With 7.1 million workers engaged in ‘precarious’ employment and 77 per cent of the self-employed living in poverty, the report ‘Working Together: Trade Union and Co-operative Innovations for Precarious Work’ calls for increased protection for those operating in the so-called gig economy.  

“Not only do they have almost no security, but while the average employed worker is losing out year by year in real terms, the self-employed are doing even worse, earning less each year in cash terms,” said co-author Alex Bird. “1.7 million of those in precarious employment are earning less than the national minimum wage, with no real enforcement of the law, and the self-employed are not even covered by the existing legislation.”

There are solutions according to Working Together. The report, commissioned by Co-operatives UK and The Co-operative College, and supported by the Network for Social Change, Wales Co-operative Centre and the Institute for Solidarity Economics, identifies ‘co-operative solutions’ as well as partnerships with trade unions as a way of ensuring a fair deal for workers in an expanding gig economy.

It calls for the UK to replicate the ‘umbrella co-operative model’ for supporting freelancers and other precarious workers and points to Belgium-based SMart. The non-profit organisation enables precarious workers operating in the arts sector to obtain a range of welfare benefits – including unemployment benefit.

SMart also provides its 70,000 plus members with tax support and advice. Sarah de Heusch Ribassin, Project Officer for the Development Strategy Unit at Smart, said:

“Many of those who were self-employed found the legislation around taxes to be so complex and were afraid to do things wrong. SMart offered an alternative that meant they no longer had to worry about making errors that would affect their income.”

Working Together also identifies Indycube as a blueprint for how partnerships between trade union and co-operatives can flourish. Indycube is a rapidly growing network for freelancers and the self-employed and offers access to workspace in more than 30 locations, predominantly across Wales.

The not-for-profit co-operative works with the trade union Community to offer a range of benefits including advice on tax, insurance, pensions and employment law.

Mark Hooper, Founder of Indycube, sums up how the relationship with Community has developed. He said:

“We see this as the way to grow with Community’s resources, capacity and knowledge, and the plan provides an opportunity for third party representation of our self-employed members.

“On a practical level, freelancers often find themselves presented with complex contracts full of legal jargon, which can result in problematic agreements and issues with payment.

“Community’s legal team are able to advise on these sorts of documents which many independent workers wouldn’t otherwise be able to access. Likewise, Invoice Factoring is a service which is generally only available to bigger companies and organisations, but banding independent workers’ voices together and working in partnership with Community has allowed Indycube to secure access to Invoice Factoring services, effectively putting an end to late payments for our members.

“Fifty-one per cent of invoices are paid late, a figure we think is far too high, and Community’s support has enabled us to make progress in this area. Thanks to Community’s status as an established union, Indycube has been able to cement itself in the minds of policy-makers and others as a voice for the fast-growing group of independent workers.

“The more members we have, the stronger our collective voice, and the more work we can all do to make our futures better.”

Les Bayliss, National Officer and Head of Special Projects for Community, said: “Our partnership with Indycube is one of a number of newly developed initiatives where, as a trade union, we are reaching out to new workers in today’s world of work.

“We will continue to listen to and understand what they need from a trade union, providing support, representation, mediation and settlement. Working together we hope to develop a ‘one voice’ approach to the needs of self-employed, freelance workers, speaking out and campaigning on the issues that affect them most.

“As a trade union we will continue to learn from our new initiatives and our new members, building new alliances with others in the private, co-operative and not for profit sectors. We will reach out to workers by being relevant to them and their needs.”

The rise in the gig economy means businesses, trade unions and government must do more to protect workers according to Ed Mayo, secretary general of Co-operatives UK, the trade body that works to promote develop and unite co-operative enterprises. He said:

“The number of zero hours workers has increased by over 800,000 within the past decade. Some 77% of self-employed workers are living in poverty…

“These are incredible numbers. With increased precariousness comes the need for increased protection and support and we know that co-operatives and trade unions can be part of the solution to this growing need.”

Cilla Ross, Co-operative College Vice Principal and co-author of the report said,

“The experience of growing numbers of workers in education, from teachers in the compulsory (pre-16) sector through to further, higher and adult education, is one of casualisation and precarity. This report pulls together examples of how unions and co-ops are successfully working together and offers real solutions on how precarious work can be challenged.”

The full Working Together report can be viewed and downloaded here.

