DESA News Vol. 11, No. 11 November 2007


The cooperative advantageThe cooperative advantage

Combining social goals with business sense for productive employment and decent work

Social concern can be good business strategy. For over 150 years, cooperatives have been demonstrating just this principle. Cooperatives employ a hundred million people around the world and, with over 800 million member owners, play an important part in community well-being and promotion of decent work. In remote areas that do not receive much attention from public or private firms, cooperatives provide livelihoods for millions who might otherwise be mired in poverty.

According to DESA’s new Report on the World Social Situation 2007, labour markets have evolved in the direction of greater economic insecurity and greater inequality in the current phase of globalization, adversely affecting opportunities for decent work and satisfactory employment over a person’s lifetime. “With globalization,” the report argues, “inequalities and insecurities have undermined the principles of universalism and social solidarity.”

To a worker trying to eke out a decent living while grappling with uncertainty, the virtues of the cooperative model stand out. Cooperatives subscribe to the tenets of the decent work agenda advocated by the International Labour Organization, uniting business and social goals. Cooperatives are built upon the values of self-help, self-responsibility, democracy, equality and solidarity, notes Ms. Felice Llamas, Social Affairs Officer and focal point on cooperatives in the DESA Division for Social Policy and Development. They are businesses, owned by the members, that generate income and employment by pooling limited resources and reducing risks while at the same time promoting social cohesion. Unlike other businesses, “Cooperatives are formed to meet the needs of their members, and are not ruled by profit, but by social and ethical values,” says Ms. Llamas. As many of them operate at the local level, there exists a commitment to the community.

More jobs, decent work

Cooperatives play a significant part in job creation, in a variety of sectors, in rural and urban areas, and for certain social groups. According to the International Cooperative Alliance, cooperatives generate a hundred million jobs around the world, twenty percent more than multinational enterprise. In Kenya, a quarter million people are employed by cooperatives. In Indonesia, the number of cooperative jobs has grown to almost 300,000, while in Colombia nearly half a million are engaged in this sector. In Italy, cooperatives account for one million workers, with another four million in France. In Canada, the Desjardins group of savings and credit cooperatives is one of the largest employers in the Province of Quebec.

Secretary-General, Ban Ki-moon, recently released a report on cooperatives, which sheds light on their role in promoting full and productive employment. The report indicates that there is an impact not only due to direct employment creation, but also due to the indirect and induced jobs that cooperatives generate. Indirect employment arises from the provision of goods and services to the cooperative sector, while induced jobs result from consumer spending by cooperative members and employees. Cooperative banks that provide microfinance are also an important source of jobs, the Secretary-General notes, especially in the informal economy, as they boost self-employment and jobs in microenterprises. That said, exact numbers are unknown due to a lack of data and complexity of measuring cooperative job creation at the national and international levels.

Although quantity matters, mere job creation and economic growth are not sufficient indicators of social development, according the Report on the World Social Situation 2007. Quality of work also matters, and should be placed that the policy-making agenda. Cooperatives are several steps ahead governments in this area. In farmers’ cooperatives, for example, members usually receive salaries above the minimum wage and enjoy comparatively higher job security. Many cooperatives also provide health, social and educational services.

An integral part of rural society

Cooperatives are an integral part of the social fabric of many rural communities. As most of the world’s poor depend upon agriculture for their livelihood, farmers’ cooperatives make a big difference in providing jobs that keep people above the poverty threshold. The Secretary-General cautions that external public and private investments often do not reach rural areas and people have to rely on self-initiatives to meet their needs.

Here is where agricultural cooperatives come in. They are pivotal to support the self-employment of millions of farmers. Cooperatives of agricultural producers help individual farmers to be more competitive and efficient, which leads to more sustainable employment. Farmers’ cooperatives in India, for example, gave a decisive impulse to the “green” and “white” revolutions, spawning jobs and injecting income to tens of millions of poor rural households. Indian dairy cooperatives, which have created jobs for more than twelve million farm families, are another case in point.

A predictable income in developing countries, where a majority of the poor live and work in agriculture, is valuable. Experts who gathered at a DESA-sponsored meeting in Shanghai last year noted that cooperatives offer the means by which jobs can be created, and incomes of poor farmers increased and stabilized. Stability is an unusual word in today’s liberalized labor markets, all the more so in rural areas where casual labour is widespread. Yet it is in rural areas especially there is a positive economic and social role the cooperative movement. Although seasonality of work tends to dominate in agriculture, the Secretary-General notes, the bulk of those working for agricultural cooperatives end up being retained under non-seasonal contracts that provide for year-round employment.

