1 / 22

Worker Co-operatives

Worker Co-operatives. Marina Albanese (University of Naples Federico II) Anthony Jensen (University of Sydney) AUSTRALIA-ITALY COMPARATIVE CO-OPERATIVE SYMPOSIUM 25th Jul 2013  - 26th Jul 2013 University of Sydney. Ideal types of self-managed firm.

landis
Download Presentation

Worker Co-operatives

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Worker Co-operatives Marina Albanese (University of Naples Federico II) Anthony Jensen (University of Sydney) AUSTRALIA-ITALY COMPARATIVE CO-OPERATIVE SYMPOSIUM 25th Jul 2013  - 26th Jul 2013 University of Sydney

  2. Ideal types of self-managed firm • the firm with the social (state) ownership of capital and exclusively internal financing: Worker managed firm (WMF) • the firm in which capital is exclusively financed by borrowing (Vanek, 1977) or which is taken entirely on lease: Labour managed firm (LMF) • the firm in Western countries where the ownership of capital belongs to partners and there is a possibility of both internal and external financing

  3. Economic literature on workers cooperatives • Underinvestment - WMF Furubotn and Pejovich (1970) • Financing - LMF Schlicht and von Weizsacker (1977) • Monitoring Alchian and Demsetz (1972) • Efficiency and governance Hansmann (1996)

  4. Entry parallels UK but 100% exits in Australia • 1852 – 1872: Goulburn Gaol, Age Newspaper • 1872 – 1923 : 600 cooperatives, Australian Cooperative Commonwealth-Paraguay, Miners Coops, Coop Legislation 1923 excludes work cops • 1923 – 1970 Christian Socialists: Fletcher Jones and Staff (3,500 employees) plus another 15 buyouts. All degenerated or failed. • 1970 – 2003 :Pluralist NSW Worker Coop Programme with buyout fund triggers 30 buyouts.Nymboidia Mine. Main attempt was on 500 worker Phillips factory Taken over by Radical Left – Worker Enterprise Corporation. 1992 Legislation includes worker coops. Closed by Unitarist Liberal Govt. 2 initial worker coops formed. Trade unions – Burkes Dept Store & Solo Perol. All LMFs in this period degenerated or were sold goal in displacement. • 2003 – 2013 – in 2009 Aust Govt funds pilot Australian Employee Buyout Centre for 18 months. Confirms potential but lacked Financial Institution.. Missed opportunity. Boardroom struggles. 1 owner in transition to employees.

  5. Case Studies –1973 - 2003

  6. Comparison Italy Australia • 1970 to 2012 • Italy and Australia were defined by the different results concering entry and exit phenomenon. • Italy due to its cooperative architecture and historical tradition continued to form cooperative with very low failure. • Australia experienced an important surge in cooperative formation but without a worker cooperative tratdition exit was the definingissue.

  7. Historicalhighlights • Italy • Produzione & Lavoro Coops , the navying co-ops. Their workers were politically radicalized and were known as the ‘red cooperatives’. • Consumer and producer cooperatives and savings banks as well as extending Catholic influence in local government: ‘white cooperatives’. • Municipal government perceived that contracts to cooperatives were an insurance against strikes and disputes. • The co-operative movement although outside the socialist sphere, “had established strong roots and provided an important alternative source of collectivist ideas and values” • In 1886 the cooperatives feel the need to organize at the national level, founding the National League of Cooperatives (Legacoop). In 1898, for dissension within the organization, cooperatives Catholic-inspired stand apart in 1919 and will give life to their national organization, the General Confederation of Italian Cooperatives (Confcooperative).

  8. Legal highlights • Italy • The importance of co-operative society at constitutional level happens on 1 January 1948. • In 1947, the new parliament, however, had already approved the Decree 1577/47 ("Law Basevi) • The Law 59/1992 also allowed to external funders to become members of cooperatives. • Civil Code (Legislative Decree 6/2003) sets out criteria for the definition of prevalently mutual cooperatives. The definition of the prevalence for worker cooperatives is defined as: "the cost of labor of members is greater than fifty percent of the total labor costs".

  9. General data on Italiancooperatives Censues data (1951-2011) • a) The number of cooperatives as a percentage of the total number of companies increased from 0.7% in 1951 to 1.2% in 2001. In 2011 the number of cooperatives was 1,4%. • b) The number of workers in cooperative companies as a percentage of the total number of workers in all companies rose from 2% in 1951 to 5.6% , to 6,6 % in 2011 . In the period 2001-2011 the rate of growth of workers in cooperatives is 22,7 %.

  10. Italian worker cooperatives • We have considered the following sectors of activity as sectors in which worker cooperatives are present: • Construction • Manufacturing activities, not including agri-food companies • Services, not including financial and property activities, but including social cooperatives.

