Business and employment co-operative

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See also: Azimut, Artenréel, Coopaname, Coopérative d'activité, Social Act, Gers Initiatives

Business and employment co-operatives (BECs) represent a new approach to providing support to the creation of new businesses. The first BEC was started in France in 1996, since when a further 55 such enterprises operating in 100 locations across the country has sprung up. The idea has also been adopted in Belgium, Sweden, Quebec, Morocco and Madagascar.

Nabil M'Rad, President of Coopérer pour Entreprendre, speaks at the EU's Regional Policy Open Days in Brusssels in October 2007

Left: Nabil M'Rad, President of Coopérer pour Entreprendre, speaks at the EU's Regional Policy Open Days in Brusssels in October 2007

Like other business creation support schemes, BECs enable budding entrepreneurs so experiment with their business idea while benefiting from a secure income. The innovation BECs introduce is that once the business is established the entrepreneur is not forced to leave and set up independently, but can stay and become a full member of the co-operative. The micro-enterprises thus combine to form one multi-activity enterprise whose members provide a mutually supportive environment for each other.

A BEC thus provides budding business people with an easy transition from inactivity to self-employment, but in a collective framework. Intending entrepreneurs pass through three stages:

  • First, they remain technically unemployed but develop their business idea under the wing of the BEC;
  • Next, if it looks like being a success, they become a ‘salaried entrepreneur’ with the security of a part-time employment contract;
  • Finally they become a self-sufficient business, sharing in the ownership and management of the co-operative.

BECs allow a small business person to achieve control over their working life, but with the support of a group of people who are facing the same problems and want to pool their enthusiasm and expertise. They help to overcome one of the most discouraging features of becoming self-employed – isolation. They thus lower the bar for becoming an entrepreneur, and open up new horizons for people who have ambition but who lack the skills or confidence needed to set off entirely on their own – or who simply want to carry on an in dependent economic activity but within a supportive group context.

BEC clients are in all sorts of activities from cookery, industrial cleaning, furniture restoration and organic horticulture to violin making, jewellery, translation and web design. At the end of 2005, the 90 sites in the BEC network numbered 2,618 supported entrepreneurs plus 1,138 salaried entrepreneurs (including 60 member entrepreneurs), with a combined turnover of €16.5 million in 2005. Two-thirds of entrepreneurs start off as unemployed, two-thirds are aged between 30 and 50 and 53% are women.

Contents

Business and Employment Co-operatives – a three-phase career

Stage 1 – Supported entrepreneur / Entrepreneur(e) Accompagné(e)

Initially, the 'candidate business' works up his idea while remaining unemployed in legal terms. He or she continues to receive unemployment benefit while developing a marketable product or service, testing the market and establishing a client base. The BEC handles the business administration and accounting.

Stage 2 - Salaried entrepreneur / Entrepreneur(e) Salarié(e)

The entrepreneur agrees a part-time employment contract with the BEC, and in return pays over 10% of sales. He or she continues to build up the business, as well as receiving training and administrative support. Meanwhile he or she benefits from social insurance cover. The salary grows as the business grows.

Stage 3 - Member entrepreneur / Entrepreneur(e) Associé(e)

When the business is self-supporting, the entrepreneur can choose to join the BEC as a full voting member, and take part in its management, continuing to pay an administration charge of 10% of sales. Optionally, the business can spin off as a totally independent entity.

Policy relevance

Business and employment co-operatives have aroused interest in various areas of policy-making:

One of these is economic development in rural areas, as BECs are a good way to support the so-called SOHO-SOLOs, professionals who migrate to the countryside to carry on their business at a distance – and in so doing bring valuable skills, economic activity and social life back to depopulated areas.

Another is the regularisation of informal work.

A third is demography, and concern about how to raise the activity rate to counter the effect of an ageing population. BECs can help excluded groups such as ex-offenders to restart their working careers, and allow older people to work part-time.

European Parliament conference, 7-8 Dec 06

BUSINESS AND ENTERPRISE CO-OPERATIVES – A LAUNCH PAD FOR INCLUSIVE ENTREPRENEURSHIP

Business and activity co-operatives are the latest thing to hit business incubation. Since the first was started in 1996, a wave of some 70 has sprung up. They are present all across France, have crossed the border – there are eight in Belgium and ten in Sweden – and with EQUAL’s help are now spreading further afield. A conference at the European Parliament, held on 7-8 December 2006 under the patronage of Green MEP Jean-Luc Bennahmias, has strengthened their position on the policy map.

Business and employment co-operatives (BECs), which give collective support to people starting their own businesses, have aroused interest in various areas of policy-making. One of these is economic develop¬ment in rural areas, as Robert Sanders from EBN, the European network of Business and Innovation Centres, said at the event. BECs are a good way to support the so-called SOHO-SOLOs, professionals who migrate to the countryside to carry on their business at a distance – and in so doing bring valuable skills, economic activity and social life back to depopulated areas.

