COMP NEWS – A worker-owned business model in Spain is accomplishing something most companies are dreaming of doing – retaining productive, happy workers who feel fairly compensated for their work.

The 22,000-person town of Mondragon in Spain’s Basque region is home to the world’s largest worker cooperative network, called Mondragon Corporation. Founded half a century ago by a priest and some of his acolytes, the co-ops have found a way, crisis after crisis, to keep unemployment and income inequality in check.

“We are seeing growing interest, especially from very developed countries like the US or the UK or in Western Europe,” says Ibon Zugasti, an international project manager at Mondragon headquarters. Those who are interested in starting their own worker cooperatives “really think that they need something singular and disruptive to get a new solution to old problems.”

Worker-owned businesses rely on communal approval to determine many facets of the business, including worker salaries and bonuses.

At the nearly 100 cooperatives that form part of the Mondragon network, many of the workers are also owners. They set their own salaries in an annual vote and receive a share of their company’s yearly profits. As a rule, managers can only earn six times more than the lowest paid worker. At some companies, the gap is even smaller.

“The objective of the cooperative is not to produce rich people, it’s to produce rich societies,” said Igor Herrarte, an engineer at Mondragon Assembly, which makes solar panels and machinery to help firms automate their production. “We don’t have a lot of rich people — or not very rich — but on the other hand, we also don’t have poor people.”

Worker co-ops have seen various resurgences over the decades, particularly in times of economic downturns. Some economists say that worker-owned business models could help address some of the concerns with the ongoing Great Resignation.

Interest in worker co-ops tends to increase in times of crisis. The number of such companies in the U.S. doubled to more than 600 from 250 in the decade or so after the 2008 recession, according to Mike Palmieri, an associate researcher with the Ohio Employee Ownership Center at Kent State University.

Co-ops also have the potential to allay some concerns that underpinned the Great Resignation, such as frustrations about not having a say in workplace decision-making. The model can also help workers address concerns about precariousness that came to the fore during Covid-19. Drivers in New York City, for example, launched a cooperative in 2021 to compete against Uber and Lyft. It now has 6,700 drivers.

To read more about the resurgence of worker co-ops, click here.

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