Two co-operative apexes have signed a joint letter urging the European Commission to prioritise business transfers – including worker buyouts, which suffer from a lack of recognition in most member states.
The joint letter was written as the Commission works on the forthcoming Single Market Strategy and the EU Start-up and Scale-up Strategy.
Cecop, the European confederation of industrial and service co-operatives, and Cooperatives Europe, the European regional office of the International Cooperative Alliance (ICA), join the other signatories to ask the Commission to be proactive in promoting business transfers within all member states.
The letter suggests that the Commission adopt a new recommendation on business transfers along with coordinated policy actions. Recommendations include undertaking and coordinating a comprehensive data collection effort across member states on all types of business transfers; establishing an EU-wide business transfer barometer; and developing a strategy to prepare entrepreneurs for taking over or handing over a business.
Other measures suggested include creating EU-funded projects and programmes to support entrepreneurs in close collaboration with business organisations directly involved in facilitating business transfers, and providing financial instruments and educational programmes to facilitate support for business transfers.
Business transfers include worker buyouts (WBOs), through which a business is transferred to its employees under a co-operative structure.
“While the European Commission’s efforts to support start-ups and scale-ups are appreciated, there is a need to support existing companies seeking continuity and growth within the Single Market,” Cecop said in a statement.
“Indeed, business transfers, including WBOs, are vital tools for continuity, scaling up, and business renewal. They are essential to maintaining local economic activity in all European regions, thereby benefiting Europe’s economy and its social fabric. Historically, the European Commission first addressed the business transfer topic in 1994, but 30 years on, a lack of political awareness persists, and there appears to be a continued reluctance to address this topic at the EU level.
“To this end, together with other European organisations, we urge the European Commission to prioritise all types of business transfers, including business transfers to employees under the co-operative model, in the forthcoming Single Market Strategy and the EU Start-up and Scale-up Strategy.”
A recent report by Fi-Compass, commissioned by the European Commission and the European Investment Bank, found that WBOs suffer from a lack of knowledge and recognition in most EU countries. And co-operative support organisations are struggling to finance the technical assistance services they provide to co-operatives and social entrepreneurs, it warns, while not all EU countries have the right regulatory frameworks and tax incentives in place for the model. According to the report, banks and traditional investors are reluctant to support WBO transactions, which they consider risky.
CECOP, along with its members Legacoop Produzione e Servizi, CFI Cooperazione Finanza Impresa, Coceta, and Les Scop, were involved in preparing the report.
