Save

The Mondragon Worker Cooperatives’ Employment Record 1983–2019

In: Journal of Labor and Society
Author:
Geert ReutenUniversity of Amsterdam, School of Economics, Roetersstraat 11, 1011 WB Amsterdam, The Netherlands, reuten@uva.nl

Search for other papers by Geert Reuten in
Current site
Google Scholar
PubMed
Close
Open Access

Abstract

In 2019, the Mondragon worker cooperatives, which number around 100, employed over 81 000 workers. Based primarily on information from the Mondragon annual reports, this article traces Mondragon’s employment record from 1983–2019. In this period its Spanish employment growth outran that of Spain by a factor of 3.4, and that of the aggregated oecd countries by a factor of 6.3. On top of the Spanish employment, Mondragon cooperatives’ subsidiaries employed about 4300 workers abroad (7% of the total) in 2001, and about 14 500 (18% of the total) in 2019. The article expands on the reasons for this last type of employment. The article also explains why the proportion of cooperative owner-members in the total employment varies over time. Depending on the sector, in 2019 this proportion is 32–45%, and measured as a proportion of the employment in cooperatives 32–74%—the difference being engendered by non-cooperative subsidiaries. Many cooperatives regard these proportions as second-best practices in the search for a modus between competitive pressures and the maintenance of employment within cooperatives.

Abstract

In 2019, the Mondragon worker cooperatives, which number around 100, employed over 81 000 workers. Based primarily on information from the Mondragon annual reports, this article traces Mondragon’s employment record from 1983–2019. In this period its Spanish employment growth outran that of Spain by a factor of 3.4, and that of the aggregated oecd countries by a factor of 6.3. On top of the Spanish employment, Mondragon cooperatives’ subsidiaries employed about 4300 workers abroad (7% of the total) in 2001, and about 14 500 (18% of the total) in 2019. The article expands on the reasons for this last type of employment. The article also explains why the proportion of cooperative owner-members in the total employment varies over time. Depending on the sector, in 2019 this proportion is 32–45%, and measured as a proportion of the employment in cooperatives 32–74%—the difference being engendered by non-cooperative subsidiaries. Many cooperatives regard these proportions as second-best practices in the search for a modus between competitive pressures and the maintenance of employment within cooperatives.

1 Introduction

The Mondragon Corporation is an umbrella organisation for nearly 100 separate self-governing worker cooperatives that together employ over 81 000 workers (2019). Being mainly located in the Spanish Basque region, the group’s cooperatives operate throughout the world, with 141 production plants in 37 countries, commercial business in 53, and sales in more than 150 countries.

Based mainly on information from the Mondragon annual reports, this article traces Mondragon’s quantitative employment record from 1983–2019, and compares this with the employment record of Spain and the aggregate of oecd countries (see Sections 5 and 7.4). The core Section 7 focuses on Mondragon’s way of employment in the face of globalising capitalism’s competition during the period 2001–2019, when the internationalisation of Mondragon’s industrial cooperatives boosted. A main part of this period covers the effects of the international banking crisis and (especially in the euro zone) the aftermath of a sovereign debt crisis.

Section 2 is on worker cooperatives in general (worldwide). The four relatively brief Sections 36 provide general information on the Mondragon cooperatives, including their organisational structure and matters such as pay differences.

The reader will see that the various section subjects refer to different time periods (2001–2019, 1996–2019 and 1983–2019); these are solely determined by the availability of data from my main source (annual reports).

2 General Information on Worker Cooperatives

2.1 General Characteristics of Worker Cooperatives

This section is about ‘worker cooperatives’ in general, though it should be noted that their exact legal form and specifics diverge across countries. I focus on the following four general characteristics:

  1. 1.Democratic decision-making: The legal entity is democratically governed by its worker-members, who directly or indirectly appoint the entity’s management on a one person one vote basis. The other coverage of the democratic decision-making (for example, regarding the annual wage scales) varies by the specific statute of the entity. Main lines may also have been legislated.
  2. 2.Ownership: The legal entity is owned by the cooperative’s worker-members. Upon becoming a member, they will usually have to pay into a fund, either directly or via a deduction from their remuneration in the early years of their membership. This fund functions as a reserve for the cooperative. Most often all or part of this fund is refundable when workers retire or move to another enterprise. Often the ownership is restricted by so-called ‘asset locks’, which means that a specific part of the asset value shall not be sold—this should secure the long-term survival of the cooperative.
  3. 3.Non-members. Often the statute allows for the employment of some percentage of non-members; this may include workers who refrain from paying into the fund mentioned above. This may be regarded as a defect, depending on the rights of these employees concerning the democratic decision-making, and on their remuneration.
  4. 4.Surpluses. The statute of an entity may prescribe that a part of the annual surpluses is not distributed to the workers, but added to the common reserves to which workers can make no individual claim (as against the funds under 2, or part thereof). In some countries this is legislated.

2.2 General Worldwide Quantitative Information on Worker Cooperatives

The available worldwide data on worker cooperatives are limited. The most encompassing dataset currently available is from cicopa (2017a), the sector organisation of the International Cooperative Alliance (ica), which regarding worker cooperatives collected data of 51 countries.1 Table 1 lists the aggregated data of these countries.

T1

Using data from the cicopa (2017a) dataset, Table 2 ranks the top 10 countries in terms of relative employment as % of a country’s labour force, as well as in terms of absolute employment.

T2

Finally, Table 3 lists information on a more encompassing class than worker cooperatives, namely ‘majority-employee-owned enterprises’ (all legal forms), though only those with more than 100 workers—due to the source’s limitations.

T3

2.3 The Record of Worker Cooperatives: Some Key Results of Empirical Research

This subsection compares the economic record of worker cooperatives (wc s) and conventional capitalist enterprises (cps).

In 2012 Pérotin published a review of empirical studies comparing the performance of worker cooperatives with capitalist enterprises in the period 1950 to 2010. She mentions that large representative datasets on worker cooperatives have only recently become available. Her review covers about 70 empirical studies. Below I present her main conclusions. To these I have added some conclusions from her 2014 paper:

  1. 1.Pérotin’s general conclusion is that ‘worker cooperatives perform well in comparison with conventional firms, and … the features that make them special—worker participation and unusual arrangements for the ownership of capital—are part of their strength’ (Pérotin, 2012: p. 36).
  2. 2.‘Worker cooperatives are present in most industries, are not always less capital-intensive and tend to be larger on average than their conventional counterparts, and survive at least as well’ (Pérotin, 2014: p. 35).
  3. 3.‘Solid, consistent evidence across countries, systems, and time periods shows that worker cooperatives are at least as productive as conventional firms, and more productive in some areas. The more participatory cooperatives are, the more productive they tend to be’ (Pérotin, 2012: p. 37). ‘Participation’ regards the degree of workers actually taking part in the democratic structure, thus the degree to which they use their rights.
  4. 4.Whereas it is often assumed that worker cooperatives under-invest, ‘no rigorous empirical evidence can be found in support of the under-investment hypothesis’ (Pérotin, 2014: p. 38).
  5. 5.‘The temptation to consume capital accumulated by previous generations, demutualize, sell out successful cooperatives to conventional owners, or degenerate by restricting membership …, all have solutions that were adopted by different types of worker cooperatives around the world, assisted by legislation’ (Pérotin, 2012: p. 37).
  6. 6.‘Among the possible solutions (sub 5) are measures like asset locks and collective accumulation of capital … Such measures do not seem to hamper productivity by dampening incentives—some of the same cooperatives that have adopted these particular measures are found to be more productive (as the French cooperatives) or to preserve jobs better (as the Italian cooperatives) than conventional firms’ (Pérotin, 2012: p. 37).
  7. 7.‘Employment in a labour-managed firm is not the same thing as employment in a conventional one. In a labour-managed firm, members participate in the decisions that affect their unemployment and income risks. They are considerably better protected against the moral hazard potentially attached to management decisions over investment, strategy, or even human resource policies’ (Pérotin, 2012: pp. 37–38).
  8. 8.‘Profit may not be higher in more participatory cooperatives, but the firms may produce more and preserve their members’ jobs better’ (Pérotin, 2012: p. 38).
  9. 9.‘Workers’ participation in profit and in decisions makes it possible for worker cooperatives to adjust pay rather than employment in response to demand shocks’ (Pérotin, 2012: p. 38). Whereas conventional enterprises primarily adjust employment, worker cooperatives primarily adjust remuneration (Pérotin, 2014: p. 40).
  10. 10.Recessions increase the number of firm closures among conventional and labour-managed enterprises alike. However, recessions decrease the number of creations among conventional enterprises, whereas the creation of worker cooperatives increases—that is, when the risk of job loss increases in conventional enterprises (Pérotin, 2014: p. 41).2
  11. 11.‘The density of worker cooperatives in an area, year and/or industry is an important determinant of further cooperative creation’ (Pérotin, 2014: p. 43; see also Pérotin, 2016: p. 17).

