WORKER COOPERATIVE TRENDS IN N. AMERICA & EUROPE
By Trent Craddock and Sarah Kennedy
This paper presents an analysis of recent trends in worker co-operatives in selected countries in North America and Europe. The paper presents statistical information based on either business registry data or survey data. However, in some countries neither is available with the result that available statistics are based on estimates that are undertaken at irregular intervals.
(All graphs show estimated numbers of worker co-ops – ed.)
Québec is a leader in policies and programs to support the social economy, including worker co-operatives. Support has included legislation permitting the creation of worker shareholder co-operatives that came into force in 1983 and the establishment of the regional development co-operatives in 1985.ii
In addition, a strong worker co-operative sector has developed in Québec with the creation of the Conférence des coopératives forestières du Québec; the Fédération québécoise des coopératives de travail; and the Fédération des coopératives de travailleurs actionnaires du Québec.
From September 2000 to 2003, the Worker Co-operative Fund Pilot Project, a $1.5 million investment fund funded by the Government of Canada and implemented by the Canadian Worker Co-operative Federation (CWCF), successfully created new, and expanded existing, worker co-operatives in all regions of Canada by assisting in their capitalization.iii
Since 2003, the Government of Canada’s Co-operative Development Initiative – a $15 million, 5 year program designed to help people develop co-ops, and to research and test innovative ways of using the co-operative model – while not targeted exclusively to worker co-operatives has helped support their development.iv
In the USA, there are two principal means through which employees can be involved in the ownership of the company that they work for: worker co-operatives and employee stock ownership plans (ESOPs). In 2004, there were 300 worker co-operativesv and 11,500 ESOPs covering over 8.5 million participants and controlling about $500 billion in assets.vi
While worker co-operatives have been holding their own in recent years, ESOPs have experienced significant growth. The popularity of ESOPs can be explained by the tax benefits that are available for such programs. In contrast, the U.S. government does not actively promote the worker co-operative model and government entrepreneurship programs explicitly exclude worker co-operatives.vii
Recently, there have been a number of positive developments such as the creation of the US Federation of Worker Cooperatives in May 2004 and lobbying by the Twin Pines Cooperative Foundation for the U.S. government to undertake a co-operative census every 10 years.
The peak level of formation of worker co-operatives was in the mid 1980s at 300 per year. Since then the British economy improved with lower levels of unemployment and thus less incentive to form worker co-operatives.
There has been a reduction in government funding of Co-op Support Organizations, who play a major role in worker co-op development. Further, there has been a change in government priorities towards the unemployed with an increased emphasis on training.viii
Steady growth in worker co-operatives has been attributed to improved coordination among the worker co-operative networks and their inclusion in government programs that support social economy enterprises.ix
Spain is home to the world’s oldest and most famous worker co-operative, the Mondragon Corporacion Cooperativa (MCC), established in 1956. In 2004, this group located in the Basque County, had sales of 10.4 Billion euros, 10.0 Billion euros of administered assets, with a workforce of 71,500.
Significant growth in this area has been attributed to supportive state policies and programs. For example, the Spanish constitution requires that public authorities encourage co-operatives and promote them via local legislation and local provisions. Furthermore, worker co-operatives benefit from a preferential tax rate of 20% as opposed to the generally available 35%. Comparatively, net profits must be distributed as follows: 70% to worker-members, 20% to reserves, and 10% to training and the co-operative fund.x
Jurisdictions such as Canada (Québec in particular), Italy, Spain and France with policies and programs that support worker co-operatives have had growing numbers of co-operatives. Similarly, jurisdictions such as the U.S.A. and the U.K. that explicitly exclude worker co-operatives from government support programs or that have reduced funding have had low or no growth in the number of worker co-operatives.
Sarah Kennedy, a student researcher with the Government of Canada's Co-operatives Secretariat, is currently a fourth year Batchelor of Commerce student at Carleton University in Ottawa.
Trent Craddock, a senior policy research officer with the Government of Canada's Co-operatives Secretariat, holds an MA in economics and an MBA from the University of Ottawa.craddockt@AGR.GC.CA
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