Thursday, 2 May 2013


You may get the impression from time to time that that our country is littered with the remnants of failed models of economic development, most of them having failed to deliver long term economic benefits and more than a few long term jobs to our people and our communities. Perhaps what needed is to step away from the centralised state dependent model of economic development, as successive Westminster governments (regardless of party) have pretty much consistently failed to deliver for Wales. 

 While we do need some fresh economic thinking, we need to think differently and to find other economic models that can deliver sustainable long term jobs and lasting material benefits to our communities and to our country. Our over-dependence on Westminster or Cardiff Bay for that matter to solve our economic problems is understandable considering the nature of our economic and political history, but, is in my opinion regrettable. 

The days of bringing in significant amounts of ‘inward investment’ are probably realistically over, Westminster has better things to spend its money on, at least as far as it is concerned. What we need are indigenous home grown businesses which will put down roots and stick around when economic times are tough rather than pulling up sticks and bugging out when the grant money runs out. We need to develop small to medium sized enterprises or local co-operative industries which will provide medium to long term sustainable job opportunities.

The co-operative model has worked well in Ireland and in the Basque country, there is no reason why it cannot work well here in Wales. The Basque cooperative model, as personified by Mondragon co-operative shows what can be accomplished. To grow local businesses and local jobs we are going to have create a real Bank of Wales, perhaps using the German Sparkasse and Landesbanken model which operate on a strictly regional basis and focuses support to local industries. 

At present too many small and medium sized businesses in our country are being denied credit by banks and this has prevented the growth of our private sector. The German Sparkasse and Landesbanken operate on a geographical basis, and have developed special expertise in the local industries so that they are better equipped to make investment decisions. The over centralised dividend driven rootless banking model that has been followed in the UK is incapable or unwilling to deliver or support economic development in Wales. 

Adam Price, rightly recently pointed out that“there are some great contemporary examples of Welsh co-operation at work.  Time-banking was a great idea developed by American Edgar Cahn, but it’s in the south Wales Valleys that it’s taken deepest root.  Antur Aelhaiarn, the UK’s first community co-operative, is still going strong after thirty years.  Glas Cymru is such a unique example of utility-based mutualism that Harvard has made it a case study.   But these wonderful examples are so often beacons without bridges, lone successes that have never scaled into a full-flung Mondragon-like movement”.
Jobs with Mondragon
Mondragon which is a collective of around 250 companies and organisations based in the Basque Country is proving to be one of the moreresilient economic success stories in recession-hit Spain. The Basque co-operative may well be the world's largest worker co-operative, it is certainly helping the Basque economy to try and resist the worst ravages of the recession in Spain. The company was established in 1956, in the province of Gipuzkoa; employs around 83,800 people with a business philosophy built around co-operation, participation, social responsibility and innovation. 

It began small, with a group of workers in a disused factory, literally using hand tools and sheet metal to make oil-fired heating and cooking stoves. It is now a large conglomerate with over 260 manufacturing, retail, financial, agricultural, civil engineering and support co-operatives and associated businesses; and has annual sales in excess of $US 20 billion (2012 figures). The Cooperative competes on international markets using democratic methods within its business organisation, helps to create jobs, and is committed to the human and professional development of its workers and pledges to development with its social environment. 

The unemployment rate in the Basque Country is 15%, and lower in the province of Gipuzkoa, (where much of Mondragon is based), the unemployment rate in Spain as a whole is now 25%. Some parts of the co-operative are wholly owned, others are run as joint venture operations, with some 114 local and overseas subsidiaries, which are committed to converting to employee ownership on a case-by-case basis, being consistent with local laws, customs and other cultural and economic considerations. The Mondragon group’s credit union (Caja Laboral) is now practically Spain’s ninth largest bank and continues to recover from an initial 75% reduction in its profitability, unlike the other Spanish banks which are still flat lining. 

Co-operative members as equal co-owners of their own workplaces, enjoy job security and individual capital holdings, with an equal sharing of profits on a proportionate basis and an equal ‘one-member one vote’ say in the way their enterprises are run. Pay within the cooperatives is strictly egalitarian, with the highest rates payable other than in exceptional circumstances being no more than six and a half times the lowest. 

We can learn a great deal from the example Mondragon and its methods when it comes generating and retaining sustainable jobs. There is no reason why the co-operative approach cannot be used to bring in a community upward slow burn approach to economic development, something that will not just provide local jobs but real community beneficial sustainable developments which can transform our communities and our country’s economic potential.

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