The Local Economy - a Central Socially Integrative City Strategy

Previous experience in implementing the Urban Districts with Special Development Needs - the Socially Integrative City programme (hereinafter Socially Integrative City programme) shows that the lack of jobs and employment opportunities plus a lack of skills and training comprise a central problem in the disadvantaged neighbourhoods.

A survey in the Socially Integrative City districts suggested that measures to improve the local job situation, to encourage initial and continuing training, to stabilize and found businesses and to support the second labour market and the "third sector" (e.g. non-profit organizations like cooperatives, associations, foundations, etc.) play a major role. Half of the topic conferences conducted in Socially Integrative City pilot districts were devoted to the local economy strategy. Examples are Flensburg-Neustadt (cf. report in info No. 4), Hamburg-Altona/Lurup and Kassel-Nordstadt (cf. reports in this issue).

The local economy strategy pursues labour market, employment, structural and social policy targets. It is combined with action plans on local business promotion, employment promotion, certification and training, and social economy (defined as community-related, socially integrative economics) into a social setting approach. This concept supplements "classical" business and employment promotion, where structural policy measures only indirectly focus on spatial entities in terms of the location of targeted firms. Local economy approaches are intended to tap the resources and address the needs of residents and companies where they live and operate and to support economic development, using spatially limited precision instruments.

The findings from an investigation of microeconomies in Hamburg (Läpple/Deecke/Krüger 1994) substantiate the significance of locally directed approaches. The study suggests that local milieus (historical and cultural surroundings) and local functional clusters (alliances between companies) influence neighbourhood business trends to a great extent. It also shows that employment in locally oriented enterprises is expanding beyond normal expectations.

Local economy approaches are not only financed by the Socially Integrative City programme. The Ministry of Education and Research Learning Region scheme is another source of funds. The European Commission supports local employment by such avenues as territorial employment pacts and a number of pilot projects on the "third system", known in Germany as the "third sector". Packaging these approaches for application in Socially Integrative City zones is possible and increases the effectiveness of all programmes.

Determinants of local economy strategy impact

Development and implementation of integrated action plans is central to the Socially Integrative City programme. The local economy strategy is an essential component of the scheme. Adoption of such an action plan and its revision by the city council give implementation of integrative urban development the necessary political endorsement.

If local economic approaches are to work, the following prerequisites, besides political backing, must apply or be established:

• The approaches are to be incorporated into citywide and regional strategies, for employment and value-added resources, like business cycles, cannot be contained within district limits.
• Districting must offer enough positive business features to sustain local economy growth
• Neighbourhood management design and implementation must include local business approaches to guarantee a holistic, harmonized effort in the district and the necessary links to decision-makers and communication and coordination bodies of all players acting on the local stage.
• An "itemized inventory" of companies operating in the zone is required as a basis for integrated district development. The data should be gathered in the process of programme implementation, analysed, enhanced and put at the disposal of various levels of district policymaking and municipal government. This is the only way to ensure widespread availability of the empirically established district indicators, statements and assessments.

The local economy strategy focuses on three areas of activity: local business founding and development promotion, employment and training, social economics.1 They will be described in detail below.

Local business founding and development promotion

Strengthening indigenous concerns and encouraging establishment of new businesses stabilizes and increases the number of jobs in the districts, ensures provision of staple goods and services and creates or sustains a competitive business sector. Home-district employment and supply chains eminently benefit less mobile population segments and individuals dependent on low-threshold services.

The objective of catering for the needs of individual companies and people who want to go into business by outreaching and offering one-to-one counselling is receiving a much higher priority. Measures should be tailored to business interests and their implementation should be supervised by experts. Options include operation-oriented seminars, information about business promotion for entrepreneurs and labour market policy and counselling for subsidy applicants. Business founders are discriminately supported - even after they have become established. They receive information on sponsorship, individual encouragement and special training. Creation of lobbies and business networks in the district promotes exchange of findings and resource pooling.

In large residential developments, particularly housing companies are leading players in shaping the social and economic structures of the district. They employ social workers, maintenance teams and administrators from the district, initiate and nurture neighbourhood activities, encourage co-determination and acceptance of responsibilities by tenants (e.g. tending grounds and caretaking), finance cultural events and more.

