- Where does ILO's vocation for LED comes from and what should be understood by ILO's LED approach?

- What is LEDA's potential with regard to the promotion of local economic development and employment in Europe?

I. Local sustainable development: an ILO vocation

I.1 The framework: ILO's mandate, core functions and activities

As the first specialized agency associated with the United Nations, the International Labour Organization (ILO) has a long tradition in the promotion of social justice and better working conditions. ILO's unique tripartite structure -governments, employers and workers organizations are members of the most essential bodies within the ILO ⁽²⁾

- promotes the involvement of social partners in for example the formulation and implementation of national employment policies or those concerning social security. One of ILO's core functions is the adoption by the International Labour Conference of Conventions and Recommendations that set international standards. Examples of key ILO conventions are the ones on freedom of association, the right to organize and bargain collectively, equal remuneration, the abolition of forced labour and child labour.

Besides the creation of International Labour Standards, ILO is engaged in an extensive programme of international technical cooperation formulated and implemented in an active partnership with constituents. Examples of technical cooperation activities are: training entrepreneurs in small business administration; strengthening social security systems, reintegration of vulnerable groups into economic activities, assisting trade unions in occupational safety and health, setting-up cooperatives, promotion of Local Economic Development, etc. These activities are implemented in countries on all continents and at all stages of economic development. The constant attention given to the importance of the link between international labour standards and technical cooperation reflects ILO's deep commitment to broad-based and equitable social and economic development.

ILO's relevance to industrialized countries, is especially related to the adjustment to globalization which is also a challenge for industrialized economies. These have become steadily more service-based and knowledge oriented in recent years. Their labour markets are much more diverse, with a rise in part-time or casual employment that has opened up more opportunities especially for women outside the home. Not all the changes have been positive, however. A number of countries still have high levels of unemployment and this, together with less stable working patterns, is exacerbating problems of poverty, inequality and social exclusion, as well as putting severe strain on systems of social security. ⁽³⁾ The ILO should be able to help, through comparative labour market research and by acting as an international forum for policy discussion on these issues. In practical terms, the ILO's technical expertise in the field of social policy might assist the European Union and the OECD to facilitate the accession of countries in Central and Eastern Europe. ILO advice should help these countries make the necessary adjustments to their social policies and institutional structures.

ILO's vocation with regard to Local Economic Development finds its particular expression in Recommendation 169 concerning Employment Policy. This recommendation stresses the importance and recognition of local employment creation initiatives. These undertakings, which can take diverse forms, such as small traditional undertakings, co-operatives and associations, offer employment opportunities, especially for workers who have particular difficulties" (women, young people). Also, the promotion of relationships complementary to the ones between governments, employers' and workers' organizations is recommended. ⁽⁴⁾

ILO structures its work according to four strategic objectives:

1) Promote and realize fundamental principles and rights at work

2) Create greater opportunities for women and men to secure and decent employment

3) Enhance the coverage and effectiveness of social protection for all

4) Strengthen tripartism and social dialogue

LED activities are very much linked to the second objective.

The Final Declaration of 1995 Copenhagen Social Summit highlights the importance of the local approach as well as the role of the ILO in the implementation of the Social Summit's Programme of Action ⁽⁵⁾

:

"The ability of local communities and groups with common interest to develop their own organizations and resources to propose policies relating to social development (under commitment iv); " Requesting the International Labour Office, which because of its mandate, tripartite structures and expertise has a special role to play in the fields of employment and social development, to contribute to the implementation of the Programme of Action" (chapter (v)).

In practice, we could summarize ILO's involvement in Third Sector issues, in three types of action:

1) Through its tripartite consultation mechanisms and its close links with civil society organizations in international forums ILO promotes social dialogue, new partnerships and information exchange at international, national and local level. ⁽⁶⁾

2) ILO's research and policy advice on the role of (new) public-private partnerships and the third sector in employment promotion. ⁽⁷⁾

3) ILO's assistance to the creation of third sector instruments or networks at the local level for SME and employment promotion.

The most relevant example of this type of activity is the promotion of Local Economic Development Agencies. This approach will be set out further. Therefore, we will first have a look on LED principles of which the LEDA can be an instrument.

