ILO COOP 100 Interview

Hagen Henrÿ, former ILO COOP Chief and Adjunct Professor of comparative law at the University of Helsinki

Established in March 1920, the ILO’s Cooperatives Unit marks its Centenary in 2020. On this occasion, the ILO COOP 100 Interview series features past and present ILO colleagues and key partners who were closely engaged in the ILO's work on cooperatives and the wider social and solidarity economy (SSE). The interviews reflect on their experience and contributions in the past and shares their thoughts on the future of cooperatives and the SSE in a changing world of work.

Artículo | 16 de marzo de 2020

1. Prior to joining the ILO, what was the nature of your involvement in cooperatives?

I would like to start by congratulating you and your colleagues for your idea of commemorating, “in style”, the longstanding involvement of the ILO in cooperative development - in fact since the beginning of its operations in Geneva in 1920! I would also like to thank you for the interest you take in my work on cooperatives!

I grew up in rural Southwest Germany, an area which was then, and still is, “populated” by all kinds of cooperatives. My father worked at the end of his professional life for 12 years for one of them. The first time I started thinking about cooperatives was in 1980 when I worked as the rapporteur during a seminar on “Co-operative Law in Southeast Asia”, organized by the then German Foundation for International Development (DSE) in Berlin and “masterminded” by Prof. Münkner. This was after I had completed my university studies in two European countries, both known for their cooperatives, namely Germany and Switzerland, without ever having heard a word about cooperatives. This did not change during my post graduate studies in two more countries, equally “cooperative”, namely France and Finland. I emphasize this because we are still in this situation where research programs and educational curricula contain next to nothing on cooperatives. Even though things may be improving, a huge gap remains between what is outlined in Paragraph 8 of the ILO’s Promotion of Cooperatives Recommendation, 2002 (No. 193) and what is actually happening on the ground. According to this paragraph “National policies should […] promote education and training in cooperative principles and practices, at all appropriate levels of the national education and training systems, and in the wider society.”

My involvement with local cooperatives started in 1983 when I became a member of a cooperative bank in Germany. In the early 1990s I joined the Marburg Consult for Self-help Promotion Cooperative in Marburg (Germany); in 1993 a telephone cooperative and a consumer cooperative in Finland. Beyond having (had) transactions with these cooperatives, I am not an active member.

The decisive turn as concerns my work on cooperatives occurred in 1992. I had resigned from my post with the German Federal Ministry of Economy for which I had worked as a legal advisor for eight years and we had moved to Finland. Prof. Münkner, whom I had known since the late 1970s convinced me to specialize in cooperative law. So I followed his advice. I benefitted from the fact that he opened many doors for me. He suggested literature to read, people to contact, seminars and conferences to attend. My first consultancy mission on cooperative law took me to Vietnam for the FAO in early 1994. Since then I have been to many countries, consulting on cooperative law and at times on cooperative policies for governmental and non-governmental national, regional and international organizations. The first such mission for the ILO took me to Mali in 1996.

Prof. Münkner also introduced me in 1992 to Prof. Köppä whom I succeeded at the University of Helsinki in 2011 when I left the ILO. My knowledge on cooperatives in Finland slowly built on what I learnt from my father-in-law who was a “life-long cooperator”.

2. How did you first start working with the ILO?

My involvement with the ILO prior to joining it at the beginning of 2007 splits into two parts. First, I participated in the elaboration of the Recommendation 193 and, secondly, my engagement in consultancy assignments.

My participation in the elaboration of the R. 193 goes back to 1993. In July of that year, the Institute of Cooperation in Developing Countries at the University of Marburg (Germany) and the Marburg Consult for Self-help Promotion Cooperative, with support from the Cooperative Branch of the ILO, organized a colloquium on the theme of “Structural Changes in Co-operative Movements and Consequences for Co-operative Legislation in Different Regions of the World” at Marburg. I participated in the colloquium with a presentation on Finland. This colloquium was planned as the first of a series of such colloquia. In his Foreword to the report on the meeting Jürgen von Muralt, whom you interviewed previously, expressed his hope “that the results of such colloquia shall provide the basic framework for a Meeting of Experts on Cooperative Legislation to be organized by the International Labour Office in May 1995.”

The same report identified a number of themes to be further discussed. Consequently, the second colloquium organized at the end of 1993 by the Institute of Cooperation in Developing Countries and the International Labour Office and hosted by the International Cooperative Alliance (ICA) at Geneva had as its theme “The relationship between the state and cooperatives in cooperative legislation.” I participated with a paper on “Co-operative Law and Human Rights”. Before the said Meeting of Experts on Cooperative Legislation in May 1995 the Federation of Danish Cooperatives hosted yet another colloquium organized by the Marburg Institute of Cooperation in Developing Countries on the theme of “Cooperative Organization and Competition Law” in which I participated with a presentation on “Cooperative organization and competition law in Finland”. The reports on these colloquia fed into the thinking of the participants in the Expert Meeting in 1995.