Additional Notes 

The Working Together report profiles a number of examples where trade unions and co-operatives are working together including:

Musicians Union (MU) and Musicians co-ops: Local Authority music service closure in 1998 led to the launch of Swindon Music Co-operative. The MU was an active supporter of the co-operative which is now the main provider of instrumental and vocal tuition in over 70 local schools. The co-op and trade union partnership has set up seven other musicians’ co-ops across England and Wales.

Actor Co-ops: There are 30 actors’ co-ops in England and Wales. Their development and success has been through a close working partnership over many years with the actors union, Equity. The partnership has secured workers’ rights through negotiated industry agreements.

Community Lives Consortium: This social care organisation has operated as a co-op since 2001. It provides housing and social care services for severely disabled adults in Swansea, Neath and Port Talbot. Unison has supported the development of the co-operative since 2001 and has a place on the board of directors.

Key findings and recommendations in the report include:

• Co-operative sector share of GDP is 2% in the UK while in Italy and other EU countries it is over 10%. There are only 474 worker co-ops in the UK versus over 23,000 worker and social co-ops in Italy where public policy support (including tax reliefs) and legislative changes in 1985 and 1991 have been transformative.
• A wider partnership with local authorities can make a real difference. Cities in the US are supporting programmes to establish an eco-system of support for co-operative development including legal and technical advice as well as enabling finance. Local government partnerships in Italy have assisted the significant growth of social co-operatives in the fields of social care and jobs for disadvantaged groups in the labour market.
• Platform co-operatives co-developed by trade unions and worker co-ops are emerging in the USA as an alternative to Uber. Other trade unions in the USA are working on Union Co-op platform solutions for childminders and district nurses. Union Co-op solutions like this are needed in the UK.
• Mutual guarantee societies were developed in Italy and considerably reduce the cost of development finance for co-operatives. 19 EU countries have adopted this innovation and the UK should do the same.
• Universal Basic Income could be introduced in the UK in tax neutral ways that would significantly benefit those in precarious work. Trade union interest in this reform is growing as an alternative to the widespread problems with Universal Credit.

About The Co-operative College, Co-operatives UK and Wales Co-operative Centre

The Co-operative College is an educational charity and has been a leading provider of education, training and research for the co-operative sector since 1919. As a membership based organisation, we work across the UK and internationally to promote co-operative values, ideas,  principles and practices. www.co-op.ac.uk

Wales Co-operative Centre is a co-operative development agency, working across Wales to promote social, financial and digital inclusion through a range of projects. For further information visit http://wales.coop.

Co-operatives UK is the network for Britain’s thousands of co-operatives. Together we work to promote, develop and unite member-owned businesses across the economy. From high street retailers to community owned pubs, fan owned football clubs to farmer controlled businesses, co-operatives are everywhere and together they are worth £37 billion to the British economy. www.uk.coop

For further information, please contact:

Dominic Mills:

Tel: 0161 2141767

Email: [email protected]

<small>Photo by Startup Stock Photos from Pexels https://www.pexels.com/photo/people-coffee-meeting-team-7096/</small>

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As part of an effort to make the ‘digital economy our own’, these organisations have today joined forces to launch a new pilot accelerator UnFound to support ‘platform co-operatives’, digital platforms that are democratically owned by their members or users.

UnFound will give these early-stage platforms the opportunity to access the UK’s first structured programme of support. Teams can apply for the accelerator programme at www.unfound.coop between now and 31st March.

Successful applicants will benefit from a team of six mentors and a series of masterclasses to support and develop the business planning and co-operative governance of their platform. Support is being made available through The Hive, a business support programme for co-operatives from Co-operatives UK and The Co-operative Bank. The accelerator culminates with live crowdfunding session, where the teams will pitch for financial support from 400 delegates at Co-operatives UK’s Co-op Congress event in London on 23rd June.

Ed Mayo, Secretary General of Co-operatives UK, says:

“We are seeing more and more sectors of the economy disrupted by online platforms, from Deliveroo to Uber. They are revolutionising so many aspects of our workplaces and lives. But what is not changing are the patterns of ownership, where a relatively small number benefit from the success of the platform.”

“Imagine, though, if the platforms we used every day were owned by the workers and the users themselves. UnFound is a great opportunity to kickstart platform co-operatives with some extremely valuable support.”

Nathan Schneider, co-organiser of the Platform Cooperativism conference, also sees the significance of this new pilot accelerator.

