Work Together 3 by CICOPA

Work together The global information bulletin on cooperatives and worker-owned enterprises in industry, services and crafts

July 2010 - Issue N° 3 SUMMARY Editorial

Intercontinental

South America

Europe

Africa

North America

Asia

Work together

is a joint publication of CICOPA and CECOP CICOPA-Europe Editor: Olivier Biron Deputy editor: José Miguel Botello Graphic design: jcse © CICOPA 2010

Between deflationary concerns and signs of renewed growth

Industrial and service cooperatives at the heart of the economy Editorial By Bruno Roelants, Secretary General of CICOPA and CECOP – CICOPA Europe This third issue of Work Together offers us an update on how industrial and service cooperatives and other employee-owned enterprises strive to create, maintain and redistribute wealth in their territories under the current crisis, together with sustainable and longlasting jobs. But it also allows us to understand part of the problems and challenges they face, and, thence, the need for laws and public policies aimed at helping them better fulfil their mission. As you will find out in the following pages, industrial and service cooperatives all over the world have indeed been affected by the crisis, but enterprise liquidation,

International Organisation of Industrial, Artisanal and Service Producers’ Cooperatives, sectoral organisation of the International Cooperative Alliance

European Confederation of Worker Cooperatives, Social Cooperatives and Social and Participative Enterprises

Impact of the crisis on cooperatives: 2nd survey among CICOPA members

job losses and indebtedness have been substantially less severe than in other types of enterprises active in the same sectors (p.3). The Mondragon cooperative group, present in various industries, has suffered a significant decrease in sales but, at the end of the day,

(continued on next page)

The International Cooperative Alliance has a new president (page 3)

(page 3) Contact: European Cooperative House Avenue Milcamps 105 BE-1030 Brussels Phone: +(32) 2 543 10 33 Fax: +(32) 2 543 10 37 www.cicopa.coop www.cecop.coop cicopa@cicopa.coop cecop@cecop.coop

International Day of Cooperatives: ‘Cooperative enterprises empower women’ (page 6)

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

Between deflationary concerns and signs of renewed growth

Industrial and service cooperatives at the heart of the economy Editorial by Bruno Roelants, Secretary General of CICOPA and CECOP – CICOPA Europe (continued from page 1) this will seemingly have only a marginal impact on net job losses (p.18). In some instances, there has been enterprise or job creation (e.g. Italy p.20, Spain p.15). The French worker cooperatives have felt confident enough to launch a common brand name (p.13). Even more significantly, perhaps, a new wave of transformation of enterprises threatened by closure into economically-sustainable cooperatives is under way in a number of countries (Argentina p.8 , Spain p.14-15; other examples will be highlighted in future issues). Besides economic and social sustainability, our enterprises are also rapidly embarking in the field of environmental sustainability (p.5). Beyond focusing on their own local and national realities (which is natural in times of difficulty), it is striking to observe that our enterprises and their representative organisations have seldom been so active on an international level. The Mondragon group is building a relationship with one of North America’s main trade unions in view of promoting industrial cooperatives in that region (p.7). Quebec and Anglophone Canadian worker cooperative movements have reached an unprecedented level of integration, in spite of a largely separate evolution (p.24). Polish and Slovak worker cooperative leaders have recently met to discuss a whole range of key issues (p.18); in fact, worker cooperative representatives of Central Europe regularly meet, as do those of Spain, Italy and France, those of the Mercosur countries in South America, and those of the US and Canada (more on this in our next issues). Yet, the evolution of our business model is facing a number of challenges, which the ongoing crisis tends to make even more acute (p.3). Many industrial cooperatives, in particular, find themselves caught in the middle of globalised production chains. While their functioning system (democratic decisionmaking system among the staff, cooperative reserves etc.) allows them to resist better, it is far more difficult for them to come to grips with structural changes in the economy. The more they build common support institutions (training, financing, R&D, production platforms etc) like in cooperative groups, the more they can also take on an active role in these structural transformations, though they still largely depend on the general economic and policy environment. Many cooperatives involved in services, including those of general interest, suffer from late payments and credit squeeze, which could become critical if these conditions lasted much longer

(p.20-21). The proliferation of fake worker cooperatives is going on unabated in a number of countries (see Brazil p.10, Colombia p.8). Some cooperative organisations, such as in Uganda, need to first make sure that energy production and distribution is available in the regions, before thinking of developing industrial or service activities through cooperatives in a systematic way (p.23). In order to meet these challenges and better accomplish their wealth generation and job creation mission, our enterprises urgently need improved laws and public policies. In Korea, the lack of both a general cooperative law and a worker cooperative one has obliged the worker cooperatives to develop through a “social enterprise” law, entailing strengths and weaknesses (p.26). In Brazil, important efforts have been deployed over the last three years to pass a law on worker cooperatives in order to promote the real ones and outlaw the fake ones (p.10). In the field of restructuring, hundreds of thousands of businesses will change hands over the next few years in Canada (p.24, similar numbers have been reported in the European Union), with general wealth and jobs at stake. Our business model is certainly one of the answers to this issue, however, it should be far better supported through appropriate public policies. In the EU, cooperatives and their role amidst the crisis have recently received due recognition by Internal Market Commissioner Barnier (p.12), Employment Commissioner Andor (p.12), Spanish prime minister Zapatero (p.16) and the new British government (p.19). A cooperative centre in a region with many worker cooperatives in Finland has received a EU award on entrepreneurship (p.13), and the Mondragon group has received one on intellectual capital and wealth creation (p.18). Hopefully, these signals will lead to concrete public policies. Last but not least, it is important that our cooperative sector be increasingly embedded in across-theboard cooperative networking and representation. Concerning the recent leadership change in the International Cooperative Alliance, we welcome the election of Dame Pauline Green as new ICA president (p.3). She is the first-ever woman in this position, which makes the theme of this year’s International Cooperative Day - cooperative enterprises empower women – particularly appropriate (p.6). Finally, the UN International Year of Cooperatives - 2012 - (p.5) will surely provide for a unique opportunity to better explain and advocate our business model. ◊

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010 3

INTERCONTINENTAL The International Cooperative Alliance has a new president By Olivier Biron, CICOPA / CECOP

D ame Pauline Green was elected for a four year

term as President of the ICA at the organisation’s general assembly held in Geneva on 19 - 20 November 2009 on the theme “Global crisis – Cooperative opportunity”. Pauline Green underlined the importance of substantially increasing the visibility of the ICA and the whole international cooperative movement, in particular towards international organisations. Pauline Green is the first woman President of the International Cooperative Alliance in its 114 year history. She was born in Malta in 1948. A truly multi-national citizen, Pauline’s family moved around Europe whilst she was young, and after working as a secretary and then a London police officer, she married and had two children. Her period as a full time mother allowed time for study and she went back to work for the UK cooperative movement as a full time lobbyist on European affairs – a job which stimulated her to stand for election as a Cooperative Party Member of the European Parliament in 1989. Over the next ten years she rose to be the leader of the largest political group in the European Parliament. From 2000 till 2009, she was Chief Executive of Co-operatives UK, the apex body for all cooperatives in the UK . She was instrumental in bringing the different sectors of the movement together, successfully lobbied for new co-op legislation in the UK , and was a key player in driving a wave of new cooperative development. She was elected president of ICA-Europe in 2002 and, between 2006 and 2009, was co-president of Cooperatives Europe, the new ICA European body. ◊

Impact of the crisis on cooperatives 2nd survey among CICOPA members By Manon Richert, CICOPA / CECOP ince October 2008, the global financial crisis has led to the bankruptcy of many financial institutions in the USA and in European countries, and is threatening the global financial system. As a response to its concerns regarding the economic crisis and its serious challenges for employment, enterprise sustainability and social cohesion, in 2009 CICOPA (directly and through its regional organisation CECOP-CICOPA Europe for European concerns) initiated a consultation process amongst its members in order to gain a better idea of the effects of the crisis on the affiliated enterprises.

One year after the first consultation that took place in March 2009, CICOPA launched a new consultation in order to observe changes and the evolution of the situa-

tion, as well as to gauge the reaction of worker and social cooperatives. Most CICOPA members took part in the 2010 consultation, namely 27 members in 21 countries (Argentina, Bulgaria, Denmark, Estonia, Finland, France, Italy, Poland, Romania, Spain, Slovakia, Brazil, Canada, China, Colombia, Czech Republic, Germany, Japan, Malta, South Korea and the USA).

