Worker co-operatives provide refuge for a workforce ailing from unstable temporary contract work and the continual threat of outsourcing

Frustrated by unjust management policies, a layoff over a decade ago roused Eugene Yao to seek a different kind of employment. “Companies can be sold to another corporation overnight. Even the general manager will be changed very readily,” Yao says, describing the unstable work environments he struggled with. “Who the hell is safe? Nobody is safe under that system.” Waving goodbye to his electrical engineering career of over twenty years, the middle-aged professional embarked on a better work life.

Determined not to return to the insecure corporate environment, Yao’s goal was to find alternative employment that would bring him security and contentment in his final working years. He teamed up with three other acquaintances to form the commuter bicycle shop Urbane Cyclist under the ideals of the worker co-operative model. These unconventional workplaces can improve the lives of workers through their commitment to democracy, autonomy and concern for community. A refreshing change from the layoffs and uncertainty in his earlier jobs, he’s managed to turn his love of bikes into a thriving collaborative business that’s in its tenth year of operation, providing him with permanent, fulfilling and empowering work.

In a worker co-operative, the traditional hierarchical structure of owner-employee gets thrown out altogether since all “worker-members” serve the dual function of both owner and employee. This economic democracy is similar in principle to the electoral democracy that Canadians often take for granted. Worker-members use the same democratic principle of one member, one vote to run their business. Voting is done either through direct democratic means or by electing co-workers as representatives. At Urbane Cyclist, all major decisions come to a vote, even those about salaries and bonuses. Akin to the dose of democratic self-determination granted to voters in a government referendum, the democratic control worker-members enjoy at Urbane Cyclist allows them to self-direct their work life.

To join a worker co-operative one buys in with cash or sweat equity (building up equity in lieu of pay). After buying in, they own an equal share of the assets. Those interested in membership at Urbane Cyclist need to demonstrate their suitability by first functioning as a regular salaried employee. After proving themselves, they can then join with an investment of $5000 (or sweat equity) if the shop requires their skill set at the time. Upon joining, earnings are then distributed according to the co-operative’s policies—usually determined by the number of hours worked.

Customers browsing through Urbane Cyclist encounter the same sights and sounds as any other commuter bicycle shop: bikes of all shapes and sizes lined up wall to wall, street savvy bike couriers sizing up their next purchase, and metallic clanking sounds coming from the back as staff repair equipment. The difference lies in the level of customer service. Shoppers at Urbane Cyclist receive more sincere assistance than in other traditionally run bicycle shops. Yao attributes this to empowerment. “If you don’t empower people, they’re not going to put in 100 percent,” he says confidently. By taking ownership of their work, members care more about what they do and as a result tend to provide better service. Customer service is crucial to success because it consistently ranks among the most important factors driving a consumer’s purchasing decision. In this respect, Urbane Cyclist has a competitive advantage over its corporate cousins.

In addition to benefiting the business, empowerment also results in a higher level of job satisfaction for members. One unique attraction for Yao is psychological freedom. “I can go away for a month and know that everything will be OK,” he says with a relaxed smile. He prefers the security of multi-member ownership to the shackles of responsibility that come from being self-employed. At worker co-operatives, people can take vacations without fear of business activities going awry.

By opposing the typical profit-centric business model, worker-members can uphold employment stability above all other business objectives. Driven largely by their desire for full-time, permanent employment, worker co-ops boast a survival rate almost twice that of investor-owned companies, according to a study done by the Quebec Ministry of Industry and Commerce. When asked if he plans on utilizing Urbane Cyclist’s success to expand, Yao’s simple response: “We’re happy where we are,” sums up their sentiment of satisfaction. Such contentedness truly differentiates worker co-operatives from their traditional corporate counterpart. They see labour as their prime resource. Their main objective is employment sustainability and not capital gain.

In a province that has a labour force of over 7 million people, it might seem strange that there are only 150 co-op worker-members. Cynthia Stuart, executive director of the Ontario Worker Co-op Federation, attributes the low numbers to a difficulty in securing start-up capital. Banks don’t like to invest in worker co-ops because they can’t understand their funding model—one that focuses on sustainability rather than the typical profit-centric bottom line. Many banks also incorrectly assume that co-ops are non-profit ventures.

Once a co-operative struggles through its start-up phase, it then faces operational challenges. The equal footing that the non-hierarchical business structure presents to members can lead to a couple of major dilemmas. One is the lack of undefined roles. Loose ends can quickly unravel the business if members fail to take ownership of certain duties. Yao avoided this problem by adopting two precautionary measures. The first was to take time early on to choose his partners wisely. Another was to create a solid operational structure that outlines each member’s responsibilities. Such an agreement avoids placing the workload unevenly on one person’s shoulders.

As the pressures of the globalized world economy continue to threaten job security, workers like Yao are increasingly looking for employment alternatives to satisfy their needs. Reflecting on his work life, Yao is happy he created secure work for himself. Equally important is the spirit of co-operation that he gained. “Hard working people who can work together can achieve a lot,” he says enthusiastically. Through their combined efforts, the Urbane Cyclists proved that worker co-ops can mend the disconnect between employees and their place of work. They’ve created a “business family.” By democratically working out problems in a just and equitable way, they establish a trusting and empowering workplace. It’s a work environment they can be proud of and one that both they and their customers enjoy.

7 Principles of Co-operatives:

1) Voluntary and Open Membership
2) Democratic Member Control
3) Member Economic Participation
4) Autonomy and Independence
5) Education, Training and Information
6) Co-operation Among Co-operatives
7) Concern for Community

Co-operatives in Canada - Interesting facts:

• Co-operatives around the world employ 20% more people than do large multinational corporations
• Co-operatives show a higher growth rate of employment than that of the Canadian economy in general. While co-operatives employed 25% more people in 2001 than in 1991, employment in Canada increased by only 13% over the same period
• Three quarters of co-ops have one or more women on their boards
• Co-ops are found in almost every sector and offer services, literally, from the cradle to the grave --- from daycares through to funeral co-ops
• In 900 communities across Canada, a credit union is the only financial institution
• Housing co-ops cost less to operate – 19% less than municipal or private non-profit housing and 71% less than public housing

Concern for Community:

Worker co-operatives are significant contributors to the social economy. One of their core principles is the reinvestment of surpluses into the local community (contributing over $76 million in 2004 in donations, sponsorships, educational and other grants). In addition to giving back financially to the community, they also support local businesses by purchasing locally. Environmental responsibility and commitment to fair trade practices are additional factors that help define co-operative’s code of social conduct.

Source: Canadian Co-operative Association

Kevin Bottero is the editor of The Mindful Word, an engaged culture and mindfulness magazine based in Toronto.