“Accelerators like UnFound make it easier for entrepreneurs trying to make their idea real in the world to do it with democracy. For too long, the startup ecosystem has been a game of trying to sell our best ideas to investors looking for exponential profits. Now, startups are starting to have better options. They can truly build their startups for their communities.”

What are Platform co-ops?

A platform co-operative is a democratically-run member- or user-owned online platform or mobile app. They are start-ups from communities of people – such as workers or users – to meet their needs or solve a problem by networking people and assets.

There are successful examples of Platform Co-operatives in North America and Europe, but they are still in early-stage development in the UK. Even though the likes of London-based TaxiApp represent an exciting new wave of co-operatively run platforms emerging here.

UnFound is open for applications from today (1st March) and closes midnight on 31st March 2018.

The accelerator is one strand of the National Co-operative Development Strategy – an ambitious strategy to create a more participative economy. Launched in 2017 by Co-operatives UK, it calls for more support for “platform co-operatives using new technology for shared ownership services.”

Jonny Gordon-Farleigh, Stir to Action, says:

“We’ve got experienced teams of facilitators and mentors who will be supporting the co-operatives through the accelerator. We’ll also be joined by the inspiring co-founders of Stocksy and Fairmondo who will be introducing new ideas for business development, digital governance, and crowd finance.”

For more information about UnFound visit www.unfound.coop

— ENDS —

 About Co-operatives UK

The network for Britain’s thousands of co-operative businesses, Co-operatives UK works to promote, develop and unite member-owned business worth £36 billion to the British economy.

www.uk.coop

Stir to Action

Stir to Action publishes STIR, a quarterly magazine on the new economy, runs workshop programmes, and supports Community Economic Development.

www.stirtoaction.com

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In his new book, Ed Mayo brings together this rich story for the first time in A short history of co-operation and mutuality.

Covering everything from the Commons to lending circles to labourer societies, this is a fresh take on the origins of co-operation form a leading voice in the global co-operative movement.

“A very thoughtful, deeply researched and original history of cooperation and mutual aid.” Frank Trentmann, Professor of History

Chapters

• Preface         1844 – The birth of co-operation
• Chapter 1      Co-operation and the human story
• Chapter 2      An ancient way of getting things done
• Chapter 3      Craft and co-operation in Europe
• Chapter 4      Traditions of co-operation
• Chapter 5      A friendly turn
• Chapter 6      From friendship to resistance
• Chapter 7      Freedom and repression
• Chapter 8      Out of Rochdale
• Chapter 9      After 1844: Plymouth and Finland
• Chapter 10    Self-help and state sponsorship in the twentieth century
• Chapter 11    The co-operative sector today
• Chapter 12    Co-operation and mutuality over time: a conclusion

Download the English version

Download the Spanish version

Take a look at the slide deck on the 12 early co-ops herePhoto by dkantoro

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From Finland’s high-tech businesses through to an extensive network of regional co-ops that ensure that there are banks, stores and other services within two miles of residents throughout the year, there are co-owned services in every sector stretching right across a country 40% larger than the UK.

We have much to learn from countries like Finland and, across Europe, there has been a welcome strengthening of trade relations and contact between the 160,000 co-op enterprises which provide jobs for 5.4 million European citizens.

My recent trip to Finland coincided with the start of the Lapland tourist season: the plane that brought me there boasted a seven metre high picture of Santa Claus on the tail. But I was there for a more prosaic reason, visiting some of the country’s leading co-operative enterprises.

It was mid-afternoon and already dark in the capital city of Helsinki by the time I met Taavi Heikkilä, chief executive of the SOK Corporation (also known as the “S Group”), who filled me in on his organisation’s progress towards creating a co-operative economy.

As in the UK, there are employee-owned co-ops and customer-owned co-ops in Finland. The S Group’s retail co-ops are customer-owned, with 1,646 food and grocery stores and 42,000 staff. Over the last 30 years the S Group has grown from around 20% market share and the third largest retailer in the country to be the market leader, with just over 45% market share. Co-operatives in the group now cover an unusually wide range of consumer services, from cars and fuel through to department stores, hotels and restaurants.

My counterpart Sami Karhu, of the Pellervo Society, reports that the co-operative business sector more widely includes 161 co-operative banks, 20 co-operative insurance companies and a range of water, forestry and farmer co-operatives. The longest running of these date back close to the start of the first co-ops in Finland in 1899, launched as part of a movement to strengthen Finnish society in the face of threats from Russia. From these humble starts, co-op banks, diaries and shops opened in almost every community in the country. The movement’s founder Hannes Gebhard described it as “the peaceful endeavor of the underprivileged to improve their lot by their own efforts, joined together.”