V. Local Economic Development Approach

II.1 LED Principles

II.1.1 Weak articulations at the national level

Generally speaking, we face in many countries and in a more or lesser degree, weak articulations at the national level between:

· Public Sector and Private sector

For example, with regard to the legal and/or institutional framework that might hamper private, business initiatives

· National Policies and Local Priorities

For example: a comprehensive infrastructure project with regard to consequences for the local environment, like the railway project the Betuwelijn that would cross cut the "green heart" of that particular region in the Netherlands in order to provide an alternative means of transport to Germany. Here the environmental, local priority is confronted with a project presented as of the public's and national, economic interest

· Economic Policies and Social Policies

For example the reduction of public, social welfare expenses that might have particular severe consequences for some groups in need for social protection

· Political decision and technical approaches

One example is the explicit commitment in many recent European policy campaigns to reduce unemployment and at the other hand the technical decisions that are being taken by the European monetary institutions not to overheat the economy and therefore to raise the interest rates. To put in simply: increased interest rates do not favor investment and therefore employment creation opportunities will decrease.

World wide experiences -in industrialized economies, developing countries or countries in transition- have shown that the promotion of Local Economic Development can effectively counter balance the effects of these gaps in policy formulation and implementation at the national level with regard to local realities.

II.1.2 What is Local Economic Development?

In this context local means: based on an optimal use of endogenous potential that includes local resources and local capacities. Local refers to one or more sub-national entities of analysis and interventions, which have a series of political, economic and social interests and skills in common. ⁽⁸⁾ Local is not restricted to the municipal level but is a territorial approach based on economic links, social inter-relationships, administrative references & public institutions and cultural identity. In other words, local does not only refer to a smaller unit but is linked to the regional, national and international level.

Economic refers to actions like: the identification of business opportunities, support of entrepreneurial initiatives and facilitation of access to the market.

And development should be understood with regard to the objective of sustainability and an improved quality of life through job and income generation.

LED will therefore enable and promote:

- Coordination of few resources available in the area, avoiding double efforts

- Concertation among the main local actors involved in economic activities and setting of priorities

- Integration of local development priorities in regional and national plans for economic development

- Participation and consensus building in economic life at local level

- Reinforcement of the intermediary capacity of local actors towards national and international organizations to facilitate resource mobilization for the region;

- Support enterprise creation by unemployed

How LED will enable the above-mentioned objectives, by which means or strategies?

- By improving the business and productive infrastructure in order to harmonize economic development and environmental protection

- By reinforcing territorial management skills of local actors

- By creating an economic environment favorable to entrepreneurial initiativesand investment including access to financial resources / credit

Picture 1. LED strategy overview

II.2 LEDA, a third sector organization

II.2.1 Active, local partnership and networks

Although we cannot speak of one type of LEDA as the actual form it takes, depends on the local needs and context and the national legislation, we can say that the most common characteristic of LEDAs, is the composition of its partnership. Partners in the LEDA are representatives of the public sector, private sector and civil society. In concrete terms, partners of LEDA can include: local and/or regional governments, employers' associations, associations of enterprises, cooperatives, and interest groups, self-help groups and trade unions.

A precondition for this mixture of partners is the sharing of the objective to animate the local economic development process. For this purpose, the LEDA is a consensus building mechanism and has strong decision making and planning functions. At the same time it is involved in the creation of technical conditions for economic development, keeping in mind that it strives to accessibility of economic opportunities for the whole population, in particular the most excluded ones.

Networking is another key aspect of the LEDA. LEDA promotes and is part of networks with other institutions, programmes involved in the local economic development process at regional, national and international level.

Although self-sustainability is a strategic objective of the LEDA, it is not a private, commercial enterprise as profits are reinvested to contribute the common goal: promotion of local economic development through employment creation. The LEDA is an autonomous organization with a legal status. Which legal form -association, foundation, non-commercial enterprise, - the LEDA finally takes, depends once again on national legislation and the local context / needs. More than a clearly defined institution that could be duplicated in whatever which region, LEDA is a conceptual framework that needs concrete local contributions to take its final form. In regions where many relevant institutions -like Chambers of Commerce, Handicraft organizations, producers associations, business support centers, etc- exist, LEDA could be more like a local network. In regions where these kinds of actors and organizations are not very well developed, LEDA would have a more institutional character, providing directly many services. We will look at these aspects further on, when we will discuss concrete examples in different parts of Europe.