Another is the regularisation of informal work. On this topic, Annie Favrie of Coopérative Initiative, Cité et Développement cited the case of Madagascar, where the vast majority of craftspeople work informally, not necessarily because they want to but because the formalities are so off-putting. The country’s first BEC is to open in January 2007, and out of just over 100 eligible craftspeople, most of whom are in the textile trade, 77 have already signed up. As a tool for development, the BEC is in fact only one part of a three-pronged co-operative approach, as it goes along with a purchasing co-operative and a mutual guarantee fund.

A third is demography and concern about how to raise the activity rate. ”In 10 years’ time, we’ll be talking about the shortage of workers,” said Pär Olofsson of the Swedish BECs network. ”BECs help ex-offenders to restart their working careers, and allow older people to work part-time.”

For Alain Philippe, President of French insurance giant MACIF and of the European Pole of Social Economy Foundations, BECs represent a route to integration, particularly for young people. For Valérie Schneider of GEMIP Midi-Pyrénées in Toulouse, they embody the four values of the économie sociale et solidaire: collective business; sharing skills and means; social values in the economy; and worker involvement. For Nabil M’Rad, President of Coopérer et Entreprendre, the BECs’ federation, they are about translating the Lisbon strategy into jobs.

Eloquent support came from Swedish MEP Carl Schlyter, in favour of the sort of local development that BECs exemplify. He quoted a study by the New Economics Foundation in support of buying local: if just 10% of public purchasing was made locally, this would have 17 times the economic impact of the entire Structural Funds. And though BECs do receive public support – once established, a quarter of their costs seems to be a rule of thumb – they don’t have to be a drain on the state budget. Benoît Smet of CooPac.be, the federation of Belgian BECs, set doubting hearts at rest when he said that last year the BECs paid more into the public purse than was paid out of it (see Azimut.

The I-2-3 of BECs

What is a BEC? Essentially, it is a launch pad, a business incubator that provides budding business people with an easy transition from inactivity to self-employment. Intending entre-preneurs pass through three stages:

  • First, they remain technically unemployed but develop their business idea under the wing of the BEC;
  • Next, if it looks like being a success, they become that oxymoron, a ‘salaried entre-preneur’ with the security of a part-time employment contract;
  • Finally they become a self-sufficient business, sharing in the ownership and management of the co-operative.

The structure thus provides the small business person with the best of both worlds – control over one’s working life, but with the support of a group of people who are facing the same problems and want to pool their enthusiasm and expertise. It helps to overcome one of the most discouraging features of becoming self-employed – the isolation. BEC clients are in all sorts of activities from cookery, industrial cleaning, furniture restoration and organic horti-culture to violin making, jewellery, translation and web design.

Transnational comparisons

At the end of 2005, the 90 sites in the BEC network numbered 2,618 supported entrepreneurs plus 1,138 salaried entrepreneurs (including 60 member entre¬preneurs), with a combined turnover of €16.5 million in 2005. Two-thirds of entrepreneurs start off as unemployed, two-thirds are aged between 30 and 50 and 53% are women.

Maria Woglinde from the Egenanställning (Self-Employment) EQUAL project in the Swedish town of Uppsala said that although the idea is new in Sweden, the project has widespread support and they are working very fast. The first BEC, Bolagsbolaget was launched three years ago, and there are now 10, spread from the north to the south of the country. They have proved a very effective route to integration for immigrants and also ex-offenders, who may find they are asked to repay their debt to public authorities before they are allowed to set up in business on their own. Pär Olofsson, chair of the Swedish network of BECs, noted that Sweden has two types of structure: some are traditional co-operatives, owned by the people who work in them, while others are owned by business support agencies. The network gives them a way to set common standards – they use a standard contract of employment – and generate trust in their endeavour.

In Germany too, said Hans-Gerd Nottenbohm from the innova partnership, EQUAL has helped relaunch the co-operative movement into labour market policy. ”The co-operative law reform that was adopted this August now allows us to create community co-operatives, social co-operatives and ‘founder’s co-operatives’ or Gründergenossenschaften, which work along the same lines as BECs,” he said. “However they don’t cater for unemployed people, they only provide common services for those who have already created their business.”

The movement is also an inspiration further afield, and particularly in the French-speaking world. Québec has its first BEC and in Morocco, the experience has led to a significant legal reform, according to Ali Boulanouar, head of the Social Economy Department of the Ministry of Industry. Co-operative law has been refashioned – notably by reducing the minimum number of members to three – to suit the needs of the fast-growing tourism and craft sectors.

