Opinion of the Committee of the Regions on "Partnerships between local and regional authorities and social economy organisations: contribution to employment, local development and social cohesion"

(2002/C 192/13)

THE COMMITTEE OF THE REGIONS,

having regard to the decision taken by its Bureau on 12 June 2001, in accordance with Art. 265 (5) of the Treaty establishing the European Community, to draw up an own-initiative opinion on this matter and to instruct Commission 6 for Employment, Economic Policy, Single Market, Industry and SMEs to undertake the preparatory work;

having regard to its opinion on the Communication from the Commission - Building an inclusive Europe (CdR 84/2000 fin)(1);

having regard to its opinion on territorial pacts for employment, and the link between them and the European Union's structural policies (CdR 91/1999 fin)(2);

having regard to its resolution on the implementation of the European Employment Strategy (CdR 461/1999 fin)(3);

having regard to its opinion on the Communication from the Commission: Acting Locally for Employment - a Local Dimension for the European Employment Strategy (CdR 187/2000 fin)(4);

having regard to its opinion on the Proposal for a Council Decision on guidelines for Member States' employment policies for the year 2001 and the Proposal for a Decision of the European Parliament and of the Council on Community incentive measures in the field of employment (CdR 310/2000 fin)(5);

having regard to its resolution on the partnership principle and its implementation in the reform of the Structural Funds 2000-2006 (CdR 434/1999 fin)(6);

having regard to its opinion on the role of voluntary organisations - a contribution to a European society (CdR 306/97 fin)(7);

having regard to its opinion on the regions in the new economy - Guidelines for innovative measures under the ERDF in the period 2000-2006 (CdR 351/2000 fin)(8);

having regard to its opinion on the structure and goals of European regional policy in the context of enlargement and globalisation: opening of the debate (CdR 157/2000 fin)(9);

having regard to the Communication from the Commission on "strengthening the local dimension of the European Employment Strategy" (COM(2001) 629 final), which stresses that the local dimension of the European employment strategy is conducive to the "third way" approach (social economy), which has the potential to make an important contribution to the creation and maintenance of jobs, for example in situations where the market does not satisfy needs or various social and cultural situations;

having regard to the report of the OECD of November 1998 (DT/LEED/DC(98)2) on social economies in the OECD member states with regard to economic development and the creation of employment at local level;

whereas the European Union calls for the commitment of all actors, including local and regional authorities, to achieving the goal for Europe "to become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion";

whereas cities and metropolitan areas are the economic engines, providing the main markets for goods and services. They contain the knowledge that is required to build a dynamic and competitive regional, national and European economy;

whereas employment policies at the beginning of this century are closely related with innovation policies, information society dissemination, social inclusion policies, business creation, and new industrial policies;

whereas this new kind of policy mix requires the reinforcement of the role of local and regional authorities and partnerships with the relevant stakeholders in civil society, such as business associations, educational institutions, different public bodies dealing with employment, NGOs, social economy organisations and civil society;

whereas social cohesion, employment and integrated sustainable local development will need more and more a strong partnership approach involving all stakeholders, the private for-profit sector, the public sector, social economy and organized civil society;

whereas social economy organisations are natural partners for local and regional authorities in development strategies;

having regard to the draft opinion (CdR 384/2001 rev. 2) adopted by Commission 6 on 21 January 2002, for which the rapporteur was Mr Verkerk (NL, ELDR - Deputy Mayor of The Hague),

adopted unanimously the following opinion at its 43rd plenary session, held on 13 and 14 March 2002 (meeting of 14 March).

1. Views of the Committee of the Regions concerning the use of partnership and European agendas

1.1. Towns and cities have tremendous potential. They are the driving forces behind regional economies. They provide a market place for many goods and services and they contain the knowledge and offer the opportunities which are necessary to establish a competitive local, regional and European economy. Cities and metropolitan areas are in a position to make an outstanding contribution towards achieving the objectives set out at the Lisbon Summit, namely that the European Union should "become the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion".