Mixed, active and local partnership, non-commercial and common local development interest, make the LEDA a third sector organization.

Picture 2. Active local partnership

II.2.2 LEDA's fields of intervention

With regard to LEDA's objectives as discussed earlier, we can distinguish 3 levels in LEDA's fields of intervention:

1) Direct interaction with (starting) entrepreneurs

2) Local business, employment and productive environment

3) Broader economical environment

What does the LEDA do regarding the first level of intervention?

In order to stimulate economic activities and enterprise creation, the LEDA could:

· carry out research activities on investment and business opportunities in the region,

· create databases on markets, technology, financing systems,

· provide technical training and advisory services

· provide managerial training and advisory services

· provide advisory services on business plans, marketing, feasibility of projects, financing, etc.

· …

It goes without saying that in this type of activities, close collaboration with other local actors like business incubators, Chambers of Commerce, training institutes, etc. (if they exist), has to be promoted.

Examples of activities the LEDA could carry out to support the business, employment and productive environment, are:

· Design projects to improve the efficiency and supply of economic support services, in other words: reinforce existing information systems, business training centers, etc.

· Support the creation or strengthening of entrepreneurial organizations

· Promote technological development and exchange

· Identify financial resources to finance these projects: resource mobilization

· Create instruments with other institutions like vocational training centers, to improve the qualitative demand and supply on the local labour market;

· …

Activities the LEDA could perform on the level of the broader economic environment, include:

· Support initiatives to improve the legal framework (eliminate heavy administrative for starting entrepreneurs

· Lobby on national level and/or international level for particular investments

· Lobby for the inclusion of local priorities in regional or national policies

· Promote local financing mechanisms, if access to credit is difficult

· Promote the participation of excluded groups in the decision and planning process of LED and in economic activities (ex.: social enterprises)

· …

V. LED experiences in Europe

III.1 The origins of Regional Development Agencies in Western Europe

In Western Europe, long and many experiences on LED through instruments like LEDA exist. The origin of Local Development Agencies goes back to the petrol crisis in the early seventies. During that period regional lobbies were set up in order to protest against the reduction of investment in less developed areas. Before the OPEP crisis these large investments were generated by the richer regions through a redistributive tax system, that was one of the aspects of the Marshall Plan after the Second World War. The restraints on GBP expenses caused by the petrol crisis, did reduce the public revenues and as a consequence the redistributive system in favor of the least developed areas. The organized protests and lobbies at regional and local level aimed at the re-launching of the redistributive model. In the end these new platforms -where regional and local public and private interests met-, had to recognize that the reality did not enable this type of resources any more. This experience showed however the potential of such strategic alliances in resource generation for the common regional welfare.

Since then, many different experiences with regional and /or local development agencies exist in Western Europe. The Netherlands, Belgium, Germany, Denmark, Scotland, Ireland, France, Italy or Portugal, they all have their particular experience with development agencies at the regional and/or local level. Some experiences have been developed very recently like in Portugal or England. Other countries have longer experiences like Italy that has been very successful in reducing unemployment particularly in the regional economy of Emilia Romagna. Emilia Romagna experienced significant growth due to unique measures taken by the regional government in active partnership with the local public and private actors. The design and implementation of coherent and integrated programmes resulted in a decrease in the employment rate from 11% to about 3% during the late seventies and the eighties. In the eighties wage rates in Emilia Romagna were twice the national average. In 1996, the region was categorized as the fourth richest sub-national region within the EU on per capita income. ⁽⁹⁾

III.2 EURADA

In all those countries, principles as explained before are similar, but there is no model that can be applied in every context. Therefore, size, sources of financing and many other operational aspects differ. ILO has not directly supported the experiences in these countries but works closely together with these Development Agencies. Especially with regard to the ex-change of information and best practices, through seminars and study tours in the cooperation framework established by the European Association of Development Agencies (EURADA).

