Main Characteristics of the Present Co-operative Structure

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    This document has been made available in electronic format
         by the International Co-operative Alliance ICA 
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                         July, 1994

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               1.   Main Characteristics of the
                  Present Co-operative Structure
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1.1  Models of co-operatives and their significance in
     quantitative terms
**************************************************************
************

>From 1948 onwards, four types of co-operatives have operated
in Slovakia:

-    agricultural
-    consumer
-    housing and
-    production.

Their success differed according to the importance given to
them by the eyes of the Government and other political bodies.
Statistical data, which indicate the development of these
co-operative branches between 1989 and 1992, are given in
annex 2. The co-operative branches can be briefly
characterised as follows:

Agricultural co-operatives 
**************************

Agricultural co-operatives are using 70.8% of the Slovak
Republic's agricultural land. Agricultural co-operatives farm
on land belonging to one village, or frequently to several.
This practice has continued following the recent changes to
smaller units. The average agricultural co-operative currently
farms around 1,800 hectares; in 1989 it farmed 2,800 to 2,900
hectares. Nowadays agricultural co-operatives, with the
exception of the traditional agricultural production
organisations, are becoming increasingly involved in the
processing and sale of their agricultural produce.

Consumer co-operatives
**********************

The consumer co-operatives are, at present, organised
according to the territorial division of the State. Retail,
wholesale and purchasing activities, and also food processing,
are generally carried out separately within each region. There
are 41 consumer co-operatives at the time of writing. The
share of the retail turnover of consumer co-operatives
represents 13% of the total amount for the Slovak Republic.

Housing co-operatives
*********************

Prior to 1989 each region had its own large housing
co-operative, and there were also several specialised
co-operatives. After this date, these big housing
co-operatives were divided into smaller units, and there are
now 130 such organisations. Housing co-operatives manage 22%
of the housing fund of the Slovak Republic.

Production co-operatives 
*************************

The changes have been particularly marked with regard to
production co-operatives. Before 1989 the average membership
was 350, the smallest 130, and the biggest 1,600 members.
Gradually these big co-operatives have been changed to smaller
units. Since 1988 new production co-operatives have been
established, the smallest of these having only five members
and the largest less than 100. Production co-operatives are
producing 4% of the total production of non-food consumer
goods in the Slovak Republic. Production co-operatives in the
construction field have 1% of the total  production industry
in the Slovak Republic. The production co-operatives operate
in almost all fields of industry and building construction.
They provide a wide variety of services to residents, and the
majority of co-operatives successfully export their products
to Western Europe, America and Asia.

1.2 Brief historical background
*******************************

With the exception of the period from 1948 to 1968, when
Slovakia formed part of the Socialist Republic of
Czechoslovakia, Slovak co-operatives have developed
simultaneously with, but independently of, the co-operatives
in Czech lands during the post World War II years, despite the
fact that they were all in the same State. Although from 1948
to 1989 the same legislation was in force throughout the whole
State, the actual conditions in which they operated were not
equal. This can also be seen during the current period of
transformation.

The old totalitarian regime developed methods to control
co-operatives, and misrepresented the co-operative principles
in order to ensure that co-operatives would serve the State,
even if this were not in the interest of their members. The
co-operatives had only two choices: to try to survive by
entering the so-called "Socialist" sector, or to submit to
inevitable liquidation, eventually becoming part of the State
sector. 

Numerous co-operatives, and also co-operative branches, which
did not want to surrender were liquidated or nationalised,
with the exception of agricultural co-operatives, which were
treated differently. The only survivors were those which the
regime considered useful. For example, the State expected the
consumer and production co-operatives to help to improve the
situation within the domestic market, through production or by
trade activities.

However, in the most difficult times, the co-operatives still
exercised self-help and mutual assistance, qualities which
were not evident in State production enterprises. The
centrally-planned economy caused difficulties for, and even
damage to, co-operatives. Nevertheless, the ability of
co-operative members to utilize gaps in market was obvious,
and lobbying of the decision-makers by co-operatives meant
that they were eventually able to persuade central political
and economic bodies to lessen some of the negative influences.
In this way we can explain why the stagnation which affected
the national economy had less of an effect on co-operatives
than on State enterprises.