Drawing on over 100 studies across many countries, many of the points above are confirmed in a summary paper by Kruse (2016). A well-documented analytical literature review of the record of wc s, especially in the face of economic globalisation, is provided by Bretos and Marcuello (2017).

Focusing particularly on matters of, or related to, the comparative productivity in wc s and cp s, econometric country studies for France and for Italy found, among other things, the following.

2.3.1 France

wc s are at least as productive as cp s; however, wc s use their capital and labour more effectively than cp s. Using the same technology, the scale of production is significantly larger in wc s than cp s in some industries, and similar in most industries. For all industries it holds that wc s are not smaller or less capitalized than cp s, and that wc s expand their capital at least as fast and grow at least as fast as cp s (Fakhfakh et al., 2012).

2.3.2 Italy

The wc s’ collective ownership and total factor productivity are positively and significantly related after controlling for factor productivity, individual capital ownership and other standard enterprise-level and sector controls. This suggests a positive role of collective capital in strengthening financial sustainability and employment stability in the long run. The wc s’ collective capital favours more investments and capitalisation. Generally, wc s are not undercapitalised and they increase capitalisation over long spells of time (George et al., 2020).

3 The Mondragon Worker Cooperatives

The following sections are on the Mondragon Corporation, which is the umbrella organisation for nearly 100 separate self-governing worker cooperatives (as of 2019). It is the world’s largest worker cooperatives group in terms of annual turnover (14.4 billion US$ in 2018, with about 81 000 employees).3 It is the tenth-largest company in Spain and the leading one in the Basque region. The group’s cooperatives operate throughout the world, with 141 production plants in 37 countries, commercial business in 53, and sales in more than 150 countries.4

From the extensive literature on Mondragon that I have seen, it seems that all the cooperatives’ characteristics listed in Section 2.3 (Pérotin, 2012, 2014) generally also apply to the Mondragon cooperatives—and I will not repeat these below.

My general approach in most of Sections 47 is to start by presenting quantitative information in the form of graphs and tables as based on the MondragonAnnual Reports 1998–2019 (from 2010 onwards the amount of information in these reports decreases). The outline is restricted to observations (indirect ones based on the Mondragonannual reports and the literature that I have seen), without normative judgements.

I will not go into the early history of Mondragon, and merely note that its first cooperative was founded in 1956 (see further Mondragonn.d.a,b, and for example Bretos et al., 2020: pp. 444–448, extending to the period after 2005 on pp. 448–451; a more brief account is Barandiaran and Lezaun, 2017: pp. 280–282). The core Section 7 focuses on Mondragon’s way of employment in face of globalising capitalism’s competition (2001–2019). To put this into perspective, three brief sections set out Mondragon’s general principles and its governance and remuneration structure (Section 4), its 1983–2019 general employment record as compared with that of Spain and the aggregate of oecd countries (Section 5), and an overview of its employment and sales by the Mondragondivision (Section 6).

When below I use the term ‘cooperative(s)’ without adjective, this refers to ‘worker cooperative(s)’.

4 Mondragon’s General Principles and Its Governance and Remuneration Structure

4.1 The Ten 1987 Principles of Mondragon

At Mondragon’s Cooperative Congress of 1987 the federation’s ‘basic principles’ were approved.5 Below these are taken over from Barandiaran and Lezaun (2017: pp. 281–282, with some textual changes):

  1. 1.Free membership: For cooperatives that want to be part of Mondragonthere are no barriers to membership, provided they respect its basic principles;
  2. 2.Democratic organisation: Equality of worker-members, expressed in the election of the cooperative’s representative bodies (one member, one vote);
  3. 3.Sovereignty of labour: Labour is the transformative factor in society and in human beings and is therefore the basis for the distribution of wealth;
  4. 4.The instrumental and subordinated character of capital: Capital is an instrument, and should be subordinated to labour;
  5. 5.Self-management: Worker-members should be provided with opportunities and mechanisms to participate in the management of the cooperative;
  6. 6.Pay solidarity: A fair and equitable return for labour;
  7. 7.Inter-cooperation: A commitment to cooperation among the individual cooperatives;
  8. 8.Social transformation: A commitment to transform society by pursuing a future of liberty, justice, and solidarity;
  9. 9.Universalism: The Mondragonconstellation is part of the broader pursuit of peace, justice, and development of the international cooperative movement;
  10. 10.Education: A commitment to dedicate the necessary human and economic resources to cooperative education.

Barandiaran and Lezaun (2017: p. 282) remark that ‘while the founding generation saw these ten principles as the enunciation of a lived experience of cooperative life, younger cohorts of worker-members increasingly treat them as part of Mondragon’s corporate self- presentation’.

4.2 The Governance Structure of the Mondragon Cooperatives

Mondragon consists of about 100 individual worker-owned cooperatives (recent years) and an umbrella organisation which is also a cooperative, the individual cooperatives being its members. Formally, this umbrella organisation has the somewhat confusing name of ‘Mondragon Corporation’. Following Ugarte, the former president of Mondragon International, I will often use the term ‘Mondragon federation’ (White, 2015).

Each individual cooperative is an autonomous and legally independent entity; its membership of the Mondragon federation is a voluntary choice. Worker-members of individual cooperatives create the entity, or join it, by contributing an amount of capital. The amount of contribution is decided by each cooperative’s General Assembly and it varies by cooperative. Figures 1 and 2 set out the organisational template for the individual Mondragon cooperatives and the Mondragon federation.

Figure 1
Figure 1

The organisational structure of individual Mondragon cooperatives (↓e stands for elect; ↓a stands for appoint)

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

Figure 2
Figure 2

Main organisational structure of the Mondragon Corporation (from 1991) (↓e stands for elect; ↓a stands for appoint)

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

4.3 Salary Differences, Paid-In Capital, and Inter-Cooperative Solidarity Funds

The first three points below regard worker-members of the Mondragon cooperatives (§6 expands on non-members). As in most of the Mondragon sections, I begin with information from inside Mondragon. The information below is from a 2015 interview with Josu Ugarte, then president of Mondragon International (Pizzigati, 2015).

  1. The maximum salary differences within the individual Mondragoncooperatives amount to 1:66 (for the corporations listed in the Spanish ibex 35 stock market index the average compensation difference is 1:105 (around 2015)).
  2. The lowest paid Mondragon associate makes in 2015 about €28 000 (in 2015 this was three times the Spanish minimum wage).7
  3. The maximum compensation difference between cooperatives is 38%. This implies that between cooperatives the compensation difference for a top manager cannot exceed 38%.
    • Interviewer: ‘So where do your executives come from?’ Ugarte: ‘we give a lot of training for our people … In this environment, we get all our executives from inside. We promote from within.8 We have more than 100 Mon\dragon cooperative companies and over 240 associated entities, so we have a lot of opportunities in different companies to promote. We have many people moving inside Mondragon’. Interviewer: ‘Mondragon operates within a globalized world economy. What would happen if executives within Mondragon started arguing that your enterprise could no longer be globally competitive with a one-to-six pay gap?’ Ugarte: ‘To modify the gap would take a vote in the General Assembly, our cooperative’s congress. So it would not be easy to have the congress of Mondragon approving this kind of modification’.

  4. To become an associate of a cooperative, a worker-member has to pay in capital. ‘We are all owners. As cooperativists, we all have capital, equity, in our company. This equity starts now with €15 000 (2015)’. Cooperatives allow this sum to be paid in 24 monthly instalments from the worker’s salary.9 ‘This equity grows over time, as our enterprises within Mondragon have profits. So we have, in effect, three kinds of income at Mondragon: our salaries, the growth in our equity in the company, and the interest Mondragon pays on that equity’.10
    • The next information is similarly from a 2015 interview with Josu Ugarte (White, 2015).

  5. A quarter of the profits of each member-cooperative is used to support the well-being of the entire Mondragon federation. Of which three fifths is used to compensate losses experienced by other members, one fifth is used to support innovation by funding technology centres and university education, and one fifth supports an Investment Fund that helps members to internationalise their business. (The technology centres operate as cooperatives and help members to compete in an increasingly technology-driven global economy.) Between cooperatives there is a commitment to employment relocation in case a cooperative goes bankrupt.11,12

5 Comparative Employment Record of Mondragon, Spain, and the Aggregate of oecd Countries: 1983–2019

Mondragon is organised in four main divisions: industry, retail, finance, and knowledge. Qua employment, the first two are the major ones (in 2019 together comprising 96% of the total). Many industrial cooperatives encompass production plants abroad (Section 6), which has gradually increased from 1989.

To put the next sections in perspective, Table 4 and Figure 3 present Mondragon’s total employment and its Spanish employment, in comparison with the employment of Spain and the aggregate of oecd countries, for the period 1983–2019.

