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The benefits of worker co-operatives

The benefits of worker co-operatives

New research has identified the benefits of taking things into your own hands and starting a worker co-operative.

Virginie Pérotin, Professor of Economics at Leeds University Business School, examined two decades’ worth of international data on worker owned co-operatives, which are businesses that are owned and run by the employees themselves.

The findings, published by Co-operatives UK, the network for Britain’s thousands of co-operatives, found that in Europe, the US and Latin America, worker co-operatives are larger on average than other businesses.

It also identified significant benefits that make the co-operative option appealing to people. These include:

  • Involvement – because worker co-operatives are owned and run by employees, they have far more say in the business, from day-to-day concerns through to major strategic issues. “A job in a worker co-operative probably is particularly valuable, since it is a job in which the employee has a say in decisions that affect employment risks,” the report says.
  • Productivity – because the employees are the owners with a stake in the future of the business, worker co-operatives are more productive than conventional businesses, with staff working harder and the organisation harnessing their skills more effectively.  The study finds that “in several industries, conventional firms would produce more with their current levels of employment and capital if they adopted the employee-owned firms’ way of organising production.”
  • Job security – because the employees themselves are in control, when there is a downturn in the economy or the market, worker co-operatives have consistently taken the decision to drop wages rather than lose jobs. When business picks up, they are ready to respond and can make up for lost pay because the employees get a share of profit.
  • Diversity – because worker ownership is a way of organising a business that creates involvement, relative job security and higher productivity, the approach works across industries,  from traditional manufacturing to the creative and high-tech industries.

Commenting on the report, Professor Pérotin said: "What the data on different models of business shows is that worker owned businesses often out-perform conventional firms and the reason is that the people who work in them control the business and want it to continue to provide good and meaningful employment.

"The boost to productivity, for example, stem from the workers having a say in decisions and owning the business, so they work harder and make better informed decisions.  

"Employee-owned businesses provide good quality, stable employment, which is likely to have beneficial effects on local communities."

Retailer John Lewis, social care organisations like Leading Lives, and wholefood suppliers like Suma are the most cited examples of worker co-ops. But worker co-ops are found in nearly every part of the economy, from creative types staring a design agency to music teachers clubbing together to ensure a steady stream of work.

Ed Mayo, Secretary General of Co-operatives UK, added: “What this research confirms is that starting a worker co-operative offers an appealing option that gives the people working there ownership, involvement and a degree of job security in what are often high performing and productive businesses.” 

For more information

Contact Guy Dixon, University of Leeds press office on 0113 343 1028 or g.dixon@leeds.ac.uk

A full copy of the report is available at http://www.uk.coop/resources/what-do-we-really-know-about-worker-co-operatives

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