A worker cooperative is a cooperative that is owned and self-managed by its workers. This control may mean a firm where every worker-owner participates in decision-making in a democratic fashion, or it may refer to one in which management is elected by every worker-owner who each have one vote.
Worker cooperatives rose to prominence during the Industrial Revolution as part of the labour movement. As employment moved to industrial areas and job sectors declined, workers began organizing and controlling businesses for themselves. Worker cooperatives were originally sparked by "critical reaction to industrial capitalism and the excesses of the industrial revolution." Some worker cooperatives were designed to "cope with the evils of unbridled capitalism and the insecurities of wage labor".
The philosophy that underpinned the cooperative movement stemmed from the socialist writings of thinkers including Robert Owen and Charles Fourier. Robert Owen, considered by many as the father of the cooperative movement, made his fortune in the cotton trade but believed in putting his workers in a good environment with access to education for themselves and their children. These ideas were put into effect successfully in the cotton mills of New Lanark, Scotland. It was here that the first co-operative store was opened. Spurred on by the success of this, he had the idea of forming "villages of co-operation" where workers would drag themselves out of poverty by growing their own food, making their own clothes and ultimately becoming self-governing. He tried to form such communities in Orbiston in Scotland and in New Harmony, Indiana in the United States of America, but both communities failed.
Similar early experiments were made in the early 19th century and by 1830 there were several hundred co-operatives. Dr William King made Owen's ideas more workable and practical. He believed in starting small and realized that the working classes would need to set up co-operatives for themselves, so he saw his role as one of instruction. He founded a monthly periodical called The Co-operator, the first edition of which appeared on 1 May 1828. This gave a mixture of co-operative philosophy and practical advice about running a shop using cooperative principles.
The first successful cooperative organization was the consumer-owned Rochdale Society of Equitable Pioneers, established in England in 1844. The Rochdale Pioneers established the ‘Rochdale Principles’ on which they ran their cooperative. This became the basis for the development and growth of the modern cooperative movement. As the mechanization of the Industrial Revolution was forcing more and more skilled workers into poverty, these tradesmen decided to band together to open their own store selling food items they could not otherwise afford.
With lessons from prior failed attempts at co-operation in mind, they designed the now famous Rochdale Principles, and over a period of four months, they struggled to pool one pound sterling per person for a total of 28 pounds of capital. On 21 December 1844, they opened their store with a very meager selection of butter, sugar, flour, oatmeal, and a few candles. Within three months, they expanded their selection to include tea and tobacco, and they were soon known for providing high quality, unadulterated goods.
The International organization representing worker cooperatives is CICOPA. CICOPA has two regional organizations: CECOP- CICOPA Europe and CICOPA Americas.
When the current cooperative movement resurfaced in the 1960s, it developed mostly on a new system of "collective ownership" where par value shares were issued as symbols of egalitarian voting rights. Typically, a member may only own one share to maintain the egalitarian ethos. Once brought in as a member and after a period of time on probation usually so the new candidate can be evaluated, they would be given the power to manage the coop without "ownership" in the traditional sense. In the UK, this system is known as common ownership.
Some of these early cooperatives still exist, and most new worker cooperatives follow their lead and develop a relationship to capital that is more radical than the previous system of equity share ownership.
In the United States, there is no coherent legislation regarding worker cooperatives nationally, much less Federal laws, so most worker cooperatives make use of traditional consumer cooperative law and try to fine-tune it for their purposes. In some cases, the members (workers) of the cooperative in fact "own" the enterprise by buying a share that represents a fraction of the market value of the cooperative.
In Britain, this type of cooperative was traditionally known as a producer cooperative; and while it was overshadowed by the consumer and agricultural types, it also made up a small section of its own within the national apex body, the Cooperative Union. The 'new wave' of worker cooperatives that took off in Britain in the mid-1970s joined the Industrial Common Ownership Movement (ICOM) as a separate federation. Buoyed up by the alternative and ecological movements and by the political drive to create jobs, the sector peaked at around 2,000 enterprises. However, the growth rate slowed, the sector contracted, and in 2001 ICOM merged with the Co-operative Union (which was the federal body for consumer cooperatives) to create Co-operatives UK, thus reunifying the cooperative sector.
In 2008, Co-operatives UK launched The Worker Co-operative Code of Governance, an attempt to implement the ICA approved World Declaration.
Research on worker cooperatives
Longevity and resilience
According to an analysis of all businesses in Uruguay between 1997 - 2009, worker cooperatives have a 29% smaller chance of closure after controlling for variables such as industry. In Italy, worker owned cooperatives that have been created by workers buying a business when it's facing a closure or put up to sale have a 3 year survival rate of 87%, compared to 48% of all Italian businesses. A 2012 study of Spanish and French worker cooperatives found that they “have been more resilient than conventional enterprises during the economic crisis." In France, the three year survival rate of worker cooperatives is 80%-90%, compared to the 66% overall survival rate for all businesses. During the 2008 economic crisis, the number of workers in worker owned cooperatives in France increased by 4.2%, while employment in other businesses decreased by 0.7%.
Pay and employment stability
A 2006 study found that wages on co-ops pay in Italy were 15 to 16 percent lower than those that capitalist firms paid on average, and were more volatile, while employment was more stable. After controlling for variables, such as schooling, age, gender, occupation, industry, location, firm-size, user cost of capital, fixed costs, and deviations in its real sales, this changed to 14 percent. The authors suggest this is due to worker cooperatives being more likely than capitalist firms to cut wages instead of laying off employees during periods of economic difficulty. A study looking at all firms in Uruguay concluded that when controlling for variables such as industry, firm size, gender, age and tenure, workers employed in a worker-managed firm earn 3 percent higher wages compared with similar workers employed in the conventional firms. However, this wage premium declines significantly with increasing pay and becomes negative for top earners. According to research by Virginie Perotin, which looked at two decades worth of international data, the tendency for greater wage flexibility and employment stability helps explain why some research observes higher and others lower pay in worker cooperatives relative to conventional businesses. A study by The Democracy Collaborative found that in the US, worker cooperatives can increase worker incomes by 70 to 80 percent.
