The European Commission has launched the 2026 European Semester Autumn Package, a framework designed to enhance the European Union’s competitiveness and social cohesion. Critical to this initiative is the Competitiveness Compass, which defines strategic priorities across three areas: increasing innovation, transitioning to a green economy, and reducing strategic dependencies.

The Commission’s strategy emphasises cutting unnecessary bureaucracy, improving access to funding, creating better jobs, and investing in education and skills development, particularly in STEM and digital sectors.  

Although the EU economy has demonstrated strong post-pandemic recovery, growth is slowing due to persistent labour and skills shortages and a significant proportion of workers in low-productivity and low-wage sectors. Additionally, global security uncertainties present risks that could impede economic expansion. To address these challenges, the Commission is promoting investment in research, technology, climate resilience, and education, alongside measures to improve labour market functioning, accelerate digitalisation, and strengthen industrial capacity.

A significant portion of future funding under the next Multiannual Financial Framework will be channelled through national and regional partnership plans (NRPPs) and the newly proposed European Competitiveness Fund (ECF). This approach aims to give Member States flexibility in areas such as defence spending, while maintaining fiscal stability and neutrality.  

Employment and skills development  

The European Semester 2026 Autumn Package also focuses on employment and social inclusion, with the Joint Employment Report (JER) providing an extensive set of indicators to monitor Member States’ progress toward 2030 targets. In 2024, the EU-wide employment rate reached 75.8%, a modest increase from 2023, but still slightly below the 78% target. Participation in adult learning remains a concern, with only 39.5% of adults engaged in learning activities, far from the 60% goal for 2030. On poverty reduction, the EU has achieved a reduction of 2.9 million people at risk since 2019, though the long-term target of 15 million fewer at risk remains distant.  

To support Member States in achieving these objectives, the EU combines financial instruments and policy initiatives. The European Social Fund Plus (ESF+, €142 billion) remains the primary vehicle for social spending, while the Recovery and Resilience Facility (RRF, €163.7 billion) promote reforms and investments that strengthen resilience and competitiveness. Additional instruments such as the European Regional Development Fund (ERDF), the Connecting Europe Facility (CEF), and the Just Transition Fund (JTF) support infrastructure development, regional cohesion, and the green transition. Initiatives like Erasmus+, the Union of Skills, the Affordable Housing Plan, the European Anti-Poverty Strategy and the upcoming Quality Jobs Roadmap reinforce the EU’s commitment to promoting skills development and quality employment across all sectors.  

Disability employment and inclusion  

Despite these efforts, significant challenges persist for people with disabilities. The disability employment gap widened to 24.0 percentage points in 2024, up from 21.4 points in 2023, reversing progress made since 2020. The gap exceeds 40% in Romania and Croatia, and is above 30% in Belgium, Lithuania, Ireland, Poland and Bulgaria. Employment participation for people with disabilities stands at 64%, compared to 83% for people without disabilities, while the poverty risk is disproportionately high at 33.6% versus 18.4%.  

Member States are implementing targeted measures to improve inclusion. For example, Greece introduced a subsidised employment program covering up to 75% of salaries for 1000 people with disabilities, while Luxembourg is modernising its disability statute to expand rights. Spain is reforming public administration recruitment procedures to remove accessibility barriers, Sweden is running employer awareness campaigns, Poland is offering wage subsidies for hiring senior employees, and Slovenia is enhancing education and training opportunities to support employability in a digitalized economy. Collectively, these initiatives demonstrate a growing commitment to building inclusive labour markets and addressing structural barriers.  

Long-term care and social services  

The European Care Strategy highlights long-term care (LTC) as a critical pillar of the social model, emphasising the need for high-quality, affordable, and sustainable services. LTC supports gender equality by enabling informal carers, primarily women, to participate in the labour market. Across the EU, Member States are modernising and expanding care systems. Belgium’s “ToekomstZorg” initiative develops intersectoral LTC, Bulgaria is creating high-quality residential facilities, Denmark is supporting independent living, and Greece has implemented a comprehensive LTC strategy. Spain is transforming care models under its Recovery and Resilience Plan to emphasise community-based care, while Croatia is integrating home and community-based LTC services and building zero-energy centres for older people. Other examples include Lithuania’s broad enhancements to community care, Hungary’s partnership forum to monitor LTC strategies, Poland’s legal reforms and senior voucher system, and Austria’s workforce reforms. Together, these efforts reflect a shift toward resilient, inclusive, and community-oriented care across Europe.  

Social inclusion, poverty, and early childhood education  

Social inclusion remains a significant challenge, particularly for people with disabilities, whose AROPE rate (At Risk of Poverty or Social Exclusion) stands at 28.7%, and rises to 36.2% for those with severe disabilities. The EU emphasises expanding access to inclusive education, employment, training, and personal assistance, alongside strengthening minimum income schemes and ensuring universal access to essential services, including healthcare, housing, and energy.  

Early Childhood Education and Care (ECEC) plays a central role in both gender equality and the inclusion of children with disabilities. Participation for children under age three is 39.2%, below the 2030 target of 45%, while participation for ages three to primary school stands at 94.6%, slightly below the target of 96%. Structural barriers such as affordability, staffing shortages, and socio-cultural factors, particularly for disadvantaged or migrant families, persist. But Member States are taking action. Ireland launched the Equal Start program, Cyprus provides ESF+ subsidies for tuition and transportation, Greece expanded all-day ECEC access, and Slovakia co-finances nursery development and strengthens staff capacity.  

In short

The European Semester 2026 and the Joint Employment Report underscore the EU’s dual focus on competitiveness and social cohesion. By investing in human capital, reducing structural barriers, modernising care systems, and promoting inclusion, the EU seeks to ensure sustainable prosperity and resilience across its Member States. While progress has been made in employment, poverty reduction, and education, persistent challenges, particularly in disability inclusion and early childhood care, highlight the need for continued targeted policies, investment, and collaboration between the EU, Member States, and civil society. The Commission’s strategic priorities and funding mechanisms provide a robust framework for addressing these issues and supporting a more innovative, green, and socially inclusive Europe.