What do we really know about worker co-operatives?

The idea that employees can run their own firms might sound unrealistic to some. This study looks at international data on worker-owned and run businesses in Europe, the US and Latin America and compares them with conventional businesses. It also reviews international statistical studies on the firms’ productivity, survival, investment and responsiveness.

It finds that worker co-operatives represent a serious business alternative and bring significant benefits to their employees and to the economy. There are thousands of worker-run businesses in Europe, employing several hundred thousand people in a broad range of industries, from traditional manufacturing to the creative and high-tech industries.

Because worker co-operatives are owned and run by them, employees in worker-owned co-operatives have far more say in the business, from day-to-day concerns through to major strategic issues.

The largest study comparing the productivity of worker co-operatives with that of conventional businesses finds that in several industries, conventional companies would produce more with their current levels of employment and capital if they behaved like employee-owned firms.

When market conditions change worker cooperatives review wages first and keep employment more stable. In a downturn worker co-operatives drop wages rather than reducing their workforce. When business picks up they are ready to respond and can make up for lost pay because employees enjoy a share of profit.

The main findings from the analysis and review are:

• Worker co-operatives are larger than conventional businesses and not necessarily less capital intensive

• Worker co-operatives survive at least as long as other businesses and have more stable employment

• Worker cooperatives are more productive than conventional businesses, with staff working “better and smarter” and production organised more efficiently

• Worker co-operatives retain a larger share of their profits than other business models

• Executive and non-executive pay differentials are much narrower in worker co-operatives than other firms

Coop UK www.uk.coop/