The Contribution of Co-operatives to Job Creation: The Swedish Case

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

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     The Contribution of Co-operatives to Job Creation
                    The Swedish Case
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                    by Per-Olof Jonsson*



Poor Tradition of Worker Co-operatives
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The Swedish Co-operative Development and Research Institute,
Koopi, is the organisation which coordinates the  development
work of six national co-operative federations and represents
their interests with Government by acting as a lobby. In
Sweden, as you may know, we have a very poor tradition of
worker co-operatives. The co-op sector has a yearly turnover
of some 20 billion ECU or 8% of the GNP. Less than 1% of this
overall turnover is represented by the worker co-ops. The main
figures belong to consumer and agricultural co-ops with some
8-9 billion ECU each. We had two small booms of new worker
co-ops in the early 70s and early 80s. Many of those
unfortunately became bankrupt during the current recession.

Currently, new worker co-ops are becoming established within
the public service sector - some 100 new co-ops during the
last two years with some 1,000 employees. These, however, are
not new jobs but replacements for former public jobs and for
the co-operators themselves an alternative to unemployment or
privatisation through buy-ups. A network of 20 local co-op
development agencies financed through central and local
government as well as the co-op business, are playing an
important role to stimulate and advise people to set up new
co-ops.


Survival Means Change
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However, the Swedish economy is undergoing a deep recession
caused by both  global and domestic structural reasons in  the
public and the private sectors. Unfortunately, the recession
happened at the same time as the deregulation of internal
rules and the privatisation of public services. The present
rate of unemployment is extremely high in relation to the
normal level in Sweden.

The recession has also forced the co-ops to a very hard and
tough modernisation and rationalisation in each of the sectors
where they are active. During the boom in the 80s, the Swedish
co-ops had a strategy for buying up-market concerns to boost
their own image. The consumer co-ops, for example, brought
non-food retail chains in order to introduce them in city
shopping-malls.

The insurance co-ops went into the medical care sector, bought
a medium size hospital and created some ten new centres for
medical rehabilitation.

The housing co-ops were pioneers in the building of high
quality apartments and developing new technical and
environment-friendly systems.

Most of the co-op expansion during the 80s was dependent on
general market signals, consumer patterns or public regulation
systems, such as income taxation reform and different forms of
subsidiaries.

Then the time came when the "Swedish model" has to be
refreshed and modernised, the co-ops were also obliged to
change in order to survive.

Concentration on the core businesses is the key solution at
the moment for all Swedish co-ops.

Sell-outs and reductions have replaced the strategies of the
80s.
Co-ops today contribute to the escalation of the unemployment.
In 1992, thousands of jobs were lost in the co-op sector, most
of them through the selling off of assets and the pruning of
activities.


Co-ops and Job Creation

With this perspective as a background, one might be pardoned
for asking whether there is any contribution at all in the
co-op sector to job creating activities? The most important 
answer is that the co-op sector has survived in its present
state.  All co-ops have survived the present recession so far,
although with some financial difficulties related to the lack
of capital interest and the ensuing dependence on external
capital loans.

However, we should recognise that co-operation is a long-term
activity. There are some interesting characteristics :
Firstly, the Swedish co-ops are rationalising more than their
private competitors; it means that they will stay strong and
become even stronger in the future. This is a very important
strategy in order to contribute to the division of social
resources and new jobs in the long run. A reduction of 10% in
the workforce has ensured the stability of the remaining 90%
of jobs.
Secondly, more and more non-members are joining co-operatives 
and the total membership is continually  increasing. The
crisis has forced the co-ops to place higher attention on
basic issues, members' fortunes in terms of price and quality,
which are playing a more important role than the number of
shops or new  apartments. It is also interesting to notice
that environmental questions take second place, after the
price, as the reason why the consumers choose the co-op
alternative in the retail sector. This increases the market
shares and can also create new jobs.
Finally, the crisis has also forced the co-ops to modernise
the decision making and logistic structures. The federation is
almost an historical phenomenon. Centralisation of business
decisions however will be followed by new forms of member
participation, communication and democratic influence.

The following are examples of present job-creating activities
in the co-op sector:

I will mention the first one as "infra-structural co-operative
development" which takes place mainly in the countryside in
the north of our country. This type of development is a part
of the regional policy for replacing former industrial jobs.
These were often concentrated into one big industry -  such as
the forest or steel industry. Now small scale co-operatives
within sectors, where the producers are at the same time
consumers in a local economic system, are established. In the
county of Jemtland, some 100 new co-ops, providing
approximately 1,000 new jobs, have been created during the
last five years, in social services, handicraft, retail,
transportation and so on. They are said to deliver their
facilities to each other!  

The alternative to those 1,000 jobs should have been a new
wave of emigration. This development should not have been
possible without the total support of all regional and
municipal administrations as well as from the banks and other
financial institutions.

My second example I will mention as "social co-operative
development". The number of child daycare centres and
kindergartens is still increasing. We now have more than 1,000
such co-ops with 20,000 children and 4,000 employees. These do
not replace existing public services but complement them, so
the number of new jobs is a net contribution.

The third example I will characterise as "integrated
co-operative development" which is taking place mainly within
the housing co-ops as an alternative to privatisation. The
housing co-op, HSB, has established a special branch for
social services named "HSB neighbourhood services".  The name
indicates that this idea is a continuing part of the core
housing co-op idea. HSB is, so to say, taking over former
public services such as housing for the elderly, mobile home
services and primary health care.

This has already created several hundred new jobs in the very
short term and hopefully will escalate rapidly.

New Ideas for the Future
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Finally, I think there will be a high number of similar
examples in the future as a result of the many experiments of
the new liberal theory. Mutual solutions will again be
considered important. At the present time we are lobbying  the
government and the trade unions in order to get unemployment
benefits transformed into share capital in co-op societies.
This system would be combined with a duty to employ young
people.

One such sector for the creation of new co-op jobs is , of
course, environmental systems and structures. Recycling and
refilling-systems must be developed on both the industrial and
household levels.

Must then the consumer and housing co-ops leave this
development to private multinational oligopolistic interests?
Could we solve our needs by creating new co-ops and new jobs?
I indeed hope that my answer can be related to the
contribution of the social economy to the creation of
employment.

Points for Consideration
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Finally, some remarks to the discussion: The cost difference
between giving a person his notice or keeping him employed, in
accordance to Swedish and Danish studies is only 1,000 to
2,000 ECU/annum.

This fact should be used by the actors of the social economic
sector to persuade their national governments and the
EC-structure to make more efforts for job creation in the
whole of Europe.

There are so many ideas, needs and uses for the co-ops to
fulfil that there need be no conflict between the social
economic sector and the government-steered public sector.

Co-ops cannot take more economic responsibility than their
private competitors because, as they are acting on the market
on behalf of their  members, they have to be competitive.
I believe  that there is no need for another transnational
network. We can use the vast number of already existing
networks.


* Mr Jonsson is Member of the Board and Chief Executive
Officer of the Swedish Co-operative Development and Research
Institute, Koopi.