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Catholic social solutions to workplace fairness


Bruising industrial confrontations within Qantas and in Victorian hospitals during the latter half of last year pose pertinent questions as to whether alternative forms of ownership and control of workplaces might in some instances have more to offer than conventional wisdom may suppose.

A case in point is the great complex of worker-owned manufacturing, retail, financial, agricultural, civil engineering and support cooperatives and associated entities headquartered at Mondragon in the Basque region of Spain.

With Spanish unemployment levels following the global financial crisis standing at some 22 per cent, the Mondragon cooperatives have demonstrated impressive resilience, absorbing their share of economic hits and emerging largely unscathed.

For example, Mondragon’s Eroski worker/consumer retail cooperative — hitherto Spain’s largest and fastest growing chain of supermarkets, hypermarkets and shopping malls — has over the last two years experienced for the first time since its inception in 1959 losses consequent on reduced consumer demand, and only in the current financial year anticipates a return to modest profitability.

Fagor, Spain’s largest manufacturer of white goods, has successfully managed down production by 30 to 40 per cent in the face of a precipitous contraction of the consumer durables market.

The cooperative group’s Caja Laboral credit union — effectively Spain’s ninth largest bank — is recovering from a 75 per cent reduction in its profitability, from 200 million to 50 million euros.

And following a sharp reduction in the use by the cooperatives of temporary workers, overall employment has stabilised at around 83,800.

The cooperatives’ triumph is attributable overwhelmingly to key attributes that set them aside from comparable conventional enterprises.

Not to be overlooked are the conceptual framework that underlies the cooperatives, as well as the enduring solidarity and subsidiarity values that enliven them. These are the legacy to the cooperatives of their founder, the Basque priest Don Jose Maria Arizmendiarrieta.

Internalised and in part secularised as the values and framework have so largely become, they stem directly from the unswerving adherence by Arizmendiarrieta to formation in the ‘see, judge, act’ or ‘inquiry’ study circle mould, as developed within the Young Christian Workers unionist movement.

As recalled by one of the five lay co-founders of the cooperative group, ‘Father Arizmendi organised specialist courses on sociology to which he invited economics professors … His ecclesiastical training led him towards being a practical apostle. He not only tried to give guidelines on what should be the model for the ideal enterprise, but he put that social enterprise to which he aspired into practice.’

The benefits of this model of industry underpinned by Catholic social values are manifold.

Practical advantage gives rise to enduring ties of loyalty to the cooperatives by their worker members. As equal co-owners of their workplaces, members enjoy job security together with individual capital holdings, equal sharing of profits on a proportionate basis and an equal say in governance.

And members share in ownership of a unique system of secondary support cooperatives, from which the primary cooperatives draw resources including financial services, social insurance, education, training, research and development.

A high priority is attached by the primary cooperatives to the competitive advantage of cutting edge research and development. To this end, the original Ikerlan research and development support cooperative is augmented by 13 sister bodies that specialise in particular aspects of manufacturing activity and product development.

And faced, as recently, by adverse trading circumstances, the cooperatives are able to avail themselves of significant flexibilities. For example, non-members employed on a temporary basis can be put off until conditions improve.

Members can agree to forfeit or postpone entitlements such as one or more of their 14 per annum pay packets or the payment of interest on their individual capital accounts, or in extreme circumstances authorise individual capital account draw-downs.

Cooperatives experiencing reduced demand are able to transfer members to cooperatives where demand is increasing, without detriment to their rights or entitlements. And supplementary capital can be accessed from centrally held inter-cooperative solidarity funds.

Meanwhile, on hold until the economy recovers, are further major changes expressing the ongoing commitment of the cooperatives to their origins and principles. These include agreed measures to enfranchise the 35,OOO of Eroski’s 50,000 retail workers who are not already members.

Some 114 local and overseas subsidiaries owned or joint ventured by the cooperatives are scheduled for conversion to worker ownership on a case by case basis, consistent with their differing cultural, legal, business and financial circumstances.

And in 2009, the US Steelworkers union entered into an agreement with Mondragon to jointly develop manufacturing cooperatives in the US and Canada, that has yet to be given effect.

A record of so remarkable a character gives rise inevitably to pertinent questions. What contribution to productivity and workplace wellbeing might countries other than Spain have to gain from attitudinal change such as Mondragon has so successfully engendered?

And why is the Church in the English speaking world so largely silent about the Mondragon cooperatives’ success in bringing to fruition the long struggle in the cause of its social teachings?

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