Opinion of the Economic and Social Committee on the "Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: Acting Locally for Employment — A Local Dimension for the European Employment Strategy"
Date: 2000-10-19
Institutions: European Economic and Social Committee
Subjects: EU programme, economic development, employment policy, job creation, regional policy, social-security contribution

16.1.2001

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Official Journal of the European Communities

C 14/63

Opinion of the Economic and Social Committee on the ‘Communication from the Commission
to the Council, the European Parliament, the Economic and Social Committee and the Committee
of the Regions: Acting Locally for Employment — A Local Dimension for the European
Employment Strategy’

(2001/C 14/13)

On 7 April 2000 the Commission decided to consult the Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee’s work on the subject, adopted its opinion on 3 October 2000. The rapporteur was Mr Vinay.

At its 376th plenary session (meeting of 19 October 2000), the Economic and Social Committee adopted
the following opinion by 103 votes in favour, with 2 abstentions.

1.

Introduction

1.1.
The aim of the Commission referral is to spark debate
and gather comments, proposals and suggestions to help
define, as part of the European Employment Strategy, the
options and possible format for an employment development
scheme, organised and supported at local level, by analysing
the situation which has emerged over recent years both at
Community level and within individual countries.

the Commission Proposal on Guidelines for Member States’
employment policies for the year 2001 stresses the need to
involve all regional and local players in identifying all possible
opportunities for creating new jobs. The Joint Employment
Report for the year 2000 also highlights the need to take
decisive steps towards decentralisation in order to boost local
employment strategies.

For some time now most Member States have realised
1.2.
the opportunities that exist at
for developing
employment. In areas where procedures had not previously
been decentralised, action is particularly effective if it goes
hand in hand with decentralisation.

local

level

1.2.1. Whilst the European Union’s employment strategy
has essentially focused on national efforts, support has also
been given to experimental
level (Local
Development and Employment Initiatives (LDEIs), Territorial
Employment Pacts, the ‘Third System’ and the Local Social
Capital pilot actions).

initiatives at local

2.

The Commission Communication

2.1. Whilst the Commission stresses the positive effect of
improved coordination of EU and national policies in the
employment strategy, it considers it essential to provide each
institutional or sectoral level with the scope and instruments it
needs to best achieve the fundamental objective of fighting
unemployment. This objective is recognised by the Treaty of
Amsterdam as a key issue for the entire EU and it must be
taken on board in all Community policies and actions.

The communication goes on to examine all

2.2.
the
objective and prospective problems in involving the local level
in the European Employment Strategy.

Even closer Community attention to the local level
1.2.2.
can be seen in the new Structural Funds Regulation of June
1999. Not only does the ERDF specifically aim to create jobs
by means of endogenous growth and by promoting territorial
employment pacts and new employment sources, but the
ESF also specifically refers to ‘initiatives to support local
employment and territorial employment pacts’. Moreover,

2.2.1.
The communication reiterates the fact that, even in
comparison with macro-economic and technological changes,
the potential for action at local level has turned out to be
considerable. The local level is more closely linked with the

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development of endogenous resources and is more able to deal
with new economic and demographic demands, regardless of
the fact that, owing to the nature of their powers and remit,
local authorities are already major employers, chiefly in their
own local areas.

2.3.
It should also be remembered that local authorities
now tend to be run on more managerial lines, although this is
not consistently the case across the Member States or even
within individual countries. The local electorate thus tends to
judge the local authorities partly in terms of their success in
tackling the unemployment problem. Consequently, training
initiatives and back-up measures for small businesses, etc. have
sprung up alongside national policies. There is thus a need to
identify better coordinated structures and more consistent and
advanced instruments to allow local authorities to include the
employment question in their work.

2.4.
In addition to the local authorities, a key role in job
creation is played by firms, especially small firms and micro-
enterprises, which have a positive impact on employment.
They must be provided with support and back-up measures,
as well as preferential services and cuts in red-tape.

