Overview Co-Operative Entrepreneurship in Belgium

Overview Co-operative Entrepreneurship in Belgium

A brief history of Belgian co-operative entrepreneurship

In Belgium the first co-operatives were established during the second half of the 19th century. They were created within the framework of social movements of that time. Belgium being a pillarized country, this means that co-operatives themselves were pillarized. The socialist pillar had its co-operative shops and pharmacies, its Insurance company (P&V) and its federation of co-operatives, Febecoop. The Christian workersmovement had its own savings and credit cooperative, co-operative shops and co-operative pharmacies. The Raiffeissen savings and credit co-operatives were embedded in the Christian farmers movement. Among independent farmers dairy co-operatives and co-operative auctions were created. The co-operative shops disappeared, pushed away by supermarkets. The co-operative pharmacies however still have a market share of 20%. And the dairy co-operatives and co-operative auctions are still extremely important for the agricultural sector in Belgium. The Christian co-operative saving and credit co-operatives, first locally organized, merged into ever bigger entities and, by the end of the 20th century, they sold their banking and insurance activities and became majority shareholders of non co-operative financial groups.

A new wave of co-operatives emerged in the aftermath of the great economic recession in the 1970s (mainly worker buy-outs and worker co-operatives aimed to keep or create labor in times of high insecurity in the labour market), especially in the Walloon part of the country. New consumer co-operatives and financial co-operatives in the field of fair trade and sustainable energy were created in the years there after. Their initiators were embedded in the Third World and Environment movements respectivelly.

After a period of relative silence, the co-operative principles and business form is being rediscovered. Especially in these times of huge societal challenges, such as globalization, ageing and environmental distortion, and in times of changing family and work patterns and persistent poverty. Bottom-up co-operatives are being set up, or at least an interest in the model can be observed among individuals, as well as social movements. The Flemish government recently has launched a program to support co-operative entrepreneurship, especially as an answer to contemporary and future societal challenges.

As a result of the pillarized roots of the most important co-operatives (in terms of members, capital, number of employees) one cannot speak of a unified co-operativism in Belgium. In 1955 the National Council for Cooperation was established, recognized by Royal Decree. The aim of this council is to accredit co-operatives that operate according to the co-operative principles. One should know that the law on co-operatives in Belgium (dating from 1873 and adapted during the last two decades) is very liberal and does not take into account the principles of co-operative entrepreneurship. In 1962 a royal decree was passed which granted fiscal advantages to these accredited co-operatives. Nowadays, some 500 co-operatives out of 40.000 are accredited co-operatives. This does not mean that the other 35.500 co-operatives do necessarily not adhere to the co-operative principles. The statute of accredited co-operative is simply unknown to many of the co-operative entrepreneurs, and the advantages granted to accredited co-operatives do not outweigh the administrative burdens for accreditation.

The co-operative trilemma

As a result of internal and external forces, asking them to re-define their unique co-operative identity and actions, traditional co-operatives developed methods to maintain contact with their co-operative members, to get to know their needs, values and expectations, to give them a voice in the governance of the co-operative, especially in the distribution and socialization of profits and the follow up of societal projects to which financial support and professional backstopping is rendered. But not only membermanagement was ensured, also multi-stakeholdersmanagement was established. Old as well as newer co-operatives set up with a social aim increasingly become involved in a dilemma between market and members’ requirements, but also in a dilemma between members’ and civil society requirements, as well as in a dilemma between private and public governance. They thus face, what Develtere & Raymaekers (2005) call a ‘co-operative trilemma’.

The trilemma that every co-operative has to deal with nowadays is how to reconcile the imperatives imposed on every business undertaking by a complex and highly competitive market with the democratic and material claims of members, the claims of the members (internal claims) with the claims of civil society at large (external claims) and the advances of the co-operation with the advantages of the welfare state. A quick look at the features of the interaction patterns of the co-operatives under review with the market, civil society and the state can reveal to what extent these co-operative groups have began to find or formulate answers to this trilemma.

