A New Type of Cooperative—Some Historical Background

Relief for the financial strain on the national system of social welfare has been found in Italy through an innovative new form of cooperative. A blend of old and new features, using volunteers and what would be considered less desirable workers, the Italian “social cooperatives” are deserving of notice. These cooperatives developed to furnish welfare services to the “economically weaker layers of society” as Italy, like other western European nations which had developed extensive “welfare state” programs, sought to diminish the financial burden of such programs. They were also able to make a dent in the unemployment problem, which by the 1980’s was extensive in Italy as well as other west European countries. Certain marginal groups of the unemployed were given work in the co-ops, under special arrangements which also made use of volunteer help.

The first experiments with this new entrepreneurial form began in Italy in the late 1970’s. Major growth followed the enactment of a law on social cooperatives. But that law, first drafted in 1981, was ten years in the making, as political parties and Italy’s major cooperative groups debated its exact form. The law was passed late in 1991.

The downsizing of the state-sponsored mental health system gave rise to a particular need to care for patients released from mental hospitals. At first this need was met by mostly Catholic volunteers, banded in “associations.” Thus, the motivation for beginning what at first were termed “social solidarity cooperatives” was initially philanthropic, based on a Christian desire to help those in greater need. As the movement grew, so did the issue of the role of volunteers.

The legislative debate of the 1980’s clarified a number of issues. First, that the preferred legal form for these organizations should be that of a cooperative, though not a co-op in the traditional sense, with a primary aim of mutual benefit to its members. However, the cooperative movement had throughout its history also assigned itself a role in the broader community; and this aspect of cooperative philosophy had been recognized in the Italian Constitution of 1946, which provided that cooperatives may have a social or community function. On this clause could be based a legal recognition of social cooperatives. It must be said that the Italian cooperative movement, one of the strongest in Europe or in the world, was at first skeptical about the mutation of the traditional forms; and that in the end the law on social cooperatives was supported by the Catholic-backed network of cooperatives, but not by the Socialist-oriented Lega.

Second, the work of social cooperatives was to be oriented toward the local community, and toward the segments of that community in greater need. Two distinct areas of need were identified, corresponding to social welfare services and to unemployment. Third, to perform these services the new organizations were allowed, in fact required, to create a diverse membership structure, including: normally employed working members; special workers, handicapped in some way, required to comprise 30% of the coops dealing with unemployment; volunteers, whose numbers and scope were limited; and user non-worker and non-volunteer members, or physical or legal persons providing financial support.

The law regarding social cooperatives gave impetus to their expansion. What are the salient provisions of this law? Several have already been referred to: first of all, re-orienting the purpose of the co-op, from mutual benefit for members to primary benefit to the local community. The law further clarifies two basic forms: (A) social service, in the areas of health care, care of the elderly, and education; and (B) the creation of employment for certain disadvantaged groups: namely, physical or mental invalids, present or former psychiatric patients, drug addicts, alcoholics, young workers from troubled families, and criminals subject to alternatives to detention. In addition, the law regulates and restricts the role of volunteers, who must comprise less than 50% of the workforce, whose work should be only complementary to that of paid workers, and who may be reimbursed only pocket expenses (although they do receive health insurance).

Employment standards and benefits are basically those of the Italian state, but with certain advantages to the cooperatives. For handicapped members, the co-op need not make welfare contributions to the state, and it may also compensate them at lower than standard pay rates (which are now conformed to those of the European Union), presumably based on their lower productivity. Social co-ops also receive a 25% reduction on land and mortgage taxes.

Beyond these regulations at the national level, governance of the individual social co-ops, or of the regional consortia which link them together, is disaggregated to the provinces and regions. Thus the regulation of work intended to benefit local communities is handled on a local or more nearly local level. Also foreseen in the 1991 law, and signficant in the growth of the social cooperatives, has been the linkage to organs of government which in effect have been the co-ops’ leading customers. This connection holds for both the social service and the employment cooperatives. Government funding for programs contracted with the coops has been and is a major portion of their budgets.

