Ending Poverty and SDG Policy Coherence in Areas with Important Cross-border Dimensions: Experiment on Cooperatives

To eradicate extreme poverty (SDG-11) requires participation of people. Identifying poor population and making them employable is essential to eradicate poverty. Economic growth is important to eradicate poverty; equitable wealth distribution is sine-qua-non to sustainable development. This chapter narrates briefly success stories of the exemplary co-operatives working to reduce poverty by collective action for millions of people and through working on multiple targets set by SDGs. As per Oxfam Report published at the time of 2017 World Economic Forum in Davos, the world’s eight richest billionaires control the same wealth equals to the poorest half of the globe’s population. The extreme unequal wealth distribution is alarming. It is well accepted that sustainable development involves a combination of economic development, environmental sustainability and social inclusion.

The co-operative organization well fits to play the role in sustainable development as the cooperatives are economic institutions of the people, for the people and by the people. As per International Summit of Cooperatives in Quebec, the world’s largest 300 co-operatives had a combined turnover of USD $2.53 trillion in 2014. The impact of co-operatives business in reducing poverty is under-emphasized. Being people’s own institution created for economic well-being of its creators, cooperatives works for social good and hence role of cooperatives in achieving SDGs could be phenomenal. The seven foundational cooperative principles2 include “concern for community,” means a cooperative entity should “work for the sustainable development of their communities through policies approved by their members.”

UNESCO has added co-operatives to the list of intangible cultural assets. Co-ops are among the sixteen new entries added to the Intangible Cultural Heritage of Humanity. The decision was adopted by the Intergovernmental Committee for the Safeguarding of the Intangible Cultural Heritage, which took place on 2 December in Ethiopia. The list of intangible heritage now includes the idea and practice of organising shared interests in co-operatives. The list describes co-operative as entities that “allow for community building through shared interests and values creating innovative solutions to societal problems, from generating employment and assisting seniors to urban revitalisation and renewable energy projects”.

Co-operatives as business model works on principle of equity, equality and concern for community and hence it can work as accelerator to achieve SDGs. The role of business and enterprises can be directed to SDGs without jeopardizing its objective of profitability, but to create synergy with other partners. ILO COOP, jointly with the International Co-operative Alliance, undertook an initiative to bring cooperative