By organizing themselves as cooperatives, small farmers can reap economies of scale through better access to inputs, sharing of common equipment and better access to markets, explains Ms. Felice Llamas. “By uniting, farmers’ cooperatives tend to become more and more efficient, and this often places them in a better position to compete with larger businesses than an individual farmer would compete operating in isolation,” she adds. At a time of increasing globalization, where farmers have to maintain their competitiveness at all costs, this should not be underestimated.

In general, production and service cooperatives require more labour than, say, utility cooperatives. Yet the latter have a clear impact in poverty reduction, Ms. Llamas indicates, as they provide a reliable and affordable supply of power in rural areas, which in turn triggers activities oriented to production and higher standards of living. Similarly, financial cooperatives are crucial as they finance businesses that would otherwise not receive support from corporate financial institutions.

“By uniting under a cooperative enterprise, rather than operating individually, production workers and artisans increase their odds of success and improve their chances for sustainable employment,” underlines the Secretary-General.  Workers’ cooperatives, furthermore, tend to create more jobs and require less capital per unit of output compared to other private enterprises. They also bolster job retention in their local communities. In Argentina, worker cooperatives took over about 100 shuttered factories and shops after the 2001 economic crisis, preserving about 10,000 jobs in the process.

Cooperatives are everywhere

Benefits of cooperatives can be found in all of corners of the world, including developed regions. A look at figures from the International Cooperative Alliance reveals the extent to which cooperatives have gained ground. In France, Japan and Korea, for instance, 90% of all farmers are members of agricultural cooperatives. In Norway, dairy cooperatives are responsible for 99% of milk production, while in Poland the figure is 75%, in Uruguay 90% and in New Zealand 95%. In the latter, cooperatives also control 70% of the meat market, 70% of the fertilizer market, 75% of the wholesale pharmaceuticals, and 63% of the grocery market. The Korean fishery cooperatives report a market share of 71%, while cooperative banks in France handle 60% of total deposits. Up to 25% of all retailers in France are cooperatives.

The cooperative movement has gained momentum over the last years. In Europe alone, in 1980 there were only 2,500 workers’ cooperatives, while now there are 85,000, with 1.5 million worker-owners employed. Ms. Llamas explains that such growth stems from a growing trend in combining small service-sector and community-based activities to meet larger demand for services. In some countries such as France, the ageing of business owners is driving the conversion of businesses into worker-run cooperatives.

Many workers, for their part, have decided to take the plunge after governments have set up cooperative-friendly environments. This has included legislation encouraging the creation of cooperatives, financial assistance, and preferential tax rates. Argentina, Colombia, France, Spain and the province of Quebec in Canada all actively promote cooperative enterprise in one or more ways. By contrast, the growth of cooperatives has slowed in countries that lack government support.

Tool of social inclusion

Cooperatives have succeeded in building capacities and opening the world of work to persons with disabilities, indigenous people, women, youth and migrants. These groups, especially the first two, are all too often excluded from the labour market. Persons with disabilities are much more likely to be unemployed than persons without disabilities. According to DESA’s Report on the World Social Situation 2007, ninety percent of school-age children with disabilities in developing countries do not attend school, hampering any prospects to escape the poverty trap.

Social cooperatives have been instrumental in boosting jobs and providing social services and health care and education to overcome such systemic impediments to development. In Italy, the law requires that half of those employed in social cooperatives come from the ranks of the disabled. In addition, seventy percent of managers and workers employed in cooperatives in 2003 were women. In rural Andhra Pradesh province in India, women’s cooperatives have been fruitful in enabling women to take part in productive employment, mainly in microenterprises.

Women’s involvement in cooperatives has turned out “an empowering tool from which entire families benefit,” says Ms. Llamas. Membership in health, childcare and consumer cooperatives, for instance, have enabled women to share the burden of traditional household duties while giving them an opportunity to work, which in turn has yielded improvements in child health and education.

Cooperatives have also helped revive economies of post-conflict and post-disaster areas – such as East Timor, El Salvador, and Bosnia and Herzegovina – through the incentives they offer to ex-combatants, minorities and displaced persons to regain an economic footing. In Rwanda, by bringing villagers of coffee-growing areas together to work towards a common economic goal, coffee cooperatives have helped reconstruct the social fabric and advanced national reconciliation.

An economic alternative, not a replacement

Some agricultural cooperatives have resorted to fair trade as a tool for widening their markets and ensuring their incomes in the face of growing global competition and volatility in commodity prices. Under fair trade, cooperatives in developing countries partner with distribution and consumer cooperatives and groups in developed countries, and are paid a price that covers the full cost of production.