Since 1998 a local development consulting firm for small and medium-sized enterprises with fewer than 50 employees has helped most companies in the St. Pauli and Ottensen districts of Hamburg to thrive and form supportive networks. The Beschäftigung und Bildung association, which provides the consultancy, opened neighbourhood offices for local business development and ongoing contacts with companies, making it conspicuous and accessible on site. Apart from outreach counselling and initiation of business networks, some of its core services were developing company-oriented seminars, which were held locally in the neighbourhood offices, doing research on financial assistance and offering agency and bank referral. This project benefited from funds from the EU's community initiative ADAPT (since succeeded by EQUAL), the European Social Fund, the City of Hamburg Departments of Economic Development; Urban Development; and Labour, Health and Social Services.

Employment and Training

Employment promotion and qualification measures are designed to improve the labour market chances of residents in districts with special development needs, e.g. by training, temporary jobs and precision placement. This also stablilizes the local economy. Neighbours who are involved in the job market projects contribute to raising purchasing power and demand in the district thanks to their higher earnings. Employment promotion and qualification can be accomplished through company and extramural initiatives and through cooperation between government and industry in the district. Measures focusing on both individuals and concerns are theoretically possible. While people-targeting measures prioritize support for skills and assets of individuals, company-targeting schemes are oriented to the requirements of firms in the district. Local jobseekers receive training customized to meet these needs. The experience gained to date by local employment agencies shows the prime importance of combining personal and company-oriented approaches in efficiently obtaining a perfect fit that benefits both parties. For example, further training in data processing for a full-time-employed clerical worker is made possible by subsidizing the pay for an appropriately trained unemployed substitute (Job Rotation Project in Hamburg). The interlocking of both approaches also appears necessary because of the fact that smaller companies in disadvantaged districts rarely hire personnel through classified newspaper advertisements. Usually they recruit people on the basis of personal recommendations. Courses where applicants assess their interpersonal and job skills themselves have proved useful. Familiarization and test runs in small companies co-sponsored by payroll subsidies from government employment promotion or welfare departments have also been successful.

Single mothers and fathers, migrants with language and qualification shortcomings, long-term unemployed and young people with no training face higher hurdles. They can be overcome by applying tools for career orientation and preparation, creation or expansion of teaching and training sites in companies and non-profit institutions and language courses for non-native speakers. The district-defined Voluntary Social Training Year (FSTJ) is one important component of youth career orientation and preparation programmes. FSTJ's core function is matching job experience with attractive training units. This youth welfare measure, devised by the Federal Ministry of Family Affairs, Senior Citizens, Women and Youth for its programme dubbed Development and Opportunities for Young People in Social Hotspots enhances the federal-Land Socially Integrative City programme and offers youngsters in difficult straits tailored support in moving from schools to careers.

A major factor is marrying local employment and training projects with district-wise implementation of integrated action plans. Meshing labour market policy with advantageous social measures not only leads to marked improvements in the neighbourhood. Measure and project participants develop a strong identification with their jobs and their district thanks to their frontline action. The urban development investment sector especially opens wide avenues where employment and skilling projects can be yoked with concrete implementations. Clearing asphalt jungles, creating green areas and remodelling public and private spaces, building playgrounds and bike paths, recycling brownfields and vacant lots are only a few of the possibilities. But non-investment measures in the district, e.g. child and youth care, sports and cultural activities, can be coupled with job and training projects.

However, job placement is usually on an individual basis rather than on a district scale. Priority accommodation of the jobless who live in the depressed districts when assigning people to hiring schemes requires a breakdown of unemployment figures by locality. It is theoretically possible, but costly and time consuming, to provide such data.

Consolidating the activities of labour and welfare departments has proven to be an effective way to apply funds more efficiently in the interests of affected persons. One example is co-locating application and guidance centres. Many agencies already exploit options for mixing and funnelling funds to dual recipients of unemployment benefit and welfare. For instance, people on welfare may participate in measures financed by job centres while Social Services continues to furnish their means of livelihood. Joint projects of the labour and welfare departments can also claim freely applicable job centre funds under Article 10 of the Sozialgesetzbuch (Code of Social Law) SGB III.

