From digital infrastructure to social inclusion, the EU's new seven-year Budget sets out more than just spending priorities. It lays down a long-term vision for the kind of economy and workforce Europe wants to build. For employers and HR leaders, it's a blueprint worth studying.
Why the EU Budget matters for the future of work
The EU Budget is the financial expression of the Union's political priorities. Structured through a seven-year Multiannual Financial Framework (MFF), it determines where money will flow, how much will be spent, and on what terms. The 2028-2034 MFF, coupled with its associated proposals and strategic documents, goes beyond fiscal allocation, and combines investment with strategic intent: strengthening Europe's resilience, competitiveness, inclusion, and social cohesion. In a recent article, we explained that the UK government's recent Spending Review serves as a barometer of domestic policy priorities. Similarly, the EU Budget hints at the direction of travel for the European workforce.
Above all, a notable feature of the 2028-34 Budget is the expanded role of public-private partnerships. Across all areas, the EU is allocating an unprecedented share of its funding to frameworks designed to leverage private capital and capability. For business, that's a signal. The Union increasingly sees employers not as mere market actors, but as partners in delivering leadership, success, and growth. These partnerships, and the conditions attached to them, will shape labour markets, productivity models, and people demands across the continent for the decade ahead.
Competitiveness and digital transformation: the rise of the European Competitiveness Fund
The centrepiece of the EU's new investment framework is the creation of the European Competitiveness Fund (ECF), an instrument designed to accelerate and enhance the EU's capacity in strategic and high-value industrial sectors, such as clean tech, advanced manufacturing, AI, quantum computing, space, and defence. With over €450bn in combined resources (including Horizon Europe, the Innovation Fund, and other flagship programmes), this is designed less as a subsidy than as a magnet to attract private capital and people.
For employers, the implications are clear. The ECF won't just decide which industries grow, but where and how they grow, including the human capital and skills that enables them. Businesses in target sectors may benefit from preferential financing mechanisms, but access may also be conditioned by new criteria around supply chain localisation, skills development commitments, sustainability performance, or speed to market.
This also means that, looking ahead, we are likely to see increased regulatory and reporting obligations linked to EU funding. These may include workforce disclosures, diversity and inclusion metrics, or training delivery targets, especially in sectors where the EU seeks rapid scaling. Employers will need to anticipate these compliance landscapes and build internal capabilities accordingly.
Defence, security, and the technological workforce
In response to geopolitical instability, the EU has accelerated efforts to establish a more integrated European Defence Union and the new Budget similarly places defence and security at the heart of Europe's investment strategy. The Competitiveness Fund will therefore strengthen the continent's defence-industrial base, support the development of dual-use technology, enhance military mobility, expand cybersecurity capabilities, and fortify critical infrastructure against emerging threats.
This convergence of defence and industrial policy has significant implications for workforce strategy. Defence-adjacent sectors, such as cybersecurity, telecoms, aerospace, and advanced engineering, will see growing demand for highly specialised roles, as well as cross-border project management expertise. And as security policy becomes more integrated across the EU, we may also see efforts to harmonise mobility frameworks for critical defence- and security-related roles. This could include the mutual recognition of certifications, joint security clearances, or accelerated skilling pathways for cross-border defence and cybersecurity projects, particularly under EU umbrella programmes.
Looking ahead, employers in these sectors can expect a more agile and security-conscious tech labour market, but this flexibility will likely trigger tighter regulation: the capacity to move skilled workers quickly across borders will be a competitive advantage, albeit subject to evolving compliance requirements. Export controls, ethical standards for dual-use AI, and infrastructure cybersecurity protocols are all areas where regulatory divergence could generate complexity. Future-ready firms will therefore need to develop internal expertise on security-oriented hiring, build partnerships with specialised training providers, and participate in cross-border collaborations to stay ahead of both policy shifts and workforce constraints.
Horizon Europe and innovation
Horizon Europe continues to underpin the EU's innovation strategy, but its focus is shifting from funding cutting-edge research to acting as a pipeline for transforming ideas into deployable technologies. Consistent with the aims of the 2028-34 Budget, and working alongside the Competitiveness Fund, the programme is therefore expected to prioritise projects that can scale, work across sectors, and integrate human capital development from the outset.
For employers in R&D-heavy sectors, this underlines the need to build absorptive and internal innovation capacity, and form partnerships with universities, startups, and research consortia. As funding will increasingly depend on access to the right skills and people, businesses can expect growing pressure to rely on agile workforce planning, collaborative innovation frameworks, as well as interdisciplinary teams that can move rapidly from idea to implementation.
We also expect policy developments that promote open science and cross-border mobility. Employers may likewise be called upon to take a more active role in EU-wide partnerships, co-investing in training, mobility schemes, and long-term workforce development as part of Horizon-backed research schemes.
Social investment and labour market inclusion: ESF+ and the new skills mandate
The European Social Fund Plus (ESF+) remains the primary EU vehicle for funding inclusive employment, lifelong learning, and skills transitions. Its continued role in supporting the European Pillar of Social Rights (EPSR), in this context, also reinforces the idea that businesses' resilience and competitiveness are inseparable from social equity.
The Budget, however, also suggests that the close alignment of skills policy and industrial strategy will be a defining feature of the 2028-2034 period. This means that funding from ESF+ will be increasingly tied to enabling the green and digital transitions, through micro-credentials, vocational pathways, and re/upskilling programmes that target the evolving needs of the labour market. Employers that seek to benefit from these schemes should therefore be prepared to face tighter expectations around training outcomes, community involvement, and collaboration with regional skills providers.
From a regulatory perspective, this translates to an environment in which employer access to public funding or procurement frameworks could be linked to demonstrated investment in workforce development and social impact. Businesses that proactively adopt ESF+-aligned initiatives, such as apprenticeships, digital inclusion efforts, or second-chance training schemes, will be better placed to meet EU standards and expectations on inclusive growth and labour activation.
