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Social cooperatives ‘a way to lift people out of poverty’

Sociologist believes they can be an alternative to welfare model

Cooperatives ensure that people lift themselves up by being empowered with the tools they need to access resources. Photo: Shutterstock

Cooperatives ensure that people lift themselves up by being empowered with the tools they need to access resources. Photo: Shutterstock

Encouraging people to set up and run their own cooperative societies may be key to allowing them to lift themselves out of poverty, according to sociologist Godfrey Baldacchino.

The university professor believes that this may be an alternative method to the traditional ‘top-down approach’ of the welfare model, with social cooperatives offering a different way of creating work.

Social cooperatives are those in which various categories of stakeholders, including paid employees, beneficiaries and volunteers, may become members.

The phenomenon has mostly been developed in Italy but exists in various forms in many countries. In some, such as Sweden and Britain, they exist without any special legislation, while elements of the Italian model have been incorporated into Belgian law.

“In many countries, including Malta, the standard approach is that welfare schemes are created to help poor people out of poverty and welfare agencies are set up in order to provide assets and resources for people in predicaments,” Prof. Baldacchino said.

Instead, the cooperative ensures that people lift themselves up by being empowered with the tools they need to access resources.

“For instance, one of the prerequisites that people need to get out of poverty is gainful employment. Cooperatives create employment for their own members – so the members of a cooperative join together and set up a structure through which they can offer services in any area of the economy.”

Cooperatives create employment for their own members

Such initiatives could be used to address most areas of poverty, including the current rising concerns about housing, Prof. Baldacchino said.

“There are other ways of organising social housing, including ways of facilitating the way people come together to manage their space.”

They are then responsible for anything from landscaping the property to redecorating the space they live in.

“By doing their own thing individually, people often end up spending more money than they need to.”

There are still some downsides to cooperatives, Prof Baldacchino conceded, adding that it might be difficult to convince and train people to effectively come together.

“The worst thing we could do is to imagine them as ideal, happy family kind of situations,” he told The Sunday Times of Malta.

“At the end of the day, we are dealing with people. But issues and arguments arise in any conventional companies as well. We should not flog cooperatives, because they also face the very real challenges involved in getting people to work together.

“I understand that this is not a culturally popular activity in Malta today,” he said, adding that our education system and our culture rewards individual initiative rather than group efforts. Nevertheless, there are dozens of cooperatives in various sectors of the economy in Malta, some of which are doing impressively well, he noted.

However, people need to know and understand that in order to benefit individually, they can also work together in complementary ways, he insisted.

Last Thursday, the University of Malta and the Foundation for Social Welfare Services signed a collaborative agreement with the intention of promoting sustainable cooperative societies.

Through this memorandum of understanding, the two parties seek to establish a relationship of cooperation in a range of social and educational areas.

The university and FSWS also want to explore the possibility of creating joint ventures and initiatives for the development of programmes of higher education in social enterprise and cooperative learning.

The government already has some structures in place to support cooperatives, including a board of cooperatives that seeks to register, monitor and facilitate their development, Prof. Baldacchino noted.

Legislation in Malta has also created an income tax exemption for cooperatives in societies, he added.

But all surpluses generated in the cooperative is taxed anyway at regular rates once they are distributed to individuals. Meanwhile, all cooperatives are obliged to transfer five per cent of any surplus to the Central Cooperative Fund, while private limited companies have no such obligation.

Prof. Baldacchino says, therefore, that further discussions on how to encourage people to create social cooperatives are needed.

“I’m not sure whether that is actually as much of an incentive as it is purported to be,” he added.

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