In Europe First of all, the majority of European member have reported a decline in production and sales. However, over the last few months, a slight and slow recovery in production and sales has been observed for Spanish, Maltese and some Italian cooperatives. The secondary sec(continued on next page)

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

tors (manufacturing and construction) are the most affected by the crisis. In the services sector, contrasted tendencies appear: enterprise-related services (e.g. real estate, logistics and transport) are amongst the most affected, while social services remain less affected. Another general trend is the worsening of the external financial environment: in 2009, it became more and more difficult for enterprises affiliated to CECOP-CICOPA Europe to negotiate bank loans, and severe late payments problems with public authorities are reported in Italy and in Spain. In this respect, legislative reforms at European level are required in order to accelerate the payment processes, and legal decisions to be taken by the European Court of Justice. However, the level of indebtedness in worker and social cooperatives is lower than in other types of enterprises. It is also interesting to note that new cooperative financial instruments and credit systems are being developed. Actually, worker and social cooperatives are less dependent on external financial sources than conventional enterprises, and this explains their greater degree of sustainability. In terms of job losses and enterprises closing down, a significant difference was observed compared to the situation in 2009. Indeed, the majority of members are now reporting job losses, whereas it was not the case in 2009. The trend is the same regarding cases of enterprises being closed down or being in the process of liquidation. However, most of the reported cases of enterprises closing down are not solely related to the current economic crisis, which acted rather as an additional factor. More importantly, job losses and cases of enterprise closures are substantially less numerous than in other types of enterprises in the same sectors.

And the rest of the world For extra-European members, general perspectives of the economic situation seem to be rather heterogeneous. While members in Asia and North America consider that the situation has worsened, in South America, two members report that the overall economic picture for 2010 is good, or at least better than it was in 2009. The most affected sectors are so widely spread across the countries in this region that it is difficult to describe a general trend. With regard to job losses and enterprises closing down, the general picture is rather mixed. The majority of members (except for Canada and Brazil) report no significant job losses and no closures directly linked to the crisis. Meanwhile, in Argentina, many independent entrepreneurs are prepared to form cooperatives in order to be in a better position to cope with the crisis. Regarding the financial conditions currently faced by worker and social cooperatives, like in Europe, all members report difficulties in the negotiation of bank loans. The situation is similar for cooperative financial support systems, since these systems usually require higher criteria that worker and social cooperatives are not always able to meet (Argentina and Colombia). However, future expectations are better outside Europe: in Argentina, Brazil, Japan, South Korea and China, affiliated cooperatives expect the economic situation to improve in 2010. American and Canadian members do not expect their situation to improve, but, at least, nor do they expect it to get any worse.

Why are our enterprises more resilient?

In fact, flexibility and innovation help cooperatives to prevent and overcome the negative effects of the crisis. For example, in order to maintain jobs during an unfavourable economic situation, some of the members prefer to cut wages rather than jobs. According to the German member of CECOP-CICOPA-Europe, this flexibility is the result of a higher degree of direct worker participation in the enterprise.

There are key concepts to explain the relative resilience of cooperatives to the ongoing crisis: indeed, these enterprises are first characterized by a special labour relationship where workers-owners hold sovereignty in entrepreneurial decisions and are fully responsible for the choices they make.

Nevertheless, considering that the situation is expected either to worsen or to stagnate, members plan to adopt measures to help their enterprises face the crisis: training and consultancy; strengthening of cooperation among cooperatives; financial and business services; promotion of the worker cooperative model, etc. In this context, micro-measures are not sufficient, and CECOPCICOPA Europe members are also asking their national governments to set up simultaneous measures for an efficient recovery: removal of fiscal disadvantages; better access to credit; more possibilities for guarantee systems; better interest rates for investment; simplification of processes for enterprise creation.

 solidarity among workers and among cooperatives,

Principles following from this are solidarity, innovation and flexibility: i.e. through mutualised financial instruments;

 innovation, i.e. through modernization, training and adaptation;

 flexibility combined with security, as far as change is meant to support sustainable employment. ◊

The full report is available on CECOP-CICOPA Europe’s website http://www.cecop.coop/Cooperative-enterprises-in.html

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010 5

How do cooperatives contribute to the environment and sustainable development? By Olivier Biron, CICOPA / CECOP On 18 November, CICOPA in collaboration with its regional organisation, CECOP-CICOPA Europe, organised a seminar on the environment in Geneva, Switzerland. It took place in the afternoon just after the CICOPA General Assembly which meets every 2 years and the discussions focused on how industrial, service, social and artisans’ cooperatives contribute to sustainable environment.

aste management in a municipality of the Buenos Aires Province, Argentina, ski equipment recycling in

France, sustainable and low carbon building in Canada were among the discussed best practices as well as 3 other examples from Japan, France and Spain which showed the potential of cooperatives as far as environment and sustainable development is concerned. This seminar is a first step which came at a critical time, just before the United Nations Climate Change Conference which will be held in Copenhagen, Denmark, where a successor will have to be found to the Kyoto protocol planned to end up in 2012. However the work which CICOPA launched with this seminar will not stop with Copenhagen. On the contrary, this initiative is seen as the beginning of a much more long term work on how our cooperative sector can better combine environmental concerns together with its economic and social concerns. ◊

For more information, see http://www.cicopa.coop/CECOP‐seminar‐Working‐together‐for.html

The United Nations proclaim 2012 as the International Year of Cooperatives By Olivier Biron, CICOPA / CECOP The resolution that the United Nations (UN) have adopted is a real plea for cooperatives. This new resolution on the role of cooperatives in social development proclaims 2012 as the International Year of Cooperatives. UN Member States approved the resolution (A/RES/64/136) on 18 December at the 64th session of the United Nations General Assembly. The UN resolution recognises that the cooperative business model is a major factor of economic and social development, promoting the fullest possible participation in the economic and social development of people in both the developed and developing world, and that, in particular, cooperatives contribute to eradicate poverty. The resolution also encourages all governments to create a more supportive environment for cooperative development by promoting and implementing better legislation, research, sharing of good practices, training, technical assistance and capacity-building of cooperatives, etc. The international Year of Cooperatives 2012 will mobilise the global cooperative Movement together with the International Cooperatives Alliance (ICA) in creating a global campaign featuring a series of events around the world and targeted messages which all cooperatives will be able to use to promote the cooperative entrepreneurial model. United Nations press release: http://www.un.org/News/Press/docs/2009/dev2784.doc.htm. ◊

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

International Day of Cooperatives: ‘Cooperative enterprises empower women’ By José Miguel Botello, CICOPA / CECOP The 3rd of July 2010 was celebrated as the 88th Cooperative International Day of the International Cooperative Alliance (ICA), and the 16th Cooperative International day of the United Nations. This year, the ICA intends to underline gender equality with the theme ‘Cooperative enterprises empower women’. The ICA invites cooperatives to recognise the fundamental contribution of women to economic development, society and culture and to reinforce cooperative engagement allowing women to take control in these enterprises and to encourage female participation in the cooperative movement. he ICA underlines that everywhere in the world women opt for the cooperative model as an answer to their social and economic needs, either to reach their ambitions to create businesses, access products and services which they need, or to participate in activities based on ethical values or principles which offer entrepreneurial opportunity.

Paloma Arroyo, director of the Spanish Confederation Worker Cooperatives (COCETA), who is directly concerned with this subject, states that ”choosing this theme is particularly significant in this time of economic crisis, while women in different parts of the world are sometimes the only form of income in a family, through cooperatives and notably through worker cooperatives”. Cooperatives are democratically owned and governed enterprises guided by the values of self help, self responsibility, democracy, equality, equity and solidarity. They put people at the heart of their activities and allow members through democratic decision making to set out how they will reach their economic social and cultural aspirations. This type of organisation offers effective organisational methods to improve their standard of living and access to decent work opportunities, savings and credit facilities, health housing, social services, and education and training. Cooperatives also offer women opportunities for participation in and influence over economic activities. Women gain self reliance and self esteem through this participation. Cooperatives also contribute to the improvement of the economic, social and cultural situation of women in other ways including promoting equality and changing institutional biases. For the director of COCETA, Paloma Arroyo , “worker cooperatives have demonstrated that it was, for all those reasons, the best entrepreneurial model for the development of women’s work, self and family.” In worker cooperatives, the female members are able to

engage in income-generating activities and organise their work in a flexible way by pooling their capital. This allows women to gain self confidence, bear professional responsibilities, valorise their skills and improve their livelihoods by deriving income for their work and accessing a wide range of services. An emblematic example of this is the one of SEWA, the Self Employed Women’s Association, in the Indian state of Gujerat. This organisation gives the possibility for poor, self-employed women workers to earn a living through their own labour or small businesses. SEWA gathers a cooperative branch which is mainly composed of production, crafts and services cooperatives. Women can become members of a cooperative in a wide range of sectors including water conservation, dairy production, craftwork, reforestation and salt farming, with involvement tailored to local conditions and even in construction. This helps women members in rural communities create their own businesses, develop collective bargaining power and create alternative sources of employment, and thereby, livelihood security for their families. SEWA also has a cooperative bank and a health insurance scheme (For more information on SEWA, please see “Work Together” nr 1 April 2009, and the SEWA website www.sewa.org). To better understand the importance of workers cooperatives in the empowerment of women, Paloma Arroyo explains that in Spain, around 49% of workers in cooperatives are women. They obtain levels of leadership to which they would not have access in traditional businesses and a much higher number follow training courses than men. Evolving without discrimination in terms of working hours or salary, both within the female and mixed cooperatives, worker cooperatives make equality of genders a reality. ◊

The ICA message of the International Co‐operative Alliance is available on: http://www.ica.coop/activities/idc/2010.html

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United Steelworkers form collaboration with Mondragon By Hazel Corcoran, Canadian Work Co-op Federation The United Steelworkers (USW) and MONDRAGON Internacional, S.A. announced a framework agreement for collaboration in establishing MONDRAGON cooperatives in the manufacturing sector within the United States and Canada. The USW and MONDRAGON will work to establish manufacturing cooperatives that adapt collective bargaining principles to the MONDRAGON worker ownership model. “We see today's agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada," said USW International President Leo W. Gerard. "Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants. We need a new business model that invests in workers and invests in communities."

