LOCAL SOCIAL CAPITAL

Art. 6 ESF

Context, objectives, principles

The reform of the Structural Funds mapped out by Agenda 2000 puts employment and social cohesion among the top priorities for Community structural measures. The same thinking was firmly expressed in decisive terms in the conclusions of the special Luxembourg Jobs Summit; its recommendations sketch out the new framework-under the Amsterdam treaty- for co-ordinating national policies on employment. Article 6 of the current year's ESF Regulation will be used to play a full part as a catalyst in testing, at regional and local level, the Local Social Capital pilot project. The lessons learnt from these trials will serve as a basis in setting up more extensive applications under the new Objectives 1 and 3 of the Structural funds. The idea under discussion here is based on this substantial ambition, to make bottom-up initiatives key components in the effort to promote employment and social cohesion.

What is Art.6 ESF?

As part of its strategy to tackle the problem of unemployment, the European Commission promotes and finances pilot projects under Art.6 of the European Social Fund Regulation. The aim is to test out innovatory ideas and approaches on specific aspects of policy which can be taken on board in the mainstream Structural Funds Program. As a rule, selected projects are funded in application of normal ESF rules with regard to co-financing although projects can sometimes be fully funded.

Article 6 pilot projects are innovative. They propose new ways of dealing with problems. Activities funded value an integrated approach and are in line with the guidelines set out by the Structural Funds: they support the principle of equal opportunities; the conservation of the environment, the respect of competition laws and focus on local development policy. They are easily reproducible and readily transferable to other regions of the European Community.

These principles are part of the Local Social Capital approach which generally aims to provide socially excluded people with the ability to integrate the labour market. The guiding principle for operations by local communities, which is underpinned by the values of citizenship and economic solidarity, is to mobilise indigenous potential to find “local responses to local needs”.

The role of LSC pilot

In 1998, a call for proposals was organised to select organisations locally based to develop "local social capital" intermediary bodies, responsible for the award of small grants for actions enhancing the social cohesion and employment opportunities of excluded groups. For the Commission, Art. 6 is the opportunity to test such a decentralised local approach and to learn from its implementation in order to be in a position to establish guidelines and best practices which will be useful to the Member States under the new European Social Fund.

With the Local Social Capital Pilot, global grants are given to non-profit organisations that will provide three types of support to micro project promoters: direct financial support, quality technical and logistic advice and participatory supervision. This pilot action will allow to identify good practices for the implementation of Article 4(2) of the new ESF regulation which states: “The programming of Fund interventions shall provide that a reasonable amount of the Fund appropriations made available for the interventions within Objectives 1 and 3 shall be available, in conformity with Article 27 of Regulation (EC) No1260/1999 [General Regulation], in the form of small grants, with special arrangements for access by non-governmental organisations and local partnerships. Member States may choose to implement this paragraph in accordance with the financing arrangements set out in Article 29(6), first sentence, of Regulation (EC) No.1260/1999”.  

In the old Structural Funds regulations, financial assistance could be provided under various forms that reflect the nature of the operations. Art 5.1 of the Council regulation EEC N° 2084/93 specified  “global grant schemes” as one of the three forms of financial assistance provided by the European Commission under the Structural Funds. The above mentioned formulation of Article 4(2) of the new ESF Regulation entails the use of the global grant schemes. The appropriateness of this mechanism in assisting local development initiatives is recognised in Article 9(I) of the Regulation (EC) No. 1260/1999, General Regulation, defining "global grants".

The concept of Local Social Capital

The notion of Social Capital has gained recognition in the area of social sciences. It refers to "features of social organisation" such as networks, norms and social trust that facilitate co-ordination and co-operation for mutual benefit".

A main driver of the creation of social capital are people and non-profit organisations who develop initiatives that contribute to the creation of employment and the strengthening of social cohesion. However, many of these initiatives do not see the daylight due to a lack of funds or to a lack of advice and hands-on backup.

The key principle for Local Social Capital actions is “local development for the community and by the community”. This implies the implementation of strong partnerships between all the local actors and in particular the participation of the socially excluded people in the development of the whole project.

In the framework of the Art.6 pilot action, "Local Social Capital means an intermediary body –operating at regional or at local level- capable of providing backup for people who pool their resources with a view to carrying out micro-level projects which promote employment and social cohesion".[1]

Again, as part of the European Social Fund, the pilot action will support projects facilitating the social inclusion and more specifically their integration into the labour market. LSC does not address unemployment in general but focuses on those groups who at present cannot for various reasons profit from the EU employment policies. Intermediary Bodies must analyse the needs and how these needs are being or not being met inside their territory in cooperation with all local actors. In collaboration with them, they must identify which needs can be met through LSC and how to best meet them. The tool they will use for this is the funding of small projects destined to "disclose" locked potential and whose effects will have a demonstrative impact on the territory and its actors. IBs will have to be innovative in order to reach and involve socially excluded people whose specific needs are not addressed and/or met by existing actions.

The intermediary bodies will be responsible for the channelling of funds and support to local micro-project promoters. They will act as intermediaries between the Commission and the people and groups promoting new initiatives in three areas:

1.       projects aimed at restoring social cohesion by encouraging co-operation and solidarity. Any socially useful activity contributing to this aim could be encouraged, be it in connection with improving the quality of life or the local environment (social and health services, assistance with transport) or strengthening/creating self-help groups or networks for the exchange of products and services at local level;

2.       projects aimed at reinforcing local networks and formal and informal groups which seek to facilitate integration of excluded persons into the world of work. In this context, the assistance could be put to use imaginatively, for example to support measures to exploit the latent vocational and social skills of persons in difficulty, or self-training and apprenticeship measures to increase familiarity with new technologies;

3.        projects with the immediate objective of providing assistance with the start-up of microbusinesses and co-operatives. The systematic provision of support for these activities, in the form of technical advice/training will be an integral part of these projects.