1.2. Employment policy therefore needs to be closely bound up with the following factors: innovation policy; integration policy; entrepreneurship, the information society and new economic sectors. In the light of this new mix of inter-linked policy areas, there is a need to strengthen the role played by local and regional authorities. If this policy-mix is to be exploited effectively, there needs to be proper coordination with the urban partners concerned, such as enterprises, educational establishments, public and private employment bodies, various NGOs and the public.

1.3. Many European cities and metropolitan areas have already had to contend with major economic and social decline for quite a long period. The decline has often been concentrated in particular districts and neighbourhoods. Although many cities and metropolitan areas, such as satellite towns and suburbs, have benefited from economic growth in recent years and are economically successful, inner cities for example still have enclaves and neighbourhoods with major problems. The phenomena involved here are: relatively high levels of unemployment; the downturn in various sectors of the economy brought about by globalisation; the decline in economic dynamism; and the impact of migration towards towns and cities and the attendant severe problem of integration. These problems accumulate in cities and metropolitan regions and are frequently concentrated in a number of parts of cities or regions. Steps must be taken to prevent parts of towns and cities becoming 21st century urban ghettos.

1.4. The European Commission's Second Report on Economic and Social Cohesion recognises the existence of these urban problems, acknowledges the role and the powers of towns and cities and identifies urban policy as one of the possible priorities of the EU's future regional policy. Cities and metropolitan areas do indeed play a fundamental role in promoting poly-centric and balanced socio-economic development in Europe. It is also important that synergy develop between cities and their rural hinterland. Rural areas can for example benefit from the educational and cultural facilities offered by cities and urban areas need the calm and space of the natural environment for relaxation and sports which require space (hiking, surfing, golf, etc.).

1.5. For the abovementioned reasons every possible effort must therefore be made to tackle these problems, to exploit potential and to seize opportunities. In this context, partnerships represent effective tools for combining forces at local and regional level. In addition to promoting general economic development, the social economy also provides opportunities for stimulating employment and integration specifically in areas of large towns and cities and metropolitan areas which are lagging behind economically. Both of these issues are examined in greater detail below.

2. Views of the Committee of the Regions on partnerships as a means of promoting territorial social-economic development

Administration (European governance)

2.1. The Committee of the Regions underlines that partnerships between local and regional authorities, on the one hand, and local and regional partners, on the other hand, can be an important tool for bringing about effective socio-economic development in towns, cities or local and regional areas. Partnerships also provide authorities with an essential tool to help them manage their town, city or region. Partnerships involve both vertical links between authorities at various levels (national, provincial, regional and urban levels) and horizontal links (between towns and cities and their local partners). This form of urban administration is more wide-ranging than the usual form of local authority, which is confined to democratically-elected administrations. Partnerships also represent a form of urban administration which exploits all the various sources of assistance and potential of the respective areas. This involves local and regional authorities calling upon all relevant local and regional bodies. This form of administrative cooperation - at both vertical and horizontal level - ties in with the present-day reality that governments operate against the background of a "network society". Activities are no longer the exclusive domain of particular bodies, to the exclusion of other bodies, but are specifically geared to involving other parties, whilst of course, retaining the responsibilities of the respective bodies.

2.2. Under the principle of subsidiarity local and regional authorities, in particular, have to play a pioneering role in establishing and mobilising partnerships. Since the leadership exercised by these authorities is based on democratic legitimacy, transparency, coordination and optimal use of all available sources of assistance, local authorities and their partnerships should, in practice, too, naturally be involved in the preparation and implementation of EU policy and activities. They should be involved, for example, in the implementation of e-Europe and EU employment policy. It still happens all too frequently that local and regional authorities have in practice to contend with policies and rules which stand in the way of the effective implementation of EU policy.

Centres of expertise

2.3. The Committee of the Regions stresses that the quality and effectiveness of partnerships will be enhanced if these partnerships are established on a lasting basis. Long-term contracts, instruction and training and gearing partnerships to the right level and to urban and regional development strategies are very important factors in this context. Smooth-running partnerships may also provide centres of expertise which can make a valuable contribution to EU and national policy in the field of socio-economic development. A number of EU policy areas and activities may be involved here, such as entrepreneurship policy, policy on SMEs, e-Europe, employment policy (with local action plans being particularly important), education (e-learning) and regional policy.

