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Play by cooperatives

A recent conference in Kerala elucidated how such organisations could be a saving grace for the North-east

Rangan Dutta |

Mention co-operative and it usually conjures up a vision of something connected with urban housing or the consumer movement. Now, what with swanky shopping malls coming up even in small towns, this thinking is changing.

When in the 19th century the cooperative movement began in Britain it was viewed widely as a mode of organising enterprises, not on maximising profit but equitable distribution of surplus among members.

A cooperative enterprise thus will have to be member-owned and democratically-managed for the welfare of the members, and, for this reason, it was considered an alternative to capitalism or a balancing sector in a market-led economy.

In India cooperatives were introduced in the early 20th century, mainly to form farmers’ credit societies to avoid their dependence on money-lenders and the consequent problem of severe rural indebtedness.

The North-east has been a part of the national cooperative movement that is now facing new challenges following innovations in both technology and management of enterprises thereby threatening the very basis of cooperative enterprises.

For example, the part-time work-based Uber-type taxi services or practice of outsourcing, which acts as a disincentive to form a cooperative, as it brings the individual direct to the enterprises and not as a group and thus capitalises on selfish instincts. New definitions of work enterprises and entrepreneurship have now emerged, challenging the basis of a cooperative by providing an alternative.

In this background, it is interesting to see that “The Cooperatives in Changing World of Work” was the theme of the international conference held at IIM Kozhikode (formerly Calicut) in Kerala from 29 April to 1 May.

It was organised by the International Cooperative Alliance, Asia Pacific Regional office in collaboration with the IIM, Kozhikode, ICA-European Union Partnership on cooperatives in development, and Uralungal Labour Contract Cooperative Society, Kozhikode. ICA, based in Brussels, is the coordinator of the cooperative movement worldwide.

The subject is relevant to development of the North-east, and the participation of delegates from 10 countries and Dr Smel Asim of the Cooperatives Unit, International Labour Organisation, Geneva and several international expert bodies, made it a historic conclave, as it deliberated, possibly for the first time in India, on the changing definition of “work” and “enterprise” in an era of outsourcing and “uberisation” of the economy.

Also, how the idea of the cooperative movement with its core philosophy of common good, voluntary membership, ethical business and members’ democratic control could cope with the “disruptive” forces released by technology, was discussed.

An outstanding example of what cooperatives could achieve for ensuring assured work and income with social security for contract construction labour in the informal economy is the Uralungal Labour Contract Cooperative Society of Kozhikode.

It arranges work for over 6,000 construction labourers on a regular basis and has developed in-house expertise in infrastructure of such a high order that it has been made a partner for the state and private corporate sector in Kerala in the construction of roads, bridges and buildings, especially those, which meet a social purpose, say education or health. So far ULCCS has completed over 6,500 major projects across Kerala, and presently engaged in about 350 projects, worth Rs 1,700 crore.

It is the largest labour contract society in India and is recognised as a global model. It has diversified and developed its cyber park, education and skill development and empowered new perspectives in entrepreneurship development and enterprise solutions.

The relevance of the ULCCS model to the North-east is manifold. The region is fast emerging as an important source of skilled and unskilled labour for South India especially Kerala where an estimated 70 percent of the migrant labour is from the North-east.

Workers from Assam and other states of the region have found jobs in road construction and repair, industries, hospitality sector and private security all over Kerala and the South.

Secondly, though there are now functioning labour and industrial cooperatives in the region — 421 in Assam, out of the total of 9,148 cooperatives with a membership of 727,000, 25 labour cooperatives in Tripura, four labour and 13 industrial cooperatives in Meghalaya and 11 labour cooperatives in Manipur.

Though the region has 9,258 co-operatives till date, no cooperative in the North-east has been able to acquire even remotely what ULCCS has achieved, either by way of wage bargaining power, technical and managerial expertise of the minimum strength necessary to organise the labour into a “workers cooperative”, capable of bidding for construction work on their own.

The absence of such dynamic labour cooperatives prompts the region’s youth to migrate to the South for low wage unskilled work. The first step for the region to take should, therefore, be to organise skill development cooperatives that will help increase their knowledge.

State support to raise the skills of the local youth who are prepared to go out of the North-east and skill teaching should be demand-driven, that is, skills in demand in states where they might move to enable the migrant workers to compete for better paid work; and this will also help them to organise labour cooperatives at home.

The formation of labour cooperatives should, therefore, be given the highest priority in state policy on cooperatives in all North-east states as a means to organise the labour for a better deal within the region, both from the government and the private sector; and to transform these cooperatives, wherever feasible, into industrial and service cooperatives.

In the process, acquire for their members working conditions of the “semi-formal” sector and capacity to become a “producer company” functioning on cooperative principles.

Second, policy makers of the North-east should take note of the observation made at the conference that “the current market driven economy in India and globally have failed to utilise the full potential of cooperative form of organisation structure” and that it has not addressed the need to redefine work, enterprises, and entrepreneurship from a social and human development perspectives.

Technology by subdividing the “work” and facilitating outsourcing has altogether changed the situation in the ground for what was known as a factory or an office or a fixed place of work earlier.

This paved the way for marginalisation of labour, high profits for few and destruction of small businesses, which has led to massive inequality in the world that Thomas Picketty documented brilliantly in his path breaking work, Capital in the Twenty First Century.

Third, the conference noted the malfunctioning of cooperative credit and cooperative banks in several countries, especially India, which has created a severe trust deficit about these institutions within the government as they deviated from the primary task of providing loans to small and marginal farmers and artisans and helping them to use loans properly. It instead financed big farmers and businesses, which landed the cooperative banks with huge “overdues” because of misuse of credit.

The unabated incidence of farmer sucides in parts of India largely due to their inability to repay loans taken from money lenders reflect poorly on the performance of the rural credit cooperatives in these areas. Therefore, periodic waiver of agricultural loan is now an election issue in states.

The cooperative movement has lost its professionalism in its core activities, which provided a large space for the self-help group movement to occupy in the micro finance sector.

Nevertheless, SHGs can’t substitute cooperatives as being too small (the average SHGs having only about six to eight members) it cannot build a platform like the ULCCS in Kerala to help labour by creating a large enterprise run for their well being.

Thus, the conclusion of the Kozhikode conference that cooperatives provide a sustainable alternative to corporates and partnerships driven solely by profit maximisation holds good because cooperatives being local and member-based generate local employment and are oriented to the well-being of the members. They are best positioned to develop a “multi-stakeholder perspective” essential for sustainable development.

The message for the North-east is clear — the answer to problems faced by the migrant workers from the North-east lies in developing a strong workers and industrial cooperative movement within the region backed by skill and entrepreneurship development and a revamped cooperative credit and banking system.

The writer is a retired IAS officer of the Assam-Meghalaya cadre and has served as a scientific consultant in the office of the principal scientific advisor to the Government of India.