Resilience, preparedness and workforce risk
The EU's growing investment in preparedness, through initiatives like the ProtectEU Strategy and the Union Civil Protection Mechanism (UCPM), reflects a core principle: that resilience is a labour issue. While they are not employment programmes in a conventional sense, these frameworks will generate growing demand for new capabilities across the workforce, particularly in disaster logistics, climate risk management, digital continuity, and public health response.
For employers, this signals the rise of a range of future-facing roles that combine technical knowledge with adaptive, crisis-ready skills, especially in climate-vulnerable sectors such as agriculture, energy, transportation, and construction. Meanwhile, as resilience is becoming a formal component of business continuity planning, companies may expect to face new requirements to train staff for emergency scenarios, demonstrate organisational preparedness, or coordinate with local civil protection authorities.
In the long term, we may also see more integrated EU guidance and regulation on essential workforce resilience planning, particularly for infrastructure operators and critical service providers. Strategic workforce planning in this domain will require attention to cross-border certification, health-and-safety harmonisation, and the cultivation of rapid-response leadership.
Strategic blind spots: what the Budget leaves unsaid
While it sets out a bold vision for the Union's competitiveness, resilience and inclusion, the 2028-2034 EU Budget also leaves a few strategic questions unanswered, particularly for employers navigating rapid labour market changes. These gaps reflect areas in which future policy clarity, targeted instruments, or implementation guidance may be needed.
First, cross-border mobility remains uneven. The Budget supports it in specific domains, such as Horizon-backed research or defence-related certifications, but stops short of outlining a broader framework for high-skill migration or sector-spanning labour mobility. In the absence of a horizontal strategy, employers will need to rely on a patchwork of national schemes or bilateral partnerships, potentially limiting their agility in responding to skill shortages and competition.
Second, lifelong learning policy is fragmented. The ESF+ is expected to fund upskilling and reskilling, but remains unaided by a standalone EU-wide framework for continuous learning or cross-sector adaptation to automation. Skills policy remains anchored to sector-specific or regionally administered programmes, meaning that access will largely depend on an employer's location or industry. This creates gaps for businesses operating across boundaries or sectors.
Third, despite SMEs' vital role in EU employment and innovation, the MFF introduces no new instruments tailored to their needs. While eligible for programmes like Horizon Europe, typically as part of larger consortia, smaller businesses might be disadvantaged by the Budget's emphasis on large-scale partnerships, high-value sectors, and co-financing requirements. This may inadvertently sideline smaller actors. Future implementation will therefore need to ensure that administrative complexity and co-financing requirements do not become barriers to SME participation.
Fourth, the Budget is surprisingly silent on issues of workplace flexibility, mental health, and employee wellbeing, despite their growing importance in post-pandemic workforce strategies. Their omission suggests a disconnect between institutional priorities and the day-to-day realities of work across Europe. Future frameworks may therefore need to account more explicitly for the infrastructure of wellbeing both as a public health concern and as a productivity imperative.
Fifth, although it outlines ambitious investment goals, the Budget offers little operational clarity, especially on how employers can access funding in practice. For smaller firms, first-time applicants, or cross-border consortia, the absence of detailed guidance or streamlined processes may pose a barrier. Without clearer pathways to participation, well-intentioned priorities might fail to reach the organisations best placed to implement them.
Sixth, demographic decline is under-addressed. Europe's ageing population and shrinking workforce are largely absent from the Union's long-term planning. Without a stronger focus on key issues, such as active ageing, return-to-work schemes, or care infrastructure, demographic pressures may erode the effectiveness of broader workforce policies, disrupting their readiness to respond to structural demographic shifts.
Seventh, the Budget's focus on green transition requires a more robust labour strategy. While the 2028-2034 MFF positions the green transition as a cornerstone of Europe's future competitiveness, it does so with limited consideration of the social and labour impacts that will accompany decarbonisation. The transition away from carbon-intensive sectors will not be employment-neutral. The absence of a stronger transition framework, covering retraining, regional support, and job displacement, might thus deepen existing inequalities, especially in vulnerable regions.
What employers should do now
The 2028-34 EU Budget is above all a strategic signal. From industrial strategy to inclusion, from frontier innovation to public resilience, it offers a window into how European institutions envision the future of work. More concretely, it tells us which sectors, values, and capabilities the EU intends to back and prioritise, and under what conditions.
But it is not without blind spots. Key challenges remain around implementation, access, and coherence, especially for small businesses, cross-border employers, and those navigating demographic or wellbeing concerns. These gaps do not diminish the MFF's significance, but they nonetheless underscore the need for vigilance and adaptability.
This is not just about money, though: it's about strategic positioning. Employers who treat this document as a forward-looking roadmap will be better positioned to lead, adapt, and grow through the next decade.
To stay ahead of the curve, businesses should therefore:
- Align internal workforce strategies with core EU budget priorities, including strategic autonomy, resilience, social inclusion, and digital transition;
- Track the rollout of key funding instruments, such as the European Competitiveness Fund, Horizon Europe, and ESF+, paying close attention to eligibility criteria and co-financing conditions;
- Anticipate regulatory conditionalities, including obligations around skills development, diversity metrics, ESG-aligned workforce disclosures, or local engagement;
- Partner with local and regional stakeholders, such as universities, skills providers, civil protection agencies, to co-create programmes that align with both EU goals and regional workforce needs;
- Invest in strategic foresight and capacity to stay ahead of policy changes, workforce demands, and new occupational categories generated by climate, defence, and technology imperatives.
In a decade defined by disruption, those who understand these signals, and act on them early, will gain a lasting competitive edge.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
