY STATEMENT

This report sets out Parliament's employment and social priorities for the 2026 European Semester in a context marked by moderate economic growth, persistent social disparities, demographic change and structural labour and skills shortages. While employment levels in the EU remain comparatively high, poverty and social exclusion continue to affect more than one in five Europeans, with particularly severe impacts on children, persons with disabilities, Roma, women and other vulnerable groups. The report therefore calls for a stronger integration of social objectives into the core of EU economic governance.

The European Semester must function as a genuinely balanced framework, embedding the European Pillar of Social Rights (EPSR) at the heart of fiscal and macroeconomic coordination. The report stresses that competitiveness, sustainability and social justice must reinforce, not undermine, one another. It calls for full implementation of the EPSR, for measurable social targets to guide country-specific recommendations, and for stronger use of the Social Convergence Framework and Social Scoreboard to identify risks and ensure upward social convergence.

Combating poverty remains a central priority. The report welcomes the forthcoming EU Anti-Poverty Strategy and insists that it address the multidimensional nature of poverty with clear objectives, adequate funding and robust monitoring. Particular emphasis is placed on eradicating child poverty. The report also reiterates the need to strengthen minimum income protection and to address in-work poverty through effective implementation of existing legislation.

Investment in people is presented as a cornerstone of sustainable growth. The report underlines that social investment, including in education, lifelong learning, affordable housing, health and long-term care, supports productivity, labour market participation and social cohesion. It calls for full use of the Recovery and Resilience Facility, improved guidance on leveraging private investment, and stronger monitoring of social investment gaps. The social economy is recognised as a key driver of inclusive local development, quality job creation and support for the green and digital transitions.

Addressing labour and skills shortages requires improving job quality, strengthening workers' rights and collective bargaining, enhancing access to training, and facilitating fair labour mobility and skills recognition. The report stresses the importance of an individual right to training, stronger validation of non-formal skills, and targeted activation measures to increase participation of underrepresented groups. It also highlights the importance of legal migration policies that respond to labour market needs.

The report further calls for greater attention to affordable housing, deinstitutionalisation and community-based care, gender equality, disability inclusion, intergenerational fairness and territorial cohesion. It emphasises that demographic transformation requires policies that increase labour market participation while ensuring dignified pensions, sustainable care systems and quality public services.

Finally, the report advocates for a more democratic and transparent Semester process, with stronger involvement of Parliament, social partners, civil society and regional and local authorities. By aligning economic governance with social priorities and long-term investment in human capital, the European Semester can better contribute to resilience, cohesion and sustainable prosperity across the Union.

ANNEX: DECLARATION OF INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that she included in her report input on matters pertaining to the subject of the file that she received, in the preparation of the report, prior to the adoption thereof in committee, from the following interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register[9], or from the following representatives of public authorities of third countries, including their diplomatic missions and embassies:

The list above is drawn up under the exclusive responsibility of the rapporteur.

Where natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that she has submitted to the natural persons concerned the European Parliament's Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.

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