The value of devolution in enabling local policy makers to deliver on local economic ambitions could be powerfully demonstrated by the Welsh government with a legislative commitment to increasing employee ownership, argues a report from the Centre for Local Economic Strategies (CLES).
With the report, CLES has added its voice to those calling on the Welsh government to adopt a version of Italy’s Marcora Law, which allows workers to invest their unemployment benefit and severance pay in recovering the business they had worked for.
The thinktank, which has played a leading role in the development of community wealth building strategies for local authorities such as Preston, said: “The value of devolution in enabling local policy makers to deliver on local economic ambitions could be powerfully demonstrated by the Welsh government with a legislative commitment to increasing employee ownership.
“Already committed to the foundational economy as a cornerstone of their economic strategy, focusing on employee ownership would enable the Welsh government to deliver a more inclusive, secure and sustainable economy.”
The Welsh Programme for Government includes a commitment to doubling the number of employee‑owned businesses in the country – from 30 to 60.
CLES says this is “a welcome stepping stone but too modest in its scale and ambition”, arguing in its new report Owning the workplace, securing the future that Wales can “look far beyond that objective”.
Labour/Co-op MS Huw Irranca-Davies has already been pushing in the Senned for such a move – inspired by the former Italian industry minister Giovanni Marcora, who introduced his law in the mid-1980s. It resulted in the development of 796 worker-recovered enterprises in Italy between 1986 and 2001, and enabled collaboration between the state, co-operative sector, business owners and workers.
CLES says the Marcora Law “provides an inspiring frame of reference” but says the Senned’s devolved powers are too limited to fully replicate it – so it has created “a bespoke proposal designed to work for Wales”.
Key provisions of the legislation recommended by CLES include putting the objective of increasing the contribution of employee-owned businesses to the Welsh economy onto a statutory footing.
“This would be supported by legislation to ensure that workers wanting to buy out all or part of a business facing closure or down-sizing would be able to access financial support and advice,” it added. “The provisions are supported by recommended policy measures, including the development of a ring-fenced loan fund, to be administered by the Development Bank for Wales.”
John Heneghan, associate director of CLES and co-author of the report, said: “Since the founding of the Rochdale Pioneers, the United Kingdom has been a forerunner of co-operative enterprise but there is much to be done if employee ownership is to deliver on its potential for more inclusive, sustainable local economies.
“The recommendations in this report would allow Wales to build on its laudable work on the foundational economy, to become a contemporary national pioneer of employee ownership and an inspiration to the rest of the UK and beyond.”