2.5.
A particularly interesting sector at local level is the
‘third system’, or social economy. This developed as an
instinctive response to collective needs which were not being
met by public services, or as back-up and regeneration
initiatives in the unfortunately numerous social problem areas.
Although this sector’s growth rates differ across the Member
States, due partly to the discrepancies in the basic situation, it
now accounts for almost 7 % of all employment. This is
without taking volunteer work into account. If the latter were
converted into full-time salaried equivalents, the third system
would account for 10 % of the workforce.

2.5.1.
There is thus all the more need to identify potential
areas for the sector to expand, and the organisational and
financial weaknesses which stunt its growth.

2.6.
The communication addresses the role, potential and
possible development of the public employment services; the
current and potential role played by the social partners; and
the possible support measures which the regional and national
authorities could provide for local initiatives.

2.7.
The communication points out that, since the Euro-
pean Council in Vienna decided to make the ESF the main
instrument for supporting the implementation of the NAPs
(National Action Plans for Employment), the new Regulation

can now support local partnerships, and more specifically local
development and employment initiatives. The Commission
specifies that it is not aiming to consult just the institutions of
the European Union on the options for further action to boost
the local dimension of the European Employment Strategy —
which is of course the object of the communication. It also
invites contributions from all
individuals or representative
associations interested in the development of employment and
in the issues discussed in the document. Moreover,
the
Commission will support a series of transnational Seminars,
and the consultation period will end in October 2000.
Conclusions will be drawn in December, at a Conference
organised in Strasbourg by the French Presidency, where the
results of
the consultation and future prospects will be
discussed.

2.8.
A budget heading (B5-503) has been made available
for all related initiatives, and will also be used to: highlight the
potential of the local action plan strategy as part of the
European guidelines; raise awareness of the potential for job
creation at
level; develop transnational cooperation;
promote the identification and exchange of good practice. At
a later stage, these actions could be extended to include
promotion of the third system under the terms of Article 6 of
the ESF.

local

3. General comments

3.1.
The Committee particularly welcomes the Commission
communication in terms of its subject matter, the in-depth
approach to the issues, and its willingness to engage in wide-
ranging consultation to gather further proposals.

3.1.1.
Employment policies — hitherto based at Com-
munity and national and regional level — would undoubtedly
be sharpened up by the introduction of local action plans
which the many interested or potentially interested players
could identify with and play their part in, according to their
particular areas of responsibility and competence and the
different regional and national circumstances. This would also
boost local involvement in the European employment strategy,
by giving local players a greater role in analysing and
establishing the NAPs. Such a process would obviously have
to respect the subsidiarity principle, and ensure that local
action is compatible and consistent with national guidelines
and priorities. As a result, policies should be better geared to
achieving the desired results. The process should also spawn
interesting new proposals that are more in tune with local
situations and with the potential and needs of local residents.

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3.1.2.
Numerous Committee opinions, some of which were
adopted some time ago (1), have stressed the need to harness
local development — and consequently employment —
potential. And the importance of the local level in employment
policies under the European Employment Strategy has been
underscored even more strongly since the Amsterdam
Treaty (2). The Committee thus firmly supports the Com-
mission’s initiatives, to which it intends to add some further
comments.

The drive to coordinate Community, national and local
3.2.
employment policies does not just raise the profile of the
obvious players, i.e. the local authorities and economic part-
ners such as SMEs, micro-enterprises and the social economy.
It also makes it possible to make best use of the indispensable
contribution of the social partners, and management and
labour organisations, which have a particularly important role
to play at local level, as can be seen for example from the
experience of the Territorial Employment Pacts. The pacts also
benefited from input from grass roots organisations, whose
involvement is important from a social and political point of
view.

3.2.1.
It is this team approach which will make it possible
to accomplish all four pillars of the employment guidelines:
increasing people’s employability; developing entrepreneur-
ship; enhancing flexibility for firms and workers; boosting
equal opportunities policies for women and men.

