Worker co-operatives and social care

Worker co-operatives are businesses that are owned and democratically controlled by workers.  At the heart of it, this means each worker-member has one vote in general meetings and in the elections for the board of directors. Co-operatives around the world are guided by seven principles, which includes this commitment to democracy as the second principle. 

According to CICOPA, the global peak body representing worker co-operatives, there are three types of worker-owned co-operatives. There are examples of each of these types of co-op operating in Australia:

Employee-owned co-operatives (often this is what is meant by the term worker co-op) directly employ worker-members, providing them with regular employment in the co-operative’s business  in accordance with local labour law.

Australian example: The Co-operative Life is a social care provider that is owned by its employees.

Producer co-operatives have self-employed workers as members (such as sole traders working in the care sector). In this model, the co-operative is not the employer of the members but allows the members to share business functions such as administration or marketing. The term ‘producer co-operative’ also encompasses a range of other co-op types where the members are businesses, including co-ops of farmers or independent retail stores.

Australian example: Victorian Stonemasons Co-operative is a co-operative of self-employed artisans that come together as a group for marketing.

Social co-operatives are not-for-profit or charitable co-operatives with a clear public purpose and include employees as members. Other stakeholders such as consumers, local community organisations or volunteers may also be members but there will remain a focus on job creation and job quality.

Australian example: Nundah Community Enterprises Co-operative is a charitable co-operative owned by its workers and a local community organisation. Its purpose is to create dignified employment for people with a disability.

Workforce attraction, productivity, industry disruption and service quality are key challenges for social care in Australia. International evidence suggests that worker co-operatives can respond to these challenges. With the right policy environment and business ecosystem, they can scale and become important players in local, regional and national care systems.

Findings in the study ‘What do we really know about worker co-operatives?’ by Virginie Pérotin (2018, Co-operatives UK), reveal that

• 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 co-operatives 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.

According to People Powered Growth by the Employee Ownership Association UK (2023):

• Employee owners are 8–12 per cent more productive than non-EOBs
• EOBs are more likely than non-EOBs to provide cost of living support, with more than a 50 per cent difference in levels of financial wellbeing support, one-off bonus payments and salary sacrifice schemes
• EOBs tend to have a higher minimum annual wage than non-EOBs by around £2,900.

In Italy, social co-operatives play an important role in the social care sector. Backed by a positive policy environment and a robust co-operative development ecosystem, they have shown the ability to scale their impact:

• Co-operatives are recognised in the Italian Constitution and have a supportive policy environment where collaboration and innovation within the sector is encouraged.
• They employ 480,000 – including 78,000 disadvantaged individuals
• They created 50,000 jobs in five years and boast a €16 billion annual production value.
• 85 per cent of social care in some parts of Italy is delivered co-operatively.

In accordance with the sixth co-operative principle, co-operation among co-operatives, local co-ops pursue federation and other collaborative strategies to increase their impact and efficiency. Federated or ‘secondary’ co-operatives can allow worker-owned models to compete with for-profit digital platforms and other industry disruptors and keep the benefits with workers and consumers:

• In the United States, Elevate Cooperative aims to improve the quality of home care by bringing together 17 home care co-operatives into a secondary co-operative with a combined 2,500 caregivers.
• The Mondragon Corporation is a federation of worker-owned co-operatives across a diverse range of industries including manufacturing, retail, banking, education and social care. Working together, these co-ops are one of the largest corporate groups in Spain.

• What is a co-operative? – CICOPA
• Care Together Program reports and case studies
• Italian social cooperatives celebrate their 30th anniversary – CICOPA
• People Powered Growth 2023 – Employee Ownership Association UK