T4
Figure 3
Figure 3

Total and Spanish employment in Mondragon, in comparison with that of Spain: 1983–2019. The total Mondragon employment includes employment abroad. The dotted line shows the total minus the industrial employment abroad. Note that because the scale of Spain’s employment is 1000 times larger than Mondragon’s, Spain’s variations are less visible.

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

sources: employment mondragon: compiled from mondragon 1998–2019; annual reports. data from before 1998 were collected from these reports when they were given, whence before 1998 there are some data gaps. employment spain: oecd statistics (as for table 4).

Thus, whereas in the period 1983–2019 the Mondragon employment in Spain outran that of Spain by a factor of 3.4, it outran that of the oecd countries by a factor of 6.3.

Comparatively this is rather successful. Mondragon also created employment abroad (Table 4, row 1 minus row 2), but to an unknown extent this also applies to Spain and the other oecd countries.

Figure 3 shows the development of Mondragon’s employment from 1983, together with Spain’s employment calibrated on 1983.13

It can be seen from Figure 3 that, compared to Spain, Mondragon took longer to recover from the international banking crisis and its aftermath, which has to do with the different sector composition of the Spanish economy and Mondragon (see the first sentence of the current section).

6 Mondragon’s Employment and Sales by Division: General Overview 1996–2019

The period considered in this section and the next is marked by two issues. First, a moderate recession in 2001–2002 and the banking crisis-induced ‘great recession’ of 2008–2013, which in many European countries (including Spain) moved over to a sovereign debt crisis (2014–2016) with a recessive government expenditure cutback that resulted in a continuation of the downturn in sales and employment (it will be seen in Section 7 why the sales of the retail division slugged beyond this period). Second, an increasing internationalisation of Mondragon’s industrial division that will be amplified on below.

The current section provides a general overview of the employment and sales during 1996–2019. The next section treats details of the types of employment.

6.1 Mondragon’s Employment by Division 1996–2019

As indicated above (Section 4), Mondragon is organised in four divisions: industry, retail, finance, and knowledge. The financial division includes banking, insurance, and social security, and the knowledge division includes technology centres as well as other knowledge-related cooperatives including a university—this last one is also indicated as the corporate division.

Figure 4 shows the course of Mondragon employment during 1996–2019. The top line (total employment) is the sum of the three bottom lines (divisions).

Figure 4
Figure 4

Employment in Mondragon Corporation by divisions 1996–2019.

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

source: compiled from the annual reports mondragon corporation 1996–2019. the figures for the financial and corporate divisions are derived (total minus retail and industrial). the figure for the retail division 2016 has been interpolated because for that year the annual report provides no datum.

6.2 Mondragon’s Industrial and Retail Sales 1996–2019

This subsection provides information on the sales of Mondragon’s retail and industrial divisions. Figures 5 and 6 show their sales from 1996–2019, focusing especially on the international sales, which in the Mondragon annual reports includes not only exports but also sales by subsidiaries abroad.14 Throughout this period many of the industrial cooperatives increasingly opened subsidiary production plants abroad.

Figure 5
Figure 5

Mondragon’s retail and industrial sales (with the latter’s share of international sales) 1996–2019. * Industrial international sales regard exports plus sales generated from production plants abroad.

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

source: see figure 4.
Figure 6
Figure 6

Mondragon’s industrial international sales proportions 1996–2019.

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

source: compiled from the annual reports mondragon corporation 1998–2019. data for 1996–1997 are from the 1998 report. for the year 2007 i used the data as revised in the annual report of 2008.

As for Figure 4 (employment), the post-2007 period shown in Figure 5 reflects the aftermath of the international banking crisis and the sovereign debt crisis.

Figure 6 shows that from 1996–2019 Mondragon’s proportion of the industrial international sales (exports, and sales of subsidiaries abroad) in the total industrial sales increases considerably. For exports this trend set in during the run-up to Spain’s accession to the European Union (at the time the ‘European Economic Community’) in 1986; foreign subsidiaries were opened from 1989.

The Mondragon annual reports provide alas no separate information on the amount of sales (or employment) by cooperatives, as distinct from their subsidiaries. Table 5 gives all the available information in the annual reports on the number of Mondragon cooperatives and subsidiaries (the 2016–2019 reports provide no information on this). Foreign subsidiaries (column 3) regard mainly industrial production plants.15 Home subsidiaries regard mainly retail entities.

T5

Table 5 shows that from 1998–2015 the number of production plants abroad (subsidiaries) increased by a factor of 13 (from 17 to 128), exceeding the total number of cooperatives (industry and retail) from 2013. The table also shows, perhaps more remarkably, the large number of subsidiaries in Spain (column 2 minus column 3), a large amount of which are subsidiaries of the retail cooperative Eroski.16

Regarding the number of cooperatives in column 1: one main cooperative went bankrupt—Fagor Electrodomésticos in 2013; other declines in the number may result from mergers between cooperatives, or from cooperatives leaving Mondragon. Errasti et al. (2017: p. 4) mention that prior to the Fagor case, the Mondragon group ‘had an excellent survival record of firms with practically no demise’.

7 Mondragon’s Way of Employment in Face of Globalising Capitalism’s Competition: 2001–2019

This section—the core one of the article—returns to the Mondragon employment. Its focus is quantitative, complemented by qualitative information from the literature. As before, the quantitative information is mainly based on the Mondragon annual reports. Although in terms of employment (and most of the time also in terms of sales) the retail and industry divisions are roughly the same size, for reasons unknown to me the reports devote relatively minor space to the retail division—also regarding data. The section is comprised of four subsections:

  1. 7.1.Types of employment in the Mondragon entities;
  2. 7.2.Retail cooperatives: worker-members and other employment;
  3. 7.3.Industrial cooperatives: worker-members and other employment;
  4. 7.4.Comparative employment record of Mondragon, Spain, and the aggregate of oecd countries: 2001–2019.

7.1 Types of Employment in the Mondragon Entities

As an introduction to, and organising framework for, the remainder of this section, Table 6 outlines Mondragon’s main legal entities and their types of employment. The legal entities range from ‘straight worker-owned cooperatives’ and ‘hybrid cooperatives’ to ‘non-cooperative subsidiaries’. The types of employment range from those of ‘worker-members’ to various kinds of ‘temporary employment’.

  1. Row 1. Straight worker-owned cooperatives (wc s): Applies (towards 2019) only to cooperatives in Spain.
  2. Row 2. Hybrid worker- and consumer-owned cooperatives: Applies to the major part of the retail division (Spain), specifically to the Eroski Group, which in 2019 together with its subsidiaries employed 36% of the total Mondragon employment (Eroski Group, 2020: pp. 11 and 15).
  3. Row 3. Hybrid worker-owned cooperatives: Mixed parent wc-owned and local worker-owned. Applies currently only to (part of the) cooperatives in Spain. These mixed cooperatives are in principle self-governing, but the parent cooperative is a shareholder—which should safeguard its original financial investment (Flecha and Ngai, 2014: pp 673–676).17
  4. Row 4. Partial subsidiary: Mixed ownership by parent wc and other (non-worker) co-owning financiers. These co-financiers can also be (non-parent) other Mondragon cooperatives. Applies to domestic subsidiaries, though currently mainly to industrial subsidiaries abroad (Arando et al., 2011: pp. 28–29).
  5. Row 5. Full subsidiary: parent wc-owned: Applies to domestic subsidiaries, though from about 2011 predominantly to industrial subsidiaries abroad.
  6. Row 6. Full subsidiary: parent wc-owned: Variant with local workers’ participation in the management. Regards domestic and foreign subsidiaries, in application of Mondragon’s ‘corporate management model’ (Flecha and Ngai, 2014: pp 676–678; regarding foreign subsidiaries, see also Bretos and Errasti, 2018: p. 10).
  7. Column 1. Ownership related: worker-members: The next two subsections (7.2 and 7.3) elaborate on the proportion of worker-members.
  8. Column 2. Voluntary non-members: Workers may refrain from membership in face of the capital to be paid in, and other cooperative duties such as payment reduction in an economic downturn. Fixed contracts for these non-members are not excluded (this is practiced in especially the retail division).
  9. Column 3. Aspirant worker-members on probation: This is a functional type of employment, as aspirant worker-members have to fit the collaborative and governance culture of the regarding cooperative (mentioned by Flecha and Santa Cruz, 2011: p. 161; see also Arando et al., 2015: pp. 6–7). In periods of considerable employment growth (such as from 1999–2007) this category will be substantial.
  10. Column 4. Temporary worker-members: This category was created in 1993. The duration of this membership is a maximum of five years, and no more than 20% of a cooperative’s full membership can consist of temporary members. These enjoy most of the same rights as full members (they share in surpluses based on the individual’s salary, and may vote for and can serve on elected bodies)—their membership fee is 10% of the full membership fee. However, they do not have job security (Arando et al., 2011: p. 32; Flecha and Santa Cruz, 2011: p. 161).
  11. Column 5. Other temporary employment by cooperatives (mentioned by, e.g., Barandiaran and Lezaun, 2017: p. 287): This category, and the following one, has evoked critical attention from inside Mondragon18 and from other commentators.19
  12. Column 6. Fixed or temporary employment by subsidiaries: There is an enormous amount of literature on this category. Some of it will be referred to in the next two subsections.

