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The Social and Solidarity Economy & The Technology of the Future: Threat or Hope?

Below is the keynote speech by Mr Vic van Vuuren, Director of Enterprises Department at the ILO at this year’s Unicoop Florence Annual Convention, in which the theme was “The Technology of the Future: Threat or Hope?”. In his talk, van Vuuren suggests that “in the transition to the platform economy and gig economy workers have also been using cooperatives and online platforms to reclaim their rights”.


Recent crises have dramatically impacted many countries in all parts of the world, and have underlined the growing issues regarding inequality, environmental degradation, unemployment and precarious work.

For us at the ILO, growing unemployment and the questionable quality of available work is of primary concern. The current global economic system is not set to provide work for nearly 200 million individuals. In particular, youth under 25 years of age have lower probability of finding decent work, compared to adults. There are 168 million children in the workforce, 21 million individuals working in conditions of forced labour or slavery, not to mention the issue of informal work, employing more than half the workforce in developing countries, putting them in situations of marked vulnerability, not to say suffering.

In this context, the ILO’s mandate of social justice comes to life, and its commitment to promoting, disseminating and mainstreaming the Social and Solidarity Economy becomes of utmost relevance. The ILO’s work in Social and Solidarity Economy is not only historical, counting a Cooperatives Unit only one year after its foundation in 1919, but remains well and alive, still today. Most recently, the 2008 ILO Declaration on Social Justice for a Fair Globalization states that in a globalized world “productive, profitable and sustainable enterprises, together with a strong social economy and a viable public sector, are critical to sustainable economic development and employment opportunities”.

The Social and Solidarity Economy presents itself, among a variety of other solutions and responses, as a viable solution to recent crises. The Social and Solidarity Economy offers alternative and complementary models of production, that when genuinely used, put the economy at the service of people and planet, contrary to other economic paradigms and current trends. SSE organizations have social and economic aims, and contribute through their very principles and values of democracy, solidarity, citizen engagement and participation to the respect of human rights, dignity, and sustainable development.

ENVIRONMENT

Aside from growing inequality, environmental degradation is an ever-growing concern for our planet, our people and our economies. The environmental pillar of sustainability should be at the center of every public policy decision, on level playing field with people and economy. Considering the widespread knowledge and awareness of the impact of human activity on our planet’s finite resources, environmental consideration in public policy should no longer be deemed as avant-garde policy making, but rather the baseline measure for sustainable and inclusive policies.

From the perspective of environmental protection the challenge of decoupling growth and environmental impacts, and crafting economic transitions that are both green and fair, SSE organizations have a number of fundamental advantages over conventional business. There is little, if any, imperative to externalize environmental and social costs or fuel consumerism as part of profit maximization and competitive strategies. Such organizations also tend to have lower carbon footprints due not only to their environmental objectives but also to the nature of their systems of production and exchange. Furthermore, organizations such as forestry cooperatives and community forestry groups can play an important role in the sustainable management of natural resources, particularly in contexts where they constitute common-pool resources.

DIGITAL

Digitalization, automation and robotization bring about the fears of job loss and the overall change of nature of many jobs. Machines can be deployed in the workplace on a scale and extent much larger than in the past and at a much faster pace, changing the production process in a way that has far-reaching consequences for productivity, employment, skills, income distribution, trade, well-being and the environment, on a global scale.

Social and solidarity economy (SSE) organizations have at least three distinctive advantages that enable them to operate in sectors like personal care and provide a viable quality employment option where other types of enterprises cannot.

  1. First, they are better at identifying emerging needs. Due to the presence of users and volunteers in their governance and workforce, they are very closely connected to the communities they serve, and very attuned to their needs. This gives these organizations a unique capacity to identify potential new areas of intervention based on the changes in the social and economic context, devising new solutions as new needs emerge.
  2. The second advantage of social and solidarity economy organizations is that they are often established by or include users in their governance, though, they are better equipped to handle information asymmetries. Moreover, even in the absence of users within the enterprise, since SSE organizations are not driven by profit, they are less likely to exploit information asymmetries in order to extract value from the transaction by taking advantage of the user. As a result, they are more likely to provide better care and higher quality services than other types of enterprises (Hansmann, 1988), especially in the services sector.
  3. The third advantage is the ability of SSE organizations to operate and develop also by carrying out low-profit activities, since the remuneration of invested capital is not a priority. These sectors are unlikely to attract for profit enterprises that are more driven by capital and return on investment, which – together with the presence of market failure – is why, traditionally, the public sector has intervened in these areas to provide essential services that could not be sufficiently provided by the market. SSE organizations can do so because they can rely on a mix of resources including donations and volunteering, and they recruit workers that are intrinsically motivated by their values and social aspirations, and thus willing to accept slightly lower wages while maintaining a high job satisfaction (as many researches on job satisfaction of workers in non-profit or social economy organizations show.

