Analysis of Worker Cooperative Movements in Canada
The study was to evaluate the worker cooperatives in Canada by trying to analyze the role the coops play in the economic development of Canada; discuss the advantages and disadvantages of the worker coops in the country. The research paper in addition explores and appraises the challenges facing workers union movements in Canada and best bit recommendations for the future success. The paper acknowledges a number of roles in economic growth such as provision of goods and services; steadying of the economy; competition; alternatives for economic expansion in the countryside. There were a number of benefits which were found to be provided by the coops to its members and to the organization where the members work. Some of the main benefits identified include provision of capacity building for members, boost morale of workers by providing security at place of work; bargain for better working conditions for its members. The disadvantages which were identified included economic implications and social implications. The paper found that worker coops face challenges of mismanagement, corruption among the managers, and unfavorable environment for coop operations, policy and legislation challenges.
In the contemporary world cooperative movements have become engines for fostering socio- economic interests of different social categories of people. Such union activities are assumed to play a vivacious role in the upward agility of collective and financial status of the adherents. Cooperatives are collective movements which are non-profit making entities formed by individuals with a common goal and objectives.
The motive behind formation of such movement is mainly to pursue a common interest (ILO, 2014). All over the world cooperatives operate under seven key principles which make them different from other business entities such as partnerships. The principles include: voluntary and open membership; democratic member control and equal voting rights; member economic participation to the capital of the cooperative society; autonomy and independence to perverse democratic power; education, training and training of members (Birchall, 2004).
Cooperative movements are categorized in a number of bases such as area of operation; the main purpose of its formation; or service offered; using the purpose as the basis, cooperative societies can be classified as: worker cooperatives; consumer cooperative societies; housing cooperatives among others. For the purpose of this paper the focus will be on worker cooperatives in Canada. In Canada the worker cooperative movement was started in the year 1943 when the employees of an electric company formed a group to help them in saving money they earned and make it easy for them to borrow loans when they needed.
Currently there is unlikely event of finding employee who is not a member of the worker cooperative societies in Canada (Cote, 2000). In fact there is much stability in the cooperative sector than other forms of businesses in the country according to research conducted by Quebec’s Department of Economic Development, Innovations and Export Trade in the year 2008. The stability could be attributed to the critical roles which such movements play in terms of pushing for the interests of its members and their undisputed role in the socio-economic prosperity of the country, Canada.
The choice for the analysis of cooperative movement in the Federal Republic of Canada has been informed by the essential role they play in the development of the country in terms of economic impression. It is shown in empirical studies that worker cooperatives provide its members with the social capital required in pushing for the worker interests; provide employment to the public; and macroeconomic development in general.
The aim of this research paper is to provide analysis of the performance of worker cooperative in terms of benefits they provide to the members, the challenges they face and the role they play in economic development. The paper will focus on the worker cooperatives to evaluate and examine the sector from a range of ideas including: size, industry sector, areas of growth, factors supporting success, reasons for closure or failure as well as factors supporting growth of the movement and individual co-operatives.
The research paper is driven by the belief and a strong conviction that how to make worker cooperatives in Canada successful is still an important to the country and individual members as they are believed to be vital in the provision of long-term employment; provide the capacity to achieve many of the economic desires of the members which the paper analyses to give appropriate information.
Worker cooperatives and economic development in Canada
It should be noted that different types of cooperatives play almost similar roles in enhancing economic development in Canada. Empirical studies have shown a great interdependence between cooperative movements and performance of various sector of economy in Canada. Canada has 8500 cooperatives in total and credit unions are said to have more than 17 million members where worker cooperatives, credit union cooperatives comprise an estimate of 20% of the total.
Cooperatives provide source of employment to a significant proportion of the population in the country whereby the sector provides direct employment to about 15000 people who work as managers, secretaries, clerks, accountants among others (Horwat, 2009). Worker coops also pay taxes to the central government which is important in contributing to economic development of the state and hence of vital importance. The evidence from studies shows that cooperatives own a total asset of approximately 330 billion dollars.
