The ILO: 75 Years of Co-operative Service

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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, 1996


Source : Review of International Co-operation Vol.89, No
1/1996, 52-60.

            The ILO  75 Years Co-operative Service 
             by Joe Fazzio and Gabriele Ullrich*1
            **************************************


The Lesser-Known Services
-------------------------
The present interest in the United Nations (UN) takes place in
different, often contradictory forms.  Such  interest may be
positive or negative, however and those expressing opinions
about the UN often have little knowledge of the structures,
instruments and activities of the various UN agencies.  What
is known about UN activities mainly concerns politics,
peacekeeping efforts and macroeconomic issues.  The way in
which the UN system responds to the concern of people in their
daily struggle for economic and social survival is less
well-known. This mostly takes place through the people's own
organizations, particularly co-operatives and similar
organizations.

Co-operative Promotion
----------------------
The promotion of co-operatives is an area of concern which has
recently attracted new attention in the global UN system and
is being taken up by the UN structures in various ways.  Based
on the  UN Secretary General's report on the global situation
of co-operatises the General Assembly of the UN adopted a
resolution3 which provided a new challenge for its specialized
agencies such as the FAO, ILO, UNESCO and UNIDO in promoting
co-operatives. In 1994 the Secretary General issued a new
report on co-operatives4 which led to Resolution A/49/605. The
first of July, 1995, was declared the first International
Co-operative Day for the UN system. The UN issued a special
press release5 which featured co-operatives as private
business enterprises within the market system, with both
economic and social functions and operating according to a
declared ethic of social responsibility. As "schools for
democracy" they fostered social partnership for sustainable
development. 

Within the UN system the largest programme for the promotion
of co-operatives exists within the International Labour
Organization, which has its headquarters in Geneva. The ILO is
the oldest of the UN's special agencies.  Founded in the times
of the League of Nations in 1919, its constitution was
established as an annex to the Treaty of Versailles, at the
end of the first World War.  Despite this historical weight,
the ILO is unknown by the public within many countries.  Among
specialists, the ILO is known either as the UN Organization
which develops international conventions and recommendations
(standards) for the improvement of working and living
conditions, or as a UN body which organizes development
projects involving technical co-operation through its
Secretariat, the International Labour Office.  The way in
which such activities interact and thus offer a unique
potential for sustainability is not generally known. For
instance, by promoting co-operatives the ILO can contribute
effectively to developing and sustaining democracy and, at the
same time, alleviating poverty.

The foundation of the ILO was intended to promote social
justice and improve living conditions worldwide.  One of the
most important means by which this might be achieved was the
freedom of association, which also included the establishment
of co-operatives and similar self-help organizations.  The
founders of the ILO and those of the co-operative movements
were convinced by the arguments promoted by the social
movements of the 19th century,  that democracy could best be
practised in self-managed and self-controlled organizations. 

Special Structure for ICA
-------------------------
To this end, the ILO's constitution provided for official
consultations with the internationally recognized
organizations of employers, workers, agriculturalists and
co-operators.  Consequently, from the beginning, the
International Co-operative Alliance (ICA) was given a special
observer status with the right to speak to any ILO body or at
their meetings.  Moveover, in 1920, the Office established  a
special Co-operative Service.  Consultations with co-operators
never reached the status of those with the employers' and
workers' organizations which, together with the Governments
have voting rights in all ILO bodies.  However, in the past 75
years frequent worldwide meetings of experts have taken place
on questions concerning co-operative development.  These led
to the establishment of a standing panel of experts on
co-operatives and, in 1966, to the adoption of the ILO
Recommendation No. 127 Concerning the Role of Co-operatives in
the Social and Economic Development of Developing Countries.

This Recommendation was adopted in the times of increasing
technical co-operation with developing countries and was thus
addressed to the Governments of these countries.  In the 60s
and 70s they were considered to play an important role in
promoting co-operatives and similar self-help organizations
which were regarded as the instruments through which global
development goals might be achieved.  This approach started
changing in the 80s. Nevertheless the value of Recommendation
No. 127, as the only international standard on co-operatives,
was recognized  was recognized as having contributed
significantly to the development of a more precise idea of
co-operative policy and legislation.  Its text gave a clear
definition, that a co-operative is "...an association of
persons who have voluntarily joined together to achieve a
common end through the formation of democratically controlled
organization, making equitable contributions to the capital
required and accepting a fair share of the risks and benefits
of the undertaking in which the members actively participate"
(12, 1(a)).

This formulation permits the inclusion of similar self-help
organizations, with other legal forms or with no legal
identity.  The ICA Statement on Co-operative Identity,
declared at its Centennial Congress in Manchester 1995, is
largely similar to the definition in ILO Recommendation No.
127.