After 1989, conditions started to change significantly both
for the better, but also often for the worse. It became
possible to approach the removal of the externally-imposed
characteristics which had affected the co-operatives and to
progress to the gradual re-establishment of true co-operative
principles, both in legislation and in practice.

On the other hand, negative features appeared and these
affected the co-operatives to an extraordinary extent. The
chaotic situation began with the legislation regarding
privatization and transformation, which was inadequately
planned. Immediately after their approval by Parliament, some
Acts had to be amended and corrected, sometimes repeatedly,
because the drafts had not taken account of unresolved
problems.

Furthermore, many changes in State policy had a negative
effect on the movement, especially on agricultural and housing
co-operatives. Not only did the "shock therapy" of previous
Federal Government fail to bring about the expected effect, it
also hampered the process of transformation, privatization and
transition to market economy. Individual steps were not
properly timed, and this caused many unnecessary
complications.

An example of this is the Federal Parliament~s Act No 42/1992
on the adjustment of property relations and settlement of
property demands in co-operatives, the Transformation Act. The
shortcomings of the draft preparation are witnessed by the
fact that, at the plenary session of the Federal Parliament at
the end of 1991, approximately 150 proposed amendments were
submitted.

It has not been possible to eliminate all of the contradictory
or ambiguous Acts. However, with regard to the given terms of
the transformation process, it was decided that the
Transformation Act should be published as soon as possible.
For this reason it is not perfect, but it nevertheless
indicates the basic orientation of the transformation.


1.3  Membership relations in the existing co-operatives
********************************************************

During the period from 1948 to 1989 the co-operative
principles were enshrined in legislation, but in practice they
were not observed. The other regulations, laws, Government
orders and internal pressures made it impossible for the
organisations to adhere to the co-operative principles. For
example:

-    Candidates for higher elected posts had to be approved by
     the appropriate body of the Communist party: an
     individual who was not a member of the Party had only a
     slight chance of gaining such approval.

-    Although co-operatives were said to be democratic, the
     principal of "democratic centralism" was seen to be more
     important. This made it possible for more prestigious
     co-operatives, and especially political bodies, to
     overrule the members and representatives of the "lesser"
     co-operatives.

The way in which the State controlled co-operative development
and the utilisation of co-operative funds had an adverse
effect on these organisations. In practice, the ultimate
authority usually lay with the Ministry of Finance rather than
co-operative members. This was a significant handicap, because
it is the co-operative funds which create the economic basis
of co-operative democracy inherent in the ability of members
to dispose of their own finances in the form of co-operative
funds.

Prior to 1989, the property situation of members was legally
controlled by rigidly-enforced "Model Regulations".
Agricultural co-operatives (previously known as "farmers"
unified co-operatives') differed substantially from Soviet
kolkhozes, in their members' relationship to the property. The
kolkhozes' land belonged to the State. That owned by the
farmers' unified co-operatives remained the property of the
members. Members could not freely dispose of it, because the
State controlled the transfer of land rights within the
co-operatives. However, land could be inherited, subject to
certain limitations. Before 1989 there was little official
discussion about members' rights to the land because, in fact,
the co-operatives kept huge amounts of property in private
ownership. The material preconditions for speedy transition to
higher economic forms were not present. In 1960 agricultural
co-operatives managed 60% of the land. The process of merging
and integration started at this time.

It was not until the second half of the seventies that the
co-operators began to take an interest in the financial
affairs of their co-operatives. Mergers were arranged in order
to enable the organisations to take advantage of new
technology. Mergers were frequently politically motivated,
with a decisive role being played by regional political and
economic bodies.

In the following two decades, plant and animal production
began to intensify. The State made huge investments in
improvements, the production of fodder, the development of big
farms and organisation of collective farms. During the
seventies and eighties, thanks to extensive investments by the
State, the agricultural co-operatives in Slovakia managed to
keep up with world trends in the production of cereals,
grapes, meat and poultry.