EURADA, a non-profit organization, has been set-up in 1991 in Brussels. Its objectives are:

· To encourage exchanges of experience between members and promote "best practices" in the field of local and regional economic development;

· To promote the recognition of the development agencies as specific mechanisms and economic development entities;

· To participate in the development and delivery of territorial development programmes and/or support programmes for companies and in particular small en medium sized enterprises;

· To reinforce and better organize technical cooperation both with the European Commission and other Community institutions;

· To assist the newly created development agencies in non-European Union countries;

· Promote cooperation between development agencies of different countries.

III.3 One Western-European experience in detail: the Setubal Regional Development Agency in Portugal

The Regional Development Agency of Setubal is another example of active and innovative partnership in Europe to promote local economic development. Setubal is a district in the South-West of Portugal, which covers an area of more than 5000km2, 13 municipalities and more than 712.000 inhabitants. The Agency has been created in 1992. Share holders in this agency are representatives of public and private sectors: the Regional Association of Local Authorities, the regional Venture capital Association (a private company with public and private shareholders) and the Regional Entrepreneurial Association.

Its main objective is to promote a quality life environment taking into account economic, social and cultural realities at the local level. Its operational strategy is the design, management and production of regional development projects with economic results.

The Setubal RDA also links to international level regarding EU matters, support to similar activities in future EU member states and LEDA initiatives supported by the ILO in Mozambique and Croatia.

The Setubal RDA is economically independent and self-sustainable as its own resources are continuously reinvested in its own activities. Clients of the Agency are: SMEs, local authorities, European regions, international institutions, national entities and regional institutions.

Activities of the Setubal Agency include:

· Information services on -for example- business opportunities and support programmes, or the creation of inter-active databases

· Training services (management, local and regional development, tourism services, public and private partnerships, project engineering)

· The Setubal Agency contributes as well to a project to set up local development agencies at sub-regional or multi-municipal level in Portugal. The main incentive for this project, is the lack of a sufficient number of inter-institutional structures of technical nature that could act as dynamic promoters of an integrated regional development. The project receives technical assistance from EURADA and is financed by the Programme for Promotion of Regional Development Potential.

· Advisory services on job creation and labour market at municipal level.

· Involvement in international cooperation projects (Mozambique, Eastern-Central Europe).

To resume this Portuguese experience, we can say that this Development Agency has a public-private base and promotes this kind of partnership at other levels. Its main objective is to promote LED and to work for local interest. Of particular interest is its innovative enterprise model: it aims at self-sustainability and works on contract basis with local governments.

III.4 Relevance of LED in Eastern and Central European Countries

III.4.1 Characteristics of countries in transition

With the disintegration of the socialist block and the ongoing liberalization, many countries in Eastern and Central Europe are facing major, structural changes in economic, political and social ways. High rates of unemployment and deteriorating living and working conditions are determining daily life. Very often, the private or semi-private companies that exist are not able to compensate for employment losses in the public sector.

In addition to the changing economic structures, many countries in transition initiate political reforms, searching for more democracy, transparency and decentralization according to EU experiences.

Several countries in this part of Europe have to deal with physical and social destruction caused by armed conflict or social struggles. One example is Croatia that emerged as a new state after 4 years of war from the former federal state Yugoslavia. Post-war problems to deal with are the return of displaced populations, demining, expensive reconstruction works, the breakdown of previous strategic economic partners within the former Yugoslavia (assembly process for cars, processing of raw materials), reanimation of formerly successful economic activities like the tourism industry and a heavily damaged social tissue.

In this Central and Eastern European context, LED is particularly relevant because it has the potential to contribute to:

· support and promotion of social consensus building. This is of special concern in countries that suffer from a lack of social cohesion in case of ethnic conflict;

· to the democratic development and transparency as new public-private partnerships at the local level will reinforce decentralized structures;

· the improvement of the investment environment through the promotion of social stability addressing problems like employment generation in new flexible sectors like SMEs;

· the improvement of negotiating skills and lobby capacities through the creation or reinforcement of associations, development committees, Chamber of Economy and other civil society organizations;

· the establishment of new forms of financing to facilitate access to credit

· new relationships and experiences abroad (ex-change of information, decentralized cooperation, technology transfer, …)

· gathering and dissemination of information to stimulate the identification of investment opportunities in the SME sector

Although these examples demonstrate the enormous potential of LED in this part of Europe, ILO faces many challenges in its assistance to LED initiatives. The long tradition to rely on central government, the priority given to employment promotion through development of big industries, lack of civil society organizations, the mistrust in "planning" and development plans are some just some examples.