European Commission supportive

The European Commission supports BECs from a number of angles. For Eddy Hartog, who heads the Lisbon strategy unit in the Regional Policy DG, they contribute to the Commission’s big priority – creating growth and jobs. And they do this not by lowering standards but through innovation – understanding ‘innovation’ not in its high-tech sense but in the sense of doing things differently and making use of Europe’s diversity. BECs are a type of incubator, a way of bringing more people into revenue-generating activity, without obliging them to become either bosses or employees. And generating activity is something that is going to continue to attract EU support. Carl Schlyter made a similar point: “Thinking only of high-tech is in some way colonialist. India and China have more engineers than we do, so we can’t win through technical innovation. We need to innovate through corporate social responsibility,” he said.

Walter Faber, head of the EQUAL unit in the Employment DG, stressed that the Lisbon strategy was not just about creating jobs, but about creating full employment, integration and cohesion. He recalled that in 1995 the Commission published a study identifying 17 ‘new sources of jobs’. They are in areas such as care, quality of life, culture and new technologies, and are provided largely by the social economy. Trends since then have proved this prediction right – jobs have been created in sectors like health and education, and not in manufacturing. That is why the social economy and BECs have such an important role to play. Noting that initiatives are increasingly being asked to demonstrate their costs and benefits, he had seen some impressive examples of the social return that social economy can bring.

Finally Apostolos Ioakimidis from the Enterprise DG admitted that the Commission has no clear policy on the social economy as such. Nevertheless it is recognised: the European Co-operative Statute has been adopted, social enterprises benefit from the same help as other businesses, and a number of EU policies, such as those on state aid, VAT, company law and accounting, pay them special consideration.

Legal issues

In the way they combine entrepreneurialism with social protection, BECs seem to many to be the embodiment of ‘flexicurity’ – or sécuriflex as the French prefer to phrase it. For Frédéric Tiberghien, France’s Délégué Interministérielle à l’Innovation Sociale et à l’Economie Sociale, they represent a real innovation, having brought into being a new animal, the ‘chimera’ of the ‘salaried entrepreneur’.

But such a chimera may arouse suspicions. As BECs have taken off, Coopérer et Entreprendre has brought the trade union movement along with it, and so far the French unions have accepted the blurring of the division between employee and director that BECs imply. Yet the form of employ¬ment contract that BECs use raises legal issues. A workshop was held on the topic, which aired concerns that existing collective agreements should be respected and a social dialogue via the trade unions should exist within BECs. The way BECs are organised means a new role for trade unions, and the way forward leads towards the negotiation of an agreement that gives ‘salaried employees’ social protection, and at the same time redefines the notion of ‘entrepreneur’.

But across the border in Belgium things are not so simple. Christophe Pollet of the Graines d’Affaires BEC in Lille and Dunkirk, has already faced tax problems working across the Flemish border in Comines (Komen). Paul Windey, Chair of the Social Dialogue in Belgium, went as far as to declare: “the status of ‘salaried entrepreneur’ will never be accepted in Belgium.” But all is not lost. Negotiations are under way to find a way to satisfactorily combine co-operation with self-employment, and the Belgian parliament is discussing a new status that allows unemployment benefit to be combined with earnings.

Another major legal issue that is rearing its head is whether BECs will be defined as services of general economic interest, and thus qualify to receive public support. Despite these problems, the model of a collective structure that nurtures individual entrepreneurship is firmly established, and is spreading fast. As Hugues Sibille, president of AVISE, France’s Agence de Valorisation des Initiatives Socio-Economiques, joked: “Next stop the United Nations.”

Spanish legal reform, 23 Dec 11

The new Andalusian law on co-operatives enables the creation of activity co-operatives by making it easier for worker co-operatives to employ non-members. Up to one-third of working time may now be carried out by non-members.[1]

SAW analysis 2012

In August 2012, Solidarité Alternatives Wallonnes (SAW) published a factsheet on activity co-operatives entitled Les coopératives d'activités - analyse, which compares the French and Belgian experiences. It may be downloaded from: http://www.saw-b.be/EP/2012/A1210cooperatives_activites.pdf

Contact

Nabil M’Rad
President
Coopérer et Entreprendre
37 rue Jean Leclaire
F-75017 Paris
Tel: +33 1 42 63 47 71
Fax: +33 1 42 63 48 15
mailto://info@cooperer.coop
http://www.cooperer.coop

References

Website of the Coopérer et Entreprendre network: http://www.cooperer.coop

Website of COPEA network (Rhône-Alpes): http://www.entrepreneur-salarie.coop

Handbook: Les Coopératives d’Activités et d’Emploi – L’entreprise partagée, AVISE, 2006. ISBN 2-908334-40-2, downloadable from http://www.avise.org

  1. Ley 14/2011, de 23 de diciembre, de Sociedades Cooperativas Andaluzas, art. 90

Comparison of three different types of support structure for new entrepreneurs: Coopératives d'Activités et d'Emploi, Couveuses, Sociétés de Portage Salariale - des opportunités pour tester, développer ou exercer son activité, AVISE, 2008. Downloadable at http://avise.org/upload/2008-01-22_Repere_Couveuses_BAT.pdf