A worker cooperative is a type of cooperative where the members are the employees of the business.
Accordingly, a worker cooperative is a business entity that is owned and controlled by the people who work in it. Worker cooperatives are not common in Australia now but have operated in many industries and regions in the past. It is important in such cooperatives that all the workers own the business together (not just some). The workers usually invest with a buy-in amount of money when they begin working as a member of the cooperative.
Worker cooperatives are starting to gain some popularity again as a structure for business start-ups, though there is also some activity in the ‘business transfer’ area where companies convert to worker-owned cooperatives, often at the instigation of the current owners working to broaden ownership to cover all employees. It is important to note however that EOA does not view employee ownership in any form as being a solution for ‘business insolvency’.
Worker cooperatives face the same market conditions and difficulties as any other business. They are not any more or any less susceptible to business failure.
The major areas that contribute to the failure of worker cooperatives are:
- Premature start – the many factors that have a bearing on the feasibility of organizing the cooperative were not determined.
- Inadequate member support – which may stem from poor communications, poor business performance, and lack of members appreciation of what they can or cannot expect their cooperative to accomplish.
- Failure of management – the management team/leaders do not assume responsibility for the successful operation of the cooperative.
- Inadequate financial support and poor financial management – members often fail to give or get the necessary financial support, and in other instances, the financial resources available are mismanaged.
As an employer, worker cooperatives are subject to the same industrial laws as other businesses in Australia with respect to award wages, employee entitlements and workplace health and safety. Worker cooperatives not operating to these standards would not be supported by Employee Ownership Australia.
For some excellent data on the impacts of worker ownership, see our ‘ESOP Info’ page.
For better business successions, check out our “Solving Succession Woes with Employee Ownership” page.
For a selection of video highlights on employee ownership in workplaces and in public policy, check out our page “Employee Ownership Videos”.
For our brief on “Employee Ownership and the Labour Movement”, please see our page “What is Employee Ownership”
See also our Employee Ownership Education page.”
Do you have a worker-owned project you want to discuss? If so, EOA would be happy to open a conversation with you about it (contact: info@employeeownership.com.au)
Resources
Check out our “What it is like to work for an employee-owned business” webinar (May, 2023)
A Better Way of Doing Business
Want Your Cooperatively-Owned Startup to Succeed? Avoid this Common Trap (May 2022)
‘A shared ownership model is important but startup co-ops will fail to thrive without an equally robust business model’.
Sharing Meld: Becoming Employee Owned by Trust (August 2021)
Meld Studios: Australia’s first company to become Employee-Owned by Trust (July 2021)
Discussion Paper: Co-operatives and Mutuals as Social Enterprises (October 2020)
Visit our friends at the BCCM (Business Council of Coops & Mutuals) for more info on coops in Australia!
For the fastest-growing worker cooperative in Australia, check out the development of Cooperative Life in the social care field (which now has 75 employees). You can see their website here and their presentation to the “High Performance in Social Care Experts Forum” on their progress.
Story on Galactic workers cooperative in Perth, Australia
3 Essential Ingredients in Successful Co-operative Start-Ups
The Worker Co-operative Code (Coops UK, 2016)
Cooperate for growth: Cooperative entrepreneurship
Return to – Employee Buyouts page
