A few weeks ago, lawyer Nejc Novak was a guest on the Super Power podcast of the media house Delo, hosted by Petra Kovič. V a longer conversation Mr Novak expressed his critical views on cooperatives and inclusive employee ownership models and some concerns about the content of our Institute. Mr Novak cited a number of school examples of stereotypes about employee ownership based on ignorance of the topic and widespread prejudices that have been holding back the development of socially responsible ownership models in Slovenia for decades. As Slovenia's leading organisation in the field of employee ownership, we believe that we have a duty to respond to those statements that concern our field of activity and which we consider to be in stark contradiction with the facts.

Over the next few days, we will be publishing a series of articles aimed at informing the public and key stakeholders about good examples of economic democracy around the world.

"I don't know if cooperatives work well in the world, I'm not sure."- Nejc Novak

Novak first expressed his concerns about cooperatives and inclusive employee ownership models in an interview in response to a reporter's question about how he felt about the concept of cooperatives. Previously, the journalist had said that "cooperatives work very well in the world".

(Workers') cooperatives in Europe and other forms of inclusive employee ownership, such as employee ownership funds in the US and the UK, have proven to be a highly competitive alternative to conventional ownership models, with many positive consequences for society and the environment.

Employee-owned companies employ tens of millions of people worldwide. In the US alone, there are more than 7,000 companies employing 14 million workers, almost 10% of the total private sector there. In recent years, the UK has also seen a huge increase in employee ownership through the ESOP model - studies estimate that at least one British company goes employee-owned every working day. Workers' cooperatives employ 500,000 people in Italy, 300,000 in Spain and around 50,000 in France. Huge companies such as Mondragon Corporation (80,000 employees), John Lewis Partnership (81,000 employees), Carl Zeiss (40,000 employees), Huawei (207,000 employees), Amsted Industries (17,000 employees), Publix Supermarkets (200,000 employees) and many others are majority employee-owned. While most cooperatives and employee-owned enterprises are in the small and medium-sized enterprise sector, they are found in both capital- and labour-intensive industries.

Empirical research has been telling us for decades that employee-owned companies are on average more productive and achieve higher added value. They are more stable in times of economic crisis (NCEO, 2022; City University, 2014; Kurtulus and Kruse, 2017) - have higher survival rates and provide more stable jobs. ESOP companies in the US laid off 4 times fewer employees in the recent Covid crisis (Employee Ownership Foundation, 2020). A few days ago, the UK published survey on the impact of ESOP ownership on business performance and found that 8-12% is more productive than its peers. Similar results are shown in studies from the US, Canada and Western European countries.

Employee-owned companies tend to offer better quality jobs, contribute to the economic development of local communities and usually operate with a high regard for social responsibility. In Slovenia, the municipality of Železniki, where the main employers are employee-owned companies (Domel and Alples), consistently ranks among the municipalities with the best standard of living (My Finance, 2017; ibid., 2019). A good example of local responsibility is the behaviour of cooperatives during the floods in northern Italy - flood waters threatened the surrounding town, so the cooperative Cab Terra decided to divert them to its own production areas. The cooperative caused tens of millions of euros of damage to itself, but prevented even more damage to the local population (The Times, 2023Employee ownership puts people in positions of decision-making and financial interest who are usually also residents of local communities, thereby reducing the problem of negative externalities of business operations.

We encourage constructive conversation about employee ownership, but expect interlocutors to be educated about the issues they are publicly discussing. Being stuck in a stereotypical and ideological understanding of the field is a sign of intellectual laziness, which is often a brake on positive social change. There are, of course, failed models of cooperative and employee ownership, but it is important not to build a straw man out of them, but to use the experience to build a more human-friendly economy.

Supported by the ACF Programme in Slovenia 2014-2021.

Read more about the project here.