The interior of a Mondragón factory

Josu Ugarte, President of MONDRAGON Internacional added: "What we are announcing today represents a historic first - combining the world's largest industrial worker cooperative with one of the world's most progressive and forward-thinking manufacturing unions to work together so that our combined know-how and complimentary visions can transform manufacturing practices in North America." Highlighting the differences between Employee Stock Ownership Plans (ESOPs) and union co-ops, Gerard said, "We have lots of experience with ESOPs, but have found that it doesn't take long for the Wall Street types to push workers aside and take back control. We see Mondragon's cooperative model with ‘one worker, one vote' ownership as a means to re-empower workers and make business accountable to Main Street instead of Wall Street." Both the USW and MONDRAGON emphasized the shared values that will drive this collaboration. Mr. Ugarte commented, "We feel inspired to take this step based on our common set of values with the Steelworkers who have proved time and again that the future belongs to those who connect vision and values to people and put all three first. We are excited about working with Mondragon because of our shared values, that work should empower workers and sustain families and communities," Gerard added. In the coming months, the USW and MONDRAGON will seek opportunities to implement this union co-op hybrid approach by sharing the common values put forward by the USW and MONDGRAGON and by operating in similar manufacturing segments in which both the USW and MONDRAGON already participate. ◊

The full text of the agreement is available at the Internet address at: http://assets.usw.org/Releases/agree_usw_mondragon.pdf

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SOUTH AMERICA Argentina

Workers rescue their enterprise By José Orbaiceta, FECOOTRA The former workers of the packaging company Dinan SACIFIyA, which had been in a critical situation since 2001 and had been taken over by various private companies, was bought out and transformed into a worker cooperative called Envases Flexibles Mataderos Ltda. It was inaugurated on 17 March 2010. he former company Dinan SACIFIyA

T which has been active in the sector

and even the leader of flexible packages productive sector for 60 years both in Argentina and in Latin America, produced more than 700 tons on a monthly basis in its seven plants and had 400 employees. During the 2001 crisis, the company started accumulating debts to the extent that it had to suspend its payments and was then taken over by the Chilean plc - Edelpa S.A. - which started a far-reaching restructuring process dismissing 120 workers, selling four plants and reducing its production to 350 tons on a monthly basis. In May 2008, the enterprise was transferred to Hurlington which continued to bring down the production to 236 tons in February 2009, to 85 tons in August and to 0 ton in October 2009 though it had orders to produce over 1,400 tons. The process could be seen as a typical “company emptying process”. The bargaining process lasted 3 months and was very hard. The Labour Ministry had to intervene but eventually on 18 December 2009, an agreement was signed between the employees and the owner, Hurlington Coporation, PC. The agreement provides for the payment of the wages which were still due to the workers, a three-year contract with the cooperative allowing the latter to use the two productive plants and the machinery; it also includes the transfer of the real estate and machines representing more than 12 million pesos which were considered as compensations to the workers, and the transfer of the raw materials. The process has been supported by the National Institute of Associationism and Social Economy

Opening ceremony of the new cooperative / Red Gráfica

(INAES) and the Domestic Trade Secretariat. Both have helped the new management to obtain the financial aid, to relate with the providers and main customers. All this engineering has been very helpful to re-initiate the production, to have the necessary orders with a view to striking a breakeven balance and being able to forecast future plans and a new position on the market. With the support of Red Gráfica Cooperativa, a cooperative group of which it became a member when it came into existence, the cooperative has organized several training workshops on the specific features of self-managed enterprises, and more precisely cooperatives, and this has been the first step towards the transformation of the old model into a new collectively managed model implying the participation, responsibility, democracy and commitment of all employees within the remit of a project which is shared with all the members to guarantee the quality of the products and services, and even the client’s satisfaction. ◊

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Colombia

Worker cooperatives are on the increase … the real ones, but also the fake ones By José Miguel Botello, CICOPA / CECOP Currently, the cooperative sector in Latin America and, more precisely, the worker cooperatives are developing and are really at the core of the countries’ economies. But this sector of activity is very distinct from the others and is confronted with some problems in a number of countries. This is the reason why this article attempts to shed some light on the Colombian characteristics. ccording to the Colombian Confederation of Cooperatives, the Cooperative principles were laid down when General Rafael Uribe declared that the cooperative ideal was part and parcel of the democratic socialist and humanist ideology. In 1916, the Agriculture and Trade Minister, Benjamin Herrera, submitted the first bill on cooperatives to the Congress of the Republic. Finally in 1931, the Congress approved the law on cooperatives. From then on, the impact of the movement has been increasing very quickly. In 1933, in all sectors, there were 4 cooperatives with 1,807 members while in 1962, 759 cooperatives were operating and had 450,000 members. In 1959, the first naWorkers in the poultry cooperative Pollos Vencedor tional association of cooperatives was created – Union Cooperativa very high number of cooperatives is due to a huge inNacional de Credito (UCONAL) – and in 1960, the Cocrease of worker cooperatives which are not pertaining lombian Association of Cooperatives (ASCOOP), affilito the solidarity sector. These cooperatives are former ated to CICOPA, was set up. conventional enterprises which opted for this legal Currently, the data are revealing that the sector in Costatus to avoid paying their contributions to the State”. lombia is doing pretty well. In 2008 the total number According to official data, out of some 4,000 worker of cooperatives from all sectors was 7,833 and the tocooperatives, only 1,000 are to be considered genuine tal of members was 4,473,514, i.e. an increase by ones, the others being bogus cooperatives, i.e. instru453,180 or in other words 11% as compared to 2007. ments to merely have access to cheaper labour, which In addition, according to ASCOOP data, between 2001 is exploited by the employers and the State itself, and 2007, the number of cooperatives increased by more precisely in the health sector. 323%. As for the number of worker cooperatives, the Against such a negative background, the cooperative figures are similarly impressive, i.e. there are 3,903 sector had to get organized and obtained the approval cooperatives of this typology with 537,859 members. of the Law 1233 in July 2008. Its provisions are enFrom a gender point of view, 60% of these members forceable to cooperatives “demanding for the workersare men and 40% are women. members that minimum requirements be complied so However, beyond the statistical data, the overview is as to pay them at least the legal minimum wage” not really so encouraging. Carlos Paz, President of the which is about 800,000 Colombian pesos (some 300 € Pollos Vencedor cooperative, and President of ASCOOP Worker Cooperative Committee says: “Actually, this (continued on next page)

10 WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

or 400 US $) and “that taxation burden be not carried by the workers”. As reported by Cooperative manager Carlos Paz, these new standards were “the Colombian government’s response to US demands” to open the door of a bilateral Free Trade Agreement with Colombia because the US trade unions “claimed very rightly that the lower cost that had bogus cooperatives were not the real ones”. The bilateral agreement should come into force in Colombia in 2012 and its impact on worker cooperatives, a huge sector, should be different according to the in-

dustrial activities involved. Health cooperatives might take advantage of the new measures whereas in the poultry cooperatives, for example, the repercussions should be detrimental. With regards to the current global crisis, Colombia has been less hit than the European and North American countries. In 2009, the GDP increased by 1.3%, and therefore Colombia is not suffering a full-fledged crisis but rather an economic slowdown. According to Carlos Paz, cooperatives “had excellent results”. ◊

Brazil

A decisive time for the Brazilian cooperative movement By José Miguel Botello, CICOPA / CECOP The cooperative movement came into existence long ago when a first embryonic movement emerged already in the last period of the Portuguese colonial rule and transformed into the Brazilian Cooperative Movement at the end of the XIXth century under the impulse of public civil servants, military officials, professionals and workers. At the outset, it took shape in urban areas since the first cooperative was supposedly created in Ouro Preto in 1889 and was called the Ouro Preto Economic Cooperative of Public Employees. Cooperatives have henceforth spread throughout the country. urrently, it is difficult to assess precisely the state