Recommendation No. 127 also emphasises on the importance of
co-operative legislation and related laws in promoting
co-operatives, and stresses the importance of education and
training, of financial and administrative aid; and supervision
and international co-operation.

Co-op Development Policy
------------------------
After the adoption of Recommendation No. 127 by the
International Labour Conference 6 in 1966, a meeting of
experts took place in 1968 to analyse the impact of the
Recommendation.  The opinion of the meeting was that it was
too early to assess the consequences of such a far reaching
recommendation.  However, the framework of the ILO's
co-operative development policy was established.

As a UN Organization which has to respect the autonomy of
national policies and therefore cannot influence the
implementation of a recommendation directly, the ILO's
activities were limited to publicising its Recommendation and
promoting its ideas through technical co-operation projects
with co-operative movements and authorities in the countries
concerned.

In the 25 years which followed, no further meetings of experts
were organized by the ILO on this subject.  The  ILO
Co-operative Service concentrated its efforts on the
implementation of technical co-operation projects for
co-operative development.  Meanwhile, the research and
information activities lost their importance.  Financed
through various bilateral programmes with the Scandinavian
countries, the Netherlands, Switzerland and later with
Germany, France and Italy as well as through the UNDP, such
projects assisted the creation of co-operative authorities,
training and development centres.  This resulted in an
increase in new co-operatives and improvements in the 
education and training of their members and staff.7

In order to promote the economic autonomy of co-operatives, 
projects fostered trade between co-operatives, the development
of co-operative management training materials (the best known
of which is MATCOM8), the adjustment of co-operative
structures to improve economic undertakings as accounting,
audit and credit.  At the same time the ILO provided advisory
services on co-operative legislation, which was one of the
issues highlighted in Recommendation No. 127.


Change in Direction
--------------------
During the 80s, however, it became increasingly evident that
the co-operative authorities within recipient countries failed
to pass on their know-how to the co-operative movements,
merely using to direct and control co-operative affairs.  As
the most highly qualified personnel of most of the developing
countries was concentrated in Governmental structures,
programmes of training and sensitization started in these
structures.  By the end of the 80s, however, there were
increasing political demands for an end of the State
intervention in co-operative matters (e.g. at the ILO 7th
Regional Conference for Africa in Harare 1988).   In order to
promote the development of democratic forces other means had
to be found to promote self-help organizations: education and
training at grassroots level, assistance with the creation and
management of autonomous co-operatives and self-help groups,
the development of participatory approaches to promotional
activities and the setting of a political and legal
environment conducive to co-operative development.

The Co-operative Branch of the ILO developed various
programmes which aim to improve education and
consciousness-raising directly at grassroots level9, to ensure
the economic survival of co-operative organizations10, to
adjust of structures and policies to the changing
environment11, and to establish networks among co-operative
institutions at national, regional and interregional levels
for the development of their human resources.12  In these
programmes the alleviation of poverty through increasing wages
and (self) employment and the development of democratic
behaviour go hand in hand.

Worldwide Experts Meeting
-------------------------
In 1993 the ILO convened another worldwide meeting of experts
on co-operatives.  This was meant to assess developments of
relevance to the ILO mandate.  In particular, the
above-mentioned Recommendation No. 127 was to be analysed, as
well as the role of human resource development in the economic
viability, efficient management and democratic control of
co-operatives and the role of co-operatives in the promotion
of employment and income.  According to this agenda, the
experts assessed the role of such organizations in the
improvement of the economic situation and of social justice of
lower income groups in the sense of the UN Resolution of 1992.

The role of such expert meetings is to advise the Director
General of the Office in the preparation of subjects relevant
to the International Labour Conference.  The meeting of 1993
was attended by 15 experts from co-operative institutions from
worldwide as well as two each from employers' and workers'
organizations.  Twelve observers from institutions working in
this area, including the ICA, also attended. 

The experts were of the opinion that Recommendation No. 127
had contributed significantly to co-operative development in
the countries concerned.  They considered the text of the
Recommendation should be revised in the light of changes in
democratization, structural adjustment and employment.  In
particular the Recommendation should  be addressed to all
countries, as its aims were also applicable to the new
democracies in Central and Eastern Europe, and to
industrialized countries in the West.  All countries should
create an environment conducive to the development of
co-operatives able to survive as private enterprises without
State's attempts to use them to implement macro-economic
goals.  

The experts stressed that such developments were only possible
if the individuals involved in all groups concerned were well
prepared to participate in and contribute to these
developments.