T6

Generally, a handicap for the current section is that on the column categories above, ‘precise longitudinal data are hard to come by’ (Arando et al., 2011: p. 17).

The following two subsections take the retail and industrial cooperatives separately. On the two together, the authors just quoted mention that by 1990 non-member workers in cooperatives comprised 10% of the total (Arando et al., 2011: p. 18), and that, at least by 2011, these ‘receive an annual profit share of, at a minimum, 25% of the share a worker-member at the same pay grade would receive’ (Arando et al., 2011: p. 18).

7.2 Retail Cooperatives: Worker-Members and Other Employment

Mondragon’s retail division consists of two cooperative groups: the Erkop Group and the Eroski Group.20 In face of the available data I focus below on the latter, which in 2019 encompasses about 75% of this division’s employment. Herewith Eroski is the largest cooperative group of Mondragon in toto (in 2019 it employed 36% of Mondragon’s total employment). In Deloitte’s world top 250 largest retailers it ranks 193rd with a revenue of $5.3 billion in 2018 (Deloitte, 2020: p. 19).21 Eroski is a hybrid worker- and consumer-owned cooperative.22 Its Governing Council is made up of 12 members elected by the General Assembly; half of these come from the group of consumer-members, and the other half from the group of employees. The General Assembly is composed jointly by 250 Consumer Partner representatives and 250 Employee Partner representatives (Eroski Group, 2020: p. 26).

Whereas the Mondragon annual reports from 2006 present information on the percentage of cooperative worker-members of the industrial division (see Section 7.3), the information on worker-members in cooperatives of the retail division is scarce. For this division only four data on the proportion of worker-members are provided (2002 and 2003 each 41%; and 37% in 2005; for 2013 there is one datum on the Eroski group: 34%).

Figure 7 presents—based on other sources—information on the proportion of worker-members in Eroski’s total employment. The incomplete top line of this figure is the sum of the two bottom lines (also incomplete). Before commenting on these, it is relevant to note first that the Eroski Group was heavily hit by the 2007–2008 banking crisis and its aftermath (that applies to most enterprises) especially because of its enormous amount of debt-financed acquisitions just prior to it—the burden of which required 15 years of continuous restructuring (reflected in the employment downfall shown in the blue columns of the figure).23

Figure 7
Figure 7

Proportion of worker-members in the retail division employment: Eroski Group, 2000–2019.

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

sources: 2000–2011: storey et al. (2014: p. 12); 2015–2019: eroski group (2020).24

Along with the mentioned acquisitions (mainly non-cooperative subsidiaries) the proportion of the worker-members dropped from 41% in 2005 to 26% in 2008—see the top line. The acquisitions accelerated in 2007–2008, but had continuously moved up in the period before it—see the blue columns 2000–2006. Arando et al. (2011: p. 19) mention that the acquisitions (starting in the 1990s) were a ‘response to competitive pressures, especially from large French chains’, whence ‘the need to expand quickly and substantially … was pressing’, and that ‘Eroski felt it was potentially too slow, risky, and complicated to expand by using cooperative legal structures’.

Next to the regular (full) worker-owners/members of its cooperatives (the dotted line in Figure 7), Eroski established in the late 1990s a voluntary, partial employee-ownership structure—called gespa (see the bottom line of the figure)—aiming for these to become full members at a later stage (Arando et al., 2011: p. 20).25 The year 2017 was the last time that in the Eroski annual reports the gespa category was mentioned (with a minor number of 486), which—given the worker-member percentages of the (broken) top line of Figure 7—probably means that the former partial members have become full members (as was the intention). Flecha and Ngai (2014: p. 676) mention that in face of concern about worker participation in its subsidiaries, it was decided at the group’s ‘General Assembly in 2009, by a vote of 77.5%, to offer all workers at its related capitalist companies (subsidiaries) the opportunity to become worker-owners in mixed cooperatives’ (according to the annual report from 2019, all the Eroski cooperatives are mixed worker-consumer cooperatives).

I consider that this opportunity for all workers to become worker-owners in the mixed cooperatives is an important principle, one that does not apply to much of the industrial division. Nevertheless the current worker-member percentage of just over 30% seems very low. This may have to do with the branch and with the capital that full members have to pay-in (which in 2009 amounted to about 30% of the average annual remuneration in an Eroski store; Arando et al., 2015: 7). But even if the latter were no hindrance, given that Eroski allows the capital to be paid in five-year instalments, general risk aversion—including possible wage decreases for members amid an economic downturn—might be a hindrance.

Finally, I mention from the annual report 2019 that 76% of the employees had a permanent contract; the salary range of the group was 1:8.2; the minimum salary was 8.6% higher than the minimum inter-professional salary in Spain; and there is no salary difference between men and women (Eroski Group, 2020: pp. 56–59 and 64–65).

7.3 Industrial Cooperatives: Worker-Members and Other Employment

In 1989 two of Mondragon’s industrial cooperatives started to locate production abroad and since then their number and the number of foreign locations has steadily increased (Section 6.2, Table 5, column 3). Before getting to the proportion of worker-members in the industrial cooperatives, some preparatory information is provided.

7.3.1 National and International Employment of the Industry Division

Figure 8 shows the national and international employment of Mondragon’s industry division from 2001–2019. The reason why this figure does not (and cannot) provide information on employment within industrial cooperatives will be explained later.

Figure 8
Figure 8

National and international employment of Mondragon’s industry division 2001–2019. Note on ‘Industrial employment abroad’. These data are available for 2012–2019. However, for 2001–2011 there are data on the total employment abroad. I have used these as a proxy for the industrial employment because the foreign retail employment is relatively minor.26

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

source: compiled from the annual reports mondragon corporation 2001–2019. the data for the year 2007 are those as revised in the annual report of 2008.

From the percentages at the bottom of Figure 8 we see that in 2006 and 2007, just prior to the banking-induced recession, the international industrial employment share stood at 37% (minus 63%). During the recession period it increased to a maximum of 40% (2011). From 2017–2019 it is back to the 37% level. Thus, in a way the international subsidiaries modified the recession’s employment downturn for Mondragon as a whole (there are quite a few subsidiaries in countries that were not/less hit by the banking crisis)—at least until 2013. From 2007 to 2013 the industrial employment abroad dropped from 16 580 to 11 012 (minus 34%). In the same period home employment dropped from 27 700 to 19 889 (minus 28%).

7.3.2 International Employment Strategy in Face of Economic Globalisation

The total industrial employment increased by 45% from 2001 to 2019. In the same period the national Mondragon industrial employment increased by 8%, and the international employment more than tripled (growth 240%). These figures reveal the employment strategy in this period by about half of the industrial cooperatives, that is, to found or acquire subsidiary companies abroad, with the intention of maintaining the home cooperative employment. This strategy was quite independent of the ‘great recession’, as can be seen from the run-up to the foreign top employment in 2007 (16 580 workers). It was rather the general response—from the last decade of the twentieth century—of multi-nationalising cooperatives to international competitive pressures in face of economic globalisation.27 Ugarte, the former president of Mondragon International, remarks on it in a 2015 interview: ‘We have compared our companies that invest abroad with the companies that stayed in the Basque country. Our multi-localised companies increased all their figures, and the companies that did not multi-localize lost employment at home’.28,29 When asked about the salaries of these workers abroad, Ugarte replies: ‘For the worker salaries, we pay higher than the local society norm. We always pay higher than the prevailing wage’ (interview in Pizzigati, 2015: p. 4).

The objective of the Mondragon international employment in service of the parent cooperatives’ employment is often stated as a distinguishing characteristic in comparison with multi-nationalising mainstream capitalist enterprises—the latter being indifferent as to where workers produce the surplus that capital owners appropriate. Obviously, worker-owners of cooperatives are not indifferent, as relocation would affect their job (the same applies for workers in mainstream enterprises, but they do not decide).

