The future potential of worker co-operatives

By ignoring the potential of co-operatives we are missing out on an opportunity for economic growth, writes FrDermot McKenna SJ

Regrettably, co-operative enterprise is not held in high esteem by our Government, by our professionals, by our teachers, or even by our Churches.

It would be interesting to know if any of our third-level or senior secondary school students know anything about co-operatives, even at a time when so many young people face a world where they will have small chance of finding work, and where worker co-operatives could potentially be an important source of employment.

In 2004, the European Commission published Promotion of Co-operative Societies in Europe. This comprehensive document starts by highlighting the scale of co-operative effort in Europe:

”In the European Union (EU) there are around 300,000 co-operatives, providing 4.8 million jobs. They exist in all member states and accession or candidate countries. At the same time they influence the everyday life of more than 140 million citizens who are members in co-operatives.

”Co-operatives today thrive in competitive markets and although they do not seek to maximise profits on capital they have achieved significant market shares in areas where capitalised companies are very strong such as banking, insurance, food retail, pharmacy and agriculture.

”They are growing fast in the sectors of health care, services to business, education and housing.”

The document adds that: ”The Commission believes that the potential of co-operatives has not been fully utilised and that their image should be improved at national and European levels.”

(Pictured: Jose Alves at the Dignity Co-operative in Acailandia, Brazil, where he makes charcoal briquettes. The centre provides legal and humanitarian aid to labourers who have fled forced labour. Photo: CNS)

However, the Commission also makes clear that it is the responsibility of national governments, rather than the EU itself, to undertake the actions and initiatives that are necessary to further the development of co-operatives.

Development unit

One important initiative undertaken by an Irish Government agency was the establishment of the Co-operative Development Unit in FáS in 2000.

A study by its dynamic director, undertaken as part of a postgraduate degree course in University College Cork, demonstrated the potential for setting up successful worker co-operatives throughout Ireland.

For example, in a small Irish town there would be typically 12 or 13 small businesses employing skilled and loyal staff.

However, almost invariably, in three or four cases the owners would be thinking of closing down their business, because of age, or illness or because no family member was interested or capable of taking over.

However, there could be an alternative to closure — the creation of a co-operatively owned and operated enterprise. The owner(s) and employees could agree that the business would be gradually sold to the employees, who would, after an induction period, take over the running of the enterprise.

The formation of this kind of ‘worker co-operative’ would be to the benefit of the previous owners, who would see the business continue in existence, to the workers, who would continue to have employment and now become co-owners — as well as to the small town and indeed Irish society in general.

Obviously, the development of co-operatively owner enterprises — whether the creation of an entirely new business or the ‘conversion’ of an existing business into a co-operative — requires a great deal of time and energy, as well as expertise in areas such as finance, management and diplomacy.

Successful employee co-operatives have been developed in Ireland, but their number is small.

Disappointingly, the Co-operative Development Unit no longer exists, and there currently seems to be an absence of official interest in promoting and supporting the development of worker co-operatives in Ireland.

Worldwide

Information assembled by the International Co-operative Alliance, based in Geneva, shows the impressive scale of co-operative effort across the world.

It is estimated that a total of 800 million people are members of co-operatives.

The United States may be one of the most capitalist countries in the world but it also has more than 45,000 co-operatives and credit unions, serving more than 100 million members — about 35 per cent of the population.

More Americans own a share in a co-operative than in the stock market — 156 million.

Figures for other countries are equally impressive. Canada has 15 million people involved in co-operatives; Colombia has 5 million.

In India, around 239 million people are part of a co-operative of some kind, and the country has 90,000 supply and marketing co-ops.

South Korea has the largest credit union movement of any developing country, with assets in excess of $7m.

Interestingly, Irish missionaries played a significant role in the development of the co-operatives in Korea.

An interesting example of the potential effectiveness of co-operatives in times of crisis is provided by Argentina.

A devastating economic collapse from the late 1990s up to 2001, led to thousands of traditional businesses being declared bankrupt. Many citizens in Buenos Aires and elsewhere were reduced to begging in the streets.

However, soon people began to take action, and over 300 failed businesses were taken over by their employees to be run as co-operatives. The owners sought to fight back and recover their businesses, with the help of the police.

Workers, assisted by families, friends and neighbours, resisted the attempts to eject them. Hotels, shops, factories, workplaces of all kinds were taken over in this movement by workers and were then operated as co-operatives.

The success of this movement inspired hope and provided an example of leadership as Argentina sought to fight its way back from economic collapse.

An interesting dimension of the conversion of businesses into co-operatives was the change it brought about in the people who had been ’employees’ but who had become ‘co-owners’ of enterprises.

Very often, they now had to work longer hours, assume additional responsibilities, and attend many meetings as they sought to synchronise their efforts to manage the company and make it a success.

Almost invariably people took on the additional workload with enthusiasm and derived a great deal of satisfaction from their new roles and responsibilities.

Very often the change to co-operative status also led to an increase in take-home pay.

Perhaps there are some important lessons to be learned from this by Ireland, as we try to deal with the consequences of our economic crisis?