5 Ideas On How Trade Unions And Cooperatives Can Help Each Other

Leo Sammallahti

Leo Sammallahti

Jan 16, 2019

The Shared Roots Of The Trade Union And The Cooperative Movement

Trade unions and cooperatives both emerged in Britain during the industrial revolution as ordinary people were seeking ways to get a fair share of the wealth created by new technologies. The two movements aimed to address inequality by creating a democratic counter-economy of mutual self-help that has continued expanding to every corner of the world.

Unlike the Silicon Valley, we at Coop Exchange don't see trade unions as an enemy but rather an ally. Cooperatives can't build a more accountable and fair economy without trade unions. We also believe that cooperatives can play a key role in revitalizing trade unions.

There is a great and living tradition of cooperatives and trade unions working together. For example, the largest supermarket chain in Singapore is so closely tied with the labor movement it is named National Trade Union Congress Fairprice Cooperative.

1. When companies are sold, make it easier for employees to buy them

There is an ongoing ”silver tsunami” of baby boomer business owners retiring and selling their businesses across the developed world. This is a great and unprecedented opportunity for trade unions to massively expand employee-ownership, which has been shown to have numerous benefits, from improved productivity to reduced risk of bankruptcy. One way to do this is Marcora law, described below.

2. Contract and buy from cooperatives

In the 2017 UK general elections, a worker-owned digital agency cooperative called Outlandish was provided with funding by the National Union Of Teachers to build a website called “School Cuts”. The site enabled visitors to type in their address and see how hard the budget cuts had hit their local schools and what it meant in terms of reduced staff hours and equipment. The site also displayed how different political parties’ manifesto commitments would affect the funding.

The site had over 670,000 visitors, with Chris Cook from the BBC describing it as “an extraordinarily successful campaign… I cannot remember a campaign as effective in recent years by any union”.

There are lot of big and small steps all trade unions can do to support cooperatives. They can do their banking in a credit union or make sure the coffee drank in their meetings comes from a cooperative owned by the coffee producers.

Harry Robbins, a member of Outlandish has written about establishing Trade Union Digital Services cooperative, which would facilitate user-centred cooperation between trade unions in digital services, such as developing digital tools to enable easier democratic participation for members.

3. Allow trade union members who start a worker-owned cooperative to have the union invest the membership fees they have paid over time into the cooperative.

Marcora law allows workers to use their unemployment benefits to invest in a worker cooperative buyout, but trade unions could enable their members to have the trade union invest the membership fees they have paid throughout their career to a cooperative they have set up.

For example:

1. 10 workers have paid an average of €250/year membership fees for an average of 10 years, a total of €25,000 of union fees.

2. If they set up a worker cooperative, the union could match every euro invested by the workers by investing up to €5000 (20% of the union membership fees the worker owners have paid) to the cooperative for it to buy equipment.

3. If the investment starts making a profit for the union, the members can request a further €10,000 investment (40% of the union membership fees), and another €10,000 (last 40% of the membership fees) if the second investment has also made a profit.


4. Contribute to cooperative commons

Trade union investments in cooperatives should be used to build open source resources for the two movements. For example, if a group of taxi drivers set up a cooperative and build an open-source app similar to Uber, this will make it easier for other taxi drivers around the world to set up their own cooperatives as they don't need to develop their own software.

Perhaps the most impressive example of this can be found in India. SEWA (self-employed women's association) is an Indian trade union of low-income, self-employed women that has grown from 30,000 members in 1996 to 4 million today, making it the biggest non-profit in the country. It has spearheaded collaboration between trade unionism and cooperativism and is currently building an open-source platform cooperative that will allow users to request a worker-owner to come to their home to do beauty services, such as makeup or haircuts. This is one of four similar pilot projects funded by the Platform Cooperative Development Kit.


5. Cooperatives as unions for the self-employed

The share of the workforce that's self employed is growing, and the share of self-employed people that are unionized is low. New ways of work require new forms of unionization, and cooperatives can play an important part in this. One of the most brilliant examples of this is Smart, a cooperative that has 60 000 self-employed members in 9 different European countries. Pooling their membership fees together allows the members to provide themselves services that would be more expensive if bought by each member individually. For example, one of the most common problems self-employed people face is uncertainty of payments. The clients often have the incentive to make their payments as late as possible, treating the pending payments as zero interest loans, while debt collectors often take a significant commission. Smart guarantees the payment on time for its members and acts as a debt collector.

The antifragility of the Smart model was demonstrated when a few hundred cycle couriers on a food-delivery app called "“Take Eat Easy” were guaranteed payment after the company went bankrupt. Smart lost hundreds of thousands of euros, but it turned out to be great publicity. Word spread about the guarantee and new members flowed in as a result. The membership fees from the new members who joined out-weighed the costs of guaranteed payments, turning the financial hit into a blessing in disguise.

Where does Coop Exchange fit in?

Coop Exchange seeks to make risk and profit sharing between trade unions and cooperatives easier in a straightforward way: by enabling cooperatives to issue investor shares that give investors (such as unions) a dividend of the profits while keeping the cooperative fully owned and governed by the members. The community wealth-building approach that has proven hugely successful in Preston is based on public institutions using their purchasing power to act as anchor institutions to worker cooperatives, such as having the hospital ordering their laundry services from a worker owned laundry cooperative. This approach is hard to pursue with trade unions: Steelworkers Unions former head has been supportive of worker cooperatives, but the union is not in the business of buying steel, so it is more difficult for it to act as an anchor institution. With Coop Exchange, the union can easily use its resources to invest in worker cooperatives.