4.

The local players

Local authorities

The Commission document constantly refers explicitly
4.1.
to local authorities as the tier of government which is closest
to people’s needs, yet which are not allowed to decide their
own employment policies even though they have — directly
or indirectly — a significant impact on local employment.
Moreover, it has emerged from a consultation launched by the
Commission that a sizeable number of the 80 000 European

local authorities suffer from serious information deficiencies,
as regards both the European Employment Strategy and
initiatives which can be harnessed locally to create employment
opportunities. Clearly, this does not apply to major local
authorities, nor to the regional level, but to the many smaller
authorities.

4.1.1.
An enhanced profile for local action as part of
the European Employment Strategy should aim to develop
proposals and an action capability which fleshes out the
current
‘bottom-up’
approach which has already been used to good effect when
preparing the Community Support Frameworks for structural
policies in the period 2000-2006.

‘top-down’ action with the type of

4.1.2.
In order to exploit that ability to take the initiative
which could make the local dimension a key factor in
improving the European employment picture, and even from
the point of view of subsidiarity, there is perhaps a case for
making the regional level a kind of go-between. The aim would
not be to centralise definition and choice of possible initiatives,
but to support, build on and coordinate initiatives which
would still continue to be managed at local level.

4.1.3.
It is worth remembering that many of the territorial
pacts which have received funding are the fruit of a joint
initiative involving several local authorities and a variety of
partners. One should also not overlook the role of groupings
of local authorities or other associations based on particular
geographical or socio-economic conditions (e.g. upland auth-
ority associations). The regional level could also play a role
in providing training and information — particularly for
administrators in rural authorities — on the national and
Community instruments which can be harnessed in various
situations. Local authorities which have already taken steps
to improve their knowledge of local government back-up
instruments and to disseminate best practice, tend to be
members of networks of cities, which play an important role
in spreading information.

Enterprises

(1) ESC opinion on Europe 2000+, Cooperation for European
territorial development, OJ C 301, 13.11.1995; opinion on the
role of the European Union in urban matters, OJ C 30, 30.1.1997.
(2) Opinion on the Commission Communication: Towards an urban
agenda in the European Union, OJ C 95, 30.3.1998; own-initiative
opinion on Territorial employment pacts, OJ C 407, 28.12.1998;
opinion on the Proposal
for guidelines for Member States’
employment policies 2000, OJ C 368, 20.12.1999; opinion on
the Urban Community initiative, OJ C 51, 23.2.2000; own-
initiative opinion on the social economy and the single market,
OJ C 117, 26.4.2000.

4.2.
The growth in private sector non-agricultural SME-
and micro-entrepreneurship over recent years, which has
shown a significant ability to create jobs, is inevitably linked
to the local context and as such is evidence of local potential.
It is thus vitally important to identify back-up instruments for
this widespread type of entrepreneurial activity, particularly in
the start-up phase, and introduce procedural and tax con-
cessions and easier access to credit.

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4.2.1. While local and regional authorities can clearly
help local business development by reducing red tape, it is
to create general
equally and perhaps vitally important
conditions that facilitate access to cheaper credit, for example
by means of public-private partnerships. However, mobilising
local and national resources is not enough;
it is essential
that people should also be more widely aware of the funding
opportunities offered under Community policies.

small- and micro-enterprises would be easier to interpret if
they included information about their short, medium and
long-term market presence.

The social economy

Training initiatives — as opposed to information-
4.2.2.
based initiatives to foster a ‘spirit of enterprise’ in young people
— are particularly necessary for promoting growth of small
local businesses. ‘Territorial training initiatives and agreements’
must be launched and encouraged. These, by coordinating the
input of local authorities, social partners, public employment
services, social economy bodies, and research centres with the
schools network, should aim to enhance cultural awareness,
disseminate know-how,
introduce the technologies of the
information society, encourage innovation in manufacturing
and services, and promote professionalism and employability,
with a view to launching new businesses and to hiring or
redeploying workers in firms which are already in business.
Such schemes are entirely consistent with the Lisbon European
Council decisions on training.