During this Meeting of Experts, I had for the first time an “official” role. I had edited and summarized the country reports on “Labor law and cooperatives”, which the Cooperative Branch had commissioned upon the request of the Governing Body of the ILO. I then prepared the Final Report “Meeting of Experts on Cooperative Law”. In relation to the recommendations, the Experts also endorsed the Conclusion of the Meeting of Experts in 1993 that the Co-operatives (Developing Countries) Recommendation, 1966 (No. 127), which was to some - limited - extent a predecessor to R. 193, should be revised.

The next step of my “official” involvement was the preparation of the section on cooperative legislation, in the Report on the “Promotion of cooperatives” for the 2001 International Labour Conference (ILC). During the ILC 2002 that adopted the Recommendation, I worked as an advisor to the ICA.

Related to consultancies, I have consulted for the ILO in over 35 countries.

3. What are some highlights of your contributions to the work of the ILO on cooperative development?

The third edition of the Guidelines for Cooperative Legislation published in 2012 is a highlight worth mentioning. I think it was Jürgen Schwettmann who first had the idea for developing the guidelines. It was a time when ILO constituents and others had developed an increased interest in cooperative law. The elaboration of such guidelines, which would build on the long history of the Cooperative Branch in the field was to facilitate law-making activities. The second edition was published in 2005 before I joined the ILO in 2007 to also provide information on the two new international instruments on cooperatives – the UN Guidelines aimed at creating a supportive environment for the development of cooperatives, and the ILO Recommendation 193. This 2nd edition of the Guidelines was almost congruent with a text I had prepared for the General Assembly of the ICA at Seoul in 2001. That general assembly endorsed this text and it was published in the ICA Review. The focus of the third edition was to incorporate more new developments such as the harmonization of law, emergence of international regulations which directly affect enterprises, and new regional cooperative framework laws. In the foreword to the third edition I tried to capture the history of the Guidelines. The Committee for the Promotion and Advancement of Cooperatives (COPAC) was also involved in the preparations and the publication of the third edition.

The Guidelines have their imperfections. Some academics consider that they are not scientific enough; some practitioners consider that they are too academic. The Guidelines probably do what they were intended to do, namely to present the “ins” and “outs” of cooperative legislation for both academics and practitioners around the world in a relatively succinct manner.

The ILO R. 193 underlines the importance of cooperative legislation. Its Paragraph 10 is explicit in this respect. It reads: “Member States should adopt specific legislation and regulations on cooperatives, which are guided by cooperative values and principles set out in Paragraph 3, and revise such legislation and regulations when appropriate.” Cooperative law is part of the wider notion of labour standards that the ILO promotes. This was confirmed by the Recommendation having been among the first instruments to undergo a “General Survey” in 2010.

The impact of ILO R. 193 is captured to some extent in “The Story of the ILO’s Promotion of Cooperatives Recommendation, 2002 (No.193) - A review of the process of making ILO Recommendation No. 193, its implementation and its impact”. One has to consider that legislation is by its very nature a complex process. It should have, and most of the time it has, many actors. None of the results may be traced back to the input of one of them. Let me give an example to demonstrate how difficult it can be to attempt to measure the impact of such activities. In a country, I discussed with the relevant government authorities and other stakeholders, over a period of close to ten years whether one single word which prevented legal persons from joining primary cooperatives as members should be deleted from a section in the cooperative law. In the end the word was deleted. I was criticized for the amount of time I had invested, but I think it was worthwhile.

4. As someone who has worked on cooperative law across decades, what do you think are the most essentials elements of a cooperative law that distinguish cooperatives from other types of enterprises and ensure their identity?

As of lately I explain what cooperative law is by saying it is the translation of the cooperative principles into legal rules. The reference to the “cooperative principles” is a reference to the three component parts of the 1995 ICA Statement on the cooperative identity (ICA Statement), namely the definition of cooperatives, the cooperative values and the cooperative principles, and to the expressly stated relationship between them.

A first answer to what the essential elements of a cooperative law are flows from the specific, three-fold objective of cooperatives as laid down in the definition of cooperatives (satisfaction of the common economic, social and cultural needs of the members). Not the least because of the (partial) inclusion of the text of the ICA Statement into the ILO R. 193 there is now a sufficiently solid consensus on this. This consensus is reinforced by the 2001 United Nations Guidelines aimed at creating a supportive environment for the development of cooperatives. But, as is often the case with such consensus at the international level, the work does not end here, it starts here. While the ILO R. 193 gives legal weight to the ICA Statement, the difference between the text of the ICA Statement and the “shape” it is given by the ILO R. 193 accounts for many of the difficulties we face when translating the cooperative principles into legal rules.