Ugarte: ‘Employment creation and preservation, at whatever scale, is deeply embedded in the culture of coops. When workers are owners, closure of any operation—even one with limited profitability—is a last resort, pursued only when a facility endangers the survival of the larger enterprise. … When opportunities arise in another country, Mondragon’s strategy is not to relocate an existing facility there, but, instead, to maintain the Spanish operation and to acquire or build a new facility abroad. This is quite different from the behaviour of US and UK companies, for example, which have been moving domestic operations overseas for decades’ (interview in White, 2015: pp. 3–4). Errasti et al. (2017: p. 8) confirm that for the most part only production that was no longer profitable or feasible in the parent cooperative was transferred to foreign subsidiaries. Similarly, Bretos and Erasti (2018: p. 8) indicate that ‘unlike the offshoring model practiced by many capitalist multinationals, the Mondragon cooperatives have expanded … [in] new emerging markets, without that meaning the closure of plants and the destruction of jobs in the Basque Country’. On this multi-national employment strategy, see also: Luzarraga (2008: pp. 408–424); Flecha and Ngai (2014: pp. 668–669); and Bretos et al. (2019: pp. 584–585, 589–590 and 596).

7.3.3 Non-Cooperative International Subsidiaries

In principle, multi-nationalising parent cooperatives might have, for the legal structure of the foreign settlements, the four options indicated in rows 3–6 of Table 6 (Section 7.1). It is understandable that worker-owners of the parent cooperative (these decide on a foreign settlement) wish to safeguard their original financial investment. That might be the case when the settlement’s legal structure has the form of a mixed cooperative that is jointly owned by the parent cooperative and the local workers (row 3 of Table 6)—which would contribute to the Mondragon principle of ‘development of the international cooperative movement’ (Section 4.1, principle 9).

Nevertheless, towards the end of the second decade of the twenty-first century, no foreign settlement has a cooperative form (Bretos and Errasti, 2018: p. 5). Apart from the possibility that some cooperative might not care for the 9th principle, two issues might hinder the foundation of a hybrid worker-owned cooperative (row 3 of Table 6). The first one is that many countries lack legal cooperative structures similar to those that apply to the Mondragon cooperatives’ ownership and governance. The second—in case the first does not apply—is that in a culture where worker-cooperatives are rare, the paying-in of capital and the possibility of wage decreases in an economic downturn (and other cooperative duties) pose even more of an obstacle than for many workers in a culture where worker-cooperatives are common, such as in Spain and, specifically, the Basque Region (on each of these hindrances, see Flecha and Ngai, 2014: pp. 671–672; Barandiaran and Lezaun, 2017: pp. 286–287; Bretos et al., 2019: pp. 594–595).

7.3.4 Cooperative Worker-Members in the Industrial Division

Figure 9 shows the percentage of worker-members in industrial cooperatives from 1995 to 2019. The annual reports of Mondragon from 2006 mention these percentages under its ‘basic data’ (for reasons that are unknown to me, these are not given for the retail division). However, the amount of employment in cooperatives is never stated (the same applies for the employment in subsidiaries), and therefore the proportion of worker-members in the total industrial employment cannot be calculated (comparable to Figure 7 for the retail division). Of the literature on Mondragon that I have seen, Luzarraga (2008) is the only author to trace the amount of employment in industrial cooperatives for a couple of years between 1999 and 2006. Combining this with data on the amount of worker-members (Luzarraga et al., 2007), the resulting three odd data are given at the bottom of Figure 9.30 Given that in 2006 and 2019 the amounts of each of the Mondragon industrial employment in Spain (minus 7.5%) and abroad (minus 8.2%) do not deviate that much, the graph’s 45% of 2006 might be used as a very rough indicator for 2019.

Figure 9
Figure 9

Proportion of worker-members in industrial cooperatives 1995–2019 (with an indication of their proportion in the total industrial employment).

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

sources: top line 1995–2005: arando et al. (2011: p. 19); 2006–2019: mondragon annual reports 2006–2019. data for ‘worker-members proportion of total industrial employment’: compiled from luzarraga (2008: p. 70) and luzarraga et al. (2007: p. 21).

Regarding the top line of Figure 9 (the complement of which is the proportion of temporary workers and perhaps workers with a fixed contract), Arando et al. (2011: 19) note that during the 1990s, the industrial cooperatives group ‘began to emphasize the importance of minimizing the use of temporary workers and set a goal that a minimum of 85% of the coops’ internal work force should be made up of worker-members’.31 This goal was reached in 2009, but it is not unlikely that this was triggered by the ‘great recession’-induced redundancy of temporary workers instead of their adopting membership (from 2007 to 2009 the division’s employment in Spain dropped by 21%—cooperatives plus subsidiaries).32 By 2017 the percentage of worker-members was back to the 2002 level, well below the intended minimum level of 85%.

Both from the side of the Mondragon federation and from the side of quite a few individual cooperatives, the amount of temporary workers in cooperatives as well as the legal form of subsidiaries has been seen to conflict with Mondragon’s initial cooperative values, or at least as a second-best practice in seeking to find a modus between competitive pressures and the maintenance of employment within cooperatives (see, for example, Bretos et al., 2020; for an overview, see their table on p. 444).

7.4 Comparative Employment Record of Mondragon, Spain, and the Aggregate of oecd Countries: 2001–2019

This subsection compares the employment record of aggregate Mondragon entities with Spain’s employment record. Many commentators assert that Mondragon has on average succeeded in maintaining the employment in its cooperatives (cf. the heading ‘International employment strategy’, Section 7.3.2). Although this is plausible, the Mondragon annual reports provide no quantitative evidence for this thesis. It is most remarkable that these reports, as mentioned, never state the amount of employment in cooperatives. They state the amount of employment of the sum of the cooperatives and their subsidiaries for each of the retail and industrial divisions. For a quantitative analysis this absence has many repercussions (as mentioned, one regards the amount of worker-members). Because only for a restricted period (2001–2019) the reports mention the amount of Mondragon employment in Spain (cooperatives plus their subsidiaries), this period is taken as a basis for the comparative performance.

Table 7 (and the two more specific Figures 10 and 11 that follow it) shows the results—the long-term perspective was shown in Figure 3 (Section 4). The period 2001–2019 covers one ‘normal’ cyclical recession (2001–2002—for Spain a relatively minor one with no employment fall) and the ‘great recession’ (2008–2013) with, in the EU, its sovereign debt crisis aftermath.

T7
Figure 10
Figure 10

Comparison of Spain’s retail employment with Mondragon’s: 2001–2019.

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

sources: see figure 7.
Figure 11
Figure 11

Comparison of Spain’s industrial employment with Mondragon’s industrial employment in Spain: 2001–2019.

Citation: Journal of Labor and Society 2022; 10.1163/24714607-bja10080

data sources: see figure 7.

Comments on Table 7: Row 1 comprises data on the total Mondragon employment, which includes foreign subsidiaries, whilst the total of Spain and the oecd do not include the employment of corporate subsidiaries. For the comparison, therefore, the Mondragon Spanish employment has been used (rows 3–9). The comparison of rows 3–4 (Spain and Mondragon Spanish) is only moderately relevant because of the sectoral differences between Spain and Mondragon. Rows 6–9 therefore focus on Mondragon and Spain’s retail and industry sectors. This comparison shows (column 4) that Mondragon did much better than the Spanish averages, especially for the industrial division.

The following two figures show in more detail the development and comparison of the retail and industrial divisions in the period covered by Table 7. Note that in Figures 10 and 11 Spain’s variations are less visible than Mondragon’s because its employment scale is 1000 times larger than Mondragon’s.

The shaded area in Figure 10 marks what later turned out to be the choking acquisitions of the Eroski Group—mentioned in Section 7.2. Note that not all of the employment downfall resulted in layoffs. Part of the acquisitions were sold, and for another part Eroski developed a franchise system (in 2019, on top of the graph’s employment, franchise holders employ about 3400 people).

It can be seen from Figure 11 that Mondragon’s industrial employment outperformed Spain especially in the four recession years 2010–2013. One main reason is that during recessions, cooperatives foremost tend to adapt wages, and only adapt employment if unavoidable.

In 2019 the retail division’s employment is back beyond the 2006 level and the industrial division’s employment in Spain is back at the 2004 and 2008 level.

8 Concluding Summary

This concluding summary starts with a general reflection on worker cooperatives. It is followed by a summary of the article’s main findings regarding the Mondragon case.

Currently, worker-owned cooperatives and similar democratic entities are, quantitatively, no more than islands within the general capitalist constellation. This is remarkable to the extent that many capitalist countries advertise themselves as being democratic; nevertheless, democratic decision-making most often ends at the factory or office gate.

Most workers in capitalist countries have no choice other than to be employed by a capitalist enterprise (especially when they have no means to start a single person business of their own). This implies that they have to accept the conditions of the employment, including the salary offered and the (most often) authoritarian work relations—ultimately the enterprise’s management decides on the work organisation, and the management itself has to comply with the profitability conditions of the enterprise’s owners or other financiers.