III.2.2 Examples of ILO assistance to LED in Eastern Europe and the Balkans

ILO has assisted or still assists LED initiatives in Poland, Bulgaria, Bosnia-Herzegovina en Croatia. In the province of Plock in Poland, ILO has worked together with UNDP in the assistance to local levels to develop strategies for entering into valuable partnerships with national and international partners. Key aspect of this programme was the reinforcement of local capacities to solve increasing unemployment and deteriorating living and working standards. Regional Development Councils were created to involve local socio-economic actors in the prioritization of development objectives in the Economic Development Plan for that region. People coming from civil society and local government structures worked together on issues like infrastructure and environmental protection, business promotion and development, rural development and agriculture and human resources.

In Bulgaria, ILO has worked together with UNDP and the EU-Phare programme to set up Local Development Agencies and Business Centers. Today, 19 these organizations are organized in the Bulgarian Association of Regional Development Agencies and Business centers (BARDA). In the Bulgarian case as well, private-public partnership has been created at the local level; the members of the agencies consist of representatives of the local administration, chambers of commerce, local industrial and business associations and private companies.

In Bosnia & Herzegovina, the ILO -in association with the United Nations Office for Project Services (UNOPS)- has promoted the establishment of Enterprise Development Centers (in the cantons of Livus, Breko, Mustar, Bihac and Banja Luka) and the Central Bosnian Development Agency in Travnik. This Agency is involved in the management of a credit scheme and is an interesting example of cooperation between different ethnic groups. In the near future we will support the Bosnian initiative to create a national network among these Centers and Agency.

In Croatia we are in the process of setting up LED mechanisms. An interesting aspect in the Croatian law on self-government is that it foresees in active partnership between local governments and professionals from the municipality. This enables continuous consultation with doctors, teachers or farmers on health, education or agriculture policies. ILO, together with UNOPS and funding of the EU, will provide training and software to reinforcement the territorial management capacities of these public-private bodies. Besides, we established two local forums of socio-economic actors, representing private and public sector and civil society to discuss LED and decide on appropriate promotion mechanisms, like the establishment of LEDAs.

IV. LED: an international dynamic

As becomes clear from the LED approach as discussed till now, LED is a bottom-up process, based on local needs and capacities. Local development is not necessarily in contradiction to the development of international economy, or a larger supra-national political economy like the EU. These two levels may be considered complementary to each other. ⁽¹⁰⁾ As the above mentioned experiences have shown, local dynamism may provoke inter-action with national and international levels.

Results of local active partnership can be actions in which diversification, innovation, flexibility and entrepreneurship are key elements. Such achievements enable the local level to enter into new and innovative partnerships with the national as well as the international level. The same process may also apply to the national level. By improving the partnership of the national actors, it may be possible to develop new innovative programmes and actions in collaboration with, on the one hand, the local levels and, on the other, the international agencies. And also at the international level, increased collaboration between different inter governmental organizations (IGOs) and NGOs and others, may create new approaches to tackle for example the problems of unemployment.

Picture 3 LED: international dynamic

Many organizations and programmes in decentralized cooperation are involved in LED. The main programmes and international networks in this field are:

· EU - PHARE, TACIS programmes

· OECD LEED (Local Employment and Economic Development) Programme

· European Association of Development Agencies (EURADA),

· International Liaison Service for LEDAs (ILS-LEDA),

· Programme for Rehabilitation and Social Sustainability (PROGRESS) in which UNOPS, ILO and other UN agencies and international partners work together, in countries in transition or emerging from conflict or other crisis situations.

Conclusions

The LED approach has demonstrated to be an enormous potential for employment and business creation and the improvement of living and working conditions in general. Worldwide experiences in which international cooperation was and is involved have also demonstrated that it is not a finished, clear cut solution that is transferable from one country to the other or even from one local context to another within national borders. The LED approach should be understood as a continuos dynamic. The LEDA could be instrument to promote new partnerships and involvement of local actors in the development of their locality. It is a conceptual framework that needs local contribution to make it function. Networking with other local entities inside or outside countries or geo-political organizations like the EU is one important aspect to bring about this dynamic.

