Cooperatives and the future of work in Ireland

January 6, 2020

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by Cian McMahon, Saint Mary’s University

The Carnegie UK Trust-TASC Ensuring Good Future Jobs essay collection describes many of the key challenges faced by workers in Ireland today, and proposes a series of policy and practice changes to ensure good future jobs. First published on 28 November, as a coordinated response to the Irish Government’s first Future Jobs Strategy, this blog series showcases the contributions by key social partners in Ireland to the collection.

Recent debates surrounding the transformation of work have tended to emphasise the adverse employment effects of economic, technological, environmental, and demographic change. In the first instance, globalisation and deindustrialisation have contributed towards growing economic inequality by weakening workers’ bargaining power. Likewise, automation and advances in information and communication technologies (ICTs) threaten to further displace and disperse workers; while global warming and environmental degradation foreshadow job losses relating to resource-intensive industries and extreme weather. Finally, a growing and ageing population is set to increase pressures on both available resources and active workers.

In seeking a progressive, pro-worker response to these challenges, one area that is often overlooked is, ironically enough, the internal organisation of the workplace. This concerns how the decision-making process is governed, and in whose interests – it is fundamentally a question of the distribution of workplace power. This short essay contends that the cooperative model has an important role to play in reconciling twenty-first century work with economic, social, and environmental sustainability (Schwettmann, 2019; CICOPA, 2018; Webb, 2016). We explore how cooperatives can improve working conditions and serve as a standard for integrating economic activity with collective wellbeing and quality of life. We also discuss the potential to expand the cooperative sector in Ireland (McCarthy, Briscoe and Ward, 2010).

At the outset, it needs to be recognised that much recent commentary on the future of work has served to distract from the most pressing tasks facing the global and Irish labour movements. In particular, scare stories in the business press concerning the “rise of the robots” and the “end of work” lack a robust empirical basis, and seem more intended to cow workers into accepting precarious conditions of employment. As the Washington-based Economic Policy Institute (EPI) concluded in their recent assessment: “There clearly are serious problems in the labour market that have suppressed job and wage growth for far too long; but these problems have their roots in intentional policy decisions regarding globalization, collective bargaining, labour standards, and unemployment levels, not technology” (Mishel and Bivens, 2017; Upchurch, 2018).

But while stronger trade union and political organisation is the first port of call for workers in such circumstances, the potential of cooperatives to further democratise the workplace shouldn’t be discounted. Cooperatives might even begin to form the basis of a transition to a more sustainable economic system. Regarding the overlapping trends outlined at the beginning of this piece, Jürgen Schwettmann writes in a recent volume bringing together cooperative researchers from the International Co-operative Alliance (ICA) and the International Labour Organization (ILO) that:

We must come to the conclusion that the current economic system is not sustainable. Yesterday, growth was the miracle recipe to cure all social and economic ills; today, growth has reached its limits because the natural resources that fuelled it in the past are disappearing. Capitalism has reached its peak. The world needs to reorganize national economies and the global economy to achieve social, economic and environmental sustainability” (Schwettmann, 2019).

So what is it about cooperatives that makes them any more potentially compatible with “a post-growth society” than conventional capitalist firms? Can we also imagine how they might provide better quality employment and conditions for their workers? For a start, cooperatives are primarily motivated by the needs of their members, rather than by profit (Schwettmann, 2019). The latter is only the means to an end, not the end in itself. The ICA defines a cooperative as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterpris”’ – one member, one vote (ICA, 2019). As such, cooperative governance principles derive from “values of self-help, self-responsibility, democracy, equality, equity, and solidarity’, as well as ‘the ethical values of honesty, openness, social responsibility and caring for others” (ICA, 2019). Hence, “genuine cooperatives are people-centred, they promote equality and sustainability, they show concern for the community, and they look at the longer term” (Schwettmann, 2019).