In trying to assess the level of cooperative importance to the economic development, a hypothetical question was asked in a study. The question was: What would be if the cooperatives did not exist? The study found that there would be a deep implication negatively on the economic growth and development of Canada. Cooperatives play a wide range of roles among the many regions in the country which directly or indirectly contribute to economic development (Cote, 2000).
Accessibility to financial services in terms of credit is enhanced for cooperative members while it is a challenge for non-cooperative members to obtain such services from financial institutions. An example is that in Canada more than 1100 communities were found to have no access to credit except those members who were members of cooperatives societies. Credit accessibility enables members to get capita which they can use in carrying out some economic activity such as agriculture or business. In a working environment sometimes the level of remuneration is low and most workers cannot secure loans on individual basis; if the workers have a cooperative society, a member can use his shares to make him qualify for credit in the society (Cote, 2000).
Cooperatives also provide training to members on important skills which can help in personal growth in terms of making good investment decision. In the northern communities of Canada, they rely on cooperatives to supply them with essential goods and services which provide a key role of cooperatives in marketing which contributes to economic development of a nation. When the workers interests are taken care of they get motivated to contribute more to the objectives of the organization which could lead to better performance in the economy (Horwat, 2009).
There are some needs of workers which they cannot address individually; hence they can form a cooperative movement to help in addressing certain social and economic needs. For example workers can form a cooperation to help them address certain social and economic challenges in life which in turn makes cooperative to play an economic role in the lives of individuals.
In some areas of the country most essential services have been lacking due to government laxity or failure to supply these essential goods and services such as infrastructural development. In such cases especially in the rural areas cooperatives have become strategic in their role as they have become alternatives providers of essential goods and services in such regions where government has failed. The role provides one of the contributions of cooperative societies to the alternatives for economic development of such areas where the government has failed (Levi, 2005).
Worker cooperatives for instance might have their savings invested in some businesses in the rural areas to provide essential goods and services such as investment in the housing sector or transport sector. For example there is a case of gas cooperatives in the Alberta area which currently manage more than 100,000km of gas pipelines creating wealth in its areas of operation where other private businesses failed to venture due to low profit expectation. The coop group also was founded to meet the community needs which the government and other private sectors could not satisfy (Horwat, 2009).
Cooperatives play important role in the stabilization of the economy especially during periods of economic crisis due to their resilience to economic changes as was evident in a study conducted by International Labor Organization showed that cooperatives around the world have shown a high degree of resilience during the recent world financial crisis. The finding were similar to the results of a study by the International Monetary Fund (IMF) in the year 2007 just before the global financial crisis which found that cooperatives were more stable than commercial banks which could be attributed to the low volatility of their returns. The study proved empirically that credit cooperatives show greater stability internationally (Horwat, 2009; ILO, 2014).
According to the study the resilience was due to their structure; the loyal following which the coops enjoy due to its deeper roots in the community as a result of the great socio-economic roles they play to the entire public directly and indirectly due to spillover effects from positive externalities. During the recent financial crisis in the world market where other companies lost value of their shares, the share of cooperatives remained more stable; the reason being that coops are owned by the local people or workers themselves who have a long term commitment in ensuring success of the society’s performance stemming from the limited liability of members (Cote 2000).
Cooperative movements also bringing about competitiveness and competition in the market which enhances efficiency of operations hence contribute to the development of the Canadian economy through better and quality service delivery. The worker coops and other types of cooperatives pool individual resources which make it possible to increase competitiveness in terms of better salaries; wages; improved service provision (Horwat, 2009).
Worker cooperatives help them have a bargaining force for better working services, provides training which makes members more competitive. The training programs which the various cooperatives offer to their members make them offset information asymmetry and market imperfection (Birchall, 2004). The members pooling together of resources therefore form a basis the members can use as a capital or power exercised against large organization in a given market resulting in more competitive prices and services.