For further reading:

Commission Europeenne: Emploi & Fonds social europeen: Des Emplois pour les gens - des gens pour les emplois, Communautes Europeennes, 1999

Commission Europeenne: Emploi & Affaires sociales: Premier rapport sur les initiatives locales de developpement et d'emploi. Des Lecons pour les pactes territoriaux et locaux pour l'emploi, Communautes Europeennes, 1997

Commission Europeenne: Emploi & Affaires sociales: L'ere des emplois sur mesure. Deuxieme rapport sur les initiatives locales de developpement et d'emploi (document de travail), 1998

European Commission: Third System and Employment

Eurostat, Statistiques en bref. Industrie, commerce et services, 3/1999

ILO, World Employment Report 1998-1999. Employability in the global economy. How training matters, Geneva, ILO, 1998

ILO, Decent Work. Report of the Director General to the International Labour Conference, Geneva, ILO, 1999

ILO (Virginie Perotin), The revival of the voluntary sector, Jobs and Social Services. Illusions and Opportunities (unpublished draft paper), ILO, May 1999

ILO, Action Programme Enterprise creation by the unemployed: the role of micro-finance in industrialized countries (seminar report 2-3 June 1998 Birmingham), Geneva, ILO, 1998

ILO (D.N. Short; R. Lindenthal, A.L. Vidal Alonso), Strategies for Local Economic Development within the framework of Sustainable Human Development. Inputs to Capacity building, (International Training Centre of the ILO, 1996)

ILO (H. Hofmeijer, A. Lazarte Hoyle, M. Zwanenburg,), Local Economic Development. Yhe Prodere experience, Geneva, 1999

ILO (A. Lazarte Hoyle), Les agences de developpement economique local: " Promouvoir l'esprit d'entreprise dans le cadre du developpement humain durable. Le cas de l'Amerique Centrale, Geneve, 1998

ILO (A. Lazarte Hoyle), Le financement du developpement economique local: "Comment faire face aux couts du developpement?", Geneve, 1998

ILO (A. Lazarte Hoyle), Constitution des agences de développement economique local. Les marches à suivre, Geneve, 1998

Neil, Cecily; Tykkylainen, Markku, Local Economic Development: A geographical comparison of rural community restructuring, United Nations University Press, 1999

UNDP, Human Development under transition: summaries of the 1997 National Human Development Reports for Europe and the CIS, New York, 1998

1. This paper has originally been prepared for the European Summer Course: "Making (it) Work. Action Plans for Local Sustainable Jobs", organized by the International Institute for the Urban Environment and the International Urban Development Association, Delft (The Netherlands), 18-24 September 1999. "Third System" or "Social Economy" and "third sector organizations" were main themes of the course. The third system (or social economy) essentially refers to organizations which belong neither to the public sector nor to the profit-making private sector alone. These concepts are supposedly familiar to the reader and will therefore not be elaborated further in this paper.

2. Including the International Labour Conference, Governing Body and committees treating specific matters relating to the world of work.

3. ILO, Decent Work. Report of the Director General to the International labour Conference, Geneva, June 1999

4. Recommendation 169 (1984), paragraph 30-34.

5. ILO (D.N. Short, R. Lindenthal, A.L. Vidal Alonso), Strategies for Local Economic Development within the framework of Sustainable Human Development, (ILO International Training Centre, 1996), p.iii.

6. For example: International Conference : "Responding to the challenges of globalization: local and regional initiatives to promote quality employment through social cohesion" in Bologna, May 1999 by ILO's Employment and Training Department

7. For example: Action programme "Enterprise creation by the unemployed: the role of micro-finance in industrialized countries", that includes research on possible links between public and private micro-finance activities. For further information on this Action Programme see: ILO's seminar report: Enterprise creation by the unemployed: the role of microfinance in indutrialized countries, Birmingham, 2-3 June 1998 organized by the Social Finance Unit of the Enterprise and Cooperative Deveopment Department. Another example is ILO's research paper: (Veronique Perotin), The revival of the volontary Sector, Jobs and Social Services. Illusions and Opportunities, Geneva, May 1999.

8. ILO, Strategies for Local Economic Development, p.6.

9. Idem, pp.7-8.

10. ILO, Strategies for LED within the framework of Sustainable Human Development, p.8-9