This is completely different for worker-owned cooperatives and similar democratic entities. Here the worker-owners decide on the work organisation, the salaries and the entity’s aims. They might appoint a management (perhaps from their own ranks), but the management is accountable to the workers’ council/assembly and is removable by the latter. There might be salary differences; however, at least in comparison with the average capitalist enterprise, such differences are minor. Worker cooperatives show that the large income differences within capitalist enterprises are a matter of economic power rather than (alleged) scarcity of managers or of efficiency requirements. Another key difference is that for capitalist enterprises, employment is merely an instrument for their profit aim; for worker cooperatives, work and work-preservation comprise the primary aim.

Each of these three points reveal the enormously progressive character of worker cooperatives. Nevertheless, worker cooperatives have to function within the capitalist competitive contest (it is like functioning within a hurdle race wherein participants who opt for elegance over speed end up losing the contest). The point is that worker cooperatives within capitalism do not set the competitive rules. They have their own normative cooperative rules, and they must seek to combine these with the dominant capitalist profit rules of competition (the hurdler who seeks to combine some elegance with the decisive speed criterion). I suppose that the detection of the limits of worker cooperatives in actual practice has contributed to the often heated debates about the Mondragon case in particular—debates between and among insiders and outsiders. The Mondragon cooperative’s international and local subsidiaries show what cooperatives can and what they cannot achieve within capitalism, and the same applies for part of the tiered workforce (members and non-members) within cooperatives.

I am convinced that a world beyond capitalism cannot be reached without (defective) islands that modify capitalism or capitalist practices, and worker cooperatives are currently a very important instance of such islands. They reveal that there is a potential, feasible alternative to capitalism. One that could be actualised with a State that is tailored to meeting the requirements of worker-cooperatives rather than those of capitalists.

Below follows a pointwise summary of the article’s main findings. The first two points are on worker cooperatives in general, and the others relate to the Mondragon cooperatives.

  1. 1.Worldwide data on the number of, and the employment by, worker cooperatives (wc s) are scarce. A 2016 dataset of 156 countries on all types of cooperatives includes information on wc s for only 51 countries. In these 51 countries 12.4 million people worked in wc s (Section 2.2, Table 1). However, even in the top 5 countries qua relative wc employment (Italy, Malaysia, Sweden, India, and Spain) the wc employment ranges around 2016 from no more than 3.9% to 1.0% of their labour force (Section 2.2, Table 2).
  2. 2.Nevertheless, wc s outperform conventional capitalist enterprises (cp s) not only in their institutional democracy (mainstream enterprises are governed by way of capitalcracy), but also on the following main points, each of which regards empirical comparisons between wc s and cp s in the period 1950 to 2010 by Pérotin (2012) (Section 2.3). (a)

    On average wc s are larger than cp s, and they survive at least as well. (b) wc s are at least as productive as cp s, and more productive in some areas. (c) wc s outperform cp s in the generation and preservation of employment. (d) When faced with demand shocks cp s primarily adjust employment, whereas wc s primarily adjust remuneration.

  3. 3.In 2019 the approximately 100 Mondragon cooperatives employ over 81 000 workers, including in 140 production plants abroad (Section 3).
  4. 4.The capitalist criterion for success is ultimately rather simple: profit measured over capital, and amount of profit increase via the accumulation of capital. Labour employment is an inevitable means for this end. The Mondragon cooperatives reverse the capitalist aim and its instrumental means—as made explicit in the Mondragon 1987 principles (Section 4.1).
  5. 5.In comparison with cp s, the core characteristic of the Mondragon cooperatives is—as for all wc s—the democratic decision-making at enterprise level by the workers, that is, the worker-members (Section 4.2) (on non-members, see point 8).
  6. 6.The very moderate (in comparison with cp s) intra-cooperative income differences are remarkable—by 2019 a before tax ratio of a maximum 1:9, and for individual cooperatives on average about 1:5 (Section 4.3).
  7. 7.The Mondragon cooperatives’ survival record of almost 65 years is outstanding—the major exception being the 2013 bankruptcy of Fagor Electrodomésticos (Section 6.2).

    The following three issues (points 8–10)—mostly gradually emerging or increasing in the period 1990–2019—in part result from international competitive pressures. Both from the side of the Mondragon federation and from the side of some individual cooperatives, these issues are considered to conflict with Mondragon’s initial cooperative values, or are at least seen as second-best practices in the face of trying to find a modus between competitive pressures and the maintenance of employment within cooperatives (end of Section 7.3).

  8. 8.A considerable amount of workers within cooperatives are non-members (Figures 7 and 9, Sections 7.2 and 7.3); for the rest of the current point and the following one, see Table 6 (Section 7.1) and the remarks on it. In quite a few cases, the non-membership is voluntary in face of the capital to be paid in, and other cooperative duties such as payment reduction in an economic downturn. In case the non-membership is involuntary, it makes a difference whether these workers have the prospect of membership within a set reasonable time. This is usually the case for aspirant members on probation, but the prospect of membership is also relevant for other workers who aspire to secure membership. Without this prospect they are in fact temporary workers (perhaps on a limited fixed contract). For these workers it again makes a difference whether they receive wages similar to worker-members as well as a share in the profits. If they do, the motive of worker-members is probably their own job guarantee if the cooperative were to run into bad market conditions. If they do not, the aforementioned motive may be in play, but they also appropriate part of the surplus produced by these workers (the aspiration by many cooperatives to restrict the proportion of temporary workers lessens the effects just mentioned, without undoing them).
  9. 9.Mondragon cooperatives can found or acquire subsidiary companies. At best these have the legal form of a ‘hybrid worker-owned cooperative’ with a mixed ownership by the parent cooperative and by the local workers (Section 7.1, Table 6, row 3). Other cases regard ‘partial or full subsidiaries’ (Table 6, rows 4–6); how the workers are treated in these cases depends on the parent cooperative. At best most of the latter workers have a well-paid permanent position. For these, as well as for temporary workers, the same applies as stated in the last four sentences under point 8.
  10. 10This point refers to 2019. Of the total employment by the retail Eroski Group, 32% regards cooperative worker-members (Section 7.2, Figure 7) (Eroski encompasses 75% of the total retail employment and 36% of the Mondragon total employment). Of the industrial cooperatives 74% regards cooperative worker-members; a very rough estimate (2006-based) is that worker-members make up 45% of the total industrial employment—cooperatives plus subsidiaries (Section 7.3, Figure 9).
  11. 11.Generally, members of worker cooperatives are far better off than workers in mainstream capitalist enterprises, and non-members are on average better paid than workers in mainstream capitalist enterprises.34
  12. 12.The comparative quantitative employment record of Mondragon is impressive. From 1983–2019 its total employment grew by 335%, and its comparatively relevant employment in Spain by 258%. In the same period Spain’s employment grew by 75%, and that of the aggregate of oecd countries by 41% (Section 5, Table 4 and Figure 3).

In view of many, but not all, points above, some enthusiasm about the Mondragon worker cooperatives is appropriate in my view. Because they have to function within capitalism, their non-capitalist reach is limited. A 2020 New York Times article on Mondragon was headed ‘Coops in Spain’s Basque Region soften capitalism’s rough edges’ (Goodman, 2020). This seems a good way of putting it.35

Acknowledgements

I am grateful for the comments by two anonymous reviewers and by the editor of jlso. An earlier version of this article appeared in Eurice Working Paper Series 118 (2021).

Author Biography

Geert Reuten tought for 35 years at the University of Amsterdam, School of Economics, where he is currently a guest research associate. He authored four academic books, edited six books, and published 70 articles in academic journals and books (the articles can be accessed at http://reuten.eu). He also published 65 articles in non-academic journals and newspapers.

References

  • Arando, S., F. Freundlich, M. Gago, D.C. Jones and T. Kato. “Assessing Mondragon: Stability and managed change in the face of globalization.” In Employee ownership and shared capitalism: New directions and debates for the 21st century, ed. E. Carberry (Ithaca, NY: ILR Press, Cornell University, 2011), 241257.

    • Search Google Scholar
    • Export Citation
  • Arando, S., M. Gago, D.C. Jones and T. Kato 2015. “Efficiency in employee-owned enterprises: An econometric case study of Mondragon.” Industrial and Labor Relations Review 68 (2) (2015), 398425.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Barandiaran, X. and J. Lezaun. “The Mondragón experience.” In The Oxford handbook of mutual, co-operative, and co-owned business, eds. J. Michie, J.R. Blasi and C. Borzaga (New York, NY: Oxford University Press, 2017), 279294.