In the Mondragon Corporation, the world's largest worker cooperative, the pay ratio between the lowest and the highest earner was 1:9 in 2018. The ratio is decided by a democratic vote by the worker-members. By comparison, the ratio between CEO pay to average earner in top 350 US companies was 1:321 in 2018.
In France, the pay ratio between the highest and lowest paid 10% of the employees is 14% lower in worker cooperatives than in otherwise similar conventional firms.
According to Virginie Perotin's research which looked at two decades worth of international data, worker cooperatives are more productive than conventional businesses. Another 1987 study of worker cooperatives in Italy, the UK, and France found “positive” relationships with productivity. It also found that worker cooperatives do not become less productive as they get larger. A 1995 study of worker cooperatives in the timber industry in Washington, USA found that “co-ops are more efficient than the principal conventional firms by between 6 and 14 percent”.
Worker satisfaction, trust, health and commitment
According to a study drawing on a questionnaire from the population of the Italian province of Trento, worker cooperatives are the only form of enterprise that fosters social trust between employees. A survey conducted in Seoul suggests that in conventional firms, employees become less committed to their job as their work becomes more demanding; however, this was not the case in worker cooperatives. In the US, home health aides in worker cooperatives were significantly more satisfied with their jobs than in other agencies. One 1995 study from the US also indicates that “employees who embrace an increased influence and participation in workplace decisions also reported greater job satisfaction” and a 2011 study in France found that worker-owned businesses “had a positive effect on workers’ job satisfaction.” One 2019 study indicates that “the impact on the happiness workers is generally positive”. A 2012 study of three Italian towns of similar demographics, income, and geography found that the town with the most worker cooperatives had:
- Better mental and physical health, and longer lives, with fewer strokes and heart attacks.
- Children were less likely to skip school and skipped school for shorter periods of time.
- Less crime, including less domestic violence and greater feelings of safety.
- Higher rates of ‘social participation’ (joining clubs and charities; giving blood; voting).
- Perception of a more positive society, more supportive personal networks, and more trust in the government.[a]
Definition of worker cooperative
Many definitions exist as to what qualifies as a workers' cooperative. CICOPA, the International Organisation of Industrial, Artisanal and Service Producers’ Cooperatives, gives an 8-page definition in their World Declaration on Workers' Cooperatives, which was approved by the International Co-operative Alliance General Assembly in September 2005. Below is the section on the basic characteristics of workers' cooperatives:
- They have the objective of creating and maintaining sustainable jobs and generating wealth, to improve the quality of life of the worker-members, dignify human work, allow workers’ democratic self-management and promote community and local development.
- The free and voluntary membership of their members, in order to contribute with their personal work and economic resources, is conditioned by the existence of workplaces.
- As a general rule, work shall be carried out by the members. This implies that the majority of the workers in a given worker cooperative enterprise are members and vice versa.
- The worker-members’ relation with their cooperative shall be considered as different from that of conventional wage-based labor and to that of autonomous individual work.
- Their internal regulation is formally defined by regimes that are democratically agreed upon and accepted by the worker-members.
- They shall be autonomous and independent, before the State and third parties, in their labor relations and management, and in the usage and management of the means of production.
Workers' cooperatives also follow the Rochdale Principles and values, which are a set of core principles for the operation of cooperatives. They were first set out by the Rochdale Society of Equitable Pioneers in Rochdale, England, in 1844 and have formed the basis for the principles on which co-operatives around the world operate to this day.
Even though there is no universally accepted definition of a workers' cooperative, they can be considered to be businesses that make a product or offer a service to sell for profit where the workers are members or worker-owners. Worker-owners work in the business, govern it and manage it. Unlike with conventional firms, ownership and decision-making power of a worker cooperative should be vested solely with the worker-owners and ultimate authority rests with the worker-owners as a whole. Worker-owners control the resources of the cooperative and the work process, such as wages or hours of work.
As mentioned above, the majority—if not all—of the workers in a given worker cooperative enterprise are worker-owners, although some casual or wage workers may be employed with whom profits and decision making are not necessarily shared equally. Workers also often undergo a trial or screening period (such as three or six months) before being allowed to have full voting rights.
Participation is based on one vote per worker-owner, regardless of the number of shares or equity owned by each worker-owner. Voting rights are not tied to investment or patronage in the workers' co-operative, and only worker-owners can vote on decisions that affect them. In practice, worker co-operatives have to accommodate a range of interests to survive and have experimented with different voice and voting arrangements to accommodate the interests of trade unions, local authorities, those who have invested proportionately more labor, or through attempts to mix individual and collective forms of worker-ownership and control.
As noted by theorists and practitioners alike, the importance of capital should be subordinated to labor in workers' cooperatives. Indeed, Adams et al. see workers' cooperatives as "labor-ist" rather than "capital-ist":
"Labor is the hiring factor, therefore the voting and property rights are assigned to the people who do the work and not to capital, even though the worker-members supply capital through membership fees and retained earnings...Any profit or loss after normal operating expenses is assigned to members on the basis of their labor contribution."
Nevertheless, recent developments in the co-operative movement have started to shift thinking more clearly towards multi-stakeholder perspectives. This has resulted in repeated attempts to develop model rules that differentiate control rights from investment and profit-sharing rights. Workers' co-operatives have often been seen as an alternative or "third way" to the domination of labor by either capital or the state (see below for a comparison). Co-operatives traditionally combine social benefit interests with capitalistic property-right interests. Co-operatives achieve a mix of social and capital purposes by democratically governing distribution questions by and between equal controlling members. Democratic oversight of decisions to equitably distribute assets and other benefits means capital ownership is arranged in a way for social benefit inside the organization. External societal benefit is also encouraged by incorporating the operating-principle of cooperation between co-operatives.