1 Sustainable Development Goal 1 calls for an end to poverty in all its manifestations by 2030. It aims to ensure social protection for the poor and vulnerable, increase access to basic services and support people harmed by climate-related extreme events and other economic, social and environmental shocks and disasters. 2 International Cooperative Alliance (1995)
voices into the debate to better understand how co-operative enterprises contribute to SDGs and the role they can play in the implementation of SDGs. The Rio 20+ Conference recognized the actual and potential role of co-operatives in achieving sustainable development, reducing poverty and creating employment there has been limited efforts to make this a reality.
Doing business through co-operatives is one way to tackle New York City’s much-publicized inequality problem. The pay ratio between the highest and lowest paid in co-operatives is maximum 5 to 1, says the report; that compares with a ratio of roughly 600 to 1 in traditional corporations3. According to Robert Jackall and Henry M. Levin, Economic insecurity and social upheaval are the most common factors leading to a rise in interest in cooperatives4. Gar Alperovitz in his book “What Then Must We Do?” notes that it’s not only the historical left that has touted worker ownership. He quotes Republican icon Ronald Reagan said in 1987; “I can’t help but believe that in the future we will see in the United States and throughout the Western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.” The co-operatives wages are lower than capitalist firms, although this wage gap is caused by characteristics of workers, but by remuneration that these characteristics receive, i.e. a worker with similar characteristics will be paid upper in a co-operative that in a capitalist firms5. Worker run cooperatives enhanced linkage between global science and local participation in decision-making and implementation. To reduce wage gap and motivate workers to be efficient, participatory development through workers cooperative is a solution, in which people help themselves and become active agents in improving their own lives.
Co-operatives are instrumental in reducing poverty through participatory development. Participatory development has been justified by the idea that the poor can only stay trapped in the vicious circle of poverty if left on their own. The poor need to get organized to work together to gain from the collective strength that they do not have individually. In India, women’s co-operatives offer self-employment opportunities that can contribute to women’s social inclusion and empowerment (Bhatt and Gailey, 2012). Self Employed Women’s Association (SEWA), Ahmedabad based union comprised of 140 cooperatives of self-employed women exceeding 1.35 million is convergence of labour, cooperative and women’s movement. SEWA builds the capacities of members through spearhead teams, to make them owners and managers of their own trades. Self Help Group (SHG) and cooperatives are formed, who are small vendors, home-based producers and labourers working in unorganized sector. SEWA’s objective is to offer integrated plan for developments of self-employed women (Sapovadia, 2016).
Co-operatives have the advantages of identifying economic opportunities for the poor; empowering the disadvantaged to defend their interests and to take part in decision-making concerning them; and providing security to the poor by allowing them to convert individual risks into collective risks. It is in this regard that different types of cooperatives mediate the access of their members to assets that they utilize to earn a living. Gambhira Farming Co-operative Society Limited (GFCSL) in Gujarat, India is unique in is approach to bring poor farmers to contribute their skill, labour and land for self
3 Federation of Protestant Welfare Agencies (FPWA) report (2015) 4 Worker Cooperatives in America, 1984 – edited in 2015 5 WAGE DIFFERNETIALS IN COOPERATIVE ENTERPRISES ANDCAPITALIST FIRMS by Jesús Clemente López, Millán Díaz Foncea, Carmen Marcuello Servós and Marcos Sanso Navarro
development through collective farming. GFCSL has members from 3 villages near Anand, town famous largest dairy co-operative AMUL. The farming by small farmers becomes non-viable due to downsizing of land holdings, limited resource, low investment capabilities, limited bargaining power in procurement of inputs, storage capacity; and changing market conditions (Sapovadia, 2013). The society helps to earn livelihood to farmers and have improved their socioeconomic condition. Sales revenue in year 2010-11 was INR 32.60 million. A member contribute labour for 150-180 days, significantly earn higher than cultivating individually and allows yearly earning of INR 90,000 (Sudarshan 2014).
In India, the National Co-operative Housing Federation (NCHF) has utilized various participatory development programmes to mobilize the urban poor and slum dwellers to form housing cooperative societies for improving their shelter. There are more than 92,000 primary housing cooperatives with a membership of over 6.5 million people in the country. These housing cooperatives have constructed/financed about 2.5 million housing units in various parts of the country, with 75 per cent of housing units going to low income families (Khurana, 2010).
A biomass-based rural cooperative in Tumkur district of Karnataka owes its success to institutional aspects like well-defined property rights in ownership, institutionalized markets and decentralized environmental governance. The biomass is derived through tree-based farming, which provides employment to 30 households. In this co-operative, the farmers manage the supply of biomass, the panchayat6 owns and operates the plant and, through a power purchase agreement, the excess power is given back to the Central grid (Business Line, 2013).
Research on the dairy industry in India indicates that cooperative members enjoy higher and more secure incomes than non-members within the industry, particularly at the primary level of production. The famous AMUL Dairy Co-operative in India sets example of equitable wealth distribution among producers. 17 member Unions of Gujarat Co-op Milk Marketing Federation (GCMMF) with farmer member strength of more than 3.6 million across 18,600 villages of Gujarat are procuring on an average 18 million liters of milk per day. GCMMF passes on 80-85% of revenue back to milk producer members thus by encouraging them to produce more milk7.

“UNDP estimates that the unequal treatment of women in the labour market cost Sub-Saharan Africa about USD 95 billion annually between 2010 and 2014.” World’s 80% property is owned by men. Gender inequality has negative cascading effect on GDP. In India, only 34% women are in formal sector while 80% in agriculture. If 1% women are increased in formal sector, it will raise 1.5% productivity. Shri Mahila Griha Udyog (Lijjat), popularly known as Lijjat, a cottage industry, is Indian women’s cooperative engaged in manufacturing of food and fast-moving consumer goods. Lijjat is providing business ownership and employment to 42000 women earning revenue amounting to rupees 6.5 billion.

Working Women’s Forum – India (WWF) is strong working women cooperative functioning in tandem with sister-concerns; Indian Co-operative Network for Women (ICNW) and National Union of Working Women (NUWW). Mission of WWF is poverty reduction and strengthening of economic and social status of poor working women through micro-credit, training, social mobilization and other interventions. The credit program of ICNW has extended credit to 410,545 entrepreneurs of approximate INR 1203 million;

6 Local Government at village level 7 http://www.amul.com/files/pdf/GCMMF-turnover.pdf

the recovery rate of credit is 98.66%. NUWW, WWF’s trade union wing facilitates the poor women in their struggles to fight for labour, land, housing, human rights issues like female foeticide, child prostitution etc. (Sapovadia at el. 2013).