C of play of the cooperative movement in Brazil on

the basis of the available figures. It is particularly the case of the worker cooperative movement for a broad range of reasons: the most significant one may be the lack of updated and reliable data because the last official figures which were made available date back to 2005 and were produced by the Organization of Brazilian Cooperatives (OCB) which does not cover all the entities of the country. Furthermore, Brazil is a specific case since there is a legal separation between two types of worker cooperatives, “worker cooperatives” as such and “production cooperatives”. The former ones provide services or labour, the latter produce goods, own the enterprise and have a direct control over their means of production. The last statistical data, the shortcomings of which have been emphasized, reveal that in Brazil, there would be 7,518 cooperatives which would have in total 6,791,054 members while there would be 1,994 worker cooperatives in place in 2005 having 425,181 members and 173 production cooperatives with 17,569 members. As for their possible development, Geraldo Balod, President of cooperative Confederation Cootrabalho, a CICOPA member, is of the opinion that even in the absence of reliable data it can be observed that “worker cooperatives have been constantly decreasing since 2005”. The main reason is the war waged against bogus cooperatives by the Federal Government which sometimes fails miserably to make a distinction be-

tween genuine and fake cooperatives. As mentioned above, a serious problem of the worker cooperatives in Brazil is the mushrooming of bogus cooperatives which are called in the country “Gatoperativas” (“catoperatives”). According to Unisol, another CICOPA member in Brazil, they were on the increase in the last decade of the XXth century when greater flexilibity was imposed on employees. They played the role of middlemen, mere suppliers of labour. It is assumed that they account for a large share of all worker cooperatives in the country but there is no official data in this respect. Currently, cooperatives in Brazil are governed by the Law 5764/1 dating back to 1971, i.e. a law that was voted under the military dictatorship. Cootrabalho finds it obsolete since it does not make any distinction between the various types of cooperatives. Moreover it only focuses on formal aspects such as the minimum number of members, the form of the constitution, etc. Unisol Secretary General, Marcelo Rodrigues, believes that the new draft legislation on worker cooperatives should be enacted to open the doors of cooperatives to legal entities, to bring down the number of founding members (which from 20 could be reduced to 7), to declare it illegal that cooperatives be merely labour suppliers, to promote a more professional management of cooperatives with the legal duty to set up a “Board of Directors”, to place a greater emphasis on their financial sustainability with the creation of Cooperative Credit Certificates and to allow the freedom of repre-

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

Brazilian worker cooperative in the metallurgy sector

sentation under certain conditions, namely the establishment of national organisations will be subject to legal conditions. Hopefully this new worker cooperative law which is still a bill - 131/2008 – will be approved, enacted and implemented. The Chamber of deputies passed a first version, and the Senate then also voted in favour with a few amendments. The Chamber of deputies now has to vote again with the Senate’s amendments, and the President has to give his final green light. It is important to recall that in October 2010, there will be elections for the various States, the Parliament and the Presidency. Luiz Inacio Lula da Silva can no longer run for these elections. Whether the new law will be approved prior to the elections, the Cootrabalho President, Geraldo Balod, thinks that it will be difficult since most political leaders are busy with the election campaign whereas Marcelo Rodrigues, Unisol Director, declares that there is already a consensus in both Chambers to vote in favour and therefore it ought to be eventually approved but maybe not before the end of 2010. As mentioned earlier, there are two types of worker cooperatives in Brazil, i.e. worker cooperatives and production cooperatives. This distinction would disappear with the implementation of the new law but a new distinction would be introduced, i.e. production worker cooperatives would produce collectively tangible goods while service worker cooperatives would provide services.

Regarding the resilience of the movement to the current financial crisis, Unisol underlines that the latter affected the cooperatives at the end of 2008 and until the end of the first quarter of 2009. Now with the recovery measures of the government, things are getting better. Geraldo Balod, Cootrabalho President, thinks that the impact on cooperatives has been all in all negative except on social cooperatives. For Unisol, the strong resilience of the sector is due to its high degree of flexibility which allows worker cooperatives to share the in-house costs, for instance to reduce the members’ pay with a view to safeguarding jobs and maintaining the economic activity during the crisis. It is important to add that the cooperative reserves have been a strong economic and financial support over this period. Now the number of companies bought out by their employees has not increased. According to Unisol, the major wave in this sense was observed in the nineties. Brazil, Paraguay, Argentina and Uruguay are the MERCOSUR members and as such are in the process of being integrated into one single region but the full integration of cooperatives in this region and throughout Latin America is still far ahead according to Cootrabalho. Unisol emphasized that the European Union is now co-funding a project of technical co-operation which should promote a Southern Networking process. It would enable to interchange worker cooperatives’ experiences within the MERCOSUR and promote regular contacts with Peru, Bolivia, Venezuela and Colombia. ◊

12 WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

EUROPE European Union

EU Employment Commissioner László Andor at work: “Cooperatives have been innovative in times of crisis” By Diana Dovgan, CICOPA / CECOP he European Parliament EPP Group (Group of the European People’s Party) organised on the 14th of April an open discussion forum on "New Employment Policy" together with László Andor, EU Commissioner for Employment and Social Affairs, members of the European Parliament, trade unions, Business Europe and different stakeholders.

CECOP took this opportunity to highlight that the sustainability of jobs has to be integrated in employment policies not only from the point of view of employment and social policies, but also from the point of view of the enterprise’s long-term economic development: indeed, enterprise development without any continuity in jobs is difficult to achieve. Measures in favour of maintaining existing jobs and skills in the enterprises should have a central place in employment policies. In the CECOP European network, several hundred enterprises condemned to disappear have been saved over the last few years through employee buy-outs, and have then developed under the cooperative form.

László Andor, EU Commissioner for Employment and Social Affairs

the same size, in the same sectors and in the same regions, as was confirmed by two successive surveys among CECOP members carried out in 2009 and 2010.

EU Employment Commissioner László Andor recognised at the meeting that cooperatives have proved innovative in times of crisis and that some lessons could be CECOP also reminded the European Parliament and the learned from their experience. He also highlighted the European Commission that cooperatives have proved to fact that cooperative banks have demonstrated their be more resilient to the crisis than other enterprises of stability compared to conventional banks. ◊

The new Internal Market Commissioner wants to focus his attention on the cooperative model By Olivier Biron, CICOPA / CECOP n 13 January, Michel Barnier, the internal market and services commissioner-designate was heard by the “Internal market and consumers protection” Committee and the “Economic and Monetary affairs” Committee of the European Parliament.

During his hearing, Michel Barnier declared that one of his priorities will be to outline the citizens, men and women as a major issue of the European market, and in this respect, he declared that he intends to focus his attention on the cooperative and the mutual model. He also underlined the possibility of a “social business act” in order to better support enterprises which fight against exclusion while doing profit. ◊

Michel Barnier, EU Commissioner for Internal Market

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

Finland

European Enterprise Awards 2010: Promoting cooperatives as a modern and flexible form of entrepreneurship By Olivier Biron, CICOPA / CECOP he European Enterprise Awards have been organised by the DG Enterprise of the European Commission since 2006 to identify and reward excellence among public authorities in promoting entrepreneurship and small business at national, regional and local level. A shortlist of 12 nominees in 5 categories has been selected for the European Enterprise Awards 2010 among more than 330 projects competed.

A cooperative project is part of this selection in the category “Responsible and Inclusive Entrepreneurship” which recognises regional or local actions promoting corporate social responsibility and sustainable business practices. The Tampere Region Cooperative Centre has operated since 1998 and promoted cooperative entrepreneurship through counselling, education and information dissemination. Anyone considering setting up a cooperative can obtain practical advice and moral support from the very first steps of the establishment process. The

new cooperatives are offered overall expertise taking into account of the individuals of which the cooperative is to be formed. The Cooperative Centre has increased the number of the cooperatives by over 300 per cent in the Tampere region over the last five years, including many worker cooperatives. The cooperatives set up by the help of the Cooperative Centre are more than 700 members. The societal meaning of the cooperatives is regionally important as the cooperatives create new jobs and the entrepreneurs already working in the field affirm their positions through cooperation. The new cooperatives channel both financial and social welfare to their members and create positive multiplicative effects around them. ◊ For more information, go on http://www.osuustoimintakeskus.net.

France

CGScop unveils its new brand and logo By Olivier Biron, CICOPA / CECOP

he whole of the French worker cooperative movement has affirmed its ambition to bring about further developments in all sectors and has launched a new brand and logo that is unique, clear and unifying. Indeed, on the occasion of the salon des Entrepreneurs, which was held on 1 February, the CGScop (General Confederation of Production Cooperatives) unveiled its new brand and logo that represents its visual identity.

French daily newspaper “Le Monde” and the website of the “L’Entreprise” magazine have showcased the cooperative model.

A new web site has been dedicated to this brand and will serve as a basis for a label that will bring together the cooperatives that are members of CGScop and that can be used in their communications. The French press has been reporting on this new brand, in particular the

company that does not have any successors or is in crisis.

In an article that appeared on 1 February, “Le Monde” highlighted not only the fact that coHenceforward, the brand, which includes both a slogan operatives in France achieve betand a logo, will be used to denote all of the enterprises ter economic results than conventional companies, but also that have opted for this status. The acronym Scop, their capacity to survive the criwhich stood, in the past, for “Cooperative Production Societies”, has now become “Cooperative and participa- sis. tive societies.” Finally, a slogan – “democracy suits us” In an article on its website, the “L’Entreprise” magazine – recalls the very style of governance of cooperatives, reminds the reader of the participative and democratic based on democracy at enterprise level. It also serves method of governance adopted by cooperatives. The to emphasise the financial stability of these enterprises intention of the article is also to emphasise the way in as well as the sense of fulfilment felt by the workers in which the worker buy-out of a company in the form of them. a cooperative may be an alternative to the closure of a

You can visit the website dedicated to this new brand at http://www.les-scop.coop. You can also look at the CGScop website at http://www.scop.coop. ◊

14 WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

Spain

Cooperatives: a solution to the economic downturn By Mariana Vilnitzky, COCETA At a time when the world economy is in the grip of recession, with companies closing down and redundancy procedures becoming increasingly more widespread, it is no surprise that Spain’s unemployment statistics have escalated. The other side of the coin, however, is that quite a significant number of workers, be it to help them face adversity or to exploit their newly-acquired “free time” constructively, have been induced to turn to the social economy sector. Cooperatives have elicited their interest. These are people who have either bought over the company that had hitherto employed them or, alternatively, formed a cooperative of their own. The examples below are cases in point and provide food for thought.

