The increasing role of workers’ cooperatives

There are many ways of skinning the capitalist cat. Instead of the Marxist cry for workers to unite to destroy the free enterprise system and replace it with Socialism, there is the rising trend towards workers forming cooperatives to engage in all types of business. I am glad to see more workers’ cooperatives in the Philippine business scene.

My recent two-year residence in Spain gave me a glimpse of what could be a most powerful instrument to attain the aspiration of the Philippine Development Plan, 2011 to 2016 of “inclusive growth.” As the country finally achieves authentic industrialization, with more and more workers being absorbed in the various industry sectors of mining, manufacturing, construction, and public utilities, the fledgling workers’ cooperatives that are now beginning to appear in Philippine business can blossom into powerful conglomerates such as the Mondragon Cooperative, a workers’ cooperative in Spain started more than fifty years ago by a Catholic priest. Mondragon ranks among the top ten largest businesses in Spain with the most diversified investments in banking, manufacturing, retailing and real estate. I met some of the top executives of this famous workers’ cooperative (which started in Northern Spain), who briefed me on the phenomenal growth of their organization, which implemented to the letter the principles of empowering workers found in the social encyclicals of the Catholic Church.  In fact, its founder’s process of beatification is now ongoing.

I am glad that the final definition of the role of workers’ cooperatives in Philippine business is now coming to a head as the Labor Code is being updated.  The proposed amendment of the “Rules Implementing Articles 105 to 109 of the Labor Code” by Secretary of Labor Baldoz has created a perfect opportunity to enlighten all the stakeholders of business about the nature and essence of workers cooperatives. As defined under Article 23 (t) of RA 9520, a workers’ cooperative is “one organized by workers, including the self-employed, who are at the same time the members and owners of the enterprise.” More specifically, it is a social enterprise that is managed by the members who offer labor as their services to different companies, institutions or entities. In effect, these members are self-employed individuals who enter into commercial agreements with corporations and institutions through the cooperative that they have duly formed and organized.

Through a workers’ cooperative, the members are enabled to render work or labor as the product, service or business thereof, and in return, not only do these individual members earn from their own labor, but also benefit from the labor or work of the other members. This form of business is clearly in keeping with the essence of a cooperative, which is an organization voluntarily formed by individuals for their mutual benefit and support, who equitably share in the capital, participate in the services and become entitled to a fair share of the benefits, as well as in the other consequences of the undertaking.

Workers’ cooperatives have been in existence since the 1930s, initially formed by hat makers, bakers and garments workers. At present, workers’ cooperatives are globally recognized, with hundreds established in Europe, North America, South America, the Middle East and India.  Among the more famous ones, in addition to the Mondragon Cooperative in Spain, are Cheque Dejuener and Acome in France, Kantega in Norway, Suma Wholefoods in the UK, Egged-Israel Transport Cooperative Society in Israel, Indian Coffee Houses in India, and Cooperativa Drapner RL and Cooperativa Nacional de Ahorro y Prestamo in Venezuela. Italy has about 8,000 existing workers’ cooperatives. In North America, workers’ cooperatives have organized the United Sates Federation of Workers Cooperatives and the Canadian Workers Cooperatives Federation.

Workers’ cooperatives are clearly contemplated in the 1987 Constitution of the Philippines, which recognizes the rights of workers to form organizations, associations or cooperatives for their common benefit. There is need, however, for the Labor Code of the Philippines to explicitly recognize the existence of workers’ cooperatives. In the already antiquated Labor Code, there is an almost exclusive focus on the relationships between employers and employees, failing to take into account situations in which entities and institutions enter into commercial agreements with laborers who are self-employed workers. In view of the growing demand for and supply of this form of contractual relationship, it is necessary to amend certain provisions of the Labor Code to effectively include, recognize and protect the rights of these self-employed laborers who rightfully belong to a workers’ cooperative.

The revision of the Labor Code should, therefore, include an amendment of Article 211 under Chapter I, Book V, on Labor Relations. The following State policy should be added: “(h)  to promote and foster social enterprises, such as but not limited to cooperatives and associations formed by contingent, self-employed or non-regular employees for the protection of their rights and the promotion of social justice and development.”  This proposed amendment will assure industrial peace because it will provide for clear guidelines for business-to-business negotiations between the members of the cooperatives and the corporations, entities or industries in need of labor services.

Secondly, there should be an additional Article in the Labor Code under Chapter III, Payment of Wages in Title II, Book III, after Article 106 and 107, addressing the workers’ cooperative in particular. The amendment reads as follows: “Whenever a person, partnership, association or corporation which, not being an employer contracts with a workers’ cooperative, for the performance of any work, task, job or project, the workers of the said cooperative shall be paid in accordance with the provisions of this Code.  A “workers’ cooperative” is one organized by self-employed workers who are at the same time the members and owners of the enterprise. The workers’ cooperative shall not be deemed the employer of its owner-members but shall be the organization that will ensure that the minimum standards and benefits as required by law are provided to its owners-members.

A third amendment is proposed of Article 82 under Chapter I (Hours of Work) in Title I, Book III, of the Labor Code  to explicitly include members of workers’ cooperatives in the provision:  Article 82. Coverage – The provisions of this Title shall apply to workers in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. “As used herein, ‘workers’ refers to those who derive their livelihood chiefly from the rendition of work or services in exchange for compensation, which shall include members of a workers’ cooperative performing a job, task or duty for a person, corporation, association, entity or institution.”

The proposed amendments will take cognizance of the evolving nature of the employer-employee relationship that has to respond to the needs of global competitiveness and the increasing sophistication and education of workers in the Philippines. For those interested in a concrete model of a workers’ cooperative that already has 34,000 workers-owners and services some 200 businesses in the Philippines engaged in agribusiness; merchandising and quick service; auxiliary, property and other institutions; manufacturing and special projects; logistics; and telecommunications, access the website of Asiapro-Cooperatives, www.asiapro.coop. –Dr. Bernardo M. Villegas, INQUIRER.net