2.4. The European Commission should promote and finance the exchange and benchmarking of best practice to enable the various forms of partnership to be exploited. This approach would benefit the applicant states in particular. The EU is therefore urged to set up a benchmarking database for partnership and the social economy. The social economy is dealt with in greater detail below. This instrument can facilitate the exchange of best practice between the existing EU Member States and the applicant states.

2.5. The CoR has set up joint committees with the applicant states to support accession at regional and local level, e.g. via the exchange of knowledge and experience. The joint committees established by the CoR with the applicant states should put specific cooperation on this point on their agendas; they should receive support in the form of EU funding and access to a European database.

2.6. The White Paper on European Governance should incorporate the abovementioned observations in its final proposals. Local and regional authorities are the very bodies which are closest to the public and therefore have direct contact with local and regional stakeholders. Town, cities and regions must be encouraged to use partnerships as a standard component of their "governance tool kits".

Territorial and strategic development

2.7. The Committee of the Regions underlines that effective partnerships tend to be those which are based on areas having an underlying socio-economic cohesion. Partnerships can therefore be found at various levels. By way of example, social inclusion projects designed to promote integration and employment are frequently based on one or more interlinked urban districts. Town centre development is often based on the development of the town or city as a whole. Economic potential (offices and industrial estates), the labour market and the housing market are frequently defined in city or regional terms. Both potential and problems existing at a given level may also have an influence on other levels. It is therefore important to be able to implement partnerships in a flexible way. Examples of such flexible partnerships are enterprises providing local services, organisations providing start-up assistance, regional labour-market pacts and tourist products having an economic objective which are linked to multi-cultural communities in particular districts of towns and cities (multi-cultural neighbourhoods, Chinatowns, etc.).

2.8. Socio-economic conditions also vary at EU level. A flexible approach taking account of the needs of urban areas and/or regions is an important requirement for enabling territorial partnerships to be implemented in an effective way. Flexibility should be demonstrated not only in respect of the management of partnerships but above all in respect of the way in which local and regional resources are used. EU funds may represent one of the available resources. The effectiveness of these funds in relation to the input of the partners is, however, rather restricted by the fact that every fund and subsidy has its own rules and that combining these instruments is highly problematic in practice. This is, however, at odds with the desire for integrated development of backward areas or districts with economic potential, as integrated development requires (subsidy) instruments which mesh seamlessly and are interchangeable. "Untying" means removing obstacles to the exchange between various European subsidies. "Untying" funds therefore offers new opportunities. This is not a way of getting round the rules against combining subsidies but rather a way of making funds interchangeable and flexible, e.g. Objectives 2 and 3.

Another limitation of European funds is the excessive burden of regulation on implementing bodies, which acts and a strong disincentive to the use of these instruments by urban and rural partners. Deregulation is urgently needed, particularly with a view to improving practical ease of implementation.

2.9. Further research is needed into ways of achieving this greater flexibility. The Committee of the Regions calls for the establishment of an inter-institutional working party (Committee of the Regions, European Commission, European Parliament and Council of Ministers) to monitor this research.

2.10. One specific point relating to the implementation of funds to stimulate local and regional development is the creation of opportunities for small (start-up) enterprises and small social-economy projects to obtain micro-loans. The Committee calls on the European Commission to expedite these facilities.

2.11. The possibility of using resources deriving from a variety of funds in the form of a lump sum enhances the opportunities for implementing EU policy (e-Europe, employment action plans) in given areas. This could mean, in concrete terms, that Objective 3 resources that cannot actually be used as such could be tapped for Objective 2 projects in the same area. The ultimate goal of EU policy is, after all, to promote economic and social cohesion and to improve the socio-economic performance of given areas.

