Twelve years later: what has been achieved since the ILO called on governments to promote co-operatives

Twelve years ago, the International Labour Organization gave a ringing approval for the promotion of co-operatives in a recommendation at its annual conference. With 436 votes in favour, and only...

Twelve years ago, the International Labour Organization gave a ringing approval for the promotion of co-operatives in a recommendation at its annual conference.

With 436 votes in favour, and only three abstentions, it was, as one delegate put it, an innovative and modern instrument which reflected the values and principles on which the co-operative movement worldwide was founded.

The Recommendation adopted that day was the first time for a generation that the ILO’s constituents – governments, employers’ and workers’ organizations – had directly addressed the needs and opportunities represented by the co-operative sector. But the Promotion of co-operatives Recommendation, 2002 (also known as Recommendation 193) built on a long tradition of engagement by the ILO in co-operative matters. Indeed, right from the ILO’s foundation in 1919 as part of the international community’s response to the traumas of the First World War co-operatives have been given a special place in its work. The importance of co-operatives is formally recognized in Article 12 of the ILO’s Constitution.

By 2002, however, it had become abundantly clear that the ILO’s previous standard on co-operatives –Recommendation No. 127 adopted in 1966 – was badly in need of updating. “Although it elaborated the fundamental principles behind co-operatives, it overemphasized the role of governments in their development and played down the importance of each co-operative being an autonomous enterprise controlled by its own members. Besides, its focus was exclusively on the role of co-operatives in the economic and social development of developing countries. Moreover, there was a lack of emphasis, too, on the fact that co-operatives are enterprises,” explains Simel Esim, head of the ILO’s co-op Unit.

The second half of the twentieth century, in fact, had seen a widespread move away from the core principle of co-operatives being democratic bottom-up organizations, established, owned and controlled by their members. Governments in many parts of the world – keen to promote economic development – had tried to support co-operatives but had done so in a very top-down and dirigiste manner.

As the 21st century started it was time to get back to core co-operative principles and ensure co-operatives had the right international framework in place to facilitate their development. The International Co-operative Alliance (ICA), the apex body for the world’s co-operative movement, had already agreed new wording for the international co-operative values and principles in 1995. The ILO’s Recommendation was able to build on the work of the International Co-operative Alliance.

For Bruno Roelants, secretary general of the International Organisation of Industrial, Artisanal and Service Producers’ co-operatives (CICOPA) and an active participant in the negotiations which led to the Recommendation’s adoption, one of its strengths is that it builds on and reiterates the ICA’s co-operative values of self-help, self-responsibility, democracy, equality, equity and solidarity, as well as the ethical values of honesty, openness, social responsibility and caring for others. The seven co-operative principles are also included as an Annex to the Recommendation. As he points out, this makes the Recommendation one of the first times that the definition of a co-operative has been externally recognized officially and unequivocally at global level.

The passing of the Recommendation marked an important step forward for the development of a strong democratic co-operative sector. But international standards by themselves can only achieve so much. The question to ask, at the 12th anniversary of the adoption of the Recommendation, is whether it has proved useful in practice.

Head office of the International Labour Organization, Geneva. Image: Martin Good /
Head office of the International Labour Organization, Geneva. Image: Martin Good /

It’s a question that the ILO’s co-op unit is itself asking. “It is time to take stock of what’s been achieved so far – and where we need to put efforts and resources in the immediate time ahead,” Simel Esim says. “The designation of 2012 as the International Year of co-operatives by the United Nations gave a real fillip to co-operatives worldwide, and through the ICA the co-operative movement has now adopted an ambitious strategic Blueprint for a Co-operative Decade. The ILO Recommendation, representing as it does an agreed statement between ILO member state governments and employers’ and workers’ bodies, can directly help the co-operative movement meet its strategic objectives”.

One case in point is in relation to co-operative law. The Blueprint reiterates what the Recommendation itself stresses: the importance of a supportive policy and legal framework for co-operatives. Indeed the Recommendation points out that laws covering co-operatives should not treat them less favourably than other types of enterprise.

For example, the steps involved in establishing a new co-operative are often lengthy and resource-extensive. By contrast, it can be a relatively straightforward process to set up a new conventional business with limited liability. What’s needed, and what the ILO Recommendation calls for, is fairness of treatment between different business models.