Finland was later described by its Nobel Prize winning scientist A I Vertanen as an economy based on mutuality: “We have no Rockefellers or Carnegies, but we do have co-operatives,” he said. This tradition continues to spread some seven decades later.

The lessons for the UK are encouraging. At a time when the closure rate for rural shops and banks is increasing, the Finns have developed and sustained vibrant community-owned model for sustainable rural outlets that integrate different services, including food, petrol and banking. By combining services in a format that is shaped by local communities and responds to local needs, but with the scale and distribution of a national chain, Finnish co-ops are finding new ways to sustain more distant regional economies.

Finnish customer-owned retailers have won market share by making membership something that is meaningful, rather reproducing another consumer loyalty scheme. They are using data and new technologies to support the close relationship, and give a sense of ownership.

The S Group’s Heikkilä explains: “In the past a retailer knew all its customers and their needs personally. Today, customer proximity means new solutions.” Customers want easy and smooth shopping and a quick interactive service and the S Group has focused on digital services to offer just that. “We see digital mobile retail as the customer’s remote control to the co-operative”, he adds.

Today, the number of co-operative enterprises in Finland stands at 4,626. While Nokia, the leading Finnish company, has been knocked back and the economy has the strains shared by Eurozone nations, there is a fresh wave of co-ops: one new co-operative enterprise starts up every working day of the year. These organisations extended the co-operative model of member to include non-traditional areas such as woodlands, energy supply, consumer and business broadband and telecoms.

Here in the UK, the Lincolnshire Co-operative Society is looking to try something similar, with experiments that combine libraries, pharmacies and post offices – each of which might be a marginal business, but together could attract sufficient footfall to sustain a village outlet. In Waddington, the library is nested within a pharmacy and operates with 15 volunteers, including one local author.

Although many retail consumer co-operatives in the UK are owned by millions of their customers, most people wouldn’t know it. Over time, the relationship between co-ops and their members and consumers has become a far more thin connection than when dividends were high and the decision makers were all local.

The larger co-operatives, such as Co-operative Group, Central England and Scotmid, are now talking actively about member engagement and so-called meaningful membership. Let’s hope we take a leaf out of the Finnish book.

Ed Mayo is secretary general of Co-operatives UK and a vice-president of Co-operatives Europe

Originally published in The Guardian

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Our aim in this report is to explore how trade unions and co‐operatives can work together to challenge precarity and secure decent work.

The world of work in the 21st century has a markedly different pattern from that of the 20th century. The two‐tiered structure that has emerged since 2007 out of austerity and automation has been well described as an hour‐glass.

In the top half there is a shrinking traditional workforce with standard 40 hour contracts, residual pensions and full employment rights and below, lies what Martin Smith of the GMB described as:

….a second growing group where technology creates an on demand working culture dominated by their smart phone of precarious work, low paid, zero hours, tiny hours, agency, self‐employed jobs.

The aim of this report is to describe more clearly the plight of the growing precariat and to identify and capture examples of best practice where unions and co‐ operatives are working together to challenge the erosion of political, social, economic and cultural rights.

Guy Standing and his work on A Precariat Charter describes why a loss of ‘social income’ won by trade union struggles over decades characterises most clearly the plight of the precariat in the 21st century: their conversion from full citizens into denizens with curtailed rights.

The precariat lacks access to non‐wage perks such as paid vacations, medical leave, company pensions and so on. It also lacks rights‐based state benefits, linked to legal entitlements, leaving it dependent on discretionary insecure benefits, if any. And it lacks access to community benefits, in the form of a strong commons (public services and amenities).

GMB commissioned research that interviewed precarious workers and found:

 Unions remain deeply supported and identified as being on their side.

 Traditional forms of collective bargaining are largely seen as inaccessible within a realistic timeframe of an organising campaign.

 Union approaches are best focused around meeting their needs.

 Union messaging that works best include: ‘Britain needs a pay rise’, ’Work you can build a life on’, and ‘Fair treatment at work.’

For this report we have surveyed and interviewed numerous officers and members of UK and other trade unions abroad as well as those working in co‐operatives. A consultation day was held in Manchester and four case studies have been put together in the next four sections to highlight innovative practices.  Though it is early days, these organising strategies are either emerging in the UK or, with focused support from the trade union or co‐operative movements, could emerge and be embedded.

