How do cooperatives ensure decent access to work and supply chains?

How do cooperatives ensure decent access to work and supply chains?
25 Oct 2021
How do cooperatives ensure decent access to work and supply chains?

Cooperatives have become synonymous with inclusive societies and markets, solidarity and support, and a sense of shared democratic values where all members benefit equally and determine the long-term trajectory of their collective enterprise. In the developing world, cooperatives are essential to the socioeconomic well-being of many vulnerable socioeconomic groups by decent and protected work opportunities for thousands. 

What are cooperatives?

A cooperative is an autonomous association that is voluntarily run by and for the economic and social wellbeing of its members. What sets cooperatives apart from traditional enterprises is that profits are used to further develop the enterprise or revert to the members, rather than benefiting third parties. Therefore, members of a cooperative from across every element of the supply chain stage will receive the benefits and have the opportunity to assume roles of leadership without being subjected to the various constraints imposed by third parties.

A global perspective

The impact and reach of cooperatives cannot be overstated. According to the International Co-operative Alliance (ICA), nearly 12 percent of the earth’s population (280 million people) are members of over three million registered cooperatives. Said cooperatives are responsible for not only protecting member rights and ability to reach markets but provide 10 percent of the unemployed population with work opportunities to improve their socio-economic standing. Furthermore, largest 300 cooperatives reported a total turnover rate of over 2 billion USD, showcasing not only their impact but their essential role in developing and developed countries alike.

The global relevance of a cooperative is its ability to create an abundance of opportunities for members, including access to management and leadership roles and an inclusive platform for members to achieve financial independence.

Cooperatives are also vehicles for gender equality and empower marginalized socioeconomic groups, such as vulnerable women in low-income households, especially in the context of the unregulated and insecure informal economy. For example, the ILO reports that 80 percent of an estimated 50 million domestic workers are women. In this context, cooperatives can advocate for their members to work under decent conditions that are free from exploitation and abuse.

Access to supply chains

According to the ICA, the cooperative business model was created in part as a solution to improve efficiency with regards to access to supply chains, mainly by “eliminating intermediaries” and allowing the coop members to provide their services and products directly to the market.

The same brief shared by ICA goes on to mention that the main difference between more traditional business models and those of cooperatives is their overall goal. For traditional businesses, it is profit over impact, and prioritizing economic benefits over the well-being of workers or communities at large. On the other hand, cooperatives are “value-based and people-centered” and are more concerned with providing equitable and decent economic opportunities to members and providing them with more direct access to supply chains either on a regional or international level.

Cooperatives in the MENA region

Before delving into the world of cooperatives in the Middle East and North Africa, it is essential to provide introductory statistics into the population and employment trends dominating the region. There are approximately 30,000 cooperatives in the MENA region, predominately within the agricultural sector, which makes up 59 percent and contributes significantly to rural employment, followed by consumption at 29.9 percent and housing at 5.6 percent. 

According to the World Bank, the population in the Middle East and North Africa is over 450 million. And when it comes to youth unemployment, unfortunately, the region has consistently reported some of the highest rates, with the latest estimates at 26.67 percent.  The World Bank also reveals that extreme poverty rates are slowly on the rise and have hit 5 percent as of 2015. In more recent reports, Carnegie reports that around “250 million people across the region are classified as poor or vulnerable.”

With growing rates of poverty and stubborn rates of unemployment, it is without a doubt that cooperatives have the potential to transform the region with improved job creation opportunities which will in effect help curb steep poverty rates.

Despite the prevalence of cooperatives around the world, the MENA has a long way to go in this respect. Unfortunately, in-depth and current information regarding MENA based cooperatives is lacking. Yet, a 2010 report published by the ILO entitled, “Cooperatives in the Arab World: Reaffirming their validity for local and regional development,” provides a somewhat in-depth look into cooperatives in the region.

For starters, some of the challenges concern the following, poor state cooperative relations, limited cooperative members due to the lack of awareness, lack of government support services, lack of access to finance, and donor dependency, to name a few. Furthermore, women lack equal representation in many MENA based cooperatives resulting in lacking membership rates.

The same report goes on to discuss various mitigation measures to improve the operation and outreach of regional cooperatives. Some of these include implementing policies conducive to cooperative development, enhancing state support to cooperatives without infringing on the independent nature of the enterprise or its members, raising awareness about the benefits of cooperatives, enhancing the operational capacity of women cooperatives via support programs and access to value chains, and promoting regional cooperation to further develop the this sector.

 Cooperatives in Palestine

The latest reports shared by the ILO reveal that there are approximately 957 registered cooperatives in Palestine, 785 in the West Bank, and 172 in Gaza. The number of cooperative members in the West Bank reached 46,000. The main sectors encompassing Palestinian based cooperatives include agriculture at 81 percent, housing, services, handicrafts, and consumers. However, the same report indicates that the presence of women in cooperatives remain limited in scope.

A study conducted by the Palestine Economic Policy Research Institute (MAS) published an insightful overview into the cooperative sector in Palestine, revealed that most cooperatives are closed off or restricted to the level of families or governorates. Said cooperatives also operate under outdated legal frameworks with limited institutional precepts set in place for “regulating member rights, duties and good governance,” which have ultimately been a significant roadblock to the development of the cooperative sector in Palestine. 

Moving forward

The role of cooperatives in protecting vulnerable workers cannot be overstated, as they provide them with a platform to engage in economic activity while adhering to democratic values, equal representation, and access to decent work opportunities for all members involved.

While cooperative work in the MENA region does exist, near-constant turmoil, growing rates of poverty compounded with the economic fallout of COVID-19, cooperatives have the potential to offer vulnerable socioeconomic groups a safe and protected outlet to work without fear of exploitation or abuse. In addition to efficient access to regional and even international supply and value chains.

However, this sector remains underdeveloped throughout the region due to many reasons, such as dependency on foreign aid, lack of state policies to protect and enhance the cooperative sector, and a general lack of awareness regarding the benefits of membership.

Ultimately, a strengthened cooperative sector needs to emerge on a wide-scale and ensure equal representation amongst the most vulnerable. To this effect, the public sector needs to ensure the implementation of policies conducive to the development of the cooperative sector while remaining separate from the inner-working of said enterprises to avoid government interference.

Greater efforts also need to be made that marginalized women have access to cooperatives, are part of the decision-making process, and have improved access to value chains, which are essential to producers, distributors, and contributors on a national and even regional scale.  To get to this point, stakeholders across the public and private sectors need to work together to raise awareness about the benefits of cooperatives and ensure that they are more readily available to the most marginalized in our communities.