The “care economy” sector is not the only one in which SSE organizations can fulfil their development potential. The creative and cultural industry sector, which represents another growing sector in terms of occupation with similar characteristics, is also fertile ground for the adoption of SSE models that can empower workers and provide more security, as are many of the other economic activities affected by the gig economy enabled by digital platforms.

Given their core values, operational approaches and organizational models, SSE organizations appear well suited to provide an employment infrastructure also for jobs that emerge in sectors characterized by a high degree of fragmentation, combining the need to coordinate complex forms of decentralization of the production process and the need to provide more security to the workers. Indeed, SSE organizations lend themselves to the adoption of organizational forms that are more flexible and decentralized by resorting to networked collaboration models based on a more rooted and developed sharing culture relative to shareholder companies.

SOCIAL: PLACE OF THE HUMAN CAPITAL IN THE NEW PRODUCTIVE SYSTEM

The below table shows how will SSE put the person at the heart of work.

SSE in the integration of vulnerable groups (women, youth, elderly, persons with disability, etc.)

SSE provides an innovative approach through its collective ownership and democratic governance, as well as multi-stakeholder decision-making processes

SSE can contribute to social inclusion through variety of means:

  • Services
  • Housing
  • Labour market integration
  • Legal counselling
  • Referral services
  • Providing voice and recognition etc.

The Madrid Declaration, signed on 23 May, 2017 by 11 countries of the EU, states:

ʺ[The] common values [of the social economy] also contribute to a future of economic and social progress and are key to achieving the objectives of the Europe 2020 strategy, in particular with regard to the social and labour inclusion of the most disadvantaged and vulnerable groups […]ʺ

The SSE provides a way into work: access to labour markets and employment

  • Formalization of the informal economy through SSE, e.g. cooperatives of waste pickers (who are often migrants or ethnic minorities, such as the Roma);
  • Disability inclusion: SSE organizations encourage active involvement of persons with disabilities in their managementSocial cooperatives in Italy: at least 30% of employees belong to disadvantaged groups – 45,000 workers from disadvantaged groups work in social cooperatives
  • ILO’s PROMESS Project in Tunisia works to create sustainable and decent jobs for youth through the promotion of SSE organizations
  • In South Africa, ILO’s SETYSA project supported partners in promoting social enterprise models for youth

LAW AND NEW MODES OF OWNERSHIP

Formalizing the informal economy:

SSE is a complementary pathway to tackling the ongoing growth of precarious employment and acute decent work deficits connected with the informal economy. Within an enabling policy and institutional environment, cooperatives and other social enterprises can play a key role in realizing the goal of decent work. From an aggregate point of view, cooperatives are among the largest employers in many countries in both the global North and South. SSE organizations can facilitate access to finance, inputs, technology, support services and markets, and enhance the capacity of producers to negotiate better prices and income. They can reduce power and information asymmetries within labour and product markets and enhance the level and regularity of incomes. The low capital requirements needed for forming certain types of cooperative can be beneficial for informal workers seeking to engage in enterprise activities.

Smallholder empowerment:

Around the world millions of rural workers and producers, often women, are organizing in self-help groups and cooperatives in ways that bode well for food security and smallholder empowerment. By organizing economically in, for example, agricultural cooperatives, and politically in associations that can engage in policy dialogue and advocacy, SSE organizations and enterprises can address both market failures (often reflected in deteriorating terms of trade) and state failures (not least the neglect of agriculture in recent decades) that underpin such problems. Furthermore, their tendency to employ low-input, low-carbon production methods and respect the principles and practices of biodiversity bodes well for sustainable agricultural intensification.

Agricultural cooperatives have also facilitated diversification of production, improvements in productivity and quality, and added value through processing of primary commodities. And by returning any surpluses to the members, they contribute to equitable growth. Another powerful contribution of cooperatives and producer organizations is their ability to help small producers voice their concerns and interests, and ultimately increase their influence in policy-making processes. Cooperatives are significant in providing jobs for rural communities. They provide direct employment as well as seasonal and casual work. However, cooperatives also maintain farmers’ ability to be self-employed, given that for many farmers the fact that they are members of a cooperative and derive income from its services allows them to continue to farm and contribute to rural community development. The impact of cooperatives on provision of income for rural populations creates additional employment through multiplier effects, including enabling other rural enterprises to grow and in turn provide local jobs.

Mr Vic van Vuuren is the Director of the Enterprise Department at the ILO Headquarters in Geneva. He was the keynote speaker at the 2018 Unicoop Florence Annual Convention. His keynote speech wasshared with permission.

The Enterprise Department promotes decent work by supporting sustainable enterprises and strengthening the institutions and governance systems which nurture enterprises of all sizes and types. As Director of the Department, Mr van Vuuren oversees a large portfolio of programs ranging from multinational enterprises, SMEs, cooperatives and social and solidarity economy enterprises, social finance and greening of enterprises.

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