In short, workers' co-operatives are organized to serve the needs of worker-owners by generating benefits (which may or may not be profits) for the worker-owners rather than external investors. This worker-driven orientation makes them fundamentally different from other corporations. Additional cooperative structural characteristics and guiding principles further distinguish them from other business models. For example, worker-owners may not believe that profit maximization is the best or only goal for their co-operative or they may follow the Rochdale Principles. As another example, worker cooperatives’ flattened management structure and more egalitarian ideology often give workers more options and greater freedom in resolving work-place problems.
Profits (or losses) earned by the worker's cooperative are shared by worker-owners. Salaries generally have a low ratio difference which ideally should be "guided by principles of proportionality, external solidarity and internal solidarity" (such as a two to one ratio between lowest and highest earner), and often are equal for all workers. Salaries can be calculated according to skill, seniority or time worked and can be raised or lowered in good times or bad to ensure job security.
Worker cooperatives have a wide variety of internal structures. Worker control can be exercised directly or indirectly by worker-owners. If exercised indirectly, members of representative decision-making bodies (e.g. a Board of Directors) must be elected by the worker-owners (who in turn hire the management) and be subject to removal by the worker-owners. This is a hierarchical structure similar to that of a conventional business, with a board of directors and various grades of manager, with the difference being that the board of directors is elected.
If exercised directly, all members meet regularly to make—and vote on—decisions on how the co-operative is run. Direct workers' cooperatives sometimes use consensus decision-making to make decisions. Direct worker control ensures a formally flat management structure instead of a hierarchical one. This structure is influenced by activist collectives and civic organizations, with all members allowed and expected to play a managerial role. Such structures may be associated with political aims such as anarchism, libertarian socialism, distributism, and participatory economics.
Some workers' cooperatives also practice job rotation or balanced job complexes to overcome inequalities of power as well as to give workers a wider range of experiences and exposure to the different jobs in a workplace so that they are better able to make decisions about the whole workplace. The Mondragon Bookstore & Coffeehouse is a good example of a workplace that does this.
The term 'worker collective' is sometimes used to describe worker cooperatives which are also collectives: that is, managed without hierarchies such as permanent manager roles.
Common ownership is practiced by large numbers of voluntary associations and non-profit organizations as well as implicitly by all public bodies. Most co-operatives have some elements of common ownership, but some parts of their capital may be individually owned.
Common ownership worker co-operatives
The principle of common ownership was codified in UK law in the Industrial Common Ownership Act 1976 which defines a "common ownership enterprise" as:
a body as to which the registrar has given, and has not revoked, a certificate stating that he is satisfied—
- (a) that the body is—
- (i) a company which has no share capital, is limited by guarantee and is a bona fide co-operative society; or
- (ii) a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014; and
- (b) that the articles of association or rules of the body include provisions which secure—
- (i) that only persons who are employed by, or by a subsidiary of, the body may be members of it, that (subject to any provision about qualifications for membership which is from time to time made by the members of the body by reference to age, length of service or other factors of any description which do not discriminate between persons by reference to politics or religion) all such persons may be members of the body and that members have equal voting rights at meetings of the body,
- (ii) that the assets of the body are applied only for the purposes of objects of the body which do not include the making over of assets to any member of the body except for value and except in pursuance of arrangements for sharing the profits of the body among its members, and
- (iii) that, if on the winding up or dissolution of the body any of its assets remain to be disposed of after its liabilities are satisfied, the assets are not distributed among its members but are transferred to such a common ownership enterprise or such a central fund maintained for the benefit of common ownership enterprises as may be determined by the members at or before the time of the winding-up or dissolution or, in so far as the assets are not so transferred, are held for charitable purposes; and
- (c) that the body is controlled by a majority of the people working for the body and of the people working for the subsidiaries, if any, of the body.
- The first provides that the company’s assets shall be applied solely in furtherance of its objectives and may not be divided among the members or trustees.
- The second provides for "altruistic dissolution", an "asset lock", whereby if the enterprise is wound up, remaining assets exceeding liabilities shall not be divided among the members but shall be transferred to another enterprise with similar aims or to charity.
British law has been reluctant to entrench common ownership, insisting that a three-quarters majority of a company’s members, by passing a "special resolution", have the right to amend a company’s memorandum of association. This three-quarters majority above applies to most limited companies, except that it is possible since 2006 to entrench altruistic dissolution in an industrial and provident society registered as a "community benefit society" ("bencom"). This statutory asset lock is not available to societies registered as 'bona fide' co-operatives. However, such entrenchment has also been written into the community interest company (CIC), a new legal status that was introduced in 2005.
Promotion and finance
Section 1.2 of the Industrial Common Ownership Act authorised the Secretary of State for Industry to make grants and loans to bodies "constituted for the purpose of encouraging the development of common ownership enterprises or co-operative enterprises" up to a total of £250,000 over a period of five years, with the proviso that grants should not exceed £30,000 in any year. Grants to promote common ownership enterprises were made to the Industrial Common Ownership Movement and the Scottish Co-operatives Development Committee, while loans were administered through Common Ownership Finance Ltd. This section was repealed in 2004.
In 1978, the UK government set up the national Cooperative Development Agency and in subsequent years common ownership was promoted as a model to create employment, and approximately 100 local authorities in the UK established co-operative development agencies for this purpose.
