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Worker cooperative

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A worker cooperative is a business owned and managed by its employees. In these organizations, the workers are also the owners. This structure allows for democratic decision-making within the firm. In some models, every worker-owner participates directly in making choices. In other models, workers elect a management team through a voting process. Each worker-owner typically holds exactly one vote to ensure equality. These businesses are also known as labor-managed firms.

Worker cooperative states
Worker cooperative states

The mechanism of a worker cooperative relies on collective ownership and shared governance. Instead of a single owner or group of investors directing the company, the workers hold the power. Management is often achieved through an egalitarian system. This means power is spread out rather than concentrated at the top. In some modern systems, members receive par value shares. These shares serve as symbols of their equal voting rights. Often, a member may only own one share to maintain this sense of equality. Once a person completes a period of probation, they gain the power to manage the cooperative. This system is sometimes called common ownership in the United Kingdom.

There are several different types of cooperatives. Producer cooperatives are a specific type often found in the United Kingdom. They focus on the workers who produce goods or services. These are distinct from consumer cooperatives, which are owned by the people who buy the products. There are also agricultural cooperatives that serve farmers. The movement has seen various waves of development. A "new wave" of worker cooperatives emerged in Britain during the mid-1970s. This group joined the Industrial Common Ownership Movement, or ICOM. This sector grew to include around 2,000 different enterprises at its peak.

The history of this movement began as a reaction to the Industrial Revolution. During this time, many workers faced poverty and job insecurity. The first worker-owned and managed firm appeared in England in 1760. Thinkers like Robert Owen and Charles Fourier provided the philosophical foundation. Owen is often called the father of the cooperative movement. He successfully improved working conditions in the cotton mills of New Lanark, Scotland. He also attempted to create "villages of co-operation" in Orbiston, Scotland, and New Harmony, Indiana.

New harmony vision
New harmony vision

While these specific communities failed, they inspired others. In 1828, Dr. William King helped make these ideas more practical through his periodical, The Co-operator.

A major turning point occurred in 1844 with the Rochdale Society of Equitable Pioneers. This group of skilled workers in England wanted to sell food they could actually afford. They pooled 28 pounds of capital to start their business.

Rochdale Society of Equitable Pioneers 1865 photograph
Rochdale Society of Equitable Pioneers 1865 photograph

On 21 December 1844, they opened a store with items like flour, sugar, and butter. They established the "Rochdale Principles" to guide their operations. These rules became the basis for the modern global cooperative movement. Today, the international organization representing these groups is called CICOPA.

Worker cooperatives show unique patterns regarding productivity and stability. Research shows they are often more resilient during economic crises. For example, in France, worker cooperatives had an 80–90% survival rate after three years. During the 2008 economic crisis, employment in French cooperatives actually increased by 4.2%. In contrast, employment in other businesses fell by 0.7%. In Italy, cooperatives that form when a business is for sale have an 87% three-year survival rate. This is much higher than the 48% survival rate for all Italian businesses.

Newcastlebridge
Newcastlebridge

However, there are trade-offs in the cooperative model. Cooperatives are often less profitable and less competitive than investor-owned firms. They tend to be more risk-averse, which helps them survive but may slow their growth. They also tend to be less flexible with their workforce. Instead of laying off staff during hard times, they often choose to adjust wages. Because of this, cooperatives in Italy have been found to pay wages about 14% lower than capitalist firms. Despite this, they offer much higher employment stability. In the United States, some studies suggest worker cooperatives can actually increase worker incomes by 70–80%.

The social impact of these businesses is also significant. Some research suggests that cooperatives foster social trust among employees. In the United States, home health aides in worker cooperatives report higher job satisfaction. The Mondragon Corporation is the largest worker cooperative in the world. In 2018, its pay ratio between the lowest and highest earners was 1:9. This ratio is decided by a democratic vote from the members. This shows how cooperatives connect economic activity with democratic values and social stability.

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New harmony vision.jpg
File:Rochdale Society of Equitable Pioneers 1865 photograph.jpg
Rochdale Society of Equitable Pioneers...
File:Newcastlebridge.jpg
Newcastlebridge.jpg
File:Worker cooperative states.svg
Worker cooperative states.svg
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