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"
Date: 2002-03-14
Institutions: European Committee of the Regions
Subjects: EC recommendation, association, economic and social cohesion, employment policy, local authority, regional development, regional policy, social economy

12.8.2002

EN

Official Journal of the European Communities

C 192/53

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;

(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.

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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

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.

1.1.
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 econ-
omy. 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’.

Employment policy therefore needs to be closely
1.2.
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

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 econ-
omy 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.

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1.4.
The European Commission’s Second Report on Econ-
omic 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 develop-
ment 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.).

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 legit-
imacy, 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.

For the abovementioned reasons every possible effort
1.5.
must therefore be made to tackle these problems, to exploit
potential and to seize opportunities. In this context, partner-
ships 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.

Centres of expertise

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

Administration (European governance)

2.1.
The Committee of the Regions underlines that partner-
ships 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
local authority, which is confined to
democratically-elected administrations. Partnerships also rep-
resent 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’. Activi-
ties 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.

form of

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, employ-
ment policy (with local action plans being particularly
important), education (e-learning) and regional policy.

2.4.
The European Commission should promote and finan-
ce 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.

The CoR has set up joint committees with the applicant
2.5.
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.

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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

The Committee of the Regions underlines that effective
2.7.
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
‘Untying’ means removing obstacles to the
interchangeable.
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.

The possibility of using resources deriving from a
2.11.
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.

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The overall weight of

3.3.
the social economy sector
represents — with about 8 900 000 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 (1).

The Committee of the Regions emphasises that the
3.4.
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 forma-
tion, 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 con-
clusions 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
including the
to this end with all the actors concerned,
representatives of civil society, promote measures to enhance
the competitive development and job creation capacity of the
social economy’.

This concerns urban areas as also rural areas. At urban
3.6.
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 deserti-
fication, 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 implemen-
tation 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 trans-
form passive social security and employment benefits
into active social investment for sustainable development.

(1) See ‘The enterprises and organizations of the third system in the

European Union’ CIRIEC, year 2000.

The Committee of

to
3.8.
strengthen the young and fragile democracies in the CEEC, the
development of a strong social economy and organised civil

the Regions stresses that,

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society, e.g. via partnerships, is essential. There is a strong
necessity for cooperation and exchange between the EU and
the candidate countries.

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;

The Committee also stresses that the need to foster partner-
ships 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 tech-
nology, 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 concern-
ing partnerships and the social economy

partnerships should be included in the White Paper on
4.1.
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;

an article should be included in the Guidelines for
4.3.
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;

restrictions have

legislation and regulatory

4.4.
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 struc-
tures 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;

the social responsibility, the local management and the
4.7.
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;

4.2.
the European Commission should set up a database of
partnership and social-economy best practice, from which the

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;

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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

Opinion of the Committee of the Regions on:

— the ‘Proposal for a Council Decision concerning the approval, on behalf of the European
Community, of the Kyoto Protocol to the United Nations Framework Convention on
Climate Change and the joint fulfilment of commitments thereunder’,

— the ‘Communication from the Commission on the implementation of the first phase of the

European Climate Change Programme’, and

— the ‘Proposal for a Directive of the European Parliament and of the Council establishing a
scheme for greenhouse gas emission allowance trading within the Community and amending
Council Directive 96/61/EC’

(2002/C 192/14)

THE COMMITTEE OF THE REGIONS,

having regard to the Proposal for a Council Decision concerning the approval, on behalf of the European
Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change
and the joint fulfilment of commitments thereunder (COM(2001) 579 final), the Communication from
the Commission on the implementation of the first phase of the European Climate Change Programme
(COM(2001) 580 final) and the Proposal for a Directive of the European Parliament and of the Council
establishing a scheme for greenhouse gas emission allowance trading within the Community and
amending Council Directive 96/61/EC (COM(2001) 581 final);

having regard to the decision of the Council of 11 December 2001, under the first paragraph of
Article 175 of the Treaty establishing the European Community, to consult the Committee of the Regions
on the matter;

having regard to the decision of the Bureau of 12 June 2001 to instruct Commission 4, now the
Commission for Sustainable Development, to draw up the relevant opinion;

having regard to the decision of its President of 11 March to appoint Ms Rahkonen (FIN/PES) rapporteur-
general for this opinion under Rule 40(2) of the Rules of Procedure;