A very significant early influence on the movement has been the Scott Bader Commonwealth, a composites and specialty polymer plastics manufacturing company in Wellingborough, Northamptonshire, which its owner Ernest Bader gave to the workforce in installments through the late 1950s to early 1960s. Contrary to the popular concept of common ownership organizations as being small organizations, this is a high-technology chemical manufacturer whose turnover has exceeded £100 million per annum since the early 1990s with a workforce of hundreds. In London, Calverts is an example of an established worker co-operative with a policy of pay parity. From the collective movement, one of the most successful ventures is probably Suma Wholefoods in Elland, West Yorkshire.
Political philosophy of workers' cooperatives
The advocacy of workplace democracy, especially with the fullest expression of worker self-management such as within workers' cooperatives, is rooted within several intellectual or political traditions:
- The alleviation of alienation in the workplace, especially in regard to Marxist thought
- The encouragement of participatory or direct democracy
- Radical but popular-democratic strategies for the overthrow of capitalism, for example, several strains of socialist and anarchist thought
- Autonomy and self-control, especially within anarchist thought.
- Cooperating with other worker cooperatives
The idea of achieving economic democracy through worker ownership on a national scale has been argued by economist Tom Winters, who states that "building a cooperative economy is one small step on the journey to reclaiming the wealth we all collectively create."
An economic model: the labor-managed firm
Economists have modeled the worker cooperative as a firm in which labor hires capital, rather than capital hiring labor as in a conventional firm. The classic theoretical contributions of such a "labor managed firm" (LMF) model are due to Benjamin Ward and Jaroslav Vanek.
In the neoclassical version, the objective of the LMF is to maximize not total profit, but rather income per worker. But such a scenario implies "perverse" behavior, such as laying off workers when output price rises so as to divide increased profits among fewer members. Evidence supporting such behavior is lacking, however; a review of the empirical economics literature is found in Bonin, Jones, and Putterman. But alternative behavioral models have been proposed. Peter Law examined LMFs that value employment and income. Nobel Laureate Amartya Sen examined pay according to work and according to need. Nobel Laureate James Meade examined behavior of an "inegalitarian" LMF. Worker cooperatives tend to have a more compressed wage distribution, which can potentially turn off high-ability workers, potentially causing the cooperative to suffer a "brain drain" as they leave to seek higher wages elsewhere, though this effect is less of an issue in a cooperative with a less compressed wage distribution. Hiring managers from capitalist firms can be very difficult because of the lower wages. 
Generally, the evidence indicates that worker cooperatives have higher productivity than conventional companies although this difference may be modest in size. Research indicates that employee ownership can improve company performance, increase firm stability, increase survival rates and reduce layoffs during a crisis, though the effect is small and only an average, meaning it is not necessarily guaranteed to bring benefits. A 2016 metanalysis concluded that employee ownership had a small positive effect on firm performance but no effects on efficiency or growth-related outcomes. However some researchers have argued that while cooperatives can have higher performance in some circumstances, there is generally little difference in performance between cooperatives and conventional firms and that ultimately they are, on average, just as productive as each other. Economists have explained the clustering of worker coops through leagues or "supporting structures" Regions where large clusters of worker cooperatives are found supported by leagues include Mondragón, in the Basque region of Spain, home of Mondragón Cooperative Corporation and in Italy, particularly Emilia-Romagna. Leagues provide various kinds of scale economies to make coops viable. But as leagues need coops to start them the result is a chicken or egg problem that helps explain why few coops get started. Research has suggested that the primary appeal of a cooperative for its members is in security of employment, as workers can actually become decoupled from a cooperative's ostensible worker ownership (due to a mixture of interests and the more individualistic values of more recent workers), making secure employment, particularly in economically precarious times, a major draw. While it has been suggested that cooperatives could be a solution to unemployment, research indicates that this is unlikely to be the case.
Worker cooperatives do not seem to differ in innovation or management capabilities from conventional firms. Workers at cooperatives tend to report higher levels of involvement in their tasks, more positive evaluations of supervisors and greater fairness in their perception of the amount of wages they received and methods of payment. Employment in worker-owned firms tends to be more stable than conventional firms, which fluctuate more. This was attributed to conventional firms fixing wages and having to lay off employees during times of economic difficulty, as workers would not accept a wage cut since they could not guarantee restoration of their original wages at a later date, requiring workers to be laid off instead. In a cooperative, workers can accept a wage cut since they know they can restore it at a later date. Cooperatives have a higher survival rate than traditional firms, which seems to be down to greater employment stability and willingness of workers to make adjustments to allow the firm to survive, rather than other possible explanations like greater productivity or financial strength. Worker cooperatives and conventional firms tend to have similar wages after controlling for other possible variables, with any wage differentiation being due to other characteristics aside from firm organization. If the workers are not satisfied with their work and participation, they can express their disengagement with higher rates of absenteeism. Managers can refrain from proposing controversial, needed changes if they feel that they would be rejected by the workers.
Worker cooperatives by country
See also: List of worker cooperatives
Worker co-operation is well established in most countries in Europe, with the largest movements being in Italy, Spain, and France.
The European Cooperative Statute, which has been in force since 2006, permits worker cooperatives to be created by individuals or corporate bodies in different EU countries. It is a loose framework that devolves much detail to the national legislation of the country in which the European Cooperative Society (ECS) is registered. It permits a minority of shares to be held by 'investor members' which are not employees.
Workers' associations were legalized in 1848 and again in 1864. In 1871, during the Paris Commune, workshops abandoned by their owners were taken over by their workers. In 1884 a chamber of workers' cooperatives was founded. By 1900 France had nearly 250 workers' cooperatives and 500 by 1910. The movement was to rise and fall throughout the twentieth century, with growth in 1936, after the Second World War, between 1978 and 1982 and since 1995.
