Liikanen highlights importance of cooperative enterprises for European competitiveness
EU Commissioner for Enterprise and the Information Society Erkki Liikanen has described cooperative enterprises as 'the bridge between local communities and the global economy' in a speech to the International Co-operative Alliance (ICA). In his address, Mr. Liikanen accepted the findings of a consultation document, which stated that cooperatives 'have the right to demand a regulatory framework that is adapted to their specific characteristics.' He reminded the audience of the Commission's legislative plans to achieve this goal through its Statute for a European Co-operative Society, which seeks to set guidelines for cooperative companies active in more than one EU country. 'In June all Member States finally agreed on the text for the Statute for a European Co-operative Society,' he said. 'The Statute has been inspired by several recent positive developments in cooperative laws [within the EU] and we believe it has struck a good balance between respect for the fundamental cooperative principles and the provision of a flexible and practical instrument which will, for example, give cooperatives access to increased capital.' Cooperative businesses differ fundamentally from traditional corporations in three key ways: purpose, profit distribution, and control. The purpose of a cooperative is to provide savings on the delivery of services or products, usually through competitive prices, rather than generating profits for shareholders. Any additional profits generated by the cooperative are divided amongst members based on their contribution to, or use of, these services. Control of the cooperative is on a one member one vote basis, regardless of the individual level of investment. Whilst some regard the cooperative model as quaint or outdated, many, Mr. Liikanen among them, see in it the potential for real innovation. For example, a company structure that combines participatory ownership and control, where the employees have a real influence over management decisions, finds itself well placed to succeed in an economy increasingly dependent on human capital. Furthermore, given the importance of the service industry in Europe (it currently employs 69 per cent of the working population), a structure that allows users to directly influence the business that serves them ensures that services remain tailored to customer needs. In fact, cooperatives are already proving their ability to deliver quality and responsive services in areas as vital as health and social care. So what is the future for cooperative enterprise in Europe? Some predict that when considering expanding their reach to other EU countries, many small businesses will prefer the European cooperative model to its cousin, the European company. Whereas a European company can only be created through the merger of existing entities doing business in more than one Member State, and require a minimum 120,000 euro in capital, European cooperatives can be created from scratch by individuals or businesses, and only require a 30,000 euro investment. Mr Liikanen believes that with the right legislation in place, and supported by an exchange of best practices among those responsible for its regulation, cooperative enterprise will take on a much broader role in European business than it has to date. 'I hope that small companies throughout Europe will see the Statute of European Co-operatives as a means of providing common services, breaking into new markets and pooling clients and resources through collaboration with similar companies in other Member States. It is therefore essential that we explain the cooperative model to a wider business audience.'