The cooperative-a-model-for-work-and-development

Adv. Kathy IdensohnDept. of Commercial Law, UCT

THE CO-OPERATIVE:

A MODEL FOR WORK & DEVELOPMENT

Some worldwide numbers:•1 billion people are members of co-operatives (50% of the world’s population & 3 x more than individual shareholders in companies and other investor-owned enterprises)•Active in all countries.•International Co-operative Movements represent 800 million members (more than the total population of Europe)•Africa - 40% of households belong to a co-operative•US – more than 100 million members (40% of the population)

INTRODUCTION – THE FACTS

1.

Job creation•Provide 100 million jobs around the world.•EU - provide 2.3 million jobs.

Securing livelihoods•Secure the livelihood of 3 billion people (half the world’s population.)•Kenya - 63% of the population derive their livelihoods from co-operatives.


1.

Financial co-operatives - serve 857 million people (13% of world’s population)

Proven success and resilience•Highly successful business model •Global driver of economic growth.•2005 - 2010 co-operatives worldwide outperformed publicly listed companies on market share gains (e.g. insurance, food retail, pharmacy, healthcare, business services , education and housing sectors).•2010 - 300 largest co-operatives had combined ann. turnover of $2 trillion


1.

Proven success and resilience•Kenya

– account for 45% of the GDP – 31% of gross national savings– control the markets for coffee, cotton and dairy.

•India – consumer needs of 67% of rural households are met by co-operatives


1.

Proven success and resilience•Agricultural co-operatives - aggregate market share of 28% in processing & marketing of agricultural products in the US, 60% in Europe.•European co-operative banks:

– 50 million members (10% of the continent’s total population)– 181 million clients, & 780 000 employees– €5.65 billion in assets– market share of approx 20%.


1.

Proven success and resilience

Showing resilience to the global economic crisis.•Financial co-operatives - remaining financially sound•Consumer co-operatives are reporting increased turnover•Worker co-operatives are growing with stable employment levels.


1.

International interest and enthusiasm•2012 - ‘The International Year of the Co-operative’, with the assertion that: ‘Co-operative enterprises build a better world’•UN’s ‘2020’ vision for co-operatives


1.

• What is a co-operative?• How do they work?• Why are they growing?• Why are they outperforming more dominant forms of enterprise?• Why so much international attention and the enthusiasm?

WHAT’S IT ALL ABOUT

2.

Some explanations…•Nature and legal features of a co-operative•Way in which co-operatives are structured & governed and how they operate•The co-operative philosophy, principles and values •Unique features •Potential for creating work and promoting development •Co-operatives in South Africa•Co-operatives in the labour law context

WHAT’S IT ALL ABOUT

2.

The definition of a co-operative

•‘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 enterprise.’

(ILO Recommendation 193 on the Promotion of Cooperatives, 2002)

WHAT IS A CO-OPERATIVE?

3.

Types of co-operatives•Can be used for a wide range of economic, social and cultural purposes. •Purpose may be economic profit, non-profit purpose, social, cultural, political, charitable or a combination of purposes.•Examples of different types of co-operatives:

1. Consumer / service co-operatives

2. Producer co-operatives

3. Worker co-operatives

4. Multi-stakeholder co-operatives


3.

Legal features of a co-operative•Legally recognised model or structure •Most significant legal features - legal status and capacity•Have separate legal or ‘corporate’ personality: •Separate rights and obligations•Limited liability


3.

• Bringing of economic and other resources under democratic control.• Kind of economic participation they give their members.• The co-operative values:

– Self-help, – Self-responsibility, – Democracy, – Equality, – Equity, – Solidarity, – Honesty, openness, social responsibility and caring for others.

THE UNIQUE CO-OPERATIVE PHILOSOPHY

4.

The co-operative principlesICA’s ‘Statement on the

Co-operative Identity’, UN resolution &

ILO recommendation

1st Principle: Voluntary and open membership


4.

2nd Principle: Democratic Member Control

–Controlled and managed by members–Equal participation on a ‘one person one vote basis’–Participation not dependent on:–Extent of membership interest–Financial status–Race, gender, cultural or social background or any other discriminating criterion –Voting rights depend on number of shares–Number of shares depends on existing wealth and financial means.–Maintenance of majority control Structures–Separation of ownership / membership and control / management


4.

3rd Principle: Member Economic Participation

– Primary aim of the co-operative is to meet members’ needs.– Economic needs - aim to maximise return for individual members rather than make

profits for the co-operative itself– Equitable participation in economic returns– The financial workings of a co-operative:– Transactions by the co-operative – transactions with members /outside 3rd parties– The concept of ‘surplus’– The concept of ‘patronage payments’


4.


The contrasting position in companies•Main aim is to maximise company profits•Shareholder profit shares depend on number of shares•Number of shares depends on existing wealth and financial means•No redistribution of wealth - the rich stay rich and the poor stay poor


4.