4.2.3.
Action is particularly effective on the local economy
level, both for creating a new class of entrepreneurs and
workers who are fully conversant with the way that
particular economy is developing, and for restoring two
qualities to the socially excluded: functioning and capability,
i.e. the chance to perform a productive role in society, and
the skills they need to seize the particular opportunities
which arise. Training must not just provide the skills needed
today and tomorrow; it must sow and nurture a culture of
adaptability, which will enable the individual to cope with
changing working patterns.

The role which the third system or social economy or
4.3.
third sector can play in local employment development is in
some ways very simple and in others very complicated. While
it is generally accepted that these terms apply to autonomous,
locally managed activities which are neither public- nor
private-sector oriented and aim to respond old or new local
needs that have been left unmet, there remains a pressing need
to agree on a common definition.

4.3.1.
The most common definition is based more or less
on the statute of the organisations operating in the sector or
system: cooperatives, associations, mutuals and foundations.
However, it is not able to cover all the different situations
which exist in the Member States and even within individual
countries.

4.3.2.
The best way to reach an agreed definition of what
the third sector actually involves is to look at the type of work
carried out, rather than attempting a ‘statute’-based definition.
In most cases, these organisations are socially oriented, often
benefiting from local authority funding, and are active in social
and welfare services, training, the environment and leisure,
and in getting people from specific disadvantaged backgrounds
back to work. As such, they have a strong local dimension.
The Committee suggested in a recent opinion that the main
criterion for defining social economy organisations should be
their not-for-profit focus on people-centred objectives and
activities (1).
they contribute
significantly to social cohesion, since these organisations are
particularly successful with groups who suffer discrimination
in the labour market, such as the disabled, immigrants and the
socially excluded.

It could also be added that

4.2.4.
This applies equally to micro-enterprises, which are
also increasing in number and employing more people, but
which often risk being seen as a quick-fix reaction to job losses
rather than a reflection of a real spirit of enterprise. It is clear,
however, that the Commission’s figures on the growth of

(1) OJ C 117, 26.4.2000 own-initiative opinion on the social

economy and the single market.

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4.3.3.
In addition to tax incentives and funding arrange-
ments, at least in the initial stages, training is one of the
measures which operators in this sector will need if the social
economy is to create plenty of more solid job opportunities.
This will enable them to complement their initial enthusiasm
and hands-on experience with managerial skills — an area in
which these organisations have proved to be weaker. The
already proven ability to identify new needs and to find
new ways of satisfying the needs arising from changing
demographic trends, should also be encouraged. However, a
strong culture of continuously assessing the efficiency of social
action must also be promoted, and this is the role of the local
authorities.

Public employment services

In most Member States, the on-going modernisation
4.4.
of the public employment services has led to greater decentra-
lisation. Local employment offices are thus better able to adapt
their resources to the local labour market.

4.4.1.
As the public monopoly on the supply of employ-
ment services has steadily been lifted, competition from new
private players has also given a further spur to renew and
bolster the role of public employment offices. These offices
must now provide a force for rationalisation and linkage
between all private and public bodies working to develop
employment and entrepreneurship in their area of operation.
The public employment services’ initiative must address both
the supply and the demand side.