The following scheme does give an oversight of the triple challenges of the co-operatives:

Bron: Develtere & Raymaekers (2006)

The Social Purpose Company

Anno 1995 the revised Belgian Company Code allows for the creation of commercial businesses that do not have maximizing and distributingprofit as their primary aim, but that have a social purpose: the social purpose company. The social purpose is not strictly defined by law. It can be an internal social aim (e.g. better working conditions, participation of employees, jobs for disadvantaged workers) or an external one (e.g. fair trade, sustainable (energy) production,..). The Social Purpose Company-statute can be granted to any type of commercial enterprise, but only in case strict criteria are met and formulated in the bylaws of the company. These criteria are largely inspired by the co-operative principles. 70% of the social purpose companies are co-operatives. Up till now, no big upsurge of social purpose companies can be observed (some 500 exist). This has partly to do with shortcomings in the law on social purpose companies and in their treatment in sector specific reglements and rules. But this might change in these times of an intensified surge for alternative co-operative answers to societal challenges and the increased government interest in social purpose companies, especially with a co-operative base.

Facts and figures

Evolution of accredited co-operatives (commissions in the National Council for Cooperation)

Source: National Council for Cooperation (2008)

Geographical distribution of accredited co-operatives

Source: National Council for Cooperation (2008)

Distribution of accredited co-operatives according to their major activities (2008)

Source: Centre d’Economie Sociale (2008), Federal Service Social Security (2008), survey CES (2007) Crossing Point Bank Enterprises (2008)

Employment in accredited co-operatives (2008)

Bron: Centre d’Economie Sociale (2008), RSZ (2008)

Distribution of paid employment according to major activity (only for those co-operatives for which the annual accounts are centralized)(2006)

Source: Centre d’Economie Sociale (2008) based on National Bank of Belgium

Size of accredited co-operatives in terms of employment (only those co-operatives for which annual reports are centralized, 2006)

Source: Centre d’Economie Sociale (2008) based on the National Bank of Belgium

Wages and added value of accredited co-operatives with paid employment (only those co-operatives for which annual accounts are centralized) (2006)

Source: Centre d’Economie Sociale (2008) based on the National Bank of Belgium

Spectrum of activities of accredited co-operatives (survey Cera Centre for Co-operative Entrepreneurship, 2006)

Source: Cera Centre for Co-operative Entrepreneurship (HIVA-K.U.Leuven)

N: 175 (item nonrespons: 0)

Number of members of accredited co-operatives (survey Cera Centre for Co-operative Entrepreneurship, 2006)

Source: Cera Centre for Co-operative Entrepreneurship (HIVA-K.U.Leuven)

N: 160 (item nonrespons: 15)

Legal personality of members of accredited co-operatives (survey Cera Centre for Co-operative Entrepreneurship, 2006)

Source: Cera Centre for Co-operative Entrepreneurship (HIVA-K.U.Leuven)

N: 154 (item nonrespons: 21)

Hypothesisdifferences between sectors: p<0,001 (Chi2 = 39,0952, 4 d.f.), Cramer’s V = 0,3563.

Hypothesis differences within primary sector: p<0,1 (Chi2 = 4,9327, 2 d.f.), Cramer’s V = 0,2995

Types of institutional members of accredited co-operatives with institutional members(survey Cera Centre for Co-operative Entrepreneurship, 2006)

Source: Cera Centre for Co-operative Entrepreneurship (HIVA-K.U.Leuven)

N: 76 (item nonrespons: 1)

Motives for establishment of co-operative (survey Cera Centre for Co-operative Entrepreneurship, 2006)

Source: Cera Centre for Co-operative Entrepreneurship (HIVA-K.U.Leuven)

Social purpose companies

References

Van Opstal, W., C. Gijselinckx & P. Develtere (2008), Coöperatief ondernemen in België: theorie en praktijk / Entrepreneuriat coopératif en Belgique: théories et pratiques. Leuven: ACCO.

Develtere, P. & P. Raymaekers (2005), ‘Mature co-operative groups seaking new identities: the case of Belgium’ Journal of Rural Cooperation, 33(2) 2005:97-109.

Gijselinckx, C. & P. Develtere (2008), The co-operative trilemma. Co-operatives between market, state and civil society. Working Paper on Social and Co-operative Entrepreneurship, 01-08.