In 2004 France had 1700 workers' co-operatives, with 36,000 people working in them. The average size of a co-operative was 21 employees. More than 60% of co-operative employees were also members. French workers' co-operatives today include some large organisations such as Chèque Déjeuner and Acome. Other cooperatives whose names are generally known to include the magazines Alternatives économiques and Les Dernières Nouvelles d'Alsace, the driving school ECF CERCA and the toy manufacturer "Moulin Roty".
Pencavel et al. (2006) found that in the north of Italy, the area where the most co-ops are located, employing around over 4% of the labour force, actually paid their workers 14% less than capitalist firms and their wages were more volatile. This was after controlling for various variables, such as schooling, age, gender, occupation, industry, location, firm-size, user cost of capital, fixed costs, and deviations in its real sales. The cooperative movement in Emilia-Romagna, Italy, successfully melds two divergent philosophical currents: Socialism and Catholicism. With more than a century of cooperative history, the region includes more than 8,000 cooperatives.
In the United Kingdom, the Labour Party's enthusiasm for worker cooperatives was at its highest in the 1970s and 1980s, with Tony Benn being a prominent advocate. A small number of such co-operatives were formed during the 1974 Labour Government as worker takeovers following the bankruptcy of a private firm in a desperate attempt to save the jobs at risk. However the change in ownership structure was usually unable to resist the underlying commercial failure. This was true in particular of the best known, the Meriden motor-cycle cooperative in the West Midlands which took over the assets of the ailing Triumph company, although there were instances of successful employee buy-outs of nationalized industries in the period, notably National Express. Meanwhile, many more worker co-operatives were founded as start-up businesses, and by the late 1980s, there were some 2,000 in existence. Since then the number has declined considerably.
Co-operatives are typically registered under either the Companies Act 2006 or the Co-operative and Community Benefit Societies Act 2014 (IPS), though other legal forms are available. A number of model rules have been devised to enable cooperatives to register under both acts; for workers' cooperatives, these rules restrict membership to those who are employed by the workplace. Most workers' co-operatives are incorporated bodies, which limits the liability if the co-operative fails and goes into liquidation.
In Israel, worker cooperatives emerged in the early 20th century alongside the Kibbutz, the collective farming movement. The Kibbutz is a cooperative movement that was founded on Zionist ideas, with the intention to cultivate land and increase the number of Jewish settlements. By the 1970s, the Histadrut (Israel Labour Federation) controlled a significant number of corporations, including Israel’s largest bank—Bank Hapoalim (literally the Worker’s Bank). By the 1990s, the Histadrut had lost its power and influence and many worker cooperative corporations were sold or became public companies. Israel’s biggest public transportation company, Egged, is still a workers cooperative. However, Egged employs workers who are not cooperative members and are paid at a lower wage than worker-members.
In North America
The United States Federation of Worker Cooperatives is the only organization in the U.S. representing worker cooperative interests nationally. Offering a voice on national level, promoting the worker co-operative model, uniting co-ops at conferences and providing a base of support and technical assistance to the worker co-operative community.
The Eastern Conference for Workplace Democracy and Western Worker Co-operative Conference hold conferences every other year for their respective regions. In addition, there are national and regional nonprofit organizations that focus on providing technical support and assistance to both create new worker cooperatives (start-ups) and conversions of existing businesses into worker cooperatives, usually when the business owner is retiring and wants to sell the company. These organizations include Democracy at Work Institute (created by the U.S. Federation of Worker Cooperatives), Cooperative Development Institute, Ohio Employee Ownership Center, Vermont Employee Ownership Center, Project Equity, and others.
Hugo Chávez, in his effort to democratize the workforce, established a lot of worker-owned and operated cooperatives the moment he got into office, in 1998. By 2006, there had been 100,000 worker co-ops set up, which represented around 1.5 million workers. From day one, he made sure to give them cheap start-up credit, technical training, and preferential treatment with government purchases of goods and equipment. Not even a year later, in 1999, he increased the number of co-ops that got tax incentives. Around 16% of the workforce was employed in these co-ops in 2005, but a 2006 census showed that 50% of the co-ops were either functioning improperly or were simply created just to get access to public funds.
In response to the economic crisis in Argentina, many Argentinian workers occupied the premises of bankrupt businesses and began to run them as worker-owned cooperatives. As of 2005, there were roughly 200 worker-owned businesses in Argentina, most of which were started in response to this crisis. The documentary film The Take described this phenomenon.
According to a recent statement by the International Co-operative Alliance, cooperative businesses in Argentina employ nearly 20 million people across a number of business sectors from health care to housing to factory work and beyond. These businesses are increasing in number at a drastic rate, with over 6000 having been created in 2012 alone.
India has a substantial set of laws, rules & regulations for enterprises in the co-operative sector.
The Indian Coffee Houses in India were started by the Coffee Board in the early 1940s, during British rule. In the mid-1950s the Board closed down the Coffee Houses, due to a policy change. The thrown-out workers then took over the branches, under the leadership of A. K. Gopalan and renamed the network as Indian Coffee House. This history is recorded in Coffee Housinte Katha, a book in Malayalam, the mother tongue of A. K. Gopalan. The author of the book is Nadakkal Parameswaran Pillai one of the leaders of the ICH movement. Another very large network of worker coops is Kerala Dinesh Beedi, originally started by exploited beedi rollers.