A decent price is significant at a time when few of profits that accrue from the export of developing country commodities end up in the hands of smallholder farmers. Supachai Panitchpakdi, Secretary-General of UNCTAD, Kemal Dervis, Administrator of UNDP, and others recently pointed out in an article on the perils of free trade in agriculture that while prices paid in the supermarket have risen, the share paid to the farmers who grow these basic agricultural commodities has fallen. “The higher end, where food and natural textiles are processed, packaged, branded and advertised is where most of the money accumulates.”

Cooperatives will not change that. The sector is too small to have much influence on the world economy. Yet while cooperatives “are not the answer to job creation and poverty eradication,” in the words of Ms. Llamas, they play “a complementary role” and need to be scaled up to benefit more people.

The General Assembly Third Committee – on social, humanitarian, and cultural matters – takes up the issue of cooperatives as a force for development starting 1 November.

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Teaming up on sanitationTeaming up on sanitation

Lack of safe water and proper sanitation is the world's single largest cause of illness

Something as easy as washing hands with soap and water can save lives. And improve health and nutrition in the process. Yet 2.6 billion people still live without even basic sanitation. Every twenty seconds, a child dies as a direct result. That is 1.5 million preventable child deaths each year. To promote better hygiene and speed up progress on securing this basic human right for an additional billion people by 2015, the International Year of Sanitation 2008 will be launched on 21 November.

Last year, the General Assembly declared 2008 the International Year of Sanitation to put the issue in the spotlight, and requested DESA to serve as its focal point. The Department is coordinating activities for the Year in partnership with UN agencies, NGOs, the private sector and academia. This will be “an opportunity to raise awareness, to educate, to engage civil society and to ensure that sanitation finds a place on the agenda of policy-makers at the local and national levels,” says Kenza Robinson, coordinator of the Year in the DESA Division for Sustainable Development.

In 2002, at the World Summit on Sustainable Development in Johannesburg, world leaders brought sanitation to the fore and agreed on a specific target to cut the proportion of people without basic sanitation in half in 2015 as a complement to the Millennium Development Goal to halve the proportion of the population unable to reach or afford safe drinking water. However, as the world is off track to meet the Millennium Development Goals, says Ms. Robinson, there is a clear need for the global community to refocus on good hygiene and basic sanitation.

The International Year of Sanitation 2008 serves that purpose. His Royal Highness the Prince of Orange of the Netherlands will attend the official launch in New York, along with ambassadors, and key UN players in sanitation from such agencies as WHO, UN-Habitat, and UNICEF. The launch will feature presentation of a new UN publication on the topic.

Gains and losses

Lack of safe water and proper sanitation are major sources of world illness. Yet strides to provide people with basic sanitation facilities have been uneven. DESA’s Millennium Development Goals Report 2007 indicates that only Eastern, Southeastern and Western Asia, Northern Africa, and Latin America and the Caribbean are on track to halve the proportion of people without basic sanitation by 2015. No other developing region has made much headway. In Sub-Saharan Africa, for example, the absolute number of people without access to sanitation actually increased – from 335 million in 1990 to 440 million people by the end of 2004. According to the report, this number may continue to rise if current trends are not reversed.

This is despite the fact improved sanitation can have a positive impact on economic growth and poverty reduction. Every dollar spent on improving sanitation generates an average economic benefit of seven dollars. Meanwhile, the economic cost of inaction is huge. If access to basic sanitation is not improved, none of the other Millennium Development Goals, to which the world committed itself in the Millennium Declaration, will be achieved.

Sadly, social stigma all too often prevents people from speaking openly about hygiene and the health of millions is compromised as a result. Almost two million people die each year from sanitation-related diarrhoea, ninety percent of them children under five. Water scarcity forces people to consume contaminated water, leading to water-borne diseases. As a result, repeated episodes of diarrhoea can push children to the brink of survival, leaving them too weak and malnourished to survive common childhood ailments.

Sanitation, weapon against poverty

The International Year of Sanitation launch is an opportunity to raise awareness of the fact that the simplest measures can make a very large difference. Washing hands with soap and water, a mundane activity in developed countries, is a major factor in saving lives. Unwashed hands can transmit the bacteria, viruses and parasites found in human faeces directly to foods and mouths.

The gap between the developed and the developing world is wide. While almost everyone in rich nations has access to a private, flush toilet served by a supply of piped water, many poor people in the developing world are forced to defecate in bags, buckets, fields or roadside ditches. Infestation of intestinal worms caused by open defecation affects hundreds of millions of mainly school-aged children, leading to reduced physical growth, weakened physical fitness and impaired cognitive functions. As the infection worsens, academic performance and school attendance decline. In the case of girls, intestinal worms can lead to anaemia, raising the risk of complications later on in childbirth.