    • Search Google Scholar
    • Export Citation
  • Bretos, I. and A. Errasti. “The challenges of managing across borders in worker cooperatives: Insights from the Mondragon cooperative group.” Journal of Co-operative Organization and Management, 6 (1) (2018), 3442.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Bretos, I. and C. Marcuello. “Revisiting globalization challenges and opportunities in the development of cooperatives.” Annals of Public and Cooperative Economics 88 (1) (2017), 4773.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Bretos, I., A. Errasti and C. Marcuello. “Multinational expansion of worker cooperatives and their employment practices: Markets, institutions, and politics in Mondragon.” Industrial and Labor Relations Review, 72 (3) (2019), 580605.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Bretos, I., A. Errasti and C. Marcuello. “Is there life after degeneration? The organizational life cycle of cooperatives under a ‘grow-or-die’ dichotomy’.” Annals of Public and Cooperative Economics 91 (2020), 435458.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • cicopa. Cooperatives and Employment: Second global report 2017 (Geneva: CICOPA, 2017a). Available online at https://www.ica.coop/sites/default/files/publication-files/cooperatives-and-employment-second-global-report-625518825.pdf.

    • Search Google Scholar
    • Export Citation
  • cicopa. Industrial and service cooperatives: Global report 2015–2016 (Geneva: CICOPA, 2017b). Available online at https://www.cicopa.coop/wp-content/uploads/2019/07/Global-REPORT-2015-2016-2019-corrections.pdf.

    • Search Google Scholar
    • Export Citation
  • Cooperatives Europe. The power of cooperation; Cooperatives Europe key figures 2015 (Brussels: Cooperatives Europe, 2015). Available online at https://coopseurope.coop/power-cooperation-%E2%80%93-cooperatives-europe-key-figures-2015.

    • Search Google Scholar
    • Export Citation
  • Deloitte 2020, Global powers of retailing 2020 (New York, NY: Deloitte, 2020). Available online at https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Consumer-Business/Report_GPR2020.pdf.

    • Search Google Scholar
    • Export Citation
  • efes. Annual economic survey of employee share ownership in European countries 2019 (Brussels: EFES, 2020). Available online at http://www.efesonline.org/Annual%20Economic%20Survey/2019/Survey%202019.pdf.

    • Search Google Scholar
    • Export Citation
  • Eroski Group. Annual report 2019 (Elorrio: Eroski Group, 2020). Available online at https://corporativo.eroski.es/wp-content/uploads/2020/08/Memoria-EROSKI-2019_en.pdf.

    • Search Google Scholar
    • Export Citation
  • Errasti, A., I. Bretos and A. Nunez. „The viability of cooperatives: The fall of the Mondragon cooperative Fagor.” Review of Radical Political Economics 49 (2) (2017), 181197.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Errasti, A., I. Heras, B. Bakaikoa and P. Elgoibar. “The internationalisation of cooperatives: The case of the Mondragon Cooperative Corporation.” Annals of Public and Cooperative Economics 74 (4) (2003), 553584.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Fakhfakh, F., V. Pérotin, and M. Gago. “Productivity, capital and labor in labor-managed and conventional firms.” Industrial and Labor Relations Review 65 (4) (2012), 847879.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Flecha, R. and P. Ngai. “The challenge for Mondragon: Searching for the cooperative values in times of internationalization.” Organization 21 (5) (2014) 666682. Available online at https://sociology.hku.hk/wp-content/uploads/9.-Mondragonpaper2014.pdf.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Flecha, R. and I. Santa Cruz. “Cooperation for economic success: the Mondragon case.” Analyse & Kritik, 1 (2011), 157170. Available online at http://www.analyse-und-kritik.net/Dateien/5696575a8cb2e_ak_flecha_santa-cruz_2011.pdf.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • George, D.A.R, E. Fontanari and E.C. Tortia. “Finance, property rights and productivity in Italian cooperative.” Euricse Working Paper Series 110|20 (Trento: EURICSE, 2020). Available online at https://www.euricse.eu/wp-content/uploads/2020/01/WP-110-20_George-et-al.pdf.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Goodman, P.S.Co-ops in Spain’s Basque region soften capitalism’s rough edges.” The New York Times (29 December 2020), available online at https://www.nytimes.com/2020/12/29/business/cooperatives-basque-spain-economy.html.

    • Search Google Scholar
    • Export Citation
  • Grace, D. Measuring the size and scope of the cooperative economy; results of the 2014 Global census on co-operatives Report for the UN Department of Economic and Social Affairs (New York, NY: UN, 2014). Available online at https://www.un.org/esa/socdev/documents/2014/coopsegm/grace.pdf.

    • Search Google Scholar
    • Export Citation
  • Heras-Saizarbitoria, I.The ties that bind? Exploring the basic principles of worker-owned organizations in practice.” Organization 21 (5) (2014), 645665.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Herrera, D.Mondragon: a for-profit organization that embodies catholic social thought.” Review of Business 25 (1) (2004), 5668.

    • Search Google Scholar
    • Export Citation
  • ica and euricse. World cooperative monitor 2020; Exploring the cooperative economy (Trento: EURICSE, 2021). Available online at https://monitor.coop/sites/default/files/publication-files/wcm2020-1727093359.pdf.

    • Search Google Scholar
    • Export Citation
  • Kasmir, S.The Mondragon cooperatives and global capitalism: A critical analysis.” New Labor Forum 25 (1) (2016a), 5259.

  • Kasmir, S.The Mondragon cooperatives: Successes and challenges.” Global Dialogue 6 (1) (2016b), available online at https://globaldialogue.isa-sociology.org/the-mondragon-cooperatives-successes-and-challenges/.

    • Search Google Scholar
    • Export Citation
  • Kruse, D.Does employee ownership improve performance?IZA World of Labor (December 2016), available online at https://wol.iza.org/uploads/articles/311/pdfs/does-employee-ownership-improve-performance.pdf?v=1.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Luzarraga, J.M. Mondragon multi-localisation strategy: Innovating a human centred globalisation. Doctoral thesis Mondragon University (Gipuzkoa: Mondragon University, 2008).

    • Search Google Scholar
    • Export Citation
  • Luzarraga, J.M., D. Aranzadi and I. Irizar. Understanding Mondragon globalisation process: local job creation through multi-localization; Facing globalization threats to community stability. Paper presented at 1st CIRIEC International research conference on the social economy, Victoria, BC, Canada, 22–25 October 2007.

    • Search Google Scholar
    • Export Citation
  • Mondragon. About us (Gipuzkoa: Mondragon, n.d.a). Available online at https://www.mondragon-corporation.com/en/about-us/; includes a document about Mondragon’s history. https://www.mondragon-corporation.com/en/history (accessed 18 January 2021).

    • Search Google Scholar
    • Export Citation
  • Mondragon. Mondragon Corporation (Gipuzkoa: Mondragon, n.d.b). Available online at https://www.mondragon-corporation.com/en/.

  • Mondragon. Annual Reports (1998–2019). Available online at https://www.mondragon-corporation.com/2019urtekotxostena/?l=en. The last report provides a reference to the pdf s of earlier reports.

    • Search Google Scholar
    • Export Citation
  • Pérotin, V.Entry, exit, and the business cycle: Are cooperatives different?Journal of Comparative Economics 34 (2006) 295316.

  • Pérotin, V.The performance of workers’ cooperatives.” In The cooperative business movement, 1950 to the present, eds. P. Battilani and H. Schroeter (New York, NY: Cambridge University Press, 2012), pp. 195221.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Pérotin, V.Worker cooperatives: Good, sustainable jobs in the community.” Journal of Entrepreneurial and Organizational Diversity, 2 (2) (2014), 3447. Available online at http://www.jeodonline.com/articles/invited-paper-worker-cooperatives-good-sustainable-jobs-community.

    • Search Google Scholar
    • Export Citation
  • Pérotin, V.Democratic firms: Assets for the long term.” In Institutions for future generations, eds. A. Gosseries and I. Gonzalez (Oxford: Oxford University Press, 2016), pp. 330351.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Pizzigati, S.Alternate approaches: a manufacturer of equality; interview with Josu Ugarte.” Too Much (June 2015). Available online at https://toomuchonline.org/this-business-manufactures-equality/.

    • Search Google Scholar
    • Export Citation
  • Santa Cruz, I. and E. Alonso. “Mondragon’s third way: Reply to Sharryn Kasmir.” Global Dialogue, Vol 6 (3) (2016), available online at https://globaldialogue.isa-sociology.org/mondragons-third-way-reply-to-sharryn-kasmir/.

    • Search Google Scholar
    • Export Citation
  • Storey, J., I. Basterretxea and G. Salaman. Managing and resisting “degeneration” in employee-owned businesses: A comparative study of two large retailers in Spain and the United Kingdom”.” Organization 21 (5), 626644.

    • Crossref
    • Search Google Scholar
    • Export Citation
  • Surroca, J., M.A. Garcia-Cestona and L. Santamaría. “Corporate governance and the Mondragón cooperatives.” Management Research 4 (2) (2006), 99112.

    • Search Google Scholar
    • Export Citation
  • Thomas, H. and C. Logan. Mondragon: an economic analysis (London: Allen & Unwin, 1982).