Comparison with other work organizations
There are significant differences between ends and means between firms where capital controls labor or firms where the state controls both labor and capital. These distinctions are easily seen when measured by essential elements of commerce: purpose, organization, ownership, control, sources of capital, distribution of profits, dividends, operational practices, and tax treatment. The following chart compares the commercial elements of capitalism, state ownership, and cooperative worker-ownership. It is based on US rules and regulations.
|Commercial criteria||For-profit corporations||State-owned enterprises||Worker cooperatives|
|Purpose||a) To earn profit for owners, to increase the value of shares.||a) To provide goods and services, or hold and manage resources for citizens.||a) To maximize net and real worth of all owners.|
|Organization||a) Organized and controlled by investors
b) Incorporated under relevant incorporation laws – varies by country
c) Except for closely held companies anyone may buy stock
d) Stock may be traded in the public market
|a) Organized and controlled by state
b) Chartered by relevant level of government
c) No stock
|a) Organized and controlled by worker-members |
b) Incorporated under relevant incorporation laws – varies by country
c) Only worker-members may own stock, one share per member
d) No public sale of stock
|Ownership||a) Stockholders||a) State||a) Worker members|
|Control||a) By Investors
b) Policies set by stockholders or board of directors.
c) Voting on basis of shares held
d) Proxy voting permitted
|a) By state
b) Policy set by government planners.
|a) By worker-members |
b) Policy set by directors elected by worker-members, or by assembly of worker-members
c) One person, one vote
d) Proxy votes seldom allowed
|Sources of capital||a) Investors, banks, pension funds, the public
b) From profitable subsidiaries or by retaining all or part of the profits
|a) The state||a) By members or by lenders who have no equity or vote |
b) From net earnings, a portion of which are set aside for reinvestment
|Distribution of net margin||a) To stockholders on the basis of the number of shares owned||a) To the State||a) To members after funds are set aside for reserves and allocated to a collective account|
|Capital dividends||a) No limit, amount set by owner or Board of Directors||a) n/a||a) Limited to an interest-like percentage set by policy|
|Operating practices||a) Owners or managers order production schedules and set wages and hours, sometimes with union participation
b) Working conditions determined by labor law and collective bargaining.
|a) Managers order production schedules and set wages and hours, sometimes with union participation
b) Working conditions determined by labor law and collective bargaining
|a) Workers set production schedules either through elected boards and appointed managers or directly through assemblies |
b) Working conditions determined by labor law and assembly of worker-members, or internal dialogue between members and managers.
|Tax treatment||a) Subject to normal corporate taxes||a) n/a||a) Special tax treatment in some jurisdictions|
- Other workers' cooperative thinkers
- Michael Albert
- Hilaire Belloc
- Kevin Carson
- G. K. Chesterton
- G.D.H. Cole
- Robert A. Dahl
- Sam Dolgoff
- Noam Chomsky
- John Stuart Mill
- Gregory Dow
- David Ellerman
- Charles Gide
- David Griffiths
- George Holyoake
- Derek C. Jones
- William King
- Naomi Klein
- Michael Moore
- Robert Owen
- James Meade
- Mario Bunge
- Carole Pateman
- Friedrich Wilhelm Raiffeisen
- The Rochdale Pioneers
- David Schweickart
- José María Arizmendiarrieta
- E. F. Schumacher
- Stephen C. Smith
- Roger Spear
- Leland Stanford
- Jaroslav Vanek
- Beatrice Webb
- Sidney Webb
- William Foote Whyte
- Richard D. Wolff
- Videos about workers' cooperatives
- This particular study only proved correlation between worker cooperatives and better community quality of life, and failed to prove a causal relationship between the two. As per page 5 of the study, "This study does not prove anything—only establishes an association, and there may be unidentified other factors at work."
- Adams, Frank and Gary Hansen (1993) Putting Democracy To Work: A Practical Guide for Starting and Managing Worker-Owned Businesses, Berrett-Koehler Publishers, Inc, San Francisco
- Doug Peacock. "Social strife: The birth of the co-op". Cotton Times, understanding the industrial revolution. p. 2. Archived from the original on 25 July 2008. Retrieved 26 June 2008.
- "The Co-operator". 14 May 2018 – via Google Books.
- David Thompson (July 1994). "Cooperative Principles Then and Now". Co-operative Grocer. National Cooperative Grocers Association, Minneapolis. Archived from the original on 10 October 2007. Retrieved 26 June 2008.
- Candid. "Google.org Awards $1 Million for Jobs Cooperative Consortium". Philanthropy News Digest (PND). Retrieved 17 November 2019.
- Burdín, Gabriel (2014). "Are Worker-Managed Firms More Likely to Fail Than Conventional Enterprises? Evidence from Uruguay". Industrial and Labor Relations Review. 67 (1): 202–238. doi:10.1177/001979391406700108.
- Voinea, Anca (2015). "The path to worker buyouts: Does the UK need its own 'Marcora Law'?". Coop News.
- "Worker Cooperatives Performance and Success Factors". Co-opLaw.org. Retrieved 15 November 2019.
- Olsen, Erik (2013). "The relative survival of worker cooperatives and barriers to their creation". Advances in the Economic Analysis of Participatory and Labor-Managed Firms. 14:83-107: 83–107. doi:10.1108/S0885-3339(2013)0000014005. ISBN 978-1-78190-750-4.
- "The resilience of the cooperative model" (PDF). The International Organisation of Industrial and Services Cooperatives. 2012. Archived (PDF) from the original on 18 July 2020. Alt URL
- Pencavel, John; Pistaferri, Luigi; Schivardi, Fabiano (October 2006). "Wages, Employment, and Capital in Capitalist and Worker-Owned Firms" (PDF). Industrial and Labour Relations Review. 60 (1): 35–36. doi:10.1177/001979390606000102.
- Burdín, Gabriel (2015). "Equality Under Threat by the Talented: Evidence from Worker-Managed Firms". The Economic Journal. 126(594).
- Pérotin, Virginie (2016). "What do we really know about worker co-operatives?" (PDF). uk.coop.
- "Worker Cooperatives: Pathways to Scale". democracycollaborative.org. 20 May 2014. Retrieved 15 November 2019.
- "New report highlights lessons from Mondragon - the world's largest worker co-op". https://www.uk.coop/. 2019. External link in
- Rushe, Dominic (2018). "US bosses now earn 312 times the average worker's wage, figures show". The Guardian.