  11. Number of worker cooperatives and workers in them 1971 – 2001 Source: Zanotti 2011

  12. Incidence of cooperatives in relation to all companies, by their number and number of workers for the period 1971 – 2001 Source: Zanotti 2011

  13. Economic trends 2007- 2011 Source: based on Legacoop notes

  14. Sectorial / dimentional analysis • Small cooperatives Production volume for the period 2007-2011 increases significantly in the Social sector (+36%), Services (+8%), while decreasing in Industry. We have a clear reduction in the profitability of the small cooperatives, in all sectors but to varying degrees. • Medium cooperatives Positive trend as far as production volume (+20.5%) and employment (+18.8%) are concerned. Instead,overall profitability sharply declined in the period 2007-2011, both in terms of operating income and net equity. From the sector trends, there emerge important differences in the growth rates among the different sectors studied. In terms of production volume for the period under study, the social coops (+42%) show a sounder growth compared to the average (+20.5%), followed by the services sector (+21%). Instead, the industrial sector, numbering 88 cooperatives, registered a decline in P.V. (-2.7%) for the five year period. • Large cooperatives Large cooperatives show an increase employment in the period 2007-2011. This increase, even though different among the various sectors, reveals, for all, an increase in 2011 over 2010. However, corresponding to this increase we see a decline in their overall earnings. The net profits record marked decreases compared to the values registered in the previous years, both in absolute values and in PV percentages.

  15. Italian worker cooperatives during the crisis Large cooperatives

  16. Large cooperatives - crisis • In the manufacturing industry, even if with fluctuating trends, employment appears stable. • For the cooperatives in the services sector (excluding retailing), the rate of growth is quite high (+25.9%). Instead, in this sector, increases in employment appear to be much lower. In fact, compared to 2007, the number of employees increased by only 1%.

  17. Italian worker cooperatives during the crisis Medium cooperatives Source: Legacoop notes 2012

  18. Medium cooperatives - crisis • In the years of the crisis, the cooperatives registered overall increases in production and employment, but they decrease in operating income and net profits. From the data, we can see that the medium cooperatives have witnessed a growth, in the period 2007-2010, both in production (+11.5%) and employment (+14.3%). The production volume increased at different rates with a decline in 2009 (- 2.5%),while employment showed a steady increase, even though the rate was higher in 2008 and 2009. • Concerning the sectors, quite significant differences emerge in growth rates. The social cooperatives increased the most in terms of production (+33.8%) and employment(+18.6%), instead, for the industrial coops (manufacturing and construction) the increase in both variables is very limited. • The role of the members has been very important regarding the increases in company capital (+22.7%) and net equity (+32.7%), both higher than that highlighted in the Mediobanca study on medium-sized companies ( +9.2% and +28.4% respectively). • the company capital of the medium Italian cooperatives increased over the 4 year period by almost 23%9 participation contributed to capitalizing the cooperatives. This figure is important given that, for the medium Italian companies, the increase in company capital from 2007-2010 was 9.2%.

  19. Trends New Companies in 2012 Source: based on Unioncamere-InfoCamere, Movimprese (2013)

  20. Trends • In the period 2007-2011, we see that a considerable number of new cooperatives were set up. However, it should be taken into account that the company enrolment numbers also include subjects which, even though legally new, could actually result from extraordinary operations. New coops (2007-2011) by sector and legal status (01/09/2012) Source: Legacoop notes 2012

  21. Trends conclusions • The collected data would appear to confirm the hypothesis that cooperative companies are better able to withstand the crisis than limited companies. • The main form of entity used by Italian cooperatives in order to favor processes of growth is the consortium, a cooperative company composed of cooperatives. The Italian legislator introduced law 127/1971 in order to regulate the question of cooperative consortia by placing two other forms of consortia (Consortia of cooperative companies and Consortia of cooperative companies for the coordination of production and trade). This provision is at the basis of the explosion of cooperative at the upper level has given a substantial boost to the re-launching of the entire cooperative movement by helping to save many cooperatives that, up until that point, had found themselves isolated on the market, from disappearing altogether.

  22. GENERAL CONCLUSIONS UNDERINVESTMENT • Limited MONITORING AND EFFICIENCY • Not a real problem FINANCING (Italy) • The difficulties experienced in accessing venture capital are easy to understandand related to: • a) An ownership system that accords limited rights to its members regarding the availability of the value of the company; • b) The profit distribution system, which gives priority to the granting of rebates and the allocation of the profits to the indivisible funds, rather than to the payment of dividends. • c) The subordination of the capital to the rights of the cooperative members would appear to represent an insurmountable obstacle for cooperatives that wish to directly access venture capital markets. For a long time, Italian cooperatives have used their indivisible reserves as the main instrument to finance their own growth. In Italy the members may also participate in the financing of their own cooperative through the provision of voluntary loans (social lending) that are regulated by specific legislation.

More Related