Supporting the growth of co-operatives trough legislation

25 Jun 2013

In a special series of articles, eDigest is examining the Blueprint for a Co-operative Decade to see how each theme is currently being supported by co-operatives . . .

One of the strongest arguments put forward to support the growth and development of co-operatives is that the business model should be on a level playing field compared with other types of business.

At the launch of the International Year of Co-operatives at the United Nations, New York, in October 2011, Dame Pauline Green, ICA President, told representatives from around the world: “Member-owned co-operatives are a serious business model – with scale. And so, co-operatives are asking that the specific and unique legal and financial framework of a co-operative is fully acknowledged and recognised in public policy and regulation.”

She added: “Co-operatives are asking that there should be a greater diversification of the global economy, to ensure a level playing field for the member-owned model of business.”

The Blueprint argues that to enable co-operatives to grow then certain barriers, generally contained within national laws, need to be removed. It added that financial, legal and regulatory infrastructures are designed for the greater majority of businesses which are profit-oriented, which are inappropriate for co-operatives.

Guidelines already exist for governments in the form of the International Labour Organization’s Promotion of Co-operatives Recommendation (193), which says nations should provide a supportive policy and legal framework guided by co-operative principles. It adds that governments should promote co-operatives for a range of purposes including the creation of employment and income generating activities.

In 2009, the Indian government amended its constitution through its Constitution (111th) Bill, which made the right to form co-operative societies a fundamental right. Last year, the United Kingdom government said it would consolidate co-operative legislation, while new legislation has been set up in Brazil, Cuba and Peru.

In order to forward the goal for supportive legal frameworks, the Blueprint outlines a number of actions including providing assistance for regulators through a support network; and by providing a study of how other countries adopt co-operative laws for policy-makers.

Recent initiatives by the ICA in this area include the ability for government agencies and regulators to become associate members of the ICA, which will eventually form part of a forum for the input and exchange of ideas. Also a network of Global Co-operative Parliamentarians, based on an existing Latin America Parliamentarian Association, is being built to identify legislators sympathetic to co-operative principles.

• To find out more about this chapter, download the Blueprint for a Co-operative Decade: http://ica.coop/en/blueprint

EU recognises co-op contribution to overcoming the crisis

The European Parliament’s Committee on Industry, Research and Energy (ITRE) adopted a draft report that highlights the contribution of co-operatives to overcoming the crisis.
The report, drafted by Italian MEP Patrizia Toia, calls on the European Commission to create a Directorate focused on co-operatives and social economy organisation. It also urges EU member states to review their legislation, following the ILO’s guidelines from Recommendation 193.
“The goal is an official recognition, at European level, of the validity of the co-operative model. It is important to remark the fact that, at a time like this, characterised by severe economic crisis, co-operative enterprises are those that are adapting better,” said Patrizia Toia.
The Italian MEP also said that creating a Directorate focused on co-operatives and social enterprises, as well as a dedicated unit within the DG Enterprise and Industry, could stimulate the transfer of business to employees.
The governance model provides co-operative enterprises with the ability to exercise democratic control over common ownership, explained Ms Toia. She added that due to the way in which the accumulated capital, co-operatives were likely to face crisis better.
A key challenge for European co-operatives, says Ms Toia, will be to maintain innovation without losing their identity.
“We live in a society characterised by great changes that are revolutionising the way we act and think. Co-operatives must be able to be competitive whilst maintaining their specific nature of companies managed in a democratic way by their members.”
The report reveals that in spite of the severe economic climate, co-operatives have continued to play an important role in boosting economic growth across the EU. More than 160,000 co-operatives owned by 123 million people provide 5.4 million jobs.
“Co-operatives contribute around five per cent on average to member states' GDP. These numbers demonstrate the importance of co-operatives within the EU and their input into the growth of Europe,” said Patrizia Toia.
She added that worker co-operatives across Europe could provide a viable alternative to bankruptcy, particularly in countries like Greece and Spain. The report calls on the Commission to draw a comprehensive survey comparing national laws that promote the conversion of businesses into co-operatives, particularly in cases of take-overs, bankruptcies.
She gave the example of Italy, France, Belgium or Denmark, where co-operative enterprises are thriving.
Photo: Patrizia Toia presenting the report at the Second Co-operative Banks Day organised by the European Association of Co-operative Banks on 15 May.

UK co-operatives grow turnover and membership

6 Jun 2013

Co-operatives in the UK have outpaced the growth of its country by more than ten times.

In 2012, British co-operatives collectively reported a £37 billion turnover — an increase of 3.3 per cent on the previous year and 11 times faster compared to the UK GDP of 0.3 per cent. This figure has also climbed by 20 per cent since the start of the recession in 2008.

These figures will form a part of the International Co-operative Alliance’s World Co-operative Monitor, which is due to be released in November. Globally, the overall UK economy is ranked 15th, according to GDP, while in terms of the co-operative economy, the country is ranked eighth according to the Monitor.

Two of the top ten consumer and retail co-operatives in the world are British, which between them account for 15 per cent of the top ten global co-operative retail turnover

Released by national body, Co-operatives UK, the annual ranking of British co-operatives also revealed an all time high of co-operative memberships, with 15.4 million being reported last year  an increase of 36 per cent since 2008 and 13.6 per cent on the previous year.

The number of co-operative businesses in the UK has also risen by 28 per cent since 2008 and four per cent in the past twelve months.

Ed Mayo, Secretary General of Co-operatives UK and Chair of the ICA’s Communications Commitee, said: “A record number of people in the UK are now members of co-operatives. They are economically active within those co-operatives and have a big stake in making them a success. This is why we can still see growth in the co-operative economy – despite the very tough economic trading conditions. More and more Briton’s are turning to co-operatives, taking greater control of their own destiny and growing their own way out of recession.”

The report outlines how local shops, owned and run by members of communities across the UK, had a combined turnover of £49m in 2012 with 51,510 members and how, in the past 12 months, more than 8,000 members have raised £9m through community share offers to register 35 new co-operative community businesses in the UK.

Added Mr Mayo: “People are taking action, they want a say in what matters to them.  In this time of limited economic growth and social challenges, the appetite is to seek to achieve independent control, to run a fair organisation that benefits all and to place increasing importance on planning for the longer term.”