- Magne, Nathalie (2017). "Wage inequality in workers' cooperatives and conventional firms". European Journal of Comparative Economics. vol. 14(2): 303–329.
- Pencavel, John (1995). "Participation and Productivity: A Comparison of Worker Cooperatives and Conventional Firms in the Plywood Industry" (PDF). Brookings Papers on Economic Activity.
- Sabatini, Fabio (2014). "Do cooperative enterprises create social trust?" (PDF). Small Business Economics. 42 (3): 621–641. doi:10.1007/s11187-013-9494-8.
- Park, Rhokeun (2018). "Responses to job demands: moderating role of worker cooperatives". Employee Relations. 40 (2): 346–361. doi:10.1108/ER-06-2017-0137.
- Berry, Daphne (2013). "Effects of cooperative membership and participation in decision making on job satisfaction of home health aides". Advances in the Economic Analysis of Participatory and Labor-Managed Firms. 14: 3–25. doi:10.1108/S0885-3339(2013)0000014002. ISBN 978-1-78190-750-4.
- "Co-operatives make for a happy place to work". 20 March 2013.
- Castel, Davy; Lemoine, Claude; Durand-Delvigne, Annick (1 November 2011). "Working in Cooperatives and Social Economy: Effects on Job Satisfaction and the Meaning of Work". Perspectives Interdisciplinaires Sur le Travail et la Santé (13–2). doi:10.4000/pistes.2635. ISSN 1481-9384.
- Kaswan, Mark J. (2019). "Happiness theory and worker cooperatives: A critique of the alignment thesis". Journal of Labor and Society. 22 (3): 637–660. doi:10.1111/wusa.12442. ISSN 2471-4607.
- Erdal, David (2012). "Employee Ownership Is Good for Your Health" (PDF). Journal of Cooperative Thought AndPractice. 1: 3–6.
- ICA (2005) World Declaration on Worker Cooperatives, Approved by the ICA General Assembly in Cartagena, Colombia, 23 September 2005 Archived 25 March 2009 at the Wayback Machine.
- Whyte, W. F., Whyte, K. K. (1991) Making Mondragon, New York: ILR Press/Itchaca.
- Paton, R. (1989) Reluctant Entrepreneurs, Milton Keynes: Open University Press
- Holmstrom, M. (1993), The Growth of the New Social Economy in Catalonia, Berg Publishers.
- "Common Cause Foundation". Archived from the original on 3 November 2013. Retrieved 2 May 2015.
- Hoffmann, Elizabeth A. (2012) Co-operative Workplace Dispute Resolution: Organizational Structure, Ownership, and Ideology, United Kingdom: Routledge Publishing. Archived 2 November 2013 at the Wayback Machine
- How to set up a Workers' Co-op Archived 15 December 2013 at the Wayback Machine by Radical Routes
- "About Us - SouthEnd Press". www.southendpress.org. Archived from the original on 8 February 2007.
- "Haymarket Cafe". haymarketcafe.org. Archived from the original on 24 February 2007.
- "Differences Between Worker Cooperatives and Collectives - Cultivate.Coop". cultivate.coop. Archived from the original on 3 August 2017.
- "Common Ownership (Grants and Loans) (Hansard, 7 December 1978)". api.parliament.uk.
- Having failed to become self-supporting, the national agency was wound up in 1989. Cornforth, Chris (1984). The role of local co-operative development agencies in promoting worker co-operatives. Annals of Public and Cooperative Economics, 55(3) pp. 253–280
- Manuela Sykes (1981) Co-operating in Employment Creation. The role of common ownership enterprise in the economic and social regeneration of areas of high unemployment: a request and a challenge to local authority leadership, Leeds: ICOM.
- Winters, Tom (2018) The Cooperative State: The Case for Employee Ownership on a National Scale. p.275. ISBN 978-1726628839,
- Jaroslav Vanek, The General Theory of Labor-Managed Market Economies, Ithaca: Cornell University Press, 1970; Ward, Benjamin, 1958. "The Firm in Illyria: Market Syndicalism," American Economic Review, 48, 4, 1958, 566-89.
- This is known as the Ward effect; see Ward, Benjamin, 1958. "The Firm in Illyria: Market Syndicalism," American Economic Review, 48, 4, 1958, 566-89.
- Bonin, John, Derek C. Jones and Louis Putterman, ‘Theoretical and Empirical Research on the Labor Managed Firm: Will the Twain Ever Meet?’ Journal of Economic Literature, Fall 1993. See also W. Bartlett, J. Cable, S. Estrin, D.C. Jones, and S.C. Smith, "Labor Managed Cooperatives and Private Firms in North Central Italy: An Empirical Comparison," Industrial and Labor Relations Review, 46, 103-118, 1992.
- Law showed that if enough weight were placed on employment LMFs would not behave "perversely"; Peter J. Law, "The Illyrian firm and Fellner's union-management model, "Journal of Economic Studies 4 29-37 (1977). Evidence is consistent with this scenario e.g. for Italian Lega labor-managed firms; see Bonin, Jones and Putterman op cit pp. 1299-1300.
- Amartya Sen, "Labour Allocation in a Cooperative Enterprise," The Review of Economic Studies, Vol. 33, No. 4 (October 1966), pp. 361-371
- Such firms would not exhibit the "Ward effect" even in theory: James Meade, "The Theory of Labour Managed Firms and of Profit Sharing," Economic Journal 82, 325 (Supplement, March 1972): 402-428.
- Burdín, Gabriel. "Equality Under Threat by the Talented: Evidence from Worker‐Managed Firms." The Economic Journal 126, no. 594 (2016): 1372-1403.