As to growth of the social cooperatives since 1991, several surveys indicate considerable expansion during this decade. An earlier survey in 1986 had identified just under 500 co-ops, serving 35,000 people. A new study in 1994 identified some 2000 co-ops, with about 40,000 paid workers and 15,000 volunteers, providing services to approximately 200,000 clients. By 1996, still another investigation found roughly 4000 registered social co-ops, of which it could verify that at least 3000 were active. They had a grand total of about 100,000 members, of which 75,000 were paid employees, 9,000 volunteers, and the remainder nonworker members. The total number of clients was estimated at 400,000. In 1996 social co-ops comprised 4% of the broader Italian cooperative sector, and provided employment to 10% of persons in the coop sector.

The geography of the Italian social cooperatives is also of interest. Strongest development has occurred in the north of Italy, with its heart in the province of Brescia, where there is one social cooperative for every 8000 persons (compared with a ratio of 1/25,000 persons for Italy as a whole). The north has also been the most fertile soil for other forms of Italian coops; thus a certain “culture of cooperativism” already existed there. In 1996, 60 to 63% of social co-ops were identified in the northern regions, and the “B” employment cooperatives were more numerous there. Central and southern regions together accounted for 37 to 40% of the social cooperatives, and the “A” or social care co-ops were more prevalent in those parts.

What These Co-ops Actually Do

As already indicated, those in the “A” category, performing social services, health care, and education, are decidedly more numerous than those creating jobs for the hard-to employ in a ratio of 70% to 30%. This is scarcely surprising, given the difficulty of creating employment and providing training for people with the broad spectrum of handicaps designated by the law. Nonetheless, in 1996 the “B” employment co-ops, which constituted less than one-third of the total sector, created jobs for some 11,000 workers, of whom over 5,400 had disabilities. That figure comes to 48.5% handicapped out of the total employed, which is well above the 30% threshold mandated by the law. The work of these co-ops is often under the rubric of maintenance of parks, gardens, or buildings but they also figure in the production of crafts. The public sector has provided orders for the “B” coops at the level of some 62%, while it gave about 3/4 of the orders for the “A” coops.

The “A” coops in 1996 most frequently provided social services (81%), less often health services (13%) and education (6%). The populations served were the elderly, minors, and the disabled, in that order of importance, with some overlap among those groups. In that respect, the 1996 survey found a transformation from 1986 when the majority of those being served were handicapped people. It is not clear whether this indicates a shift in the need for services; or an evolution from the original stimulus to aid those who were being abandoned in the downsizing of government programs; or a change of policy on the part of the public authorities, putting more funding into services for the elderly. By 1996, the “A” cooperatives most often provided their services in facilities or residences which they operated; but some also served in a domestic mode, taking the service to the homes of the clients.

The composition of Italian social co-ops has evolved in this decade in two significant ways. Volunteer participation, so important at the beginning, has decreased markedly. The recent data show only a small percentage of volunteers, or none at all in many co-ops. The stricture of the 1991 law against greater than 50% participation of volunteers has thus proved to be superfluous; many social co-ops now function with no volunteers. On the other hand, the third category of members, non-volunteer and non-employee, has remained a consistent and important presence. Their role in the capitalization of the cooperatives is of crucial importance. Their continuing participation also preserves the social cooperatives as “multi-stakeholder” organizations.

Small Need Not Be Disadvanataged

If the element of membership structure has evolved, the size of the social cooperatives has remained true to the traditional blueprint. The social co-ops are not large: the 1996 data show a typical workforce of 40-50 persons. True, any given co-op provides its service or employment only in one locality: the terms of the 1991 law tie them to serving only in a given municipality. Still, these are small economic units, and Italy today is a sophisticated economy with a number of giant corporations. Are the social co-ops themselves not disadvantaged, as midgets among giants?

