The Young Foundation reveals a new way to reimagine our economy through a trailblazing model of economic and social equality.

Date: 5 April 2017

Young Foundation research launched on 5th April on the Mondragon Corporation reveals a large global business owned by its workers delivering economic and social equality by combining success in the marketplace with social benefit.

Mondragon, the world’s largest worker-led cooperatives association with annual revenues of over €12 billion (equivalent to those of Kellogg’s and Visa), represents a radical alternative system with equity embedded in its core. This is epitomised by salary ratios between the lowest and highest paid workers of 1:9 (compared to 1:129 for a FTSE 100 company), the redistribution of wealth and the growth of cooperatives which are supportive institutions including schools, banks and welfare support for members. These findings have highly important implications for the development of an inclusive UK economy, and demonstrates how businesses can be both competitive in the marketplace and generate social value at large scale.

The research launch will also present a joint set of policy proposals with Co-operatives UK on key learnings government and civil society can take from this model for the UK and beyond.

Key elements of Mondragon’s ecosystem:

  • Equality is embedded in working practices. Equity in the organisation is owned by workers, salary ratios do not exceed 1:9 between the lowest and highest paid workers and democratic practices are entrenched in a “one person, one vote” system.
  • Cooperatives work together to achieve their aims through inter-cooperation. For example, just recently 2,000 workers were relocated to other cooperatives after the collapse of one of their oldest ventures, showing how the relationships between different elements of the ecosystem facilitates the resilience of the overall cooperative group.
  • Cooperatives provide supporting infrastructure. Different cooperatives provide a network of sustainable infrastructure institutions including schools and a university, banks and welfare support for the benefit of members. This helps underpin Mondragon’s development and growth.
  • A commitment to and investment in innovation. This has enabled Mondragon to sustain itself, grow and adapt in a changing market place while retaining its core mission. For example, it has its own Innovation model, M4Future, and 15 large technological centres.
  • Reinvestment of profits and wealth distribution. Inter-cooperation is demonstrated through the reinvestment of profits into employment creation and corporation-wide funds for education and local/regional socioeconomic development.

Implications of this research:

  • Businesses can place social benefit at the core of their mission without compromising their success and competitiveness in the market.
  • Wealth needs to be distributed by taxation, but more equal pay ratios also lead to wealth redistribution.
  • Sustainable positive change is possible at scale. Rather than just relying on the ‘solo entrepreneur’ people can be brought together to create sustainable positive change if strong and shared values are embedded in socioeconomic and investment practice.
  • Ownership by workers acts as a strong motivator for their loyalty to its business. Thus, worker ownership is a very powerful driver of social innovation.

Glenys Thornton, CEO of The Young Foundation said:

It has been a great honour to have worked with Mondragon to launch ‘Humanity at Work’, examining this business which performs highly successfully in some of the world’s most competitive markets. But this isn’t just about business success, Mondragon creates true social benefit too. It provides strong evidence in terms of both policy and practice for building a more inclusive economy. Going forward we will be at the forefront of the influencing and practical implementation of this inspiring model for social change.

Ibon Zugasti, Mondragon International Projects Manager, said:

Mondragon presents an alternative approach to fighting the structural causes of inequality. We are therefore thrilled that our work with the Young Foundation has resulted in a compelling research report about the radical ways in which we work. It is really important that the findings of this research are used to help guide policy makers and industry towards an inclusive economy that truly works for everyone.

Ed Mayo, Secretary General of Co-operatives UK, the network for the UK’s thousands of co-operatives, said:

Mondragon is more than just a business – it offers inspiration for how we might reimagine our economy. Because it is the workers who own and control Mondragon they have a stake in what it does, a say over its direction and benefit when it does well. And it achieves all this at scale, demonstrating the contribution of worker ownership and fair pay ratios to the running of a large commercial business.

ENDS.
Notes to editors:

1. For interviews and more information please contact: Lucie Russell, Head of Communications on 07931 507873 or 020 8980 6263, email lucie.russell@youngfoundation.org.

2. The Young Foundation is a research and action based institute with a formidable track record of confronting inequalities. We work across the UK and internationally to create insight and innovations which put people at the heart of social change. We do this through research, work with communities and social innovation. We also bring together leading thinkers and policy makers around the world to develop new ideas to confront inequalities and create fairer societies.

3. We were founded by the great social scientist and innovator Michael Young and originally called the Institute for Community Studies. We became the Young Foundation after Michael’s death in 2002. Together we have created and supported over 80 organizations including Which?, The Open University, Economic and Social Research Council, Social Innovation Exchange (SIX), School for Social Entrepreneurs, Uprising and Studio Schools Trust. Find out more at www.youngfoundation.org

4. The Mondragon Corporation is an association of worker-owned cooperatives based in the Basque country in Spain The Mondragon Corporation is a family of worker-owned and run businesses based in the Basque country in Spain. It is composed of more than 260 different companies and subsidiaries, with over 75,000 workers in 35 countries and annual revenues of over €12 billion.

5. Co-operatives UK is the network for Britain’s thousands of co-operatives. Together we work to promote, develop and unite member-owned businesses across the economy. From high street retailers to community owned pubs, fan owned football clubs to farmer controlled businesses, co-operatives are everywhere and together they are worth £34 billion to the British economy. www.uk.coop