The competitiveness enhances provision and supply of innovative goods and services which in the end become the bench mark in a given market and increase the competitiveness of all the market players (Horwat, 2009).
Advantages and disadvantages of worker cooperatives in Canada
There are a number of benefits which are found to be derived from worker cooperatives where union members; the organization or company and the nation as a whole receive different benefits. It was found that the worker cooperatives in the country provide workers with a plat form to share and provide solution to various individual members social and economic problems. The worker cooperatives provide benefit such as counseling and ethical support to its adherents especially during times of social misfortunes.
The workers who form saving cooperatives can access credit based on their shares which they can use for their individual investments. Worker cooperatives plays a crucial role in offering training to its members on various life issues as well as knowledge and skills on their expertise hence make them more competitive and more productive in their areas of work (Deller et al, 2009).
Cooperatives bargain for better terms of services for its members such as competitive wages and better working conditions from the organization’s management. The collective bargaining for better salary and competitive wages enhances welfare improvement among workers (Horwat, 209). There are certain organizations which might victimize their workers by not following due process, worker cooperatives help in protecting the workers from such victimizations hence make workers feel more secured at their working place.
The mutual support members of workers coop get from one another boosts their morale and performance in their areas of jurisdiction (Cooperative secretariat of Canada, 2011). On the other hand, companies also receive a number of benefits from the movements whereby there would be improved performance as a result of training the members receive from coops. When skills of workers are improved, their performance in their various working areas will also improve which have a positive impact on the general performance of the organization.
When workers feel secured in their place of work they are likely to perform better, a role which cooperatives provide which benefits both workers and organizations. Coops make conflict resolution in the organization or company easier because the management of the organization can address the workers through their union leaders which reduce the risks of labor unrests. Performance will be positively increased in an environment where the organization’s management provides a favorable environment for operations of worker cooperatives.
When worker unions are fought by the company to management, they are likely to affect the performance of companies as the workers are likely to be highly demoralized and could lead to rebellion of workers. The advantages discussed above in one way or another contributes the greater welfare of Canadian citizens at large (Deller et al, 2009). There are worker cooperatives in Canada which have invested in various sectors to participate in the provision of services and essential commodities such as banking services, housing services, credit provision.
By these investments, the cooperatives provide employment to other citizens, and also make services available to various people, a fact that is very instrumental to the country. When workers are given better terms of service, it will also impact on the welfare of communities and their families (Cote, 2000). As much as worker coops have merits, the movements also have shown major drawbacks due to some disadvantages which they come with.
In Canada most workers have been pushing for better terms of services without considering the economic implications on the company. Most of the unions push for improved terms when the cost of living goes up; however they never considered the profit levels of the company or the ability of the organizations to sustainably afford their demands. This has led to increase in the wage bill where most income is used in paying salaries at the expense of reinvestment. This has made most companies to realize negative economic returns at the expense of responding to pressure from worker unions.
Unions sometimes make it difficult for organizations to implement certain policy decisions which could make operations more efficient and improve performance of the company. For example some workers coops have opposed introduction of new technology in the management and normal operations of certain tasks in the organization due to fear of laying off of some workers when their duties become obsolete due to technology advancement.
This has continued to lay a huge salary burden which is not easy to sustain in the current poor economic status of the country which has shown the USA dollar become expensive (ILO, 2014). The conflict of interest is an issue which has made cooperative movements to be losing in their fight for the welfare of workers. The conflict has been witnessed when some members of the union are also leaders of critical departments which are mandated to implement certain decisions. In such cases it would be difficult to implement the demands of the workers at the expense of the organization’s stand bringing one shortcoming of coops (Levi, 2005).
Challenges experienced by the worker cooperative societies in Canada
The main objective of forming cooperatives in Canada was to protect the social and economic interest of its members (workers); however this objective has remained very far from fully being reached as the unions still face challenges ranging from political, environmental, economic and moral challenges (Horwat, 2009).