14 MECHANICS TAKE THE REINS THEMSELVES 14 workers forestalled the danger of the leading me-

mates knew about the cooperative business model.

chanics workshop in Sabadell (Catalonia) closing its

So, consultations were initiated and thereafter action

doors by turning it into a cooperative. Retraining is an

undertaken to alter the structure and establish the

example of institutional support. However, it is more

new one. Five months later 14 of the 33-strong former

than that. It exemplifies the determination and tenac-

workforce own their own company: Mec 2010. Unem-

ity of a group of mechanics to hold on to their jobs in

ployment benefit was capitalised and used to buy the

the midst of a storm.

machinery in the old workshop and relocate to new

When Pedro Delgado heard that the mechanics workshop where he had been employed was on the brink of collapse, he made up his mind there and then that not

premises of 1000 m2. The former employees and current owner-controllers expect to work to full capacity by the end of the year.

only would he not be unemployed but that he would

The changeover in Mec 2010 to a cooperatively-

join forces with his workmates and take the workshop

constituted enterprise must be set in the context of

over. Is he seeing things? “Not at all. I’m only a me-

crisis. This is borne out by a rise in the number of co-

chanic. I just didn’t t want to see us all on the street”,

operatives spearheaded by workers or owners .A total

said the Cooperative’s current Chairman. The idea of

of 12 entities in Catalonia have opted to become coop-

joint ownership surfaced because one of the work-

eratives in the past year.

A worker of Mec 2010 / COCETA

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

NAPARBIER: FROM REDUNDANCY PROCEDURE TO BREWERS COOPERATIVES A real love of beer brought three workmates from Koxka, the multinational brewing corporation, together. Josu Taniñe Alórriz, aged 43, Juanjo Garro Roldán , aged 37 and Juan Antonio Rodríguez who saw redundancy procedures shaping up and that 10% of the workforce had been laid off, they themselves among them. So, they decided to ‘go it alone’ and manufacture their own brand. They had already started making their own home-made brew. “We realised it was popular and some of the beer-drinkers were encouraging us to set up on our own. As against that, we had steady jobs in the factory and were apprehensive about making the break” said Josu Taniñe. It was in the wake of the first redundancy notice, and hence bad news, that they saw their opportunity. They went to the Chamber of Commerce to find out about forming a company. They were thereupon channelled in the direction of the social economy, because it was thought that their approach “fitted the social economy concept”. As

Naparbier cooperative members / COCETA

soon as we heard of the values to which cooperatives subscribe, “we knew straight away that

we were on the right track. Now we feel we are in a position to assume responsibility, to share and to decide. The reverse of what we had been our experience up until then”, said Taniñe. “Just as importantly, we were taken by the hand when it came to undertaking the management function”, he added. Further information can be downloaded from www.naparbier.com.

Employment on the increase in worker cooperatives By Mariana Vilnitzky, COCETA

W orker cooperatives have shown that in times of

crisis they are much more efficient to maintain employment than other types of enterprise. While unemployment in Spain is growing, employment in cooperatives is maintained and has even increased in some sectors, in particular in the education and caring professions. In most cases, worker cooperatives do not lay off in times of crisis but they rather adjust wages, redistribute working hours, and implement innovative systems designed to avoid job destructions. According to data provided by COCETA, the creation of worker cooperatives during the first half of 2009 exceeded those generated in the same period last year, a trend that is confirmed in some communities as in

Murcia, where some 190 worker cooperatives were created in 2009. Moreover, while 24% of companies closed down in Spain, only 6% of worker cooperatives went out of business. Sector claims The COCETA Assembly also provided a platform to demand measures and actions at both central and autonomous levels. COCETA requires making access to funding easier for cooperatives; allowing profit generation and enabling new investment and regular commercial traffic. Worker cooperatives also call for legislative changes in taxation, particularly to adapt the burden of mandatory endowment funds, which have an irrepartible character, to similar figures as SMEs and microSMEs. ◊

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Zapatero: "Cooperatives are a pioneering approach, full of possibilities" By Mariana Vilnitzky, COCETA For the first time in the history of Spanish cooperatives, a president meets with the sector, together with the whole social economy. This is what José Luis Rodríguez Zapatero did in Madrid in mid-February. The meeting marked the stages before and after the recognition of the social economy in general, and cooperatives in particular. n late February in Madrid, during the seminar “Social economy: competitive and sustainable companies committed for employment”, organized by the Spanish Confederation of Social Economy Enterprises (CEPES), the Prime Minister, José Luis Rodríguez Zapatero, said that cooperatives are a "prominent, broad, and pioneering approach of the social economy, and, today, it is also an approach full of possibilities."

Zapatero, who was the first Spanish Prime Minister to meet with the social economy, also stated that the sector's needs will be referred to in the Bill on Sustainable Economy, which will be discussed in Congress; they will be even more present in the Social Economy Act, which is expected to be debated in Congress before the summer.

Spanish Prime Minister, José Luis Rodríguez Zapatero / CEPES

"We want this Bill to be an innovative Social Economy Law at the European level and I want to emphasize these four elements," said Zapatero. "The new law will define a legal framework for the social economy, based on its characteristics and welcoming diversity; it will recognize the important contribution of the social economy to economic development, job creation and employment stability, which characterizes social economy, and establishes commitment and measures to ensure its promotion by all public authorities; third, it will establish channels for dialogue between organizations representing social economy and the government, and fourth, it will go a step further in reducing red tape and administrative obstacles that hinder the development of their business activity." The Spanish Presidency and the social economy in Europe For the Prime Minister, "social economy has been very important in the phase of economic expansion and will be very important in the process of overcoming the crisis. Its companies encompass entrepreneurship, risk, imagination, but also responsibility and commitment. Herein lies its strength". In his speech, Zapatero highlighted his commitment to the promotion of social economy in Europe: "we will use our presidency to promote and give value to the social economy," he said, adding that: "we have an excellent opportunity for it: the European Conference on Social Economy, which is going to be held in May in Toledo. We want it to be a meeting between representatives of social economy and of the third sector, and representatives from European and Latin American governments and of the Autonomous Communities, with members of the Council for the Promotion of social economy, experts and social partners. Social economy in Europe represents 10% of businesses and 6% of total employment, two million companies and nearly 20 million workers. And their ability to contribute to the development of a healthier and more productive model of sustainable growth in the whole European Union has to be shown at the meeting in Toledo". The European Conference on social Economy took place in Toledo on 6th and 7th May under the Spanish Presidency of the European Union. The conclusions of the conference highlighted that the social economy enterprises are a business actor that contributes towards building Europe in a globalised world. In this respect, it is underlined that there is a need for the European Union and the Member States to generate measures that will create a favourable environment to the development of Social Economy enterprises in their multiple expressions and notably or cooperatives. ◊

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“Sociedades Laborales” in Spain, an employment-generating business model By José Luis Núñez, Confesal

T he law governing “Sociedades

Anónimas Laborales”, the first drafted to regulate this category of corporation, was enacted in 1986. At that time, they were limited liability companies under the terms of which it was mandatory for the workforce to hold 51 % of the shares, thereby over time categorising them as worker-members. This quintessentially Spanish model was used to solve corporate crises at a time when adverse economic conditions were forcing numerous industrial undertakings and manufacturing plants to close. It was at this juncture that it fell to “sociedades anónimas laborales” to restructure corporations with a view to giving them a fresh lease of life and reactivating employment. Years later, supported by the “Confederación Empresarial de Sociedades Laborales”, this was the branch of the economy that realised the need to overhaul the law in a way that would leave room for a more dynamic and flexible model. The underlying idea was that it should not only revitalise corporate businesses and their workforces but should be capable of accommodating new entrepreneurial forms of business. Hence, in 1997, with the sector’s backing, the law on “Sociedades Laborales” was passed and is currently in force. It represents a new departure insofar as it provides for the establishment what is known as the “sociedad limitada laboral”. These are companies formed by not less than three members in which no one member shall be authorised to appropriate more than 33% and for which the minimum authorised capital on formation is €3,000. That this type of company had proved successful was acknowledged without delay. Indeed, with the exception of the past two years when the downturn became widespread, statistics made it abun-

dantly clear that they had been capable of generating employment and creating wealth nationwide. From 1996 to 2006, they increased by 14,957 numerically while the number of jobs rose by 77,383. In corporate terms, this translates into an upward revision of 282% net and an increase in employment of the order of 146%. In 2009, the latest year for which statistics are available, the “sociedades laborales” sector was seen to be managing 17,000 companies, employing a 100,000-strong workforce and had registered a turnover of €16 million euros in the last financial year. However, we must also call attention to the fact that the branch of the economy that includes “sociedades laborales” has been sliding in its employment-generating capacity since 2002 at precisely the time when the traditional economy was doing the reverse. Confesal claims that this needs to be attributed to deficiencies in the current law on “sociedades laborales”, evidenced in aspects such as a lack of incentives for companies and their workforces to adequately motivate workers that are not properly defined as members. As against that, a significant proportion of the workforce has become self-employed on the strength of the many favourable development policies that have been pioneered combined with the enactment of self-employment legislation. “Sociedades laborales” call for legislative reform For two years now, this state of affairs, aggregated with the economic