The report illustrates each organising strategy and draws together broader and crosscutting findings and recommendations.

Read the report here

Photo by jon crel

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Dear Birdies,

The tweet-powered t-shirt vending machine in the room at Twitter’s shareholder meeting didn’t work at first. A Twitter employee attending to the machine walked me through the three hashtags required to get the shirt, but the machine wasn’t recognizing my tweeting. So, after 10 minutes of small talk with the employee about our proposal, I told her “Thank you” and started to go. But then the employee opened the vending machine door and handed me a shirt. Such a simple fix!

At Monday’s annual meeting, Twitter shareholders did not approve our proposal.

But by winning 4% of the vote, we can – and very likely will – resubmit a better proposal next year to democratize Twitter.

Twitter’s opposition statement to our proposal said it couldn’t be done. The truth is, even some of the strongest allies of #BuyTwitter assumed it was too complex. We’ve been through eight months of organizing, from op-ed to petition to proposal, defense, andMonday’s vote tally. Looking back, it all seems simple, like unlocking a vending machine.

Now, after the meeting, everything seems possible for our group.

A stock market analyst who helped guide our efforts emailed me, saying: “This study could be a game changer… You have legitimacy now from the shareholder vote. That carries weight. Leverage it to the fullest. Media coverage may very well be in your favor, too.”

Momentum from the vote is one way that #WeAreTwitter #BuyTwitter has succeeded so far at building organized power among Twitter users and shareholders.

Here is some more of what we’ve accomplished together:

• Advancing democratic ownership and accountability on the platforms we use, including a couple dozen individuals doing analysis, web design, advocacy with allies, and more.
• Dozens upon dozens of articles featuring #BuyTwitter including The Financial Times, WIRED, Salon, Recode, Vanity Fair, and The Co-op Water Cooler.
• Hundreds upon hundreds of tweets in the past week alone about #BuyTwitter, including an original love ballad on YouTube!
• A letter signed by major of coop allies, including the International Co-operative Alliance, Co-operatives UK, the National Cooperative Business Association, and Co-operatives and Mutuals Canada. You can sign it, too!
• Another letter by the International Co-op Alliance, on behalf of 2.6 million enterprises and 1 billion members worldwide.
• A poll conducted last week found that more than 2 million UK Twitter users would consider investing in a democratic Twitter.
• A Twitter Moment of selected highlights uniting #BuyTwitter, #NetNeutrality, #Coops, #corpgov, and exiting the stock market.

This is just the beginning. What’s next?

• Help build cooperative social media by joining the new Social.coop, a cooperatively owned instance of the federated, open-source Mastodon network. This is just one of many projects you can support in the #platformcoop ecosystem.
• Explore the broader movement for cooperative platforms and an Internet of Owners by attending The People’s Disruption conference in NYC and other events around the world.
• Join the organizing effort in our Loomio group. What should next year’s proposal say? Should we press on as a social media users’ union? A cooperative investment club?

I hope we can get together for an open online conversation. Until then, share our celebration tweet and have a wonderful week.

Onward,

Danny and the #WeAreTwitter team

PS: If someone you know wants a free kitten, tell them to get one here.

Photo by clasesdeperiodismo

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In the story of co-operative enterprises worldwide, there can be a powerful alignment between the ‘hard side’ of business structure and ownership, and the ‘soft side’ of business values and culture. There are 1.6 million co-operative enterprises worldwide, linked in theory under a common statement of identity and set of values. In the book Values, I look at the practice of this and the extent to which co-ops live up to their stated values.

A guest contribution from Ed Mayo, Secretary General of Co-operatives UK,

Values are what matter to us, what motivate us. As such, values have the power to encourage voluntary action and effort that goes beyond the narrow limits of individual self-interest. Values help us to work together.

How do values fit with models of organisation?

In commercial business, where participation is subject to contract and compensation, there are times when that same voluntarism, or ‘discretionary effort’ in the jargon, is critical to the enterprise. This insight underpins a new wave of attention to ‘employee engagement’ in many countries.

A different way to approach the case for investing in intrinsic values is the extent to which they can drive positive norms and behaviours, such as loyalty or ideas for innovation, in customers, suppliers or employees. The extraordinary success of open source or free software, the importance of volunteering in civil society, the power and reach of faith communities, are examples of institutional activity that are dependent on the free and willing collaboration of people on the basis of sufficient overlap of values and purpose.

