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 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.
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.
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