The Telecsal “sociedad laboral”

downturn, has led to Confesal pressing the Government to pass legislation that will loosen the straitjacket into which “sociedades laborales” have been put and give this business model back the dynamism on which it had been able to rely for the past decade. The underlying purpose would be to empower workers by allowing them access to property ownership and business management, offering them greater security of employment and a sounder entrepreneurial fabric. This would entail offering tax incentives to those who joined as members y greater tax savings for companies who integrated salaried employees as members. At this point in time, the Government, through the DirectorateGeneral for the Social Economy, Self -Employment and CSR in the Ministry of Labour has initiated the process to promote a Bill designed to overhaul current legislation. ◊

Further information may be downloaded from http://ww.confesal.es

18 WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

Mondragon Excels in the Management of Knowledge and Intellectual Capacity By Olivier Biron, CICOPA / CECOP

T he Most Admired Knowledge Enterprises (MAKE)

is a research programme which seeks to identify those organizations that are out-performing their peers by above-average growth in intellectual capital and wealth creation. MONDRAGON has been recognised as one of the 10 European Most Admired Knowledge Enterprises, in the ninth edition of the MAKE report. The report has been drawn up by Teleos, an independent firm engaged in research into the management of knowledge and intellectual capital and by Know Network, which is a global WEB community of organisations engaged in the study and sharing of knowledge practices that promote quality results. The Mondragon Group was founded in 1956 and is considered one of the most successful examples of worker-owned enterprises in the world. The Mondragon Corporation is divided into four main areas: Finance, Industry, Retail and Knowledge and is today the top Basque business group and the seventh biggest in Spain. This is the second time that Mondragon has been recognized as a European MAKE Winner. ◊

The Mondragon Corporation’s performance in 2009: sales went down, employment also suffered but less than sales In 2009, the Mondragon group was substantially affected by the economic crisis, in particular in some of its key industrial products, such as components for the automobile industry, and in distribution. Its total sales amounted to 14 780 billion Euro, namely 12% less than in 2008. The average amount of jobs during the year was 85 000, a reduction of 8.3% as compared to 2009, one of the strongest ones in the group’s history. Nevertheless, the lesser reduction in employment compared to sales, due partly to voluntary wage cuts and to the temporary redeployment of hundreds of workers from one cooperative to another, should be emphasised. In addition, one third of this reduction was offset by year’s end, and virtually all the net job reduction took place through early retirement. See www.mondragon-corporation.com

Poland—Slovakia

Step forward in the Polish – Slovak cooperation By Helena Capova, Coop Product Slovakia eaders of the National Auditing Union of Worker Cooperatives (NAUWC) and Coop Product Slovakia (CPS) met on 25th March 2010 on the premises of Pokrok Worker Cooperative based in Zilina, Slovakia and discussed the development of mutual cooperation between Slovak and Polish worker cooperatives, the participation of Polish worker cooperatives in the COOPEXPO Exhibition and Polish experience in the field of social cooperatives.

They also made an assessment of the impact of the crisis on cooperatives in both countries. They noted that, while in Slovakia, producer cooperatives have experienced drops in sales, turnover and reduction of workers and members as well as a worsening situation in the field of producer cooperatives of disabled people, in Poland, the situation improved. Cooperatives in Poland have adopted measures aimed to prevent collective redundancies. The Coopexpo exhibition, another topic which they discussed, is held yearly in conjunction with the biggest agricultural fair Agrokomplex in August (this year between 19th and 22nd August) in Slovakia. The fair will be the occasion for the Polish organisation to hold a seminar on social cooperatives as they have now gained significant experience in this field. The possibilities of trading and crossborder cooperation between Poland and Slovakia, in the fields of products, tourism, and exchange stays among others, were also examined. ◊

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

United Kingdom

Cooperatives and worker owned businesses in the UK - an electoral gamble? By John Atterton, Co-operatives UK he United Kingdom general elections have taken place on the 6th May. As a result of their campaign, three of the major parties: Conservatives, Labour and Liberal Democrats have released Party Manifestos all of which prominently mention cooperatives.

The Labour Party announced that it would support and encourage the cooperative movement at the next general election in the UK. Co-operatives UK has welcomed all three parties recognition of the role Cooperatives can play in creating a better society. For more details of Co-operatives UK’s response please to the parties during the campaign, check http:// www.cooperatives-uk.coop/live/dynamic/News/ IndexSmall.asp

Worker cooperatives in particular have been in the spotlight in the build up to the general election when David Cameron, the Conservative Party leader, unveiled a plan to allow public sector workers to form cooperatives, so that, for example, “nurses could manage their clinics”, or “teachers run their schools” (The Economist, 02/18/10).

In May the UK cabinet office released the new Coalition’s programme for Government which re-affirms both parties commitment to cooperatives.

Co-operatives UK, the umbrella body for cooperatives in the UK and member of CECOP, reacted immediately to this plan by “welcoming Conservative support for the cooperative movement”, however warning that “the devil will be in the detail”: the plan shouldn’t be “imposed on public sector workers from above” (Third Sector Online, 02/16/10).

“We will give public sector workers a new right to form employee-owned cooperatives and bid to take over the services they deliver. This will empower millions of public sector workers to become their own boss and help them to deliver better services.” (page26) http://www.cabinetoffice.gov.uk/ media/409088/pfg_coalition.pdf.

Michael Stevenson Chairman of The Co-operative Party (closely aligned to the Labour party) responded that “Tories are not the party of mutuality” (Guardian 04/15/10)

Co-operatives UK is now seeking to build links with other European Cooperative organisations with experience in developing public-service oriented or social cooperatives. ◊

The importance of cooperatives featured on the Guardian website By Olivier Biron, CICOPA / CECOP

s different political parties announced at the time of the campaign that they would support and encourage the cooperative movement at the next general election in the UK, an article in the Guardian website explains how the history of cooperatives made social progress in Britain, which is described as “the emergence of an unprecedented force for social change through worker ownership and control, but also the extent to which capitalist society in Britain felt challenged by such a movement”.

“If Labour honours its pledge to support the cooperative movement”, says the author, “the resulting social change could be significant”. Two examples of cooperatives are showcased in the article, and namely, the Leeds Co-op and SUMA. Read the article at www.guardian.co.uk/ commentisfree/2010/feb/09/importance-ofcooperatives. For more information please see www.suma.coop. ◊

20 WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

Italy

The Italian cooperatives react to the crisis By Giancarmine Vicinanza, Confcooperative The recovery is underway, but it is weak. Although confidence is growing, short-term expectations remain uncertain. Cooperatives are still in the grips of the crisis, but they continue to respond with great courage from an employment point of view: they are cutting prices in order to support sales and to maintain production levels. They are sacrificing profit in order to safeguard employment. ndeed, as a result of these extraordinary efforts, 7 in every 10 cooperatives managed to maintain the same levels of employment, whilst 1 in every 10 cooperatives has even managed to take on new workers. These figures are taken from the XIV Economic Brief (covering the 3rd quarter of 2009 and containing forecasts for 2010), which is compiled by 'Elabora', the studies department of Confcooperative.

In terms of liquidity, cooperatives are not in a particularly good situation; payment delays are also being suffered by worker, social, fisheries, agri-food and retail cooperatives that have already been weakened by the payment deferments granted to their members. For worker and social cooperatives, then the public administration is almost always at the origin of these payment delays. This profound sense of insecurity regarding payments and liquidity has a major influence over investments and the growth of cooperatives. For example, social cooperatives, which always tend to lead the way when it comes to employment growth, have even decided to defer the already planned integration of new staff. As well as the issue of late payments, notably from public administrations, cooperatives point out the following elements that continue to undermine their development: contractual dumping; calls for tender for services and supplies that are won by extremely low bids, very often in sectors in which the operating margins are already extremely low; unfair competition and “predatory pricing” techniques; the rigidity of the labour market and the lack of specialised workers on the market; access to credit; the fiscal burden; bureaucracy-related costs; the poor infrastructures in the country. Finally, there is also the considerable impact of energy-related costs. In order to be competitive then there is a need to look to foreign markets and the cooperatives which already have activities abroad have experienced a higher increase in income than those which only operate on the domestic market. The fall in consumption, dumping practices and the application of “predatory pricing” have forced some cooperatives to cut the sales price of the goods and services which they provide. Credit is a big problem In the South of Italy, only 12.5% of cooperatives asked for new financing during the last four months of 2009, compared to a national average of 34%. In the North,

there is currently an increase in the number of applications for credit that have been rejected. In the central region of the country there is a higher number of financing being granted that is below the level requested. At the national level, 11% of cooperatives have been asked to agree to a payment re-scheduling plan. In terms of interest rates in relation to current financing arrangements, 2 out of 10 cooperatives have reported an upwards adjustment of rates, whilst 5 out of 10 have reported no change. Only 3 out of 10 have recorded a decrease. With regard to required guarantees, 1 in 4 cooperatives has reported that the banks have made additional guarantee-related requests, some of which are personal guarantees. With regard to current financing arrangements, we can see the continuation of the tendency according to which there is an increase in the application of “other conditions”. ◊

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Focus on cooperatives in the services sector in Italy : Current situation regarding the members of Legacoop Servizi By Daniele Conti, Legacoop Servizi Legacoop Servizi is the representative organisation of the services cooperatives that are members of Legacoop (Lega Nazionale delle Cooperative e mutue – The National League of Cooperatives and Mutuals), which is the oldest of the Italian cooperative organisations and has a membership composed of more than 15,000 cooperative companies from throughout Italy and from all production sectors. The 2,500 services cooperatives that are members of Legacoop Servizi generated an overall turnover of approximately 8,000 million Euros in 2009 and have more than 350,000 members and workers. They provide a wide range of services: from the transportation and movement of goods to catering, from cleaning to hygiene and sanitation services, from private security to passenger transportation and cultural services.