More and more qualified workers and university graduates were
attracted to the agricultural co-operatives. In 1970, there
were seven graduates for every 1,000 co-operators;  by 1980
this ratio had increased to 18, and it had reached 30 in 1990.

Simultaneously, differentiation started to emerge between
agricultural co-operatives. This was partially due to the fact
that many were not able to keep up with the rapid development
of the outstanding co-operatives and got into difficulties,
especially financial difficulties.

In the light of these results it is necessary to understand
that democracy was, and still is, seen to be of the utmost
importance in applying rights and requirements. However, it is
not yet fully manifest in the members~ voluntary and
democratic fulfilment of duties towards their co-operatives,
nor in the augmentation of co-operative property, improved
business practices, efficiency and respect for the
democratically-elected officials of the co-operative.

In agricultural co-operatives, there are not only
member-workers, but also shareholder-members who do not work
in the co-operatives, but who reclaimed land during the last
three years under the restitution law.

In many cases the present representatives and managers are
able, with the help of members, to fulfil the new requirements
for co-operative development: but they frequently fail to
obtain sufficient response and understanding from their
members in their approach to the new tasks required by the
market economy.

Often, managers are unable to adapt to new market conditions
and to cope with the inevitable exposure to risk which
business entails. Unsuitable economic tools, discrimination
against agriculture and the State's failure to respect its
particular conditions prevent steps being taken to lessen
shortages.

Consumer co-operatives have the longest tradition of all
co-operative branches in Slovakia. In 1989 they had nearly one
million members and were responsible for roughly one third of
retail sales nationwide.

The activities of consumer co-operatives were influenced by
various factors. They had a virtual monopoly of food and
industrial goods sales in rural areas. This was due to a
political decision dating from 1952 according to which
consumer co-operatives were forced to abandon their centres of
operation in towns and industrial centres. Because of this,
co-operatives had to establish a completely new network within
the countryside, heavily subsidised by the State. When this
monopoly position ceased to exist (in 1990), the number of
consumer co-operatives plummeted by 73%. This was partially
explained by the return of 542 operational units, under the
law of restitution, to the previous owners or their heirs.

1990 was the year in which Slovak consumer co-operatives
attained their highest qualitative and quantitative results.
They had 8,289 operational units in the retail sector and
operated 3,823 public catering establishments. Their
membership was in excess of 900,000, with 57,930 employees and
5,230 apprentices.

After 1990, following the liberalization of prices and
privatization of State trade, the fall in consumers'
purchasing powers and consequent decrease in demand,
especially for industrial goods, the consumer co-operatives
lost dominant market position. In 1992 their share of retail
sales fell to 13.8%, the number of shops remaining under the
direct control of consumer co-operatives dropped to 5,399 and
that of public catering establishments to 1,232.
Simultaneously, membership fell to 260,500 and the number of
employees decreased to 34,302.

Housing co-operatives have the shortest tradition. The first
ones were established in 1919. World War II partially
destroyed the housing stock. Considerable new housing
development was required, and housing co-operatives,
especially employees' and companies' housing co-operatives,
played a significant part in this.

After 1948 housing co-operatives were forbidden to participate
in new housing development. Only 15 housing co-operatives,
later renamed to "national housing co-operatives" remained in
Slovakia. These co-operatives are still in existence, but form
only a small proportion of the total stock of
co-operatively-owned housing.

The former regime aimed to provide accommodation for all its
citizens free of charge. In the fifties it became evident that
this intention was unrealistic, as the demand for apartments
was far in excess of those available. Therefore, the political
bodies decided to require a financial contribution from
candidates so as to cover the growing costs of the new housing
developments.

For this reason, the Act of May 1959 once again permitted the
establishment of construction housing co-operatives, on the
condition that their management, i.e. their regional
administration and national committees, would be responsible
to the State. Conditions regarding the financing of housing
development were issued. These were acceptable to the majority
of housing co-operatives and their residents.