3. Views of the Committee of the Regions concerning partnerships and social economy organisations

3.1. Alongside government activity and the traditional market economy, goods and services are also delivered by a "hybrid" with social objectives and requirements. The form this takes varies from one country to another. As definition is difficult we will call it the social economy. The organisations of the social economy are economic enterprises producing products and/or services, but they are not limited companies with share capital.

3.2. The legal forms of social economy organisations are different from one Member State to the other, but in general these are co-operatives, mutual societies, associations and foundations. Recently there are new forms emerging, some with new legal forms, as social enterprises, general interest co-operatives, responding to new needs such as employment creation, fighting exclusion, or the restructuring of the welfare state.

3.3. The overall weight of the social economy sector represents - with about 8900000 employees in the EU - 6.6 % of civil European employment. Present in all economic and social sectors, composed by very big and very small enterprises, it constitutes thus an economic sector of the first rank, with a level of employment comparable to that of a country like Spain(10).

3.4. The Committee of the Regions emphasises that the social economy is among the essential players at local level. In partnership with the private for-profit sector and the public sector, it contributes to social cohesion, social capital formation, inclusion, employment and enterprise creation at local level. It should also be borne in mind that partnerships and the social economy at local/small town level also make a contribution at city/regional level.

3.5. This partnership approach is in line with the conclusions of the Lisbon summit and the principle of subsidiarity, "considering the application of a fully decentralised approach involving actively the Union, the member states, the regional and local levels, as well as the social partners and civil society using variable forms of partnership", as well with the current employment policy guideline 11 stating "Member States will encourage local and regional authorities to develop strategies for employment in order to exploit fully the possibilities offered by job creation at local level and promote partnerships to this end with all the actors concerned, including the representatives of civil society, promote measures to enhance the competitive development and job creation capacity of the social economy".

3.6. This concerns urban areas as also rural areas. At urban level, the main problems to face are fighting against exclusion and criminality, stimulating employment and employability, empowering people and reinforcing local capacities. At rural level there is a need to tackle economic and social desertification, invest in the creation of sustainable enterprises and quality employment, stimulate networking. To face these problems, not only the traditional private for-profit sector and the public sector have to be considered, but also the social economy sector can increasingly give a valuable contribution through its capacity to organise people, develop empowerment and democracy (governance) and create economic and social activity and jobs.

3.7. The Committee of the Regions stresses that the social economy can make an interesting contribution to local and regional development:

- social-economy firms are an important partner for local authorities in local development strategies and in building a new local plural welfare. This does not of course prevent the principle of fair play being applied by local authorities or companies from the traditional commercial sector and the social economy competing fairly over the implementation of local development strategies. In particular the social economy can fill a gap in providing social goods and services which are not provided by traditional market operators or government;

- the social economy adds value to the process of local development and social progress through building local social capital by enhancing trust relations and community confidence, civic engagement and participation in society and by stimulating greater social cohesion reconnecting excluded and marginalised people (e.g. immigrants, the long-term unemployed);

- through their structural difference to public and for-profit firms social-economy enterprises are an essential part of the plural European social and economic model;

- the social economy creates social enterprises and a new entrepreneurial culture of the social entrepreneur (OECD), mainly oriented towards the inclusion of marginalised groups of people through active participation and a new approach: combining a new mix of resources (public, market, voluntary work), to create jobs. The social economy can therefore meet needs where the public sector or the market cannot;

- by organising unemployed people at local level, social-economy organisations help local authorities to transform passive social security and employment benefits into active social investment for sustainable development.

3.8. The Committee of the Regions stresses that, to strengthen the young and fragile democracies in the CEEC, the development of a strong social economy and organised civil society, e.g. via partnerships, is essential. There is a strong necessity for cooperation and exchange between the EU and the candidate countries.

The Committee also stresses that the need to foster partnerships to develop a strong social economy and organised civil society, and the necessity for cooperation and exchange between the EU and the candidate countries, apply equally strongly to the countries on the southern shores of the Mediterranean covered by the Barcelona process.

3.9. As a laboratory of social innovation using new technology, the social economy is an important player to handle the digital divide through a more participative approach of NTIC and using the new communication technologies to build e-democracy and e-learning systems at local level.