S ervice cooperatives affiliated to Legacoop Servizi are

generally labour-intensive companies and they have also seen a significant increase in terms of employment. The choices and processes of modernisation developed over the course of recent years have ensured that this sector has become an advanced area for the provision of integrated and high quality services, thereby enabling it to occupy a position of excellence at a national level in terms of turnover and entrepreneurial maturity. In Italy today, services cooperatives are an essential component of the processes of tertiarization of the public administration, industry and retail trade, as well as being an important protagonist in terms of the capacity to autonomously provide high quality services directly to the purchasers of services and to users, thereby providing a quality response to both traditional requirements as well as to the innovative demands that are made by the world of production and society. Worker services cooperatives, including those that take the form of a consortium, are a decisive factor of innovation in the economic policies of in Italy. The experience of those enterprises is underpinned by the capacity to place work at the centre of their approach, to promote and to develop occupational skills in order to make the services efficient and to respond to requirements in an appropriate manner. Over the course of the last few years, the services cooperatives that are members of Legacoop Servizi operated in such a way to guarantee a secure future for new generations of members and workers, affording them the possibility of working in structured companies that enjoy stable working relationships. In order to guarantee the long-term growth of services cooperatives, there is an increasing need for policies, not only at a national level, but also at a European level, that are designed to legalize and to regulate the market. In particular, the notion of legality with regard to public procurement is a fundamental factor of development for capable and healthy companies. To this end, there is a need to guarantee the transparency of calls for tender through the stipulation of awarding criteria that reward the overall proposed project (the criteria of the most economically advantageous tender) and not just the price (thereby excluding undercutting), to undertake a careful examination of any anomalies that appear in the tender and to effectively monitor the services carried out. In the present context of the credit squeeze and current global economic crisis, the serious payment delays related to public procurement, which is not solely an Italian problem, although the country is without equal at the European level from this point of view, represent a significant handicap to the development of cooperative enterprises since it makes it difficult to guarantee the resources required to promote the necessary growth and innovation policies. Further development can take place if cooperatives make the most of their know-how and skills: to this end, it is necessary to promote the creation of new cooperatives between the professions and in innovative sectors and to favour processes that are designed to encourage cooperatives to combine their efforts. The areas of competence developed by the Association in recent years can represent an important incubator for new cooperation. ◊

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The plastics industry in Tuscany: an example of a successful cooperative By Adriana Assini, ANCPL The Industria Plastica Toscana (IPT) is an Italian worker cooperative based in Scarperia, Florence. It was created in July 1994 upon the initiative of some former employees of the Italian Plastics Industry, who took over the private company and founded a cooperative model following its bankruptcy.

S ixteen years after its crea-

tion, it represents a successful experience from the field of active policies working to promote employment in Italy and particularly through the ‘Marcora’ law, which supports the transformation of businesses in crisis into cooperatives. The cooperative aimed to sustain the employment and the production in one of the more significant sectors of activity in the region of Mugello, taking the failures of the former management into account. The business currently employs 39 workers, of which 34 are memberworkers. The cooperative continues to work in the packaging industry. Today activity is devised between primary packaging products, (food packaging), and secondary packaging products, (plastic bags), and production is processed at a level of mass distribution.

Biodegradable packaging / Coop Firenze

IPT is part of one of the most important businesses of its sector in Italy. From 2002 until the current day, the value of production has gradually increased. The results of 2009 enhance the increase in the value of production, which exceeds 12 million euros. The current volume of production is close to 4.000 tonnes per year. The evolution in the production of shopping bags is remarkable: during the last few years, it has consolidated and developed itself and now the production of primary packaging represents nearly 20% of the total production. IPT is in the process of modernisation in order to improve against the international competition which is becoming increasingly ferocious. It has, for example, created a label for low impact products on the environment which are bio-degradable. Thus in 2009 a number of large cooperative and non-cooperative businesses decided to replace plastic bags with bags produced from renewable sources, such as Mater-B, which is a type of ‘bioplastic’ from a renewable food source made from corn. Produced in Italy, they are completely biodegradable and conform to European Standards. Moreover, due to the existing uncertainty concerning legislation in Italy and the delay up until 2011 to ban the commercialisation of traditional plastic bags, one can now see a growing interest for products made from natural sources and businesses are in the process of equipping themselves in order to rapidly provide an adequate response. In this sense the IPT objective is to reinforce this part of production and develop its research to diversify and enlarge production, notably on the subject of food conditions. The cooperative is notably in the process of developing a series of innovative products, which will have a low impact on the environment and on the reduction in the use of traditional plastic bags. ◊

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AFRICA Uganda

Cooperatives collaborate with the private sector to improve people’s access to electricity By Leonard Msemakweli, Uganda Cooperative Alliance One of the factors contributing to the perpetuation of poverty in a country such as Uganda is the lack of energy, especially 3-phase electricity power which is required for industry. As a matter of fact, industry is a great factor which can help in alleviating poverty. Without energy it is very difficult for people to exploit the resources around them and to create new opportunities. The correlation between the lack of energy and the low level of development in the country is high. n Uganda, only about 10 percent of the population is connected to the national electricity grid but it is mainly in the urban areas and the costs to access electricity are the most expensive after Sweden. Installed capacity in Uganda is 409 MW but actual generation is as low as 140-200 MW. This low generation is partly due to climate change which causes very low levels of water in the rivers and lakes during the dry season which in turn lowers the generation capacity. Because of this, market for bio-energy is growing very fast.

The next phase in modernization of cooperatives in Uganda With the phase of re-discovering cooperatives in the country headed by the Uganda Cooperative Alliance (UCA) now over, UCA is embarking on the second phase which includes establishing new types of modern cooperatives as a strategy to strengthen the whole cooperative movement. Historically, Uganda has been known for largely agricultural cooperatives but this is changing. UCA is currently working on a programme to help its members to establish bio-energy systems which will not only modernize the agricultural cooperatives in the rural areas but will also support many rural institutions as well as warehousing, value addition, pumping clean water, lighting in houses and rural towns, commercial business and many others using low cost renewable energy generated by cooperatives themselves. By working together with foreign investors, a revolving energy fund is to be set up which is financed partly by foreign investors and partly by cooperatives in Uganda. It is expected that about 100 million US dollars could be raised. Over a period of 10 years, 11 energy cooperatives, similar to those which have been growing in the US since 1942, will be created throughout the country and they will generate 2,194 MW, six times what the country is currently able to generate with its entire hydro-electricity infrastructure. Those new cooperatives will be set up and owned together by the foreign investors and cooperatives in respective areas. This innovative financing model will overcome the difficulties in developing and replicating bio-energy systems for rural communities that have been tried by some donors and did not work partly due the associated high expenses. With this model, the so-called “have-nots” will be able to meet their equity contribution to the fund. The renewable energy Fund that UCA is targeting is specifically designed for developing countries. The contract foresees that, over time, foreign investments will gradually decrease as the equity of cooperatives increases: the cooperatives involved in this project should own 100 percent in the end, using the generated revenue from electricity to buy off those parts owned by foreign investors. Although a relative risk does exist, everything will be done by UCA in order to ensure that the cooperative principles are respected and, notably, the “one person - one vote” principle as the issue of relative share holding here will not determine the voting power. Indeed, it is a very interesting and innovative approach which finds its cause in the need for cooperative members and people in Uganda to have electricity in order to be lifted out of poverty. Technical and economic studies are currently on-going in three selected areas of Uganda where the project is to be piloted. Moreover, once the project will be running, it should completely transform the lives of people in rural communities and boost the cooperative movement. Indeed, it should impact on the creation of many cooperatives notably, health and artisanal cooperatives. It also represents an appropriate response to climate change by cooperatives in Uganda. ◊

