Understanding Worker Cooperatives: How They Operate and Their Role in the Economy

Worker Cooperatives: A Comprehensive Guide

Managing a business doesn’t necessarily require being a traditional manager or entrepreneur.
One notable alternative is the workers’ cooperative – a social organization aimed at meeting the needs of its members, who are also the workers, offering them better working conditions than those typically available in the market.

This form of organized activity has existed for a long time, evolving yet remaining a valuable economic resource for both workers and the economy as a whole.
According to the Ministry of Economic Development, as of 2024, Italy boasts over 87,000 active cooperatives.
How does this crucial part of our economy actually work? Let’s explore!

What is a Workers’ Cooperative?

A workers’ cooperative is a specific type of company that operates under mutuality principles among its members, with the aim of conducting economic activities under better conditions than what individuals could achieve independently in the market.

Unlike other business structures, cooperatives focus not on profit-making but on collective well-being and addressing member needs.
Legally, Article 45 of the Constitution acknowledges the social function of cooperatives, emphasizing their mutual aid aspect without private speculations.

The Essential Principle of Mutuality

At the heart of every cooperative lies the principle of mutuality, where cooperation and social utility take precedence over personal profit.
There are two forms of mutuality: pure and spurious.

Pure mutuality means limited interaction with third parties, whereas spurious mutuality allows for broader commercial activities, incorporating profit motives while maintaining mutual interests.

Cooperatives with predominant mutuality status focus primarily on their members, meeting specific financial criteria such as generating more than 50% of income from member-related goods and services.

How Does a Cooperative Work?

Individuals form a workers’ cooperative to provide members with favorable working conditions economically and qualitatively.
Members experience a dual role of both “entrepreneur” and “worker,” with two forms of relationships in the cooperative dynamic:

1.
**Associative Relationship**: Members not only work but also share responsibility for risks and capital formation, participating in profit distribution and strategic decisions.

2.
**Employment Relationship**: Though they are akin to small entrepreneurs, member workers receive treatment comparable to regular employees, ensuring their rights, work hours, and fair compensation.

Cooperatives have three main governing bodies: the assembly of members, the board of directors elected by this assembly, and the supervisory board, which oversees cooperative operations.
Importantly, members’ financial risk is limited to their capital share, which is usually not high.
New members can always join to further enhance both human and financial resources.

Types of Cooperatives

Cooperatives are essentially variable-capital societies with mutual goals.
According to Article 2512 of the Civil Code, prevalent mutuality cooperatives engage significantly with their members and often rely on their contributions of labor, goods, or services.
They must register in a special registry with annual balance deposit requirements.

The most prevalent type is the production and labor cooperative, which encompasses goods production and service provision.
Moreover, cooperatives can be classified based on their sector of activity, including agricultural, credit, construction, transport, editorial, cleaning, and catering cooperatives.

How to Establish a Workers’ Cooperative

The first step to founding a cooperative is drafting a public deed by a notary, outlining operational rules and founder details.
Founders must be at least nine workers from the cooperative’s sector without existing competing business holdings.
The notary also prepares the bylaws and necessary registrations in the Companies Register and National Cooperative Registry.

The average cost of establishing a cooperative is around 2,000 euros, covering initial expenses like notary fees, VAT registration, and requisite licenses.

Once established, the cooperative can begin operations, utilizing internal or external skills to create either subordinate or autonomous work relationships for its members.