Hope for the Unemployed
-----------------------
Co-operatives and similar self-help organizations were
considered by the experts to be an efficient possibility of
self-employment and thereby provide for those unable to find
employment within private enterprises or  public bodies. 
According to the ILO's World Labour Report of 1992,  within
most developing countries less than 50 per cent of the
workforce in the non-rural sector and less than 75 per cent in
the rural sector is able to undertake waged employment.  This
makes the search for alternative employment opportunities one
of the most urgent challenges currently faced.  Co-operative
organizations offer entrepreneurs survival in the formal and
informal sector, and also an improvement in the living
standards.  By joining together in such organizational forms,
small economic units can obtain services, finance and
information at favourable terms.  Thus, co-operatives have an
impact on both employment and income situation and can help to
alleviate poverty in developing countries.  At the ILO meeting
of 1993, experts from co-operative institutions, employers'
and workers' organizations confirmed these effects. 
Nevertheless, they warned to stress the dangers involved in
such self-help organizations as being used by Governments,
donors and NGOs to  achieve  macro-economic goals.13

Focusing on Co-op Law
---------------------
In May 1995, the ILO convened another worldwide meeting of
experts, this time with a focus on co-operative law.  The ILO
Governing Body decided that the meeting was to discuss the
impact of labour law, industrial relations  and international
labour standards on co-operatives and co-operative law, as
well as co-operative law and the regulatory role of the State.

The Meeting noted that recent economic trends including
structural adjustment and particularly privatization, have
highlighted the role of co-operatives in promoting
self-employment and wage employment.  Co-operatives are being
formed with a strong emphasis on their original values,
including collective self-help, equality, democracy and strong
member participation.  The growth of the co-operative movement
worldwide required an examination of labour law and labour
relations in relation to co-operatives as business enterprises
of employers.  In recent years, due to increased competition
in the market economies, many co-operatives have grown from
small member-owned and operated enterprises into larger
businesses with a formal organizational structure, a detailed
division of work and salaried employees and managers.  This
has  been the case for both service and production or worker
co-operatives.  Therefore, co-operatives have become
increasingly subject to the application of labour law and
labour relations systems as has any other form of business
enterprise in the private sector.

The Meeting considered,  nevertheless, that the issue was more
complex in the case of worker co-operatives, where the members
were simultaneously both the owners and the workers.  The
members, as self-employed individuals, are subject to an
association agreement to establish a co-operative business
enterprise as owners,  yet they are also employed by  the
enterprise.  The Meeting noted that a major question arises in
the case of worker co-operatives as to whether the
member-workers have the legal status of employees and thus are
subject to labour law, or whether they are independent
self-employed workers subject only to the agreement of
association establishing the co-operative.  Legal practice in
many countries does not provide a clear answer to this
question.  Thus, the application of legislation governing
hours of work, holidays, minimum wages and collective
bargaining is often difficult to enforce in these
circumstances.  The Meeting, however, noted that safety and
health, as well as social security aspects, should receive
particular attention.  The Meeting was of the opinion that the
relationship between the co-operatives and the labour market
should be further investigated.

The issue of labour relations was also examined by the
Meeting.  The experts observed that the traditional
employer/employee relationship would apply to paid managers
and to those  workers within co-operatives who are not
members. 

The critical issue, however, is the relationship between the
management of a co-operative enterprise as an employer and the
members in their quality as both owners and workers.  This
management-member relationship in co-operatives is very
important, especially when compared to other forms of business
enterprises, as the members are not only owners of the
enterprise, but are simultaneously involved as suppliers,  or
clients or workers.  

This relationship has inevitably given rise to legal problems,
but the general trend is that worker-members should receive
all the benefits of labour law and social security, currently
enjoyed by worker non-members.

The Meeting gave careful consideration to the importance of
international labour standards to co-operatives, their members
and non-member employees.  The experts noted that the
standards concerning employment, training, social policy,
freedom of association, labour administration, occupational
safety and health, social security and working conditions were
all relevant to worker members and non-member employees alike. 
Furthermore, the Recommendation concerning the role of
co-operatives in the economic and social development of
developing countries, 1966 (No. 127) was reviewed and judged
to have had a beneficial impact on the promotion of true
democratic and independent co-operatives.  The experts
therefore endorsed the conclusion of the earlier Meeting of
Experts that the Recommendation should be revised to update
and extend its policy guidelines to all countries,  and that
ILO member States should take appropriate action.

The Meeting also gave careful attention to the role of the
State in enforcing co-operative law in the light of changing
economic conditions. Due to recent trends towards political
liberalization and the market economy in developing countries
and economies in transition, long-established Government
supervisory structures have been called into question and have
been weakened. The role of the State and of co-operative law
has changed, and basic elements of the legal structure such as
collective, co-operative or State property have now become
part of the private sector.  Co-operatives, formerly viewed in
some countries as parastatals, have become true private and
autonomous institutions. Structural adjustment policies have
reinforced political liberalization and the trend towards
democratization, de-officialization and the deregulation of
the co-operative movements in developing countries and in the
former Socialist countries.  The experts noted that experience
has shown that co-operatives cannot develop under strong
Government control, and that the trend is towards the reform
of co-operative law to limit the regulatory powers of the
State.  