That said, cooperatives come in many different forms: consumer cooperatives, whose members are the consumers of various commodities; small business (producer) co-operatives, whose members are small and medium businesses; community cooperatives, whose members are community representatives; worker cooperatives, whose members are those who work within the enterprise; and solidarity (multi-stakeholder) cooperatives, whose members are a combination of the various classes already mentioned (Webb and Novković, 2014). From a sustainable work perspective, we argue that worker membership of cooperatives is a necessary requirement if they are to be considered genuine cooperatives, adhering to the movement’s values and history as self-help organisations of working people (International Labour Organisation, 2014). Therefore, we advocate worker cooperatives and worker-inclusive solidarity cooperatives as a sustainable alternative to business as usual (Novković, 2019; CICOPA, 2014).

Across the world, cooperatives are the most wide-spread enterprise alternative to conventional capitalist and state enterprises. Yet, while the impact of cooperatives of all types is substantial – over 1.2 billion members, employing just shy of 280 million people (nearly 10 percent of the world’s employed population) and benefiting some three billion people (about half the world’s population) – the scope of worker cooperatives is comparatively small, albeit more significant than is usually thought (ICA, 2017; CICOPA, 2017). The International Organisation of Industrial and Service Cooperatives (CICOPA) estimates that there are 11.1 million cooperative worker-members worldwide (CICOPA, 2017). Although worker coops account for a very small proportion of all firms in most countries, they tend to be concentrated in particular countries (e.g. Italy and Spain) – and even particular regions within those countries (e.g. Emilia-Romagna and the Basque Country) – that have instituted a supportive cooperative development ecosystem (Bateman, 2013).

Cross-country empirical evidence has mounted in recent decades to indicate that worker cooperatives are a viable economic alternative to conventional capitalist firms; in terms of their relative size, capital intensity, survival rates, employment stability, productivity, and profit retention. In fact, on average, worker coops generally outperform their rivals according to these measures, owing to greater organisational efficiency and worker-controlled flexibility (Pérotin, 2016). And while less research exists on social aspects of worker coops, sociologists of work are showing increasing interest. One prominent study from the Alternative Organisations and Transformative Practices Research Cluster at Middlesex University suggests that worker coops adhering to the movement’s values and principles greatly improve the lived experience of workers both within and beyond their workplaces (Ozarow and Croucher, 2014). This extensive investigation of the worker-recovered companies (WRCs) movement in Argentina, which became widespread following the 2001 crisis,[1] and where workers who were owed unpaid wages occupied bankrupt firms and resumed production under workers’ control, found that:

The WRCs’ social goals have been largely upheld. They have overwhelmingly prioritised maintaining and creating sources of dignified work, higher wages or social projects for local communities over profit maximisation…
…Survival is a clear precondition. Despite enormous legal, logistical and commercial pressures, tensions with unions and attempts at co-optation from the state, the WRCs have almost without exception survived and flourished since 2001. This is consistent with European experience, where workers’ cooperatives were up to three times more likely to survive the economic crisis in Italy between 2007 and 2010 than other forms of enterprise, and 50 per cent more able to do so in France in 2012 (CECOP, 2013: 11–12). The model is clearly viable
” (Ozarow and Croucher, 2014).

Cooperatives of all types are relatively widespread in Ireland: “[W]ell over half of the Irish population are members of a co-operative, many of whom may not realise they are members and part-owners of the business which serves them” (McCarthy et al., 2010). There are about 1,500 cooperatives in Ireland altogether. Credit unions dominate the Irish coop sector, though agricultural coops also have a strong history (Doyle, 2019). “Workers’ co-operatives are less common in Ireland than elsewhere, but this business model is attracting increasing interest as a useful means of job creation and small business development” (McCarthy et al., 2010). The last quantitative study of the Irish worker coop sector found that there is around 20 still in operation, employing 135 workers – a significant decline from the 82 worker coops, employing 591 workers, identified by the now-defunct Cooperative Development Unit (CDU) in 1998 (Gavin et al., 2014; McMahon, 2019). The present weakness of the Irish worker coop sector relative to other European countries can be attributed to the lack of any comparable institutional support structure (Worker Cooperative Network, 2012), which itself reflects the relative weakness of the Irish labour movement and the absence of a strong cooperativist political culture in Ireland (McMahon, 2019). The worker-inclusive solidarity cooperative form is all but unknown in Ireland (McCarthy et al., 2010).