There is plenty of evidence that businesses with strong sets of values perform better than those without. Research on around 700 firms, using five years of data compiled by the Great Place to Work initiative, suggests that, while there is no performance link with firms that have simply published a set of values, there is a strong positive link with those firms whose values are seen within the company to be prominent.

At their best, shared values create a northbound train – the effect of everybody focused on the same direction. At their worst, a clash of values can distract and destroy any business.

At the same time, it is mistaken to think that business behaviour you might not approve of is not shaped by values. They may just be the wrong values – for example, of power, status or personal greed. To effect change, though, values are still where you have to start. If you are concerned with fairness and democracy, for example, the question is what forms of ownership and control best fit with those values?

What the research can’t prove, though, is whether this is correlation or causation. Is it the case that the best-performing firms are so well organised that, as an illustration of their high performance, they have strong, embedded values? Or is it the case that those values help to reinforce and even drive that high performance?

The same research concludes that going public reduces the extent to which companies can focus on ‘integrity as short-term decisions can carry undue weight. Privately-owned companies (including venture capital-backed organisations) tend to have higher levels of integrity than publicly-quoted companies.’

The ultimate owners set the formal rules and structure of the business. While values are not transmitted in a top down way – contrary to the myths of business leadership – the structures of power in an enterprise shape the values that drive the business.

In listed companies, the owners are the investors. In a co-operative, they are the members. In a co-operative, values and/or their associated principles are typically included in the articles of association, giving a mandate for action. There is a parallel here with B Corporation, the growing field of companies that write public benefit into the articles of the firm. There are hopeful moments like this in the life of many a business, such as when a business founder retires and explores employee ownership as a way to take it forward, when ownership opens up and offers a way to lock in the values of the firm for good.

In the story of co-operative enterprises worldwide, there can be a powerful alignment between the ‘hard side’ of business structure and ownership, and the ‘soft side’ of business values and culture. There are 1.6 million co-operative enterprises worldwide, linked in theory under a common statement of identity and set of values. In the book Values, I look at the practice of this and the extent to which co-ops live up to their stated values.

As Professor David Wheeler, President and Vice Chancellor of Cape Breton University, Canada, says: ‘don’t look to a static list of stated principles, when what really matters is the development, articulation and evolutionary processes that surround them.’ But there is some evidence to suggest that, at the very least, businesses with distinctive values may act in distinctive ways. The global values offer a prompt, or default, for co-operatives that can then be a reference point for its members. In France, co-ops are now required to conduct an independent audit for members at least once every five years to assess their co-operative difference.

In many countries, ethical values are core to the brand values of co-ops. The UK consumer research magazine Ethical Consumer, drawing on an extensive database of ethical screening, states that co-operative businesses are in the top third of ethical performers in 80% of the markets that they surveyed, and are the top performers in 23% of markets.

Values are the hidden side of any business. There is a toolkit to run enterprises in a way that facilitates dialogue and behaviour around values – from participatory processes for articulating values and recruiting for values through to integrating values in the supply chain. This toolkit on values is one perhaps that can help to make business part of the solution and not simply part of the problem when it comes to the big challenges facing the world.

Ed Mayo is Secretary General at Co-operatives UK and author of a new book, Values: how to bring values to life in your business.

Values is published by Greenleaf and available on http://www.greenleaf-publishing.com/online-collections/values

Photo by swisscan

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Over the last few years a growing body of evidence about worker-owned businesses has emerged, showing that they give staff more of a stake in the organisations they work for, boost productivity, and can work in almost all parts of the economy.

But, beyond these headlines what do we really know about worker cooperatives? Do they tend to be small? Do they struggle to get financial investment? Are they successfully competing with conventional businesses?

Professor Virginie Pérotin at the Leeds University Business School has looked at international data on worker-owned and run businesses in Europe, the U.S., and Latin America and compared them with conventional businesses.

In her new report, What Do We Really Know About Worker Cooperatives?, published by Cooperatives UK, the network for Britain’s thousands of cooperatives, she has analysed international studies on business issues like productivity, survival, investment, and responsiveness and identified a number of findings that add to our understanding of worker cooperatives.

1. Worker co-ops are successful businesses. First of all, she finds that worker cooperatives represent a serious business alternative and bring significant benefits to their employees and to the economy. “There are thousands of worker-run businesses in Europe, employing several hundred thousand people in a broad range of industries, from traditional manufacturing to the creative and high-tech industries,” says Professor Pérotin.