- Basterretxea, Imanol; Heras-Saizarbitoria, Iñaki; Lertxundi, Aitziber (20 February 2019). "Can employee ownership and human resource management policies clash in worker cooperatives? Lessons from a defunct cooperative". Human Resource Management. 58 (6): 585–601. doi:10.1002/hrm.21957. hdl:10810/31804. Retrieved 13 September 2019.
- See Chris Doucouliagos, Worker participation and productivity in labor-managed and participatory capitalist firms: A Meta-Analysis," Industrial and Labor Relations Review, Vol. 49, No. 1, October 1995.
- Kruse, Douglas. "Does employee ownership improve performance?." IZA World of Labor (2016).
- O’Boyle, Ernest H., Pankaj C. Patel, and Erik Gonzalez-Mulé. "Employee ownership and firm performance: a meta-analysis." (2016).
- Arando, Saioa, Monica Gago, Derek C. Jones, and Takao Kato. "Efficiency in employee-owned enterprises: An econometric case study of Mondragon." ILR Review 68, no. 2 (2015): 398-425.
- Monteiro, Natalia P., and Odd Rune Straume. "Are Cooperatives More Productive than Investor‐Owned Firms? Cross‐Industry Evidence from Portugal." Annals of Public and Cooperative Economics 89, no. 2 (2018): 377-414.
- Jaroslav Vanek termed such leagues "supporting structures."
- Sumit Joshi and Stephen C. Smith, "Endogenous Formation of Coops and Cooperative Leagues," Journal of Economic Behavior and Organization, 68, 1, October 2008, 217-233. Examples of leagues include Legacoop in Italy Archived 30 November 2009 at the Wayback Machine and Mondragón Cooperative Corporation.
- Heras-Saizarbitoria, Iñaki. "The ties that bind? Exploring the basic principles of worker-owned organizations in practice." Organization 21, no. 5 (2014): 645-665.
- Staber, Udo. "Worker cooperatives and the business cycle: are cooperatives the answer to unemployment?." American journal of economics and sociology 52, no. 2 (1993): 129-143.
- Basterretxea, Imanol, and Ricardo Martínez. "Impact of management and innovation capabilities on performance: Are cooperatives different?." Annals of Public and Cooperative Economics 83, no. 3 (2012): 357-381.
- Frohlich, Norman, John Godard, Joe A. Oppenheimer, and Frederick A. Starke. "Employee versus conventionally‐owned and controlled firms: an experimental analysis." Managerial and Decision Economics 19, no. 4‐5 (1998): 311-326.
- Albanese, Marina, Cecilia Navarra, and Ermanno C. Tortia. "Employer moral hazard and wage rigidity. The case of worker-owned and investor-owned firms." International Review of Law and Economics 43 (2015): 227-237.
- Park, Rhokeun, Douglas Kruse, and James Sesil. "Does employee ownership enhance firm survival?." In Employee Participation, Firm Performance and Survival, pp. 3-33. Emerald Group Publishing Limited, 2004.
- Bailly, Franck, Karine Chapelle, and Lionel Prouteau. "Wage differentials between conventional firms and non-worker cooperatives: Analysis of evidence from France." Competition & Change 21, no. 4 (2017): 321-341.
- "emiliaromagna". Archived from the original on 9 October 2014. Retrieved 2 May 2015.
- "Smith, Julia. BC Institute for Co-operative Studies "The Most Famous Worker Co-operative of All…Mondragon"". uvic.ca. Archived from the original on 1 May 2007.
- Ridley-Duff, R. J. (2007) "Communitarian Perspectives on Social Enterprise", Corporate Governance: An International Review, 15(2):382-392.
- Spear, R. (1999) "Employee-Owned UK Bus Companies", Economic and Industrial Democracy, 20: 253-268.
- "Home - Employee Ownership Association". Employee Ownership Association. Archived from the original on 8 May 2015. Retrieved 2 May 2015.
- United States Federation of Worker Cooperatives Archived 24 February 2015 at the Wayback Machine
- "Home". usworker.coop. 4 March 2017. Archived from the original on 4 April 2013.
- "Western Worker Cooperative Conference". Archived from the original on 17 January 2012. Retrieved 28 February 2013.
- Moskowitz, Peter (24 April 2017). "Meet the Radical Workers' Cooperative Growing in the Heart of the Deep South". The Nation. ISSN 0027-8378. Retrieved 20 December 2018.
- Democracy At Work, Economic Update: Cooperation Jackson: A Closer Look, retrieved 20 December 2018
- "Canadian Worker Co-op Federation "Members"". canadianworker.coop. Archived from the original on 15 August 2006.
- "Ontario Worker Co-op Federation "What is a Worker Co-op?"". ontarioworker.coop. Archived from the original on 2 March 2007.
- "Canadian Worker Co-op Federation "What is a Worker Co-op?"". canadianworker.coop. Archived from the original on 8 February 2007.
- "Zapatista coffee". Archived from the original on 6 January 2015. Retrieved 2 May 2015.
- Bowman, Betsy; Stone, Bob. "Venezuela's Cooperative Revolution". Dollar and Sense: Real World Economics. Dollar and Sense.
- Wilpert, Gregory (2007). Changing Venezuela by taking power: The history and policies of the Chávez government. Verso Books. p. 77. ISBN 9781844675524.
- Benjamin Dangl, 'Occupy, Resist, Produce: Worker Cooperatives in Argentina' Archived 29 October 2013 at the Wayback Machine
- International Co-operative Alliance. "Argentinas Co-Operative Sector Continues Grow". Archived from the original on 29 October 2013. Retrieved 28 October 2013.
- See T.M. Thomas Isaac, Richard W. Franke, and Pyaralal Raghavan, "Democracy at Work in an Indian Industrial Cooperative. The Story of Kerala Dinesh Beedi," Ithaca: Cornell University Press, 1998.