Coming back to the future (and present) of work,[2] worker-inclusive cooperatives have the potential to help address many of the challenges now facing us. Platform cooperatives allow workers to collectively appropriate and initiate technological advance for their mutual benefit, such that ‘technological innovation and control by a few can be de-coupled’ (CICOPA, 2018). Furthermore, the requirements of worker creativity and flexibility – or “economies of scope” – at the technological frontier of modern-day production mean that “the cooperative form has a comparative advantage because decentralized and democratic management is often conductive to their delivery” (CICOPA, 2018).

Worker-inclusive cooperatives also can help to tackle Ireland’s high incidence of low pay (Sweeney, 2019) by reducing intra-firm pay inequality: “Executive and non-executive pay differentials are much narrower in worker co-operatives than other firms” (Pérotin, 2016). Take the famous Mondragon Cooperative Corporation (MCC), for example, where the salary ratio between the lowest and highest paid worker is 1:9, as compared to 1:129 for the average FTSE 100 company (Hodgson, 2017). MCC is “the largest industrial workers’ co-operative group in the world, the largest business group in the Basque Country, and the tenth largest in Spain” (Hodgson, 2017). Meanwhile, back home, “It would take 230 years for the average worker to equal the 2017 earnings of one of Ireland’s top paid CEOs” (Rigney and Sweeney, 2019).

While the cooperative values and operational principles appear consistent with a post-growth environmental ethic, expecting coops to address all of the challenges of globalisation, demographic change, and environmental degradation may well be asking too much of them. But even here the coop model potentially holds the seeds of an answer. This requires shifting from a focus on market competition between cooperatives to a focus on cooperation among cooperatives via coop networking, federation building, and democratic planning. The cooperative form is also probably better suited to small and medium enterprise, rather than macro-level strategic activities where state enterprise takes precedence. But again, state enterprise may benefit greatly from cooperative governance structures, such as autonomous work groups, works councils, or board-level worker representation (Harnecker, 2013; Novković and Veltmeyer, 2018).

The Irish labour movement should take inspiration from successful Irish worker cooperatives like the Quay Co-op in Cork city. With its roots in the social movements, Quay Co-op has thrived as an environmental and social justice worker coop since 1985 [3]. Likewise, Trademark Belfast, the anti-sectarian unit of the Irish Congress of Trade Unions (ICTU),[4] has incubated a number of successful worker coop initiatives in recent years (Nolan, Perrin-Massebiaux, and Gorman, 2013). The first such initiative was Belfast Cleaning Society, established in 2012 as an ‘interface worker coop’, bringing together working class women from across the sectarian divide, to counteract precarious working conditions in the contract cleaning industry. Belfast Cleaning Society are a proud living wage employer: “We don’t cut corners, we clean them[5].

A reasonable strategic aspiration might be to initially aim to grow the Irish coop sector to something resembling that of Emilia-Romagna. The Italian region has a population roughly equal to that of the South of Ireland, but with “more than 40% of its GDP generated in the cooperative sector” and one of the very highest living standards in Europe (Bateman, 2013). The ultimate aspiration should be towards what James Connolly called an Irish “Cooperative Commonwealth” (Connolly, 1915). The benefits of the cooperative work model, in terms of advancing sustainability within the workplace and wider society, means that we should aim for nothing less.

 

[1] ‘The best and most up-to date figures put the number of [worker-recovered enterprises in Argentina] at 314, with a total workforce of 13,462, continuing a trend of strong growth since 2001’ (Larrabure 2017, p. 3).

[2] As Siôn Whellens points out, ‘In reality, the “Future of Work” is already the “Present of Work” for hundreds of millions of people. We see the acceleration in mass migrations from the countryside to the cities, from the poor south to the richer north, and of people fleeing from areas devastated by war, economic and environmental collapse. In the richest countries, it is more like “The Past of Work” as workers’ rights, incomes and organisation have been eroded by thirty years of ideologically-driven political innovation, the privatisation of public goods, removal of workers’ rights, and erosion of social benefits such as health and social care. As technology, wealth distribution and modes of work follow the social politics, the 21st century looks more and more like the 19th.’ (CICOPA, 2018)

[3] See http://www.quaycoop.com/about-us/.

[4] See http://www.trademarkbelfast.com/.

[5] See http://belfastcleaningsociety.com/