According a number of studies which have been conducted to evaluate the performance of worker cooperatives in the country, it was established that there are members who use leadership in the coop to front their selfish agenda at the expense of the interest of its members. The studies have revealed how cooperative management boards sometimes have been compromised by the organizations top management to drop a genuine interest of the members for their own selfish gains.
This is a moral problem where leaders have failed to stand firm on the course of fighting for the interest of the members (Khurana, 2010). The second challenge facing worker coops in Canada has been found to be lack of favorable environment to operate freely in fronting their agendas. In some organizations in the country, some leaders want to maintain the status quo and do not want to embrace change, for this reason they have been consistently fighting the emergence of coops by trying to intimidate the coop leaders by sacking them at any time there is labour related standoff. Coops in the country also face a problem of getting enough funding from the government to enable them meet the financial requirements for their operations.
The studies have shown that federal institutions lack knowledge of the cooperative system which affects the access to government funding (Horwat, 2009). Cooperative movements have also faced internal management challenges from corrupt leaders. The vice of corruption has hindered the coop movements from achieving intended objectives.
There is another challenge of bureaucracy which makes decision making very difficult, and in the end making operations less efficient. The policy on cooperative management is not favorable for the investment in coops in the country as evidence show that Canada Revenue Agency regulatory rules do not allow for investment in this sector (Cooperatives Secretariat of Canada, 2011).
Factors that might contribute to the success of worker cooperatives in Canada
There is need for the political class to review the legislation and the policy agenda of the coop movements to provide a well-elaborate framework for the monitoring of their operations, and more favorable environment for their operations. The management should be well-trained on management skills as a remedy to curb failures due to mismanagement (Hancock, 2008). There is need to reduce bureaucratic processes involved in decision making to increase performance efficiency of cooperative movements. Tougher penalties should be introduced to curb corrupt practices within the coop movements through use of tougher rules and regulations and harsh sanctions to the offenders who in most cases have been using cooperatives to enrich themselves at the expense of the members who contribute (Cote, 2000).
Making the management accountable to their actions is a key in ensuring sustainability and prosperity of the cooperative entities since when such a culture of accountability by public servants is enhanced it will compel them to act in a more responsible manner. One of the mechanisms that can the enforced to help make leaders or coop managers accountable is by introducing performance contracting where they should be required to meet a certain threshold of performance (Birchall, 2004).
Apart from performance contracting there is need to introduce new requirements for one to vie for managerial position; this is due to the fact that one of the undoing of these movements is that the management is not elected on basis of capability to properly run the society, but on the ability to influence members which in most cases depend on resource endowment. Most of coop movement experience mismanagement problems as a result of this, and the paper proposes that there should be some qualities of management which will also reduce the cost incurred in management training (Horwat, 2009).
From the above discussion it was found that one of the challenge coops face is lack of sufficient funding from the government, reason being the federal institutions lack proper knowledge about coop management. For this reason the paper would propose that some level of basic training should be provided on coop management principles to address the challenge. Finally it would be very beneficial to ensure openness and transparency in conducting various operations of the movement to win the trust and confidence of the members which will in turn make them feel motivated to continue investments into the movement (ILO, 2014). The value will also lead to better growth as such core values when are fully practiced attract more potential members to join the movement, and in the end there would be increased success of the coop.
Worker cooperatives provide workers with a bargaining power for better working conditions which could boost the performance of the economy as a result of individual company performance. When employees are inspired, they perform better to their different coops and hence provision of stability to the economy and also make market more competitive and efficient. The coops have also been found to face a number of challenges such as mismanagement of funds, lack of political good will as well as morality among the leaders.
The paper has also found that coops face challenges such as corruption and embezzlement of funds; however despite of the challenges, the paper has found that cooperatives have had more positive impact on the entire economy of Canada and to the individual members of the movement. From the findings it can be concluded that worker unions play an important role in the entire economic welfare of the country.
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