The social partners

4.5. While all the above comments confirm the importance
of the role of the social partners in applying local employment
development strategies, it needs to be specifically stressed.
Indeed, the European Council in Feira stated only recently with
reference to framing the NAPs, that ‘the social partners are
in defining,
invited to play a more prominent
implementing and evaluating the employment guidelines
which depend on them, focusing particularly on modernising
work organisation,
lifelong learning and increasing the
employment rate, particularly for women.’

role

4.5.1.
So while this local action is a strategic element of the
European Employment Strategy and of the individual NAPs, it
must be built on by defining a joint approach and common
objectives for the social partners, to enable them to develop a
sort of
‘process within the process’ within the reference
frameworks and objectives established by the local authorities.
A special role should be accorded to any bilateral sectoral
associations, as they can offer valuable local assistance with
training schemes, employment growth, support
in crisis
situations, flexibility management, and organisational back-up
for small businesses. The social partners can also identify the
added value of their specific input, make regular assessments
and disseminate the benchmark results of their joint action,
with particular reference to the adaptability pillar.

5.

Specific comments

4.4.2.
In order to improve the overall quality of public
employment services, generalised steps are needed to upgrade
their staff and introduce and disseminate new technologies. In
particular,
links should be established with schools,
universities, research bodies and the social partners. Labour
market data should be constantly collated and processed for
monitoring, and the quality of service should be systematically
assessed.

local

In general terms, if some areas achieve greater econ-
5.1.
omic success than others, this is largely because individuals or
social groupings have taken consistent systematic action,
backed up by product diversity and the cohesive role played
by the public institutions. A local development model that fits
in with general employment policies should therefore take this
as its starting point, and should aim first and foremost to
pinpoint and assess local resources and situations.

4.4.3.
Public employment services obviously play a key role
as regards employability. They can also play an important
local role in equal opportunities, as well as carrying out specific
schemes to promote the other two pillars of entrepreneurship
and adaptability.

However,

5.1.1.
some serious problems need to be
explicitly highlighted as they often colour the local employ-
ment picture. These are undeclared work, insecure work and
social exclusion.

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5.1.2.
Undeclared work is fairly common in sectors that are
labour intensive and involve local economic networks (1). It is
also widespread in sectors with a high proportion of small
businesses, and in the social economy (not to be confused with
the voluntary sector). The main cause of undeclared work, as
the Commission has emphasised in several Communi-
cations (2), is the burden of tax and social security contri-
butions, and this problem needs to be addressed, although it
obviously cannot be solved at local level. Pending the introduc-
tion of national provisions to regularise such work, employ-
ment policy measures should include steps at local level to
ensure compliance with the rules, backed by rigorous checks.

sectors, or the upgrading of craft traditions. Environmental
sustainability policies also provide scope for new jobs. More-
over, one should not underestimate the potential of local
employment
initiatives and micro-enterprises to galvanise
entrepreneurial activity, for instance in fields associated with
information technology. The rapid development of
infor-
mation and communication technologies and the ability to use
them can determine the success of a possible initiative or the
loss of more jobs in a particular area. The new regional
programmes of innovative measures, recently unveiled by the
Commission (3), form a vital framework for local employment
strategy.

Article 1 of the new ERDF Regulation states that the
5.1.3.
Fund contributes to ‘... the creation of sustainable jobs’. Local
employment policy should adopt a similar approach. Measures
should be taken to provide real new job opportunities, making
sure that the people entering or returning to employment do
not merely fuel the numbers of the ‘working poor’.

5.1.4.
Social exclusion is not caused simply by economic
factors such as poverty, long term unemployment and bad
housing. Cultural, generational, technological, environmental
and health-related factors also come into play. This is a
challenge which local employment policy must definitely
address, irrespective of any Community or national schemes,
because experience has shown the importance of an integrated
approach and the effectiveness of partnerships that actively
involve the socially excluded alongside local authorities, social
partners, NGOs and voluntary associations.

5.2.
One possible brake on development potential is red
tape. The widespread trend towards decentralisation may help
here, but other measures are also needed. Procedures for new
businesses should be simplified and qualified advisory/training
services should be set up to provide administrative and
marketing support for small business start-ups in the crafts
and local service sectors.