3.10. The social economy needs to be recognised and taken into account in economic and social policies with its specificities at European, national and local level. With its capacity to reconcile the economic and the social spheres and by coupling the spirit of entrepreneurship with social purposes, it can combat passive dependency in social welfare systems. This can lead to win-win situations in which public resources for services are supplemented by market and voluntary resources.

3.11. Specific attention should be paid to the economic and social principles of partnership and socio-economic enterprises in educational curricula and particularly in MBA programmes. Education currently focuses on general economic principles based mainly on traditional economic thinking. In addition to commercial training, the socio-economic manager ought also to receive specific training in break-even and continuity management and the calculation and assignment of the value of the social component. This should be included in the ESF regulations in the context of lifelong learning opportunities, e.g. with a view to establishing training courses in this field.

4. The Committee of the Regions' recommendations to the Council and the European Commission concerning partnerships and the social economy

4.1. partnerships should be included in the White Paper on Governance in the European Union as a basic instrument for local and regional governments, together with the express recommendation that all Member States and candidate countries take decisive steps to make use of partnerships to promote territorial economic development, social cohesion and the social economy;

4.2. the European Commission should set up a database of partnership and social-economy best practice, from which the applicant states can also benefit, and promote and finance the bilateral or group exchange of best practice in respect of partnerships at local and regional level, e.g. via the CoR's joint committees;

4.3. an article should be included in the Guidelines for Member States' Employment Policies with regard to Local Employment Action Plans, with a view to enabling the formation of partnerships to be entered as an item of expenditure and enabling the time invested in this work by local authorities to be eligible for compensation. Guideline 11 should be amended accordingly and its relevance for all four pillars must be better recognised in the guidelines for 2002 and subsequent years;

4.4. legislation and regulatory restrictions have an important impact, giving more or less favourable frameworks to the emergence of new initiatives like social enterprises. A benchmarking approach would be suitable. Therefore structures and adapted financial mechanisms (including the granting of micro-loans) supporting these often micro-initiatives must be developed at European, national and local level;

4.5. partnerships should be used as centres of expertise and involved at an early stage when EU and national policy is being prepared and it should likewise be recommended that partnerships be exploited in this way in both Guideline 11 of the Employment Guidelines and the Structural Funds Regulation;

4.6. an approach based on flexibility, the untying of funds and deregulation, aimed at creating a viable situation for local partners, should be adopted when distributing EU funding (Objectives 1, 2 and 3) in order to facilitate spatial development in towns and cities in respect of both the exploitation of potential and the tackling of problems. The European Commission is urged to devote further study to ways of achieving greater flexibility and to the lump-sum concept. An inter-institutional working party should be set up to this end. The Structural Fund rules for 2007-2013 should be adapted accordingly;

4.7. the social responsibility, the local management and the territorial principles of social economy enterprises make them a model for sustainable development. Therefore they need to be embedded in territorial development policy frameworks, at European, national and local level;

4.8. transferring the good practices of local partnership, especially with social economy organisations to the candidate countries, to strengthen social cohesion, employment creation, governance and democracy;

4.9. educational curricula in the Member States should devote attention to the principles of the social economy and partnerships. Such education, and the establishment of curricula and training programmes for that purpose, could be financed under the heading of lifelong learning.

Brussels, 14 March 2002.

The President

of the Committee of the Regions

Albert Bore

(1) OJ C 317, 6.11.2000, p. 47.

(2) OJ C 293, 13.10.1999, p. 1.

(3) OJ C 226, 8.8.2000, p. 43.

(4) OJ C 22, 24.1.2001, p. 13.

(5) OJ C 144, 16.5.2001, p. 30.

(6) OJ C 266, 8.5.2000, p. 20.

(7) OJ C 180, 11.6.1998, p. 57.

(8) OJ C 144, 16.5.2001, p. 62.

(9) OJ C 148, 18.5.2001, p. 25.

(10) See "The enterprises and organizations of the third system in the European Union" CIRIEC, year 2000.