However, conflicts were caused by State intervention in the
affairs of housing co-operatives under the system of central
control which limited co-operative autonomy at that time.
Three forms of accommodation then existed simultaneously:
individual, State and co-operative. 

Housing co-operatives became predominant in construction
because of a Government policy introduced in order to
stabilise population and manpower in certain areas by
allocating housing to residents under the name of
co-operatives. This had a negative effect because residents
did not become members of housing co-operatives on the basis
of voluntary decision but merely because the accommodation
allocated to them was officially known as co-operative
housing. Such `members' were not interested in the work of the
co-operative, but they did make demands upon it.

The basic co-operative features of solidarity and self-aid
were weakened. The State used housing co-operatives to
implement its housing development policies. Flats were
allocated according to economic and political criteria, thus
people who had no connections whatsoever with co-operatives
became their members.

Although limited in number, there were also some self-build
housing projects, in which the participants carried out some
of the building work themselves and employed contractors to
perform other tasks which were beyond their abilities.

Despite the many problems encountered during this period, the
housing co-operatives manifested their ability to survive. 

Production co-operatives were also unable to avoid negative
interference from the State, particularly in the form of a
totally unsuitable system of a bureaucratic planned economy.
However, at a relatively early stage it was possible to obtain
an undertaking from the Ministry of Finance to permit the
members of production co-operatives to retain a certain
proportion of their profits according to criteria approved by
the members. This complementary `reward' was small and had no
relationship to the amount of work produced, but it was a
recognition of the fact that the members of production
co-operatives are partners in business who must bear
entrepreneurial risks.

Before 1989 the co-operatives and their Union were able to
exercise a certain amount of self-determination. They could
not escape the effects of the planned economy, but they were
able to create a bigger niche for co-operatives than would
originally have been thought possible. This meant that
production co-operatives were gradually able to move away from
the State system of credit and financing, creating their own
financial system from the taxed income (contributions) of
co-operatives and from other resources. This enabled them,
above all, to provide co-operatives with credit on favourable
terms and, in some cases, even interest-free loans. This
permitted intensive investment in construction and technology
to take place, resulting in rapidly increasing levels of
exports to Western Europe. Thus, many co-operatives were able
not only to adjust their production to Western market
conditions, but also to purchase advanced technology with the
foreign currency earned. It was even possible for some plants
to be fully automated.

After 1989 there was a significant decrease in the number of
co-operative members and workers. Some of them left to join
other companies, where they expected to attain higher
earnings. Others chose to go into business as independent
tradesmen or craftsmen.

Yet another explanation for this fall in membership was the
decrease in standards of living, and consequent fall in demand
for goods offered on the domestic market. Increasing levels of
unemployment further limit demand, and the growing ratio of
people in socially weak groups also has this effect.

This whole process has still to be finished, and has not yet
been fully analysed. The transition of the former
Czechoslovakia and other post-Communist States from planned to
market economies and to greater levels of privatization could
be supported neither by theoretical approaches nor by
practical verification. Inadequacies appeared, especially in
the timing and order of steps. Because of this, the countries
have had to learn by trial and error, learning from their
mistakes and continuously analysing their reforms.

The truth is that many citizens entered into business lacking
the appropriate knowledge and abilities, or with the intention
of implementing get-rich-quick schemes with no concern for the
effect which these might have on their fellow citizens or the
State budget. The main cause of budgetary deficit is not
higher expenditure, but the black economy (loss of revenue
from taxes, customs duties and other charges on such illegal
activities).

1.4  Co-operative secondary organisations,
     associations,federations
**************************************************************
*******

After 1989, relations between co-operatives and their unions
were among the most discussed problems, and provoked strong
criticism and broad discussion.

Co-operative Unions (of the agricultural, consumer, housing
and production co-operatives etc.) and the former Central
Co-operative Council received State recognition as the
organisation's central bodies. They held quasi-ministerial
authority, being able to issue binding amendments and
regulations to member co-operatives, but Union chairmen could
not become members of the Government. The special position
enjoyed by the Co-operative Unions meant that the Government
did not order Union chairmen to perform tasks, but requested
them to undertake these, or recommended that they implement
similar procedures.