Commitment to policy coherence for SDG implementation needs to be backed not only by political statements, action plans and organisational structures, but also by resources. Certainly the budgetary process is a powerful tool for coherence, as it seeks to allocate resources to government’s priorities and achieve greater efficiency in governments operations as highlighted in PCSD Framework. Local-level coherence in the areas of employment, skills and economic development is key to SDGs. Good way of translating policy coherence into action for SDG implementation is to identify a set of core priorities based on areas with strong impact potential. The co-operatives are best example of local level involvement and self-resource mobilization. Mumbai Tiffin Box Supplier’s Association (MTBSA) or dabbawala (person carrying lunchbox) was founded in 1880. Daily approximately 5000 dabbawalas deliver homemade food to about 200,000 customers in every corner of Mumbai. MTBSA provides direct employment to 5000 people who are one of the poorest.

The Uralungal Labour Contract Co-operative Society Limited (ULCCS Ltd) is constructions cooperative society with the focus of activities on societal uplifting and nation building by providing appropriate job opportunities to downtrodden, through collective initiative of members. It imparts training to members at affordable rates and provides education to make them employable. The society earned profit of rupees 15.4 million with annual revenue of rupees 1.5 billion in 2010-11.

Unequal wage and profit sharing is ubiquitous in market economy. Dewan claims that leaders are recognizing that extremely inequitable income distribution, with its plummeting wages and depletion of low- and middle-income jobs, has no solution in the current capitalist economy8. The co-operative business model can correct the economy without a long legislative process or large-scale regulatory reforms. In February of 2014, a commission in Wales announced that conventional approaches were insufficient for economic development; it needed co-operatives, and the New York City Council held a hearing called “Worker Co-operatives — Is This a Model That Can Lift Families Out of Poverty?”. The researches on employee-owned compared to investor-owned businesses have found that they are as good or better. Co-operatives are “more productive, less susceptible to failure, more attentive to quality, and less likely to lay off workers in a downturn.” The employee-owned British retailer John Lewis has almost outpaced its corporate rival, Marks & Spencer.

Fairer share of the fruits of their labor by sharing company profits with employees. In doing so, employee-ownership more equitably distributes wealth throughout the workforce, helping to even out the lopsided capital accumulation trends that have produced the United States’ massive income and wealth disparities. Models of democratic employee-ownership not only share wealth with employees, but also incorporate employee-owners into decision-making and management processes.17 By establishing employee participation as the cornerstone of day-to-day business operations, democratic

8 Shaila Dewan titled her New York Times Sunday Magazine article on worker co-operatives, “Who Needs a Boss?”, Worker Cooperatives Correcting Wealth Distribution, 2014 employee-owned businesses promote economic democracy also at the micro-scale, in the workplace itself.

One of the most powerful benefits of democratic worker-ownership is the role it can play in promoting economic equality by reducing income and wealth disparities. Worker-owned cooperatives combat income inequality and decrease wealth gaps in two critical ways. First, employee income ratios— meaning the ratio between the highest-paid and the lowest-paid employee—are dramatically lower in worker-cooperatives than in many conventional investor-owned businesses. Second, by expanding ownership opportunities to workers, worker-cooperatives allow a much larger portion of the population to build wealth through business ownership.

Each worker-owner of a worker-cooperative holds one voting share in the company, and so each individual worker-owner retains direct control over his or her own working conditions, wages, and job security. The worker-members of a worker-cooperative collectively decide how to divide surpluses between re-investing some revenue as retained earnings in the business’ collective account, and distributing some as dividends the cooperative pays to each worker-member based on the relative amount of work he or she did. Studies have also found a correlation between broad-based employee ownership and higher productivity rates, along with improved overall firm performance.

Empirical evidence demonstrates that employee-owned businesses and cooperatives are more resilient than are conventional investor-owned firms: they have higher survival rates and fare better during economic downturns than do conventionally owned companies. Worker cooperatives create stronger local economies by rooting businesses in their communities. As a result, cooperative businesses tend to purchase locally more frequently and re-invest more in the local economy and community than do conventionally owned businesses. The results of a 2012 study by the National Cooperative Grocers Association provide an example. The study, which measured the impact of food co-operatives versus conventional grocers on the local economy, found that $0.38 of every dollar spent at a food cooperative is reinvested in the local economy, compared to just $0.24 at conventional grocers. These two fundamental characteristics of democratic employee-owned businesses—equitable wealth distribution and employee participation—make them valuable vehicles for correcting deleterious income and wealth imbalances, and for building greater economic inclusivity, stability, and sustainability.

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