Q&A: Hagen Henrÿ on changes to co-op law around the world

'A balanced society is a peace-maker. This is not fantasy, but a paraphrase of the opening sentence of the constitution of the ILO'

Dr Hagen Henrÿ is an adjunct professor of comparative law at the University of Helsinki and chair of the International Cooperative Alliance
Co-operative Law Committee. He was previously chief of the ILO’s Co-operative Programme and edited the third edition of the organisation’s Guidelines for Cooperative Legislation (2012).

How did the ILO come to publish its first guidelines on co-operative law?

The idea dates back to the mid-1990s, with the Coopreform program of the ILO under which the International Labor Office supported ILO member states in revising their co-operative policies and legislation.  By the time the first edition, the Framework for Cooperative Legislation, was published in 1998 the original working paper had undergone multiple changes which took into consideration the consultation process of stakeholders in many countries.

The second edition (2005) reflected the newly adopted ICA statement of co-operative identity, and also the material for the UN guidelines for the development of co-operatives (2001), and for the ILO Recommendation No. 193 concerning the promotion of co-operatives (2002).

The reference in UN and ILO documents to the co-operative values and principles demonstrates how important those values and principles had become. More and more co-op laws refer to them.

What has happened since then?

Circumstances have changed again considerably. This might prompt yet another revision of the Guidelines, which would have to deal with
the increasing difficulty in setting co-ops apart from other types of enterprises through law.

While the pressure to approximate the legal features of co-ops with those of capitalistic enterprises (companisation) is diminishing, the pressure to harmonise the governance structures of all types of enterprises (convergence) increases.

This is due to the changing role enterprises are required to play in society. It reflects the debate on corporate social responsibility (CSR) in the context of a shift towards sustainability. While the task of co-operative law over the past 50 years has been to distinguish co-ops from capitalistic enterprises, it must now also distinguish them from other actors of the social and solidarity economy while ensuring their position within it. 

How important is for co-ops to have their identity protected by law? What happens where this is not the case?

Unlike other types of enterprises, co-operatives have developed, as of the mid-19th century, a set of values and principles which constitute their identity.

The importance for co-operatives to have this identity protected by law depends on the importance they attach to the various functions or roles
of the law.

Given a “school” among lawyers who defend the idea that the identity of co-ops may be protected through their byelaws and that a specific law is not needed, it might be worthwhile considering what the main functions of “law”, as understood here, are – namely: a pedagogical one, the function
of protecting third parties, the function of recognition, and as a policy instrument.

The pedagogical function responds to the needs of those who do not have the means or knowledge to protect themselves and others if they had no guidance through law. The interest of third parties to be protected through a law, which prescribes the lines of responsibility and the capital structure of co-operatives in congruence with their specific objective/purpose, is a consequence of the recognition of co-operatives as legal entities with the shift of liability from individual persons to an abstract entity.

The recognition of co-ops as legal entities, as that of any other type of enterprise for that matter, is a largely underestimated and often even unknown development factor. As the identity of co-operatives can only be established against the identity of other types of enterprises, a diversity of enterprise types is not only in the interest of co-operatives, but is also a condition of sustainable development, the source of which is diversity.

Is co-op law ranked higher on education and research agendas than in the past?

Yes – but still not where it should be. However, there are now more courses being taught; more articles and even books are being published. Iuscooperativum, a network of co-operative lawyers established in 2015, has published the first issue of its International Journal of Cooperative Law and has (co)organized two international conferences on co-op law, one in 2016 in Montevideo and one last year in Athens which attracted a relatively large number of participants. The third will take place next year.

How can national co-operative bodies help campaign for improved co-op legislation?

They can only play the role their members, and the members of those co-ops, empower them to. The action has to start from the bottom. 

Most countries allow co-operative members to elaborate byelaws/statutes that comply with the co-operative values and principles. They should make use of this autonomy and – most importantly – ensure through internal control mechanisms that they practice these values and principles.

Where necessary, they should empower their co-ops to unionise and federate at national and international levels and see to it that their representative bodies use their power to ask that legislators respect the obligations governments accepted by adopting for example the UN Guidelines and the ILO R. 193.

Equally important is that these representative bodies build up own expertise concerning co-op law in order to be an adequate interlocutor for the government. The ICA has had since 2013 a Cooperative Law Committee; its four regional organisations have similar entities. As of the end of 2018 the ICA has also had an Identity Committee. The conferences organised by the ICA research committees have had since 2011 an increasing number of participants presenting their findings on co-op law. This demonstrates the place co-operative law has acquired over the past few years.   

As it reaches its centenary, where does the future lie for the ILO?

I attach a high value to this unique organisation, the ILO. Its unique tripartite has reflected the antagonism between capital and labour, the two structuring elements of the economic, social and political order of industrialised and industrialising countries over the past 100 years.

This structure gave the acts of the ILO greater democratic legitimacy than other international organisations. This must not, however, cover the fact that this structure excluded all those who were not represented by employers’ and workers’ organisations – and co-operatives are foremost in this. Attempts in the 1920s to turn the ILO into a quadripartite organisation, including co-ops, failed.

Despite the considerable work of the ILO on co-operative development, this activity has never matched the work on labour standards in the sense of labour law in its broadest sense.

With the decrease of formal employment the focus has shifted to home-workers, freelance workers, the self-employed, and so on. As social protection schemes are in many countries linked to formal employment relationships, this signifies unknown challenges. Over the past years, the factors of globalisation have diminished the aggregate weights of labour and capital in the economy, relative to the new means of production and product, namely knowledge.

Digitalisation allows for production processes free of time and space constraints. This makes it impossible to maintain the links of solidarity that have fuelled interest groups that defend workers’ rights. In addition, the person moves back into the centre of the economic processes – and enterprises which succeed in making democratic participation a principle of all aspects of their organisation and operations will have a competitive advantage.

If the ILO, in collaboration with other actors, succeeds in sharpening the concept of the social and solidarity economy, of which co-operative enterprises remain the main actors, it will contribute to the creation of a balanced society.

A balanced society is a peace-maker. This is not fantasy, but a paraphrase of the opening sentence of the constitution of the ILO. The challenge consists in integrating these new elements into the structure of the ILO or into a new structure of the ILO.

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