The co-operatives and their Central Unions perceived the
greatest interference in co-operative democracy to be the
State's suggestion of candidates for elected positions. Lists
of functionaries were circulated, on which were indicated the
central or regional body of the Communist party which had
proposed the candidate. In this way it was ensured that only
Party members would be candidates for all the highest offices
and that they would have a majority in all the collective
bodies.

The second type of public authority interference was created
by the power of the Union, which could, in certain cases:

-    recall elected functionaries or co-operative bodies and
     appoint substitutes which were responsible not to
     members, but only to the Union;

-    decide to merge or divide co-operatives, even if this
     were against the wishes of the co-operative members;

-    approve the co-operatives' annual reports and balance
     sheets, including the division of profit (except for the
     farmers' unified co-operative): confirmation of this
     decision by the General Assembly of the Union was a mere
     formality. Only in exceptional cases would appeals from
     members' meetings influence the decisions of the Union. 

Some development features were specific to co-operative
agriculture. In July 1947 legislation was passed to abolish
the agricultural chamber and legalise the Central Union of
Slovak Farmers. In March 1948 the Union was reorganised to
suit the new political situation. It fulfilled economic tasks
and participated actively in the establishment of the Farmers'
Unified Co-operatives. In 1956 it had 156,000 members, 57,000
of whom were women, and developed activities in villages,
especially educational activities and the foundation of
co-operative laundries.

Gradually, as the Farmers' Unified Co-operatives  were
established in the regions, the units of the Central Union of
Slovak Farmers were disbanded. Finally, the whole Union was
wound up by a decision of its Managing Committee in March
1952.

The peasants regretted the loss of the Central Union, feeling
that even the Congresses, which took place every two to five
years, were no compensation. This period, during which the
agricultural co-operatives had no central organisation, lasted
until the foundation of the Slovak Union of Co-operatives and
Farmers in 1968. Although content and organisation have been
subject to some changes, it is still in operation.

At the beginning, the Union's purpose was the economic defence
of its member organisations. From 1970 onwards, it was
gradually to change its original mission, restrict its
economic activities and focus on the social protection and
welfare of its members. By this means it gained the character
of a trade union organisation. Any new initiative was
criticised by the political and State organisations. As part
of centralisation, the Union had to change its structure and
became known as the Union of Co-operative Farmers.
Nevertheless, it survived and continued to develop its
activities.

After 1989 basic changes occurred in the position and
activities of the co-operative unions. The Slovak Union of
Production Co-operatives, Slovak Union of Consumer
Co-operatives and Slovak Union of Housing co-operatives:

-    defend and support the interests of co-operatives and
     their members, mainly in their relation to State bodies
     and foreign and international co-operative institutions;

-    participate in the creation of, and propose amendments to
     or acceptance of, new legislation;

-    support mutual collaboration between co-operatives of all
     kinds;

-    develop humanitarian aims and ideas as part of
     co-operative activities, including the establishment of
     disabled people's co-operatives;

-    manage Union property and the joint funds of each
     co-operative branch;

-    establish business entities to assist member
     co-operatives in their activities;

-    perform extended consultancy services, especially for
     legal, financial and taxation matters, and also  defend 
     industrial and other rights of member co-operatives;

-    organise education and training of members, and establish
     apprenticeships, according to the interest and needs of
     member co-operatives;

-    to help develop cultural, recreational and sporting
     activities;

-    to assist co-operatives tackle social problems by means
     of a "fund for mutual co-operative aid";

-    to maintain a common information system among
     co-operatives and unions;

-    to develop their participation in business activities,
     and thus increase their financial resources so as to
     decrease costs to unions and member co-operatives;

-    to represent member co-operatives in economic
     transactions, should they be requested to do so;

-    to provide better publicity for the co-operative
     principles and values in economic, social and democratic
     fields, and thus improve public opinion.