Gratifyingly, this message has been taken on board by governments around the world that have been actively developing, revising and updating their co-operative legislation over the past 12 years. The list of countries is a long one, and Bosnia and Herzegovina, Guinea, Hungary, Kyrgyzstan, Moldova and Viet Nam are just a few of the close to 100 states who have used the Recommendation 193 in revising their co-operative laws. The South African co-operative Amendment Act of 2013 actually spells this out, by stating that “this Act is aligned with ILO Recommendation 193 of 2002 which is also ratified by the South African Government”. In francophone Africa, L’Organisation pour l’Harmonisation en Afrique du Droit des Affaires (Organization for the Harmonization of Business Laws) worked with the ILO on a uniform co-operative legal framework, in force since 2011, which applies in seventeen African countries.

In many other cases too, the ILO has been able to help directly in the work of legal reform. The ILO has published what is generally regarded as the standard work on co-operative law, the handbook by co-operative legal expert Hagen Henrÿ Guidelines for Co-operative Legislation, now in its revised third edition. “The third edition has been produced to incorporate new developments that impact on the development of co-operative law with the inclusion of a general trend in the harmonization of law, the emergence of international regulations, new regional co-operative legislation and framework laws, as well as innovation in the co-operative form of enterprise itself,” says Hagen Henrÿ.

In addition to supporting governments in formulating, revising and updating the co-operative policies and laws, through notably technical co-operation the ILO has assisted its constituents in making progress towards the implementation of the Recommendation.

The ICA’s Blueprint also stresses the importance of member participation and engagement: participation, claims the ICA, is once again becoming one of the co-operative sector’s most valuable assets. Here, too, there is evidence that the Promotion of Co-operatives Recommendation can be of use. In Colombia, for example, the co-operative movement has been able to use the Recommendation to help combat what are known as ‘pseudo-co-operatives’, enterprises which are set up by companies to establish disguised employment relationships with their former employees. In both Bolivia and Kenya, co-operatives have found the Recommendation helpful in protecting their autonomy, potentially under threat from changes in government legislation. In Romania, two national co-operative federations were able to prevent the government from adopting an emergency measure which they claimed would considerably restrict the autonomy of the county’s co-operatives, by pointing out that the proposed measure would have violated the Recommendation.

“We have found over and over again that the Recommendation has been useful,” Bruno Roelants says, offering as examples the role it has played in lobbying work which the co-operative sector has undertaken with bodies such as the International Accounting Standards Board and the European Commission. A particular strength of the Recommendation, he adds, is its call for governments to adopt supportive policies to aid the development of co-operatives.

The past 12 years have seen many governments taking this advice to heart. The provincial government of Québec (Canada) drew up its own co-operative development policy statement in 2003, the result of broad consultations among stakeholder groups. The Turkish government has adopted a co-operative development policy and strategy in 2012, based on the Recommendation. Uganda is another example, as is Malaysia. In Sri Lanka, a draft national co-operative strategy is currently under consideration by the Parliament.

In support of the Recommendation, the ILO has also been able to provide advisory services to governments and co-operative bodies in numerous countries around the world. The list encompasses more than 50 countries, from Benin, Egypt and Indonesia to Sri Lanka, Zambia and Zimbabwe. The ILO has also been able to work with the Co-operative College in the United Kingdom and the ICA to produce an information handbook to the Recommendation, first published in 2004, with a second edition coming up this year.

For Simel Esim, all this activity suggests that the adoption of a formal international standard by the ILO can indeed have direct results. “We’re committed to ensuring that the Promotion of Co-operatives Recommendation continues to make a difference to co-operatives and their members, wherever they may be,” she says. “With this aim, we’ve been working very closely with the International Co-operative Alliance. We will be renewing our Memorandum of Understanding from 2004 in the coming year, and plan to work with them and a range of co-operative organizations and institutions in contributing to the goals outlined in the legislation theme of the Blueprint for a Co-operative Decade.”

While there’s no room for complacency, in general the co-operative sector today is in a better place than it was 12 years ago. The focus on member control and engagement is key to the rejuvenation of a model of working which has successfully met members’ needs for over 150 years and continue to have  much to offer in today’s world.

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