In developed countries, the role of the State under
co-operative law has been historically limited to a
promotional role based on the belief that efforts to improve
the business efficiency of co-operatives and thus help them to
compete with other enterprises should be encouraged.  At the
same time, co-operatives are allowed to adopt rules of 
management and finance similar to other forms of enterprise in
the private sector.  The Meeting endorsed the view that the
required reform of the regulatory role of the State would be
facilitated by a revision and updating of Recommendation No.
127.14

An Opportunity for Recognition
-----------------------------
The results of these meetings initiated a process which has
led to discussions within at the level of the Governing Body
of the ILO and of the International Labour Conference and may
result in a revision of Recommendation No. 127. This would,
however, depend on the reaction of Governments, employers' and
workers' organization represented in these bodies, and also in
the need for such a discussion to be expressed in the lobbying
process for the agenda of these bodies. The disadvantage for
co-operatives is that there is no formal constituency in the
ILO bodies, and thus the lobbying has to take place via
Governments', employers' and workers' representatives. The
dialogue among the over 172 plus member States of the ILO,
involving governments, employers' and workers' organizations
and co-operative federations would re-launch the concerns of
co-operatives and similar self-help organizations at the
widest and highest levels. Never before was the chance greater
for them to be recognized as autonomous, economically
self-reliant and democratically controlled private sector
enterprises, which should be offered the same opportunities
for development as other private enterprises without
interference from the State in an environment where they can
develop the impact  described above. This concerns the
improvement of employment and income, as well as the
development of human resources.15

At the same time the Co-operative Branch of the ILO continues
its assistance to the co-operative institutions and thus to
create for them an enabling environment through technical
co-operation projects and advisory services. They are meant to
assist in improving the conditions for democratic attitudes
and efficient management as well as the development of
employment and income opportunities.


Notes
------
1.   Joe Fazzio is Chief of the Co-operative Branch of the
     ILO; Gabriele Ullrich was until September 1995 Chief of
     the Section on Human Resource Development, Legislation
     and Information in the ILO Co-operative Branch.

2.   Status and role of co-operatives in the light of economic
     and social trends, Report of the Secretary General of the
     UN (A/47/216/43) of 28 May 1992.  The drafting of this
     report was assisted by the Joint Committee for the
     Promotion and Advancement of Co-operatives (COPAC) to
     which besides UN agencies also international NGOs such as
     ICA and WOCCU belong.

3.   UN General Resolution 47/90 adopted on 2 November 1992.

4.   Status and role of co-operatives in the light of new
     economic and social trends, Report of the Secretary
     General of the UN (A/49/213 of 1 July 1994).

5.   United Nations in Focus: "Co-operatives: Schools for
     Democracy", New York, 1 July 1995

6.   The International Labour Conference (ILC) is the annual
     general assembly of the International Labour Organization
     which offers the member governments, employers' and
     workers' organizations a global forum for the discussion
     of social and labour issues.  The ILC adopts the
     international labour standards and the Office's budget.

7.   See also the ILO background paper for the Meeting of
     Experts on Co-operatives in 1993 by H.-H. Mnkner "Review
     of the Impact of the Recommendation Concerning the Role
     of Co-operatives in the Economic and Social Development
     of Developing Countries", Geneva 1992.

8.   ILO Materials and Techniques for Co-operative Management
     Training.

9.   The ACOPAM (Appui associatif et co-op‚ratif aux
     initiatives de developpement a la base) and INDISCO
     (Inter-regional programme to support self-reliance of
     indigenous and tribal communities through co-operatives
     and other self-help organizations) programmes.

10.  The INTER-COOP (International network of co-operative
     trade partners) programme.

11.  The CO-OPREFORM (Structural reform through improvement of
     co-operative development policies and legislation)
     programme.

12.  The CO-OPNET (Human resource development for co-operative
     management and networking) programme.

13.  ILO Final Report on the Meeting of Experts on
     Co-operatives, Geneva, 29 March to 2 April 1993, ILO
     Working Paper on Co-operative Development, 1993.

14.  The report of the meeting was approved by the Governing
     Body of the ILO in its 264th Session (November 1995).

15.  The role of co-operatives as "schools of democracy" in
     the process of economic liberalization and of employment
     creation is specifically emphasized by the ILO Director
     General's report of 1992 on "Democratization and the
     ILO".

---------------
*  Joe Fazzio is Chief of the Co-operative Branch of the ILO;
Gabriele Ullrich was, until September 1995, Chief of the
Section on Human Resource Development, Legislation and
Information in the ILO Co-operative Branch.