Certain features were notable in the development of the Union
of Co-operative Farmers after the 1989  revolution . In April
1990, democratically-elected representatives met at a national
conference of co-operative farmers, which established a new
organisation, the Agricultural Co-operative Association. This
took over from the existing Union. In Slovakia, the
independent Slovak Agricultural Co-operative Association was
established.

The conference adopted the regulations and orientation of its
activities resulting from the needs of their members. The
Association unified agricultural co-operatives, farmers and
agricultural employees. Its activities were governed by the
rules of voluntary association and democracy. 

During 1991 and 1992 the Association intensified its
activities against interference from the central Federal and
Slovak State authorities. This was manifested especially in
expressing co-operative views and commenting on the
implementation of economic reforms in agriculture. It proposed
solutions in the field of economic tools, and measures to
defend the social interests of agricultural co-operatives'
members.

In May 1993, at the Conference of the Slovak Agricultural
Co-operative Association in Bratislava, a successor
organisation, the Union of Agricultural Co-operatives of the
Slovak Republic  was established as the unified Slovak State
organisation.

According to approved regulations, this is a voluntary,
independent and self-governed organisation which is an
association of legal entities: agricultural co-operatives and
trade associations in which co-operatives participate. The
Union also permits trade associations and other legal entities
to become associate members if the subject of their activities
is agriculture or associated services.

Union activities must take the following into consideration:

-    socially-oriented market economy and freedom of business
     activities,

-    all forms of ownership having equal rights,

-    basic human rights and freedom,

-    co-operative principles,

-    protection of the environment, as the most valuable
     national asset.

The mission of the Union is to promote the development of
favourable entrepreneurial conditions for its members and to
defend their other economic and social interests.

In this sense the Union develops partner relations and
collaborates with State authorities, co-operative and trade
organisations and other domestic and foreign institutions.
Co-operative Unions also enter into specific activities to
facilitate the financing of Union and co-operative activities.
In 1948 there were 1,200 credit and financial co-operatives in
Slovakia. They had 468,000 members with share capital  of
about 70 million Czechoslovak Crowns. These co-operatives were
nationalized in 1948, the majority being amalgamated into  the
State savings bank and the remainder being taken over by the
State Bank.  In 1991, the KOOPERATIVA  co-operative insurance
company was established with its headquarters in Bratislava
and a daughter company in the Czech Republic. In 1992, 
COOP-BANK was founded. Its headquarters were in Brno (in the
Czech Republic) and it had a daughter company in Bratislava.
These two joint-stock companies offer services to  all
companies and individuals and the majority of shares are held
by co-operatives and co-operative organisations.  At the
division of the Co-operative Union of the Czech and Slovak
Federal Republic, Czech and Slovak partners agreed that they
would leave intact some trade companies whose spheres of
operation were in both the Slovak and Czech republics:

Coop-Bank, a joint-stock company with its head office in Brno
and with branches in the territory of both republics,

Kooperativa, a joint-stock co-operative insurance company with
its head office in Bratislava and branches in both republics.

Low-level contacts are also maintained by co-operative
joint-stock companies for foreign trade: Intercoop in
Bratislava and Unicoop in Prague.

The Unions have established a number of joint-stock companies
and limited liability companies:

Agricultural co-operatives
**************************

-    Agroslovakia - a farmers' investment fund, is a joint
     stock company in which farmers have the majority of the
     shares. This was one of the investment funds established
     in the first wave of "coupon privatisation". Most of  its
     shares are in the food industry.

-    Interaudit -  a limited liability company  - provides
     auditing, accounting and other economic services  to
     agricultural co-operatives.

-    Agrokapital - a limited liability company processes
     investment funds by means of participation certificates.
     In this way, it helps the agricultural co-operatives to
     arrive at correct,  rational investment decisions.