  • White, A.Worker cooperatives in a globalizing world; interview with Josu Ugarte.” Great Transition Initiative (October 2015), available online at https://community-wealth.org/sites/clone.community-wealth.org/files/downloads/paper-ugarte.pdf.

    • Search Google Scholar
    • Export Citation
1

It is part of a wider dataset for 156 countries that includes information on other types of cooperatives, mainly ‘producer-serving cooperatives’ and ‘user cooperatives’. An earlier report on cooperatives by Grace (2014), with data from 142 countries, which at the time claimed to be ‘the most comprehensive dataset on cooperatives’ (p. 1), makes no distinction between types of cooperatives at all. The same lack of distinction applies for Cooperatives Europe (2015). This was their latest report of key figures on cooperatives when I accessed their website on 9 January 2021.

2

On this point see more extensively Pérotin (2006).

3

See ica and Eurice (2021: 62), which is about the world’s top 300 cooperatives. (The worker-owned enterprise John Lewis Partnership plc (UK) ranks second.)

5

Mondragon (n.d.a,b), history.

6

According to Barandiaran and Lezaun (2017: p. 284), the maximum ratio is 9:1 in gross terms, the after-tax ratio being close to 1:6.5. According to Herrera (2004: p. 7), the before-tax ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. Flecha and Santa Cruz (2011: p. 161) write: ‘Currently, the top salary at mc is six times that of the lowest worker, except that a few ceo s may earn up to 9 times the salary of the ordinary worker. At most of the cooperatives the ratio is far lower’. Arando et al. (2011: pp. 30–31) write that from 2002 the maximum ratio is 8.9:1, but that most cooperatives maintain 5:1 as a maximum.

7

In 2015 the Spanish annual minimum wage stood at €9080 (https://www.citizensadvice.org.es/faq/minimum-wage-for-2015-2016-2017-2018-2019-2020/).

8

See also Arando et al. (2011: pp. 35–37). However, Bretos et al. (2019b: p. 13) mention that from about 1990 onwards, ‘many Mondragon cooperatives have hired external managers who are more committed to efficiency than to the cooperative culture and social objectives’.

9

These contributions are decided on by a cooperative’s General Assembly and vary by cooperative.

10

When a worker-member retires, the nominal value of the capital paid in is reimbursed.

11

On the ‘profit pooling’ and the employment relocation, see also Arando et al. (2011: pp. 33–35).

12

Next to the profit allocation above, there are also general rules for the allocation of the remaining part of profits within individual cooperatives—the largest part of these profits stays in the cooperatives (see Flecha and Santa Cruz, 2011: p. 160).

13

The first Mondragon cooperative was founded in 1956 and in 1968 the group’s then existing cooperatives encompassed about 6000 worker-members (Mondragon n.d., history). Thomas and Logan (1982: pp. 46–47) provide data on the employment in industrial cooperatives in the period 1956–1977.

14

See, e.g., the annual report 1998: p. 17.

15

In 2012—the last year for which this information is available—the retail division had no subsidiaries abroad; some time earlier, it had 22 establishments in France.

16

In 2019 the number of its subsidiaries amounted to 27 (Eroski Group, 2020: p. 15). In that year the group encompassed 36% of the total Mondragon employment (by comparison: this is as much as 74% of the employment of the national and international industry division).

17

The authors remark that ‘the creation of mixed cooperatives brings the Mondragon cooperatives closer to their aim of not only expanding their economic activities but also their cooperativist values and culture’ (Flecha and Ngai, 2014: p. 674).

18

Referred to by, among others, Arando et al. (2011: pp. 18–19).

19

See the references by Heras-Saizarbitoria (2014:p. 4), and more recently Kasmir (2016a,b)—see also the comment on Kasimir (2016b) by Santa Cruz and Alonso (2016).

20

In the academic literature that I have seen, there is hardly any information on the Erkop Group apart from that it operates in the agri-food and services sectors. Its website mentions that it encompasses four cooperatives with a total employment of 9500 persons (https://erkop.coop/ (accessed 20 February 2021)).

21

In that year it ranked as the 5th largest retailer in Spain. In 2009 it was the 3rd largest in Spain, with a 76th place on the Deloitte ranking (Arando et al., 2011: p. 9).

22

Though it tends to advertise itself as a consumer cooperative. Which is not odd given that (in 2019) it had next to 9258 ‘Employee Partners’, 1 228 830 ‘Consumer Partners’ (Eroski Group, 2020: p. 24).

23

The debt finance was in 2019 still a big problem. The Eroski annual report 2019 (p. 22) mentions ‘a restructuring agreement for its financial debt to banks’ giving ‘financial coverage until 2024 … without the obligation to make divestments’.

24

After comparing the storey et al. (2014) data for the total employment (columns) with those of the total retail division as stated in the mondragon annual reports (in fte), it seems that the storey et al. data are in ‘persons’ rather than fte (for a number of years, e.g., 2008 (storey et al., 2014: p. 29), the mondragon reports provide both data, each for eroski and erkop separately). supposing that the storey et al. (2014) membership data are also in persons, this may not affect the membership percentages very much. the 2013 data is from the mondragon annual report.

25

Arando et al. (2015: pp. 8–9) mention that the (non-full) gespa members require a membership capital stake that is about half as large as in a cooperative; this represents about 25% of the average annual earnings for workers in a gespa store. They also mention that ‘membership in gespa, as with membership in cooperatives, provides what is effectively 100% job security—no gespa members have ever been laid off, and in the few instances of gespa store closures, members have always been offered alternative employment nearby’.

26

Moreover, I have adopted the information by Bretos and Errasti (2018: 5) that there are no Mondragon cooperatives abroad (only subsidiaries). However, at least in the annual reports this is never explicitly stated (nor denied).

27

Two cooperatives multi-nationalised in 1989, and in 2006 their number had grown to 25 (Luzarraga, 2008: pp. 81–2). In 2015 ‘about 30 industrial co-ops (out of a total of 68) are multinational companies that control 128 productive subsidiaries abroad, all of which are non-cooperative firms’ (Bretos and Errasti, 2018: p. 5).

28

Flecha and Ngai (2014: p. 670) mention that between the periods 1990–1995 and 2005–2010 employment in non-internationalising cooperatives decreased by 11%, whereas it increased by 170% in the home cooperative of internationalising cooperatives.

29

It will be seen later that in 2006 the proportion of worker-members in industrial cooperatives was 82%. In reference to Ugarte’s statement of the relative performance of multi-localising cooperatives it is very interesting that Luzarraga (2008: p. 178) finds for this year (the single one studied) that the multi-localising cooperatives outperform the non-multi-localising ones in worker-membership: 84% versus 75%.

30

Luzarraga (2008: p. 144) mentions that in 1994 (not shown in Figure 9) 85% of the total industrial workforce consisted of members.

31

At the time the authors’ last datum was for 2009, whence it was understandable that they observed a ‘steady if modest improvement in the membership ratio beginning early in this decade and continuing through 2008, when the group approached its 85% membership goal’ (Luzarraga, 2008: p. 19).

32

As indicated, the annual reports never mention the amount of employment in cooperatives; however, from 2001 the total industrial employment in Spain (cooperatives plus subsidiaries) is either directly mentioned, or it can be derived from other data (it runs from 22 803 in 2001 to 24 676 in 2019).

33

2001–2007: https://ec.europa.eu/eurostat/databrowser-backend/api/query/1.0/LIVE/xlsx/en/download/49f69dfc-567b-4306-ad80-d0abd794a5c4 (last updated 26 march 2020, accessed 23 february 2021); 2008–2019: https://ec.europa.eu/eurostat/databrowser/bookmark/17e0d63c-bfe6-48b6-b832-e7ab333bf2ee?lang=en (last updated 11 november 2020; accessed 23 february 2021)). other data: oecd statistics (https://stats.oecd.org/ (accessed 13 May 2021): labour/labour force statistics/annual lfs/summary tables/employment.

34

The last phrase of this sentence is based on little information—see the respective quotes in Sections 7.1 (last paragraph), 7.2 (last paragraph) and 7.3 (Section 7.3.2, International employment strategy, quote from Ugarte).

35

Goodman observes, among other characteristics: ‘In a world grappling with the consequences of widening economic inequality, cooperatives are gaining attention as an intriguing potential alternative to the established mode of global capitalism. They emphasize one defining purpose: protecting workers. (…) They elevated workers into owners—partners is the term of art—with each gaining a single vote in a democratic process that determines wages, working conditions and the share of profits to be distributed each year. (…) In the United States, the chief executives of the largest 350 companies are paid about 320 times as much as the typical worker (…). At Mondragon, salaries for executives are capped at six times the lowest wage. The lowest tier is now €16,000 a year (about $19,400), which is higher than Spain’s minimum wage. Most people earn at least double that, plus they receive private health care benefits, annual profit-sharing and pensions’.