Due to the support stipulations, job creation measures financed by government labour and welfare offices are limited to a certain number of months and most are bound by the additionality requirement. These restrictions impose barriers to achieving medium-range employment goals. It therefore seems necessary to consider resorting to intensifying efforts to convert government units to profitmaking ventures to attain partial market orientation and greater independence of job providers. The financial basis for the divested units might include middle-term or long-term subsidies made available for complex urban renewal processes.

Around 70 jobs were created thanks to the local economic strategy of the Beutelweg Cooperative in Trier-Nord in the context of an integrative rehabilitation project. About 3600 people live in the Wilhelminian conversion district with former Prussian barracks, which have been Reich and federal property since the 1940s. The renewal process began with the founding of a resident-managed Bürgerhaus in 1983. Occupants founded the Beutelweg Housing Cooperative in 1991. The covenant allowed tenants to acquire their dwelling in the condominium by purchasing a DM 100 share. The integrative remediation plan has three pillars which gird all individual projects. Apartment modernization (1) is accomplished through work (2) and self-help (3) as a component of the financing model. The cooperative has since hived off two free-enterprise subsidiaries. Haus-Verwaltungs- und Sanierungs-GmbH (HVS) handles administration and renovation. Wohungswirtschaftliche Service Gesellschaft GmbH tackles other assignments. Both firms are attuned to onsite reintegration and vocational training of the community's long-term unemployed.

Most of the rehabilitation was covered by the social housing agency of the Rhineland-Palatinate Ministry of Finance. Residents picked up about 20 percent of the tab. Since the district was embraced by the Socially Integrative City programme in 2000, consultants have been installing neighbourhood management to buttress the local business strategy. Managers are refining and expanding earlier approaches to augment local employment and training and establish sustainable, self-supporting structures. In addition to building renovations and work on grounds, district developers are focusing on playground creation and enhancement, construction of a multimedia centre as a learning, initial and further training facility and expansion of programmes for children and adolescents.

Social economics

The goal of social economics, or the third sector, is developing new "social enterprises", mainly to provide locally demanded services which the market cannot furnish. Examples include community-oriented neighbourhood enterprises, district services, domestic service agencies, school cafeterias, neighbourhood clubhouses and culture cafes. Social economy projects, which simultaneously pursue social, community and business goals, are particularly well suited to create incomes and job opportunities for poorly qualified workers. They also supplement the social and cultural infrastructure and the community-based supply of goods and personal, domestic and communal public services. Anchoring these projects in the district and patterning them on local demand are crucial ingredients of success. Since this sector will probably never support a full cast of paid workers, volunteer staff will always play a significant supporting role. This form of district-based work helps give disadvantaged jobseekers the qualifications and self-esteem they need to compete on the first labour market. To prevent marginalization, however, flexible bridges between voluntary and remunerative work must be installed.

An exemplary strategy for employment, primarily of women, in the social economy has enabled Großbreitenbach, Thuringia, to launch and follow through more than 30 projects with just under 100 workers. In the district, which has a population of 3300, a women's group, Großbreitenbach e.V., was founded in 1992 to explore new job and employment opportunities. A brainstorming session engendered GBF-promotion, a women's work project that started with 30 female employees. The initial welfare activities were in housekeeping and at the Women's and Family Centre, the Youth Centre and the Altenfeld Senior Citizens Club. Little by little they were complemented by diverse endeavours: a women's newspaper, ISA; the Hyperactive Child Guidance Centre and "women on the web", an Internet travel service provider. The main thrust is creation of permanent jobs which were identified as promising prospects in the course of networking individual initiatives and particular interest groups. The Haus für Alle - a mingling point for youth work, senior citizen services and women's activities - pools forces to form a powerful community institution. The announcement awarding the 2000 Socially Integrative City Prize to this project stated that "it throttled the exodus, principally of young people, and created new local patriotism."

Comprehensive local economy strategies

The above-cited examples of the three fields of activity show that successful project approaches frequently pursue several objectives simultaneously. Moreover, best practices tend to be comprehensive local economy strategies that unite various policy areas. A mix of diverse economic, architectural, planning, employment and business promotion policies achieves synergies in residential environment and repair activities which are married to training and employment measures or in remodelling of buildings and rooms to serve a different purpose.