5.2.1.
The service sector (personal and, to a lesser extent,
community services) currently offers the greatest potential for
new jobs. However, one should not overlook more traditional

5.2.2.
The communication focuses almost exclusively on
the potential role of small and micro-enterprises. However,
medium and medium-large companies should not be excluded
from the picture (4). The possibility of regular contact between
the local authorities and the social partners should not be
ruled out, as it is not unusual to see a local economy suddenly
facing a crisis caused by decisions taken far away and
without warning. Moreover, some local economies can become
attractive thanks partly to the presence of businesses which
are large employers, catching the eye of medium-sized and
medium/large-sized firms.

5.3.
The need for financial support from the local auth-
orities is clear, but problems arise because arrangements for
the allocation of budgetary resources by central government
vary from country to country, as do the tax-raising powers of
local authorities. There must be some guarantee that funding
will be available, as otherwise no strategic measures are
possible. At Community level,
in addition to the specific
references in the abovementioned articles of the ERDF and ESF
Regulations, all the possibilities offered by the Structural Funds
and Community Initiatives should be tapped, especially ESF
programmes. Support for local employment initiatives is a
horizontal priority of the ESF, and it must be provided in
practice. It would also be worth exploring the scope for using
new funding mechanisms for the small grants referred to in
Article 4(2) of the ESF Regulation, earmarked specifically for
NGOs and local partnerships.

(1) Opinion on the Commission communication on undeclared work,

OJ C 101, 12.4.1999.

(2) Notably COM(1998) 219 final.

(3) Draft communication of 11 July 2000 from the Commission to
the Member States on the regions in the new economy: Guidelines
for innovative measures under the ERDF in the period 2000-
2006.

(4) Opinion on Managing change — Final report of the high level
group on economic and social implications of industrial change,
OJ C 258, 10.9.1999, p. 1.

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5.4.
It is vital that an effective network be established for
disseminating good practices at local level. It is also worth
publicising experiences that did not achieve the desired results,
as lessons can be drawn from the mistakes. At all events, there

should be a periodic appraisal of the results achieved, not only
in terms of jobs created but also of their quality, and an
analysis of the progress, growth or ‘mortality’ of small and
micro-enterprises.

Brussels, 19 October 2000.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on the ‘Proposal for a Decision of the European
Parliament and of the Council establishing a programme of Community action to encourage
cooperation between Member States to combat social exclusion’

(2001/C 14/14)

On 24 July 2000 the Council decided to consult the Economic and Social Committee, under Article 137
of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee’s work on the subject, adopted its opinion on 3 October 2000. The rapporteur was Mrs
Cassina, the co-rapporteur Mrs zu Eulenburg.

At its 376th Plenary Session (meeting of 19 October 2000), the Economic and Social Committee adopted
the following opinion by 99 votes in favour, two votes against and two abstentions.

1.

Introduction

1.1.
The proposal for a Decision of the European Parliament
and of the Council establishing a programme of Community
action to encourage cooperation between Member States
to combat social exclusion (henceforth referred to as ‘the
programme’) comes in the wake of the strategic goal (1) for the
next decade mapped out by the Lisbon Council.

(1) ‘The Union has today set itself a new strategic goal for the next
decade: 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.’—
Lisbon Council, Presidency Conclusions (point 5). ‘The number of
people living below the poverty line and in social exclusion in the
Union is unacceptable.’Lisbon Council, Presidency Conclusions
(point 32).

The proposal aims to create a dynamic and open
1.2.
framework of cooperation between the Member States who
have or will set up national action plans to combat exclusion.
The aim is to work together in a coordinated and mutually
supportive manner to achieve the objective of greater social
cohesion, based on a better knowledge of the phenomenon of
exclusion and commonly defined criteria for analysing and
addressing it.

1.3.
The objectives of the programme are to improve the
understanding of exclusion, to organise policy cooperation
and mutual learning in the context of the national action plans
and to develop the capacity of actors to address social
exclusion, in particular through networking at EU level.

1.4.

The actions provided for consist of:

— analysis of the different aspects, causes and trends in
social exclusion, collection of comparable statistics and