A different kind of capitalism•Companies favour financial capital•Co-operatives favour social capital•Companies reward individual competition•Co-operatives reward co-operation


4.

4th Principle: Autonomy and Independence– Autonomous, self-help organisations controlled by members.

5th Principle: Education, Training and Information– Provide education and training for members, representatives and employees– Play an important role in raising community awareness of co-operation.

6th Principle: Co-operation amongst Co-operatives– Co-operation with other co-operatives in local, regional, national & int’l structures.

7th Principle: Concern for Community– Work for sustainable community development


4.

ADVANTAGES OF CO-OPERATIVES: WORK AND DEVELOPMENT

5.

General strengths and benefits•Flexible - can be used in diverse sectors and regions, for a wide range of purposes, by groups of all sizes •Can simultaneously meet a number of socio-economic needs ‘Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.’ – UN Secretary General Ban Ki-moon

ADVANTAGES OF CO-OPERATIVES…

5.

General strengths and benefits•Comparatively more resilient to economic downturns •Have long-term sustainability•Give marginalised and disadvantaged groups access to work and markets, mobilisation and ‘voice’•Responsive, innovative and dynamic


5.

Contributions to employment and economic growth•Reduce market failures and stabilise the economy•Improve market access and competiveness for individual members through pooling of resources:

– Gives marginalised individuals access to markets they would not be able to access alone – Allows individuals with different knowledge, skills and products to add value to the end

product or service - opens up different markets and increases profits– Economies of scale - allow for bulk buying and selling, reduce costs and increase profits


5.

An illustration:

the olive farmer


5.

Contributions to employment and economic growth•Help balance market participation and wealth distribution•Keep the production of goods and services close to the needs of the people they serve •Provide goods and services that are unattractive to other commercial enterprises and public authorities are unable to supply•Long-term view rather than short-term profit•Create jobs, increase sustainable employment and protect incomes


5.

Contributions to employment and economic growth

•Provide a different kind of work: – individual autonomy and empowerment – directly incentivise and reward individual effort– benefits of a co-operative environment – generate knowledge and skills, act as schools of entrepreneurship and management


5.

Contributions to social development•Inclusive, unite communities•Concerned with promoting members well-being and aspirations •Address the needs of particular communities•Help to solve problems that would otherwise remain the responsibility of government agencies.


5.

Main areas of success:

• Countries with diverse political conditions, degrees of economic development, cultural and historical backgrounds

• Times of economic crisis• Rural and regional development.• Agricultural, credit and banking sectors• Provision of water, electricity and other utilities

CO-OPERATIVES IN SOUTH AFRICA

6.

Current regulation•The Co-operatives Act 2005 & Regulations•Administered by a branch of the CIPC •Additional support agencies e.g. The Small Enterprise Development Agency, Co-operatives Bank Development Agency


6.

Registration numbers

Total of 54,461 co-operatives registered as at 31 January 2012… Co-operatives registered under the Co-operatives Act 2005 alone, by province

Province #

Kwa Zulu Natal 11,820

Gauteng 7,907

Eastern Cape 6,544

Limpopo 4,576

Mpumalanga 3,296

Province #

North West 2,540

Western Cape 1,684

Free State 1,644

Northern Cape 709

TOTAL 40,720


6.

Under-utilisation and challenges•Lack of awareness of the co-operative model•Lack of appreciation of its potential•Lack of resources•Undeveloped networks and lack of co-operation•Lack of institutional support•Mismanagement•Breakdowns in member relationships

CO-OPERATIVES AND LABOUR LAW

7.

• The creation of jobs• The provision of decent and sustainable work• The position of worker co-operatives• Current status• Concerns and calls for reform

MEASURES FOR REFORM

8.

• The Co-operative National Policy (2004):‘To grow a self-sustainable and integrated co-operative sector, supported by all stakeholders, contributing to economic growth, poverty reduction and employment creation as well as assisting in bringing about economic transformation and an equitable society.’

• Government’s strategic objectives to grow, promote and support all types of co-operatives

• Key focus areas - youth, women, and people living with disabilities, rural, peri-urban and former homeland areas

MEASURES FOR REFORM

8.

The Co-operatives Amendment Bill, 2012 •The Bill’s aims – to address all identified challenges to co-operative growth and success•Main reform areas:

– Ensure good governance, transparency and accountability– Facilitate co-operation and co-ordination between co-operatives– Provide new support structures and resources– Address the position of worker co-operatives

CONCLUSION

9.

• Failure of predominant models of social and economic organisation• A time of global crisis • Co-operatives provide hope and a clear direction forward• The ICA’s cooperative growth areas:

– the provision of credit – the provision of housing– job creation.– agricultural production– management of cultural institutions, water resources, waste disposal, public

transportation and renewable energy sources

CONCLUSION

9.

‘The argument in favour of co-operatives has never looked stronger.’

– the ICA