Consumer co-operatives
***********************

-    DOVP, a co-operative trade and production enterprise, a
     joint-stock company, provides wholesale services to
     consumer co-operatives and manufactures a small 
     selection of products;

-    DRUPRO, a joint-stock company offers design and
     engineering services to co-operatives and other bodies;

-    DVPT-Inform, a joint-stock  company, carries out
     information technology, software, hardware and computer
     education projects for co-operatives;

-    OPTIMA, a joint-stock company, refits and provides
     equipment for retail units and restaurants. It also
     carries out repair and maintenance work and organises
     publicity and exhibitions;
 
-    Three joint-stock companies: OPTIMAL, FROP and POINT,
     repair  trade equipment for retail and wholesale units,
     restaurants, refrigeration equipment, etc.;

-    TATRATOUR, a joint-stock company, is a co-operative
     travel agency which offers a wide range of services to
     tourists, both  at home and abroad;

-    ESDE, a joint-stock Investment Fund, was established by
     the Slovak Union of Consumer Co-operatives under the law
     on investment funds passed by Parliament before the first
     wave of "privatisation coupons";

-    The Agricultural Institute for Education, a joint stock
     company, organises educational activities for
     co-operatives and co-operative organisations.

These 10 joint stock companies are entirely owned by consumer
co-operatives.

Production co-operatives
************************

-    EUROCOMP  -  Slovak-Italia, a joint-stock company,
     operates  in the field of civil engineering and
     construction;

-    GENOCONSULT, a limited liability company provides various 
     intermediary and commercial services for production
     co-operatives;

-    ESKULAP, a limited liability  company, offers specialist 
     services to production co-operatives through the
     implementation of new techniques and technology;

-    SLOVAKIA, a limited liability company, is a network of
     retail units which sell co-operative products;

-    MAGNET- SLOVAKIA, a joint-stock company, is a mail-order
     company for co-operative products;

-    The Co-operative Members' Investment Fund, a joint stock
     company, operates the "coupon certificates" system
     established by the SUPC (Slovak Union of Production
     Co-operatives).

These companies are mainly owned and controlled by the
production co-operatives.

Co-operatives and co-operative unions also hold shares in some
banks and trade associations, namely:

-    Tatra-Banka, a joint-stock company;
-    Devin-Banka, a joint-stock company;
-    Technopol, a joint-stock company involved in foreign
     trade.

>From the above, it is clear that co-operatives, and especially
their associations, participate in entrepreneurial activities
which do not result in fierce levels of competition. Profits
from shareholdings and reduced costs resulting from
collaboration help to keep co-operatives' membership fees to a
minimum.

The main tasks fulfilled by the Co-operative Union of the
Slovak Republic are as follows:

-    to promote the interests of co-operatives in dealings
     with the Government and its Ministries, and the
     Parliament of the Slovak Republic, especially as regards
     any legislation which affects co-operative activities;

-    to represent and coordinate the activities of member
     organisations (Co-operative Unions) in foreign relations
     by collaborating with the ICA and its specialised bodies.

All Unions promote the interests of co-operatives and their
members with regard to:

-    the Council of Economic and Social Agreement (known as
     the Tripartite), in which employers' and employees'
     organisations and Government have equal representation;

-    the Trade Unions.


1.5 Evaluation of the existing co-operative system
**************************************************

An examination of the strong and weak points in the present
co-operative system within Slovakia reveals differences
between the co-operative branches.

Those branches which were able to develop a stronger, more
stable structure in the years between 1948 and 1989 are in a
relatively more favourable position. The consumers' and
production co-operatives were first to be able to establish
their unions in the period after 1948. Furthermore, since
these co-operative branches were represented in the ICA
through the Central Co-operative Council they were able to
learn about the situation and problems of co-operatives in
non-Communist States, and to gain information from their
membership in ICA committees.

Housing co-operatives 
*********************

The situation of the housing co-operatives was not quite so
good because their development began comparatively late, the
Union of Housing Co-operatives not being established until
1968. Members of housing co-operatives usually lacked, and
continued to lack, close ties with their co-operatives. Only
gradually have they begun to realize that membership imparts
not only rights, but also obligations. An improvement is now
being witnessed in the maintenance and cleanliness of
co-operative housing, especially when this is compared with
State-owned accommodation. Members have begun to take more
care of their environment because they must contribute to the
cost of repairs.