A further question is how the cooperative principles enter the realm of law. The tentative answer is “via legal principles”. But “which legal principles”? Those of international law? Those of the legal system in question? What are the consequences of the answers to these questions? Special cooperative legal principles, yet to be developed - by whom and how? Something similar to the “Principles of European Cooperative Law, PECOL”? The issues become even more complex as we move toward harmonized cooperative law at the regional and international levels. This opens another vast field for comparative cooperative legal studies.

One of the main outcomes of the 2020 World Economic Forum at Davos shows how difficult it has become to distinguish cooperatives from other types of enterprises through law. The Corporate Social Responsibility (CSR) of all enterprise types has left its moral and political comfort zone to become a legal obligation; its scope has widened to include societal issues. So the move is now from a moral CSR to a legal Corporate Social and Societal Responsibility (CSSR). The growing consensus around this obligation must be read in the context of a search for a new pact on the distribution of the social costs of enterprising. It concerns the behavior of enterprises. Cooperatives have to abide by it. But the cooperative principles go beyond that. They call for structural differences between cooperatives and other types of enterprises, which set them apart and which are the raison d´être of cooperative law. The main feature in this context is the democratic participation of the members. Being that mechanism which regenerates social justice, democratic participation is also central to sustainable development. To mention that participation is also one of the five pillars of the ICA Blueprint for the Cooperative decade 2011-2020.

However: It is not enough to include the one member/one vote rule in the cooperative law or in the statutes of the cooperatives. Participation is a wider concept; it includes control. Participation must permeate all organizational and operational aspects. Its translation into legal rules is a challenge if we are to capture new developments in at least two directions. First, multi-stakeholder and multi-purpose cooperatives in the education, utilities, health and care sectors etc. with heterogeneous memberships where private law and public law mix; and, second, the integration of cooperatives into global value chains not only operationally, but also organizationally - and the transformation of these chains into networks of globally acting actors. This requires redefining the participants (members and other stakeholders), the loci and the modes of participation (modern techniques; block chain for example). Implied by this comment is a plea to put more emphasis (not meaning a total shift!) on modern type cooperatives.

5. What are the recent issues and trends concerning cooperative legislation?

There is a growing pressure to align the governance structures of all types of enterprises in view of increased financial and economic stability. We call this the convergence of the governance structures of enterprises. In fact, the trend does not differ essentially from what we experienced over the past decades in the field of cooperative legislation, namely the companization or demutualization of cooperatives through law by approximating their characteristics with those of stock companies. The paradox with convergence is that its aim – more financial and economic stability – relies on a condition, namely diversity, which it itself destroys. There is an epistemological link between diversity in its two aspects (biological and cultural), development and sustainable development.

6. What are your thoughts on a growing momentum around the social and solidarity economy (SSE)?

There is indeed such a growing momentum. So far the SSE laws and cooperative laws relate to different subject matters. The SSE laws set the criteria legal entities must meet in order to qualify as enterprises of the SSE and in order to be eligible for the application of specific government policies, be it a specific (income) tax regime, special criteria for the access to public procurements or other. The absence of such laws in some countries must not be understood as them not having such policies. The difference lies, more often than not, in a different approach to the law/policy-nexus. By cooperative law we understand the law which regulates the organizational set-up of an enterprise, the responsibilities and liabilities of the persons involved, the capital structure, governance issues etc. Cooperative law is organizational law laying down the requirements for the attribution of the status as legal entity. The risk of redundancies arises when a legislator starts elaborating an organizational law for social enterprises recognizing them as legal entities. So far, moves in this direction have not yielded any result.

7. What role do you expect the ILO to play on cooperative development in a changing world of work?

There are a number of areas where cooperatives can make a contribution beyond the pursuit of their central function, which is to address their members´ needs. For example, a contribution to sustainable development and peace; participation in the new social pact. Any measures - policies, laws, whereby I use the wide notion of law as justified in the Guidelines for cooperative legislation, need to take account especially of the factors, which change the nature of enterprises radically. The dominant shareholder paradigm is being replaced with a stakeholder paradigm. Enterprises are conceptualized as citizens with greater social and societal (legal) obligations, while integrating ever more intensively, operationally and organizationally, into values chains and they are interrelating in networks of globally acting actors. Cooperative enterprises are no exception to this development.

In order to effectively address these changes the ILO might benefit from even closer institutional links with the organized world of cooperatives. The ILO might use its influence to ensure that the subject of cooperatives is (re)introduced into the research and education agendas at all levels of education systems. 

ILO COOP 100 Interview series features past and present ILO colleagues and key partners who were closely engaged in the ILO's work on cooperatives and the wider social and solidarity economy (SSE). This article does not constitute an endorsement by the International Labour Office of the opinions expressed in it.