The UN publication entitled Water for Life Decade, prepared with input from the Secretariat of UN-Water in DESA, notes that “many decision makers underestimate the critical role that water, hygiene and sanitation play in poverty alleviation. The economic and health benefits of providing access to water and sanitation facilities significantly outweigh the cost of investment.” Investment in latrines and toilets in homes and in every school is crucial for health, and can even be a source of productive employment. “In areas affected by high unemployment,” the report suggests, “villagers can be engaged as latrine builders, masons and water pump operation and maintenance stewards.”

At its May session next year, the Commission on Sustainable Development will review progress in implementation of policy recommendations made by the Commission on the sanitation issue in 2005. Those recommendations, to be considered by Member States, stressed the need to set up an institutional home at the national level for sanitation – which is lacking in many countries – prioritizing sanitation in national development plans, incorporating sanitation in integrated water resources management plans, and promoting sanitation sensitive to the needs of women and girls in addition to hygiene education and awareness.

Girls at risk

Better sanitation facilities bring development benefits beyond those directly attributable to health outcomes. The Commission on the Status of Women, for instance, in considering the question of “elimination of all forms of discrimination and violence against the girl child”, has concluded that a lack of sanitation facilities threatens girl child most, undermining her ability to enjoy her rights and to reach her full potential.

One of the messages of the International Year of Sanitation is precisely that proper sanitation fosters dignity, while providing privacy and safety that is especially for women and girls. “Appropriate sanitation facilities have been shown to improve attendance school rates, above all for girls reaching puberty,” says Ms. Robinson. Restricted access to toilets increases the chance of chronic constipation and is making women vulnerable to violence if they are forced to defecate at night or in secluded areas. For this reason, having sanitation facilities can be liberating for women and girls, which benefits the whole community.

Bringing sanitation to the fore

“Adequate investment in capacity building, technology transfer, adoption of low-cost technology options, and greater community involvement, especially women involvement, in sanitation management, can promote simple technology design for easy maintenance, facilitate cost-recovery, and help ensure equitable access,” according to Ms. Robinson. In this spirit, DESA and UN system partners will be organizing a workshop next year to consider the linkages between improved sanitation and girls’ education, among other events.

When sanitation is recognized as a national development priority, and where there exist clear policies, budgets, coordination and cohesion within government institutions including at the regional and local levels, Ms. Robinson adds, successful sanitation programmes result. Integration of sanitation into national sustainable development and poverty reduction strategies, as well as integrated water resources management plans, are important ways of advancing implementation of the sanitation agenda. “Integration of sanitation programmes into national priorities is useful as it facilitates monitoring of the status of – and the need for – sanitation and wastewater treatment to meet the Johannesbourg commitments and targets.”

As the International Year of Sanitation looms, many challenges await. Only 20 percent of public sector spending in the water and sanitation sector in developing countries went to sanitation during the 1990s, says Ms. Robinson. It is therefore urgent “to prioritize the areas of greatest need and impact.”

New office, renewed action

A new project office managed by DESA to support the International Water for Life Decade (2005-2015) in Zaragoza, Spain will raise awareness on water and sanitation issues, and advocate for global action, as part of the campaign to reach the 2015 target. The Zaragoza office will also coordinate implementation of UN-Water’s work on water and sanitation. UN-Water is an inter-agency group that coordinates international action on those matters, and is supported by the Division for Sustainable Development in DESA.

The International Year of Sanitation 2008 seeks to secure increased financing to jump start and sustain progress through commitments from national budgets and development partner allocations. It will also mobilize existing alliances among governments, via collaboration agreements that set out the what, who, and how to implement specific actions. Reaching the water and sanitation target is estimated to require $11.3 billion, a large sum but, to put it in a global perspective, less than the annual North American spending on household pets. The technologies, approaches and skilled people are ready. Now is the time to act.

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Eradication of poverty: We must vigorously promote productive employment and decent work

Eradication of poverty: We must vigorously promote productive employment and decent work

17 October marked the 20th anniversary of the International Day for the Eradication of Poverty. Speaking on behalf of Under-Secretary-General Sha Zukang, Ms. Rachel Mayanja, Assistant Secretary-General, stressed that the path to poverty reduction is development, particularly the creation of productive employment and decent work. Winners of the International Children’s Art Competition on poverty eradication, ranging in age from six to fifteen, were presented with awards by Ms. Mayanja during the ceremony.

(10 minutes)
Stand up against poverty on UN Radio: minute)