Agricultural co-operatives 
**************************

The most complicated situation is witnessed in the
agricultural co-operative system. As regards restitution, it
has been necessary to distinguish between several categories
of people who have a claim on co-operative assets under the
transformation law. They are:

a)   those who, as part of the "collectivisation" of
     agriculture, (either voluntarily or under pressure)
     became members of agricultural co-operatives and brought
     with them land, buildings, machines, tools, livestock or
     other assets;

b)   those (usually former agricultural workers) who became
     co-operative members but did not bring any property into
     the co-operative. This category also includes those who
     worked in co-operative administration and graduates from
     agricultural secondary schools and universities, but
     equally those whom the Communist Party bodies sent to
     work in farmers' unified co-operatives;

c)   those who did not work in co-operatives or in
     agriculture, but who were the former owners of
     agricultural land or their legal heirs, having handed
     their land over to the unified agricultural
     co-operatives.

d)   those who worked in the co-operatives as employees.

As can be seen from the above, transformation and
privatisation is a far more difficult task in agricultural
co-operatives than in other co-operative branches. These
problems are presented in more detail in chapters 2.1 to 2.4,
which deal with the transformation of co-operatives.

The application of market forces and economic transformation
forced almost all agricultural co-operatives into a position
of economic crisis, in which all the advantages previously
provided for co-operatives were cancelled. Many members failed
to appreciate the advantages which co-operatives gave them:
i.e. employment and a decent wage. Many others simply lacked
any sense of solidarity with their co-operatives.

In the transition to a market economy a considerable
proportion of co-operatives were unable to adjust quickly to
the tough new economic conditions, either for objective or for
subjective reasons.

The problems which co-operatives face are complicated. So,
too, is the question of the image of the co-operative movement
as a whole.

During the last 40 years there has been little recognition of
the co-operative movement's achievements prior to 1948. This
has resulted in a one-sided view of co-operatives: and it is a
negative view. The opinion prevalent among middle-aged and
younger members of the population was that co-operatives were
products of the totalitarian regime. Even many co-operative
members did not know about the long and positive tradition of
co-operatives within Slovakia. The technical literature
continued to affirm that co-operatives could develop fully
only within the Communist regime. It was simply not possible
to publish truthful information about the pre-1948
co-operative movement.

In other co-operative branches the effects of
"collectivisation" were usually less drastic, so their image
was, and is, less subject to change.

It is possible to see the production co-operatives in a
relatively positive light. The "collectivisation" of crafts
resulted in the majority of private craftsmen going to work in
State enterprises. Most of those who chose to join production
co-operatives did not own much in terms of liquid or fixed
assets, so the transformation went relatively smoothly.The
image of consumer co-operatives is also a positive one,
despite the fact that membership has fallen considerably over
the past two to three years. With the help of the State,
consumer co-operatives built a solid network of shops,
department stores, public catering establishments and travel
agencies. Unlike their counterparts in the Czech Republic, the
Slovak co-operatives have been able to build in towns.

After 1967 consumer co-operatives had been allowed to come
back into the town so that, by the end of the eighties,
co-operatives were responsible for 29% of the urban turnover.
Political bodies support this process, because it encourages
real competition for State trade.

The most problematic image is that of the agricultural
co-operatives, as has already been discussed. Furthermore, a
serious social problem is manifested, i.e. that the membership
is aging and these co-operatives have a relatively small
proportion of young people.

In many agricultural co-operatives the tough economic
conditions have caused immense problems. The liberalisation of
prices and consequent increase in inflation caused a rapid
drop in demand, which resulted in the dismissal of more than
one third of members and employees. The agricultural
co-operatives' economic crisis was also caused by a rise in
the cost of inputs by 250 - 280% at a time when the increase
in prices paid for agricultural produce was only 120%. In
other words, the co-operatives' incomes failed to cover their
costs.