Sunday, December 13, 2009

Worker Cooperative Survival Rates

In a study conducted by the Ministry of Industry and Commerce and presented by the Minister, Mr. Guy Julien, in August 1999 at the congress of the International Cooperative Alliance in Quebec. The study demonstrated that cooperatives have a higher survival rate than comparable, non-cooperative enterprises. Co-op startups are twice as likely to celebrate their 10th birthday as conventionally owned private businesses.

"A recent ILO study also confirms that the survival rate of worker cooperatives and employee-owned firms in market economies appears to equal or surpass that of conventional firms, and that they also match or exceed the productivity of those conventional firms", says Jürgen Schwettmann, head of the ILO's Cooperative Branch. "Cooperatives and employee-owned enterprises deserve greater support because of the many 'collateral benefits' that they produce for their members and the community at large". According to the ILO study, workers' cooperatives and employee-owned enterprises generally pay wages that are competitive or better than locally prevailing wages when profit-sharing, bonus and dividends are included. They are less likely to lay off members during economic downturns, preferring to share the work, even accepting a lower price for their product in order to remain in the market and maintain production and employment.

We made a preliminary analysis to test survival rates among the three types of companies with different associative legal forms. After the first year from inception, the surviving companies close their businesses at a rate of around 5% or 8%, depending on the type of firm. During this initial period, between the first and third year of activity, new cooperatives have a higher probability of survival than public-owned or limited-liability companies.

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