2. Worker cooperatives give staff control. Because worker cooperatives are owned and run by them, their employees have far more say in the business, from day-to-day concerns through to major strategic issues. “A job in a worker cooperative probably is particularly valuable, since it is a job in which the employee has a say in decisions that affect employment risks,” reads the report.

3. Worker cooperatives boost productivity. As the employees are the owners with a stake in the future of the business, worker co-ops are more productive than conventional businesses, with staff working harder and the organisation harnessing their skills more effectively. The largest study finds that “in several industries, conventional firms would produce more with their current levels of employment and capital if they adopted the employee-owned firms’ way of organising production” the report highlights. “Worker cooperatives are more productive than conventional businesses, with staff working “better and smarter” and production organised more efficiently,” adds Professor Pérotin.

4. Worker cooperatives provide greater job security. When market conditions change, worker cooperatives review wages first and keep employment more stable than in conventional businesses. In a downturn, they drop wages rather than reduce their workforce and, when business picks up, they are ready to respond and can make up for lost pay because employees enjoy a share of profit.

5. Worker cooperatives are larger than conventional businesses. Contrary to a popular myth, far from being small, cooperatives tend to be larger than other businesses. Professor Pérotin identifies a number of reasons for this — most businesses are in fact small, cooperatives are resilient and therefore are often older businesses than the average, and many in countries like France emerge as buyouts of existing businesses rather than start-ups and therefore are born large.

6. Worker cooperatives are resilient. Last year our own data found that, whereas only 40 percent of new businesses in the UK survive the difficult first five years, 80 percent of co-ops do. Professor Pérotin’s analysis supports this, and she points out “worker cooperatives survive longer than other firms overall when industry and starting wage, size, and year of creation are taken into account, and this is due to their much lower closure risk (hazard), all else being equal, than conventional firms.”

7. Worker cooperatives have relatively high levels of investment. It is sometimes thought that worker cooperatives may struggle because they rely on investment from the employee members rather than external sources. “However, in practice,” says Professor Pérotin, “worker cooperatives plough back significantly more profit than required, perhaps as a form of insurance against job losses in downturns. This suggests that the hypothesised under-investment process itself does not apply in practice.”

So, when you put it all together, worker co-ops are successful, productive, resilient, and relatively large businesses that give their staff job security and control over its strategic direction. That is something that everyone needs to know about worker cooperatives.

Author Ed Mayo is Secretary General of Co-operatives UK, the network for Britain’s thousands of co-operative businesses.

Cross-posted from Shareable.

Top photo courtesy of Co-operatives UK: Debbie Harley, a worker and director of Delta-T Devices, a thriving environmental science instruments worker co-operative, checks in on an installation.

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Co-operatives UK has welcomed the announcement (Wednesday 20 April) by the Shadow Chancellor, John McDonnell, that the Labour Party will aim to double to the size of the UK co-operative sector if in power, as a way to boost the economy.

Drawing on figures from our co-operative economy report, he compared the size of the UK co-operative sector to counterparts in Europe, saying “We should be more ambitious about what can be achieved here. We want to see resilient, high-productivity businesses in an economy that is fairer for everyone. The next Labour government will look to at least double the size of the co-operative economy. That’s a £40 billion boost to the economy.”

His suggested mechanisms for supporting the growth of the co-operative sector chime with a number of our policy proposals, including legislation for ‘mutual guarantee societies’ which will enable small businesses to pool resources in order to access much-needed finance and support for self-employed workers to form co-operatives, both of which are recommendations from our latest report on freelancer co-ops that picked up significant media coverage.

The Shadow Chancellor also cited the limited resources allocated to co-operatives in central government, which points to our case for consolidating responsibility for co-ops in the department for business.

Ed Mayo, Secretary General of Co-operatives UK, welcomed John McDonnell’s support. He said: “Today’s announcement from John McDonnell is a welcome endorsement of the difference co-operative businesses make, both to individuals and to the economy as whole.

“The aspiration to double the size of the co-operative sector resonates deeply with Co-operatives UK’s strategy. The action the Shadow Chancellor suggests, including new legislation and allocating more resources in government to support co-operatives, are among proposals that can help deliver this step-change.

“Our report released earlier this month, Not alone, set out the case for co-operative solutions to some of the insecurity faced by freelancers, and we are delighted to see the Shadow Chancellor highlighting this potential and endorsing our recommendation for legislation that will help small businesses club together as co-ops.