The solution to this problem has been the formation of geographic consortia which link all the social coops of a locality and/or region. A network of some 40 regional, provincial and national consortia now provides a superstructure, or support structure, for all of Italy’s social coops. The consortium provides its member co-ops with advantages deriving from a larger economic scale. It is also politically useful in streamlining the dealings between the regional political authorities and the member co-ops. At the national level, the Consorzio Gino Mattarelli functions also as a research organization which studies the workings and development of the social cooperatives. The regional consortia may be seen as second level cooperatives; or as support structures, giving assistance to their member co-ops, as has so often proven useful in cooperative history. They too are a vital component in the co-ops’ success.

The Italian social cooperatives have “cousins” in other European states. The problems that brought them into being the financial crisis of the European welfare state system, along with surging levels of unemployment in the 1980’s, were not limited to Italy. Other countries came up with their own programs, often though not always in cooperative form. CECOP (European Confederation of Workers’ Cooperatives, Social Cooperatives and Participative Enterprises), an umbrella committee within the framework of the European Union, centralizes information on them.

Still, certain elements can be identified as specific to the Italian situation. The original motivation to help those in greater need was based on Christian principles; that motivation at first took the form of volunteer associations to address specific Italian needs. The volunteers brought to these actions their values of social solidarity and building of community. The Law of 1991, which codified the former volunteer associations and co-ops into a defined cooperative form, prescribed limits but also gave the co-ops specific rights and benefits, and more generally, a positive attitude of support from the state. The law also formulated the connection of the co-ops to the local community. In the case of the “B” coops, the law created a wide scope of help for people with specific impediments to employment.

Further, the new firms could connect to a strong old cooperative tradition in Italy, which has many worker cooperatives and a couple of national cooperative federations. For the Italian cooperative movement as a whole, the social co-ops have meant the exploration of the broader social mission of cooperative work, and its orientation toward the whole community, an aim which goes back to the beginnings of the movement.

Clouds on the Horizon?

The future of Italian social co-ops may not be problem-free, as a number of issues cloud the horizon. The founding capital is secured through the members, but the budgets and earnings of many units depend heavily on contracts with Italian state or regional entities. Their operation must therefore focus on the needs perceived and specified by the public authorities. Were this support to diminish, their situation would become fragile. Secondly, the lessened or absent role of volunteers is variously assessed. Some consider it a positive development, showing seriousness of intent and economic viability of the co-ops; for others this evolution indicates a weakening of social motivation, or a diminution of the multi-stakeholder approach, and constitutes a problem.

In any case, Italy’s social cooperatives deserve to be known and studied. They give clear evidence that supplying social welfare services in a non-governmental program with government support can be economically viable. Further, they show that a cooperative may work when composed of people with diverse interests, resources, skills, abilities, and needs: that is, a multi-stakeholder cooperative organization is viable. In addition, the employment co-ops indicate a way of bringing help through jobs to people with serious problems, given innovative structures and government support. For other nations, regions or localities facing similar problems, these several achievements can be instructive.

REFERENCES

Borzaga, Carlo, and Alceste Santuari. “Social Enterprises in the Field of Personal Services in Italy, ISSAN, University of Trent, Italy, 1998.

Pezzini, Enzo. “Social Cooperatives in Italy as an Innovative Response to Social Needs,” CECOP, Brussels, 1997.

Rossi, G., “The Phenomenon of Social Cooperatives in Italy,” The World of Cooperative Enterprise 1996. Plunkett Foundation, Oxford, 1996, pp. 109-114.

FOR MORE INFORMATION:

CECOP, European Confederation of Workers’ Co-operatives, Social Cooperatives and Participative Enterprises, rue Guillaume Tell 59, B - 1060 Brussels, Belgium. Attn: Dr. Enzo Pezzini; E-mail: cecop@geo2.poptel.org.uk.

Wilda Vanek holds degrees in modern European history and has been researching the history of experiments in worker cooperation and worker self-management. She lives in Ithaca, NY, with her husband, Prof. Jaroslav Vanek.