The Italian Way

Postcard — By Derek Walker on January 10, 2012 7:00 am

AS relentlessly depressing economic headlines continue unabated, high street retail chains continue to close and unemployment figures continue to rise, there is the one sector that has been doing relatively well. Despite difficulties elsewhere in the economy the co-operative sector has enjoyed notable success according to figures compiled by Co-operatives UK. During the period 2008-2010, the sector’s turnover grew by 21%. In 2010 the co-operative sector built on strong performance in 2009 to rise by 4.4%, compared with 1.3% in the UK economy as a whole.

Today, at the beginning of the United Nations’ International Year of Co-operatives, the Wales Co-operative Centre publishes a report that brings together the latest research about co-operatives in Wales. This marks the first time we have examined their current impact on – and the role they could play in growing – the Welsh economy.

‘Co-operatives in the Welsh economy’, written by the Bevan Foundation, reveals that co-operatives are a dynamic, thriving sector of the Welsh economy, generating £1 billion in income and employing around 7,000 people in a wide range of sectors. Co-operatives in Wales generated a total pre-tax profit of £19 million in 2010, with three generating profits in excess of £1 million and a further four generating profits of between £250,000 and £1million. Our research found that social enterprises employ more people relative to turnover than mainstream small businesses and worker co-operatives have lower-than-average levels of staff turnover and absenteeism. This can be explained in part by their democratic structures, which mean workers have more opportunities to take active roles in decision making. Co-operatives are also more likely to involve women and minority ethnic groups than private businesses.

When you consider this evidence, it’s clear that co-operatives could play a bigger role in making Wales a more prosperous, fair and sustainable place to live. To see how this could work in practice, we can learn from Italy, where co-operatives have gone from playing a negligible role in the economy to becoming a global success story. There, 70,400 co-operatives employ over 1 million people in a wide range of sectors. Italy’s largest supermarket chain Coop Italia is a co-operative and includes 115 consumer co-operatives as part of the chain as well as 1,444 shops and 56,682 employees.

Producer co-operatives are important too – more than 40% of Italy’s wines are produced by co-operatives as is much of the output of parmesan cheese and other food and drink. Social co-operatives were introduced more recently, and now cover a wide range of social activities. In 1985 there were just 650, compared with an estimated 6,800 in 2002 with over 100,000 employees.

There are an estimated half a million users of social co-operatives, which include some of the most vulnerable groups within society – the co-operatives also employ a relatively high proportion of disabled people. The collective turnover of social co-operatives is estimated to be around 1.3 billion euros today. Key factors in the development of Italy’s co-operatives have been availability of finance, preferential relationships, favourable taxation, the role played by consortia of co-operatives working together to help others, a positive legal framework, a public enterprise agency and partnerships with others.

Within Italy, the formerly impoverished Emilia Romagna region has achieved truly remarkable growth for its 3.9 million people. Intensive efforts to create new co-operatives in the region resulted in thousands of co-operatives being created – by 2003 co-operatives accounted for 40% of the GDP of the region, accounted for 10% of employment and provided over 85% of the city’s social services. Emilia Romagna is now one of Italy’s most prosperous areas, as per capita income has risen from 17th to second among Italy’s 20 regions. Success is attributed to intensive government support for small and medium sized firms including co-operatives, plus good relationships between co-operatives.

In Wales today we can certainly identify with pre-transformation Emilia Romagna. The country has been hit hard by the recession and constraints on public spending and services, coupled with welfare reform, will put further pressure on individuals, families, communities and the services they rely on. As our report demonstrates, co-operatives offer a tried and tested solution to a number of these problems, and the case for increasing our efforts to support co-operatives is overwhelming.

It would be optimistic to claim that the answer to all our economic woes lies with the co-operative and social enterprise sector. Nonetheless there is certainly the potential for further growth. Wales already has some superb co-operative businesses and witnessed excellent growth, which show what is possible. We have some of the same conditions that have resulted in Italy’s success. But we need to look in more detail at some of the other factors that are missing in Wales to see what can be done to bring about the step change in the growth of co-operatives that has taken place in parts of Italy.

There is also a case for giving greater consideration to how the sector can offer a response during the economic downturn in certain public policy areas such as social care.

Co-operative, mutual and social enterprise models deserve our respect for their resilience and success in recent years and we would be wise to give them a closer look in the year ahead.

Tags: co-operatives, equality, food, Italy, social enterprise