In Berlin-Neukölln borough politicians were instrumental in getting business, union, association and government leaders to form a panel in 1994 to plot strategies to enhance the community's competitiveness and promote employment and training (see www.pakte.de). The first fruits were business and craft days organized since 1996 by an association founded solely to this end, Verein Wirtschaft und Arbeit (Management and Labour Club). By 2000 the association's membership had grown to 60 individuals and institutions, including freelancers and professional pools. SMEs form the backbone of the Verein, but concerns like Deutsche Telekom AG and Stadt und Land, a housing society, are affiliated.

The association is the enforcer of the Neukölln Territorial Employment Pact, an EU-initiated local and regional tool to foster and safeguard employment by means of grassroots partnerships. In 2000 there were 90 such agreements in Europe. Nine were in Germany. In 1998 an onsite office was opened. It offers diverse services to create and retain jobs in the district. European Union financial support enabled the Verein to implement 10 projects, including Socially Integrative District Development to integrate unemployed residents and welfare recipients into the first labour market, to found a training network with a staff of two to locate company training places, the focus being on Turkish-owned businesses, and launch Project Gründerzeit to spoon-feed infant enterprises.

The Verein advises the companies, supports continuing training and affords an overview of the funding labyrinth. An annual prize is award to particularly promising new ventures. Challenge and Konvoi Neukölln concentrate on the problems faced by SMEs. Challenge provides business consultancy and trains personnel via seminars and internships in neighbouring firms. Concerns can join the Konvoi convoy if they wish to study the environmental impact of their plants and processes and desire to qualify their staff to accomplish this task.

The Verein also sponsors a businesswomen's centre and is establishing an Internet commercial-site bourse. The club has undertaken measures to implement federal job creation and structural change (ABM/SAM), whereby unemployed labour was put to work to improve the "greenvirons" of housing areas. The Neukölln pact has created more than 420 training slots and jobs in the district to date.

A second example of a broad, heterogeneous coalition is the Duisburg-Marxloh local economic strategy (see www.lokaleoekonomie.de). This web operated in a district that was built in the late 19th century, ruled by the barons of coal and steel and has been undergoing steady structural change since the late 1970s after the traditional industries collapsed. Unemployment increased. While the indigenous population declined, many foreign citizens moved into the area. In the light of these trends, Duisburg-Marxloh was accepted for the interdepartmental urban renewal programme in 1993. A year later a council resolution gave the Marxloh project the green light. In 1995 the district was incorporated into the EU's URBAN Community Initiative.

Early in 1996 the Office of Economic Development of the EG DU Entwicklungsgesellschaft Duisburg devolved from the city government. Its tasks included improving the employment and supply situation in Marxloh, halting depopulation and purchasing-power drains and encouraging residents to identify with the district and get involved in local activities. Since 1999 the office has been steering district improvement and operating as a redeveloper of remediation sites. It serves as an initial contact point for investors and companies, disseminates information, provides counselling and coordinates local business activities. Several successes have been scored already. The number of businesses has stabilized, new firms have been founded and networks have been launched. German retailers have banded together in the Marxloh Promotion League. Turkish merchants have a counterpart named TIAD.

The multicultural makeup of the population prompted the office to recruit one Turkish and one German manager. Networking in the district is achieved by convening a district conference. The 70 delegates represent several district organizations and the population at large.

The local economic strategy in Marxloh is enhanced by a "citycam" in the form of regular resident surveys providing feedback and input for future onsite operations. In the meantime Marxloh has been acclaimed as a classic example of integrated urban district development. Nevertheless, participants have been navigating in experimental waters all along due to the complicated cast of players and the shifting financing approaches.

Outlook

Strengthening the local economy is a foundation for development of viable structures in Socially Integrative City districts. First, it spawns self-confidence and boosts the ego of residents, which integration in the local economy bestows. Second, it builds buying power and demand, which benefits district-based firms. Imposing and implementing projects and measures designed to serve multiple purposes requires more than just perseverance and stamina. Reciprocity and networking of players from such spheres as business promotion, district development, citizen initiatives, companies and schools are also keys to success. Other components of a winning local economy approach are meshing various policy areas and weaving neighbourhood development tactics into citywide and regional development strategies.

Notes

(1) The policy areas were confirmed by the European Evaluation of Socioeconomic Strategies in Disadvantaged Urban Areas (ELSES) project, in which the North Rhine-Westphalia Institute for Regional and Urban Development Studies participated with the Duisburg-Marxloh district. | (back)

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