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NORTH

AMERICA

Canada

Interview with Alain Bridault, President of the Canadian Worker Co-op Federations Q: You’ve recently been elected president of the Canadian Worker Cooperative Federation (CWCF). Why was this important to you? A: It seemed essential to me to strengthen worker cooperatives in Quebec by joining the Quebec movement with the Canadian Worker Cooperative Federation. Therefore, in 2007, I first convinced the Network of Worker Cooperatives of Quebec, of which my co-op is a member, to become a regional member of the Federation. Being the representative of the Quebec Network to the CWCF, I was elected to CWCF’s Board of Directors. I then convinced the Federation of Forestry Cooperatives in Quebec to also become a CWCF member. I believe that since the Board of the CWCF quickly elected me to be vice president in 2008 and then president in 2009, it is a mark of recognition of the worker co-ops in Quebec since they are the largest number of worker co-ops of all provinces of Canada with about 300 cooperatives. Q: What differences exist in law between Quebec and the rest of Canada? A: Unlike the rest of Canada, 100% indivisible reserves are included in legislation in Quebec and they are very important! This is obviously essential for the sustainability of worker cooperatives. This is one of the areas in which I intend to focus as president of the CWCF. (Editor’s Note: Under Quebec law, if a cooperative decides to dissolve or convert to a for-profit company, the reserves of that cooperative are not divided among its members. Instead, by law, any reserve funds have to go to another cooperative. This indivisible reserve is created through allocation of a minimum percentage of profits, which in Quebec’s case is 10%). Q: Do you think worker co-ops may represent an alternative to the crisis that has shaken the global economy? A: Of course, and not only worker cooperatives, but all cooperative sectors. In Quebec, the example of the ‘Mouvement des caisses populaires Desjardins’, (the Desjardins credit cooperative movement), is particularly telling. It is the largest banking network in Quebec with more than 4 million members out of a population of 7 million. If Quebec was comparatively little affected by this crisis, this was partly due to the strength of this banking network. In addition, a large project that I would also like to put in place is with regard to business succession and transfer. In Canada, it is estimated that 200,000 businesses will change hands over the next ten years. For example, in Quebec this means that entire villages

may be completely deconstructed, because many businesses that employ up to 100 people will have no buyer. We'll see companies bought by competitors, which are sometimes left to die in order to eliminate competition. In this context, the cooperative alternative needs to get ready as it can help to save villages. Orion, the cooperative of which I am a founder, is working on this issue and has published several guides to raise awareness about this. In 2011, CWCF is organizing a major international conference on converting businesses to worker cooperatives to fully showcase the expertise and experience which has been acquired, and the seriousness of the cooperative alternative to the issue of succession. Q: What is your vision of worker cooperation today? A: First of all, I am from the self-management movement of the seventies. This led me to worker cooperatives, to what the French economist Claude Vienney termed concrete self-management practice. For me, worker co-operation was only a marginal phenomenon of the cooperative movement during what I call the century of hegemonic mode of industrial production, until the early 1980s. At that time, the different forms of consumer cooperatives were the ones which had the highest development potential. But with the advent of the so-called post-industrial society or the (continued on next page)

WORK TOGETHER ‐ ISSUE N° 3 ‐ JULY 2010

knowledge society in the words of Peter Drucker, the formula of worker co-operation can fully live out its potential. Indeed, the success of businesses in the new economy is now based on the skills of their human resources. Today's businesses and more in the future will be smart companies offering products and services with high intelligence added. Management practices change. The management of human resources is now more important than other aspects of management, because the competitiveness of enterprises depends on their capacity to mobilize the intelligence of their employees. This means developing their sense of belonging, implementing participatory management practices, leaving ample room for innovation, and increasingly involving them in company performance. But all this is the very paradigm of a worker cooperative as the only form of business which, by nature, is intelligent, which has the poten-

tial of mobilizing understanding of its human resources through its purpose and its way of being. This is why I believe that the objective conditions for a vast new deployment of worker cooperatives are now in place. In particular, there is enormous potential for creating new cooperatives, particularly among young graduates and in the field of new technologies where there is a lot more intelligence added. However, the subjective conditions do not yet exist, especially among us in North America. Indeed, in Canada we are very close to the nerve centre of capitalism with the United States at our door, the production center of capitalist ideology. We have much to do in order to realize the potential of the worker cooperative movement. ◊ Interview carried out by Olivier Biron, CICOPA / CECOP

United States

« Capitalism, a Love Story » … or not By José Miguel Botello, CICOPA / CECOP ichael Moore, the American film director famous for producing documentaries that show a reality that differs from that we are offered by the mainstream media, criticises in his latest film, Capitalism, a love story (2009), the free market system prevailing in the United States, and exposes what makes it responsible for most of the ills brought by the current global economic crisis. One of the solutions that come to Moore in this documentary is the creation of a cooperative society. In particular, he portrays Isthmus Engineering & Manufacturing Co-op in Wisconsin, a cooperative that generates $ 50 million annually, and also workers at Republic Windows & Doors, who, after getting paid what they were owed by the company and the Bank of America, continued working in the manufacture of doors and windows and created a cooperative.

Among the most serious consequences of the capitalist crisis, Moore deals with the many evictions that banks realise every day in America, where families who once had everything a person of "middle class" could wish, are now living in the street because of massive layoffs conducted by large companies for the sake of maximum profit. In his documentary, Moore also explains the reasons why this system that currently exists in the U.S. is so wild: according to the director, this has happened since Ronald Reagan came to power in 1981, in the context of the oil crisis. Wall Street began to take power in American politics, making institutions like

Michael Moore

the Congress adopt measures that helped capital at the expense of the working class. This process repeated itself during the presidencies of George Bush Sr., Bill Clinton and George Bush Jr. For more information about this film, visit its official website at: http://www.michaelmoore.com/booksfilms/capitalism-love-story ◊

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ASIA South Korea

Transformation of businesses to social enterprises, a new type of social contribution for companies? By Changhwan Lee, KASEE lthough the Korean worker cooperative movement was born in the beginning of 1990s, it had suffered many problems such as an absence of proper legislation and a support program. Because of this, since the mid1990s, the first generation of Worker Cooperatives engaged in the ‘self-sufficiency support program (SSP)’ which aimed to promote ‘Worker Cooperative-like’ small enterprises in order to provide job places for the poor. However, these small enterprises were very weak particularly in terms of autonomy. Most of them were managed in a practical sense by support agencies which are subsidized by the government. To maintain the cooperative principles, Korea’s Federation of Worker Cooperatives (KFWC) was organized in 2002. KFWC was composed of some pioneer Worker Cooperatives and newly organized Worker Cooperatives under the SSP. However, the enactment of the social enterprise promotion Act in 2007 Opening of In’s Care in the presence of KASEE President, Chuljong Lee (on the right) changed the situation. This act enabled a new label “social enterprise”, not only for existing small enterprises under the SSP, but also for various civil initiatives. In order to organize ‘cooperative minded’ new initiatives, KFWC changed its name to Korean Association of Social Economy Enterprises (KASEE) in 2007.

One of the important members in KASEE, Working Together Corp. (WT Co) is a group which is composed of 9 Worker Cooperative-type small enterprises under the SSP across Kyungki province (province around Seoul) in the cleaning sector. The WT Co was launched with financial support from the Overcoming-unemployment Foundation in 2003, and thereafter, it has developed not only economic activities such as cleaning and maintenance of schools, hospitals, and public buildings, wholesale of articles concerning cleaning, but also social activities such as training programs and hygiene services for poor families. In 2008, the WT Co had 10 local branches and 180 workers. Its turnover was 3 million USD. In 2009, WT Co had an opportunity for development. Woongjin Group, one of the biggest groups in South Korea, decided to give its home cleaning part to WT Co without compensation. Woongjin Homecare, the home cleaning part of Woongjin group had started its business in 2007, but due to its low profitability, Woongjin group decided to sell the business. In looking for a proper purchaser, Woongjin group saw that social enterprises could add more value to the cleaning sector, and decided to transform Woonjin Homecare to a social enterprise specialized in the cleaning sector. The entire ‘alienated’ part included 8 local branches and 70 workers. At first, WT Co hesitated to accept it because the scale was too big. However, in considering maintenance of employment of workers in Woonjin Homecare, and also the scale of the economy, WT Co accepted this freedom or transformation. With this new independance, WT Co received all its brand, workers, assets and also existing business rights. After this transformation, all workers in ‘Ins’ care’ (the new name of Woongjin Homecare) who had been fixed term workers, were re-employed as permanent workers and received a basic wage increase. Hyunsu LEE, researcher at the Hope Factory Institute evaluated “the transformation of businesses to social enterprises could be a new type of social contribution of companies” and added: “It would be necessary to support social enterprises in order to enable them to use the system and know-how of big companies.” This case of change was introduced in the Daily Joongang, a major daily newspaper in South Korea (28th January, 2010). Until now, cooperative governance systems don’t apply to this new business activity. One of the important objectives of WT Co, said Chuljong LEE, president of WT Co and president of KASEE, is the cooperativisation of this activity in the course of restructuring of WT Co in the coming years. ◊

If you have any questions, suggestions or criticisms about “Work Together”, please write to us at cicopa@cicopa.coop Work together is a periodical joint publication of CICOPA and CECOP CICOPA-Europe edited in English, French and Spanish - © CICOPA