“Co-operatives are owned and supported by people of all political parties and of none, whether as customers, employees or local residents. We have and continue to work across the political spectrum to support the development of a more co-operative economy. Labour’s political leadership on this issue and announcement today that co-operatives are an essential part of Labour’s vision for a ‘better, fairer economy’ is welcome indeed.

“We look forward to working with the Labour Party, as we do with other parties in Westminster and the devolved nations, to put this into effect.”

Photo by chriskay

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While most of us are familiar with consumer or worker coops, the social co-operative is a bit different.  First, it welcomes many types of members – from paid staff and volunteers to service users and family members to social economy investors.  While many coops look and feel like their market brethren, with a keen focus on profit and loss, social coops are committed to meeting social goals such as healthcare, eldercare, social services and workforce integration for former prisoners. They are able to blend market activity with social services provisioning and democratic participation, all in one swoop.

Pat Conaty is author of the report, “Social Co-operatives:  A Democratic Co-Production Agenda for Care Services in the UK.”   He explains how the legal and organizational structures of multi-stakeholder co-operatives – as well as their cultural ethos – generate all sorts of advantages.  They can deliver services more efficiently than many conventional businesses.  They are more adaptable and responsive than many government programs.  And they invite active, inclusive participation by members in deciding how their needs shall be met — and in contributing their own knowledge and energies.

The report examines best practices in co-operative health and social care services, and profiles the success of social coops in Italy, Japan, France and Spain, among other countries, as well as in Quebec, Canada.

The Italian experience with social coops is especially impressive.  Since passage of a 1991 law that authorizes social co-operatives and provides public policy support for them, Italians have started 14,500 social co-operatives that employ 360,000 paid workers and rely on an additional 34,000 volunteer members.  The typical coop has fewer than 30 worker-members, and provides services to the elderly, the disabled and those with mental illnesses.  Some provide “sheltered employment” for people with disabilities and other vulnerable groups.

Currently social coops are providing services for nearly five million people in Italy. They bring in and spend 9 billion euros annually. Their survival rate after five years is 89 percent.

In Quebec, “solidarity co-operatives” have been building an alternative “social solidarity economy” since 1995. These coops are bridging the co-operative movement, trade unions and the public sector while meeting people’s needs in effective, compassionate ways.  The chief focus of the Quebec movement, writes Conaty, is job creation and home care, but they are also being used for “rural regeneration” by helping save rural shops, post offices and social services.

What’s exciting about social coops is their ability to creatively blend commons-based practices with market activity – without letting market forces dominate the agenda. Moreover, they do not merely “administer services” in the style of a typical nonprofit; social coops are directed and accountable to their memgers.

“The social co-operative model turns the users of social care into partners, alongside the workforce, with both given an ownership stake in the business and a share in its success,” says Ed Mayo, Secretary General of Co-operatives UK, a British group that promotes the co-operative economy.

Why do social coops work?  Clearly there are many factors ranging from enlightened public policies to national cultures and ethical commitments.  But the idea of co-production is a powerful engine driving this social institution.  As described by two British scholars, Sarah Carr and Catherine Needham:

“The term co-production is increasingly being applied to new types of public service delivery in the UK, including new approaches to adult social care.  It refers to active input by people who use service, as well as – or instead of – those who have traditionally provided them.  It emphasizes that the people who use services have assets, which can help to improve those services, rather than simply needs which must be met.  These assets are not usually financial, but rather are the skills, expertise and mutual support that service users can contribute to public services.”

Needless to say, most markets and government bureaucracies can’t quite get their head around the idea of such participatory “associative democracy” and building alternative institutions that nurture participation.  But as Henry Tam of the University of Cambridge explains:

“Inclusive communities are more effective forms of human association because they recognize the intrinsic value of enabling all their citizens/members/stakeholders to interact with each other as equals in deliberating how power is to be exercised by them, to further the good of each and all.  This communitarian model builds directly on the development of co-operative thinking through the Owenites and cooperative democrats of the late 19th / early 20th century.”

Conaty’s report digs quite deeply into the key organizational, legal and financial challenges in establishing successful social coops – while pointing to available solutions.  For example, new sorts of public policies are needed to support social coops as well as new types of financing, such as venture funding and social finance.

Given the role that social coops can play in rebuilding democratic culture while meeting urgent, unmet social needs, much more attention should be paid to the great promise of multi-stakeholder co-operatives.  This report provides an important factual analysis for inaugurating a new conversation about an attractive, proven alternative.

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