'The Italian Road to Recuperating Enterprises and the Legge Marcora
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RESEARCH REPORT N.015 | 17 THE ITALIAN ROAD TO RECUPERATING ENTERPRISES AND THE LEGGE MARCORA FRAMEWORK: Italy’s Worker Buyouts in Times of Crisis Scientific Coordinator (Coordinatore scientifico): Marcelo Vieta Researchers (Ricercatori) : Marcelo Vieta Sara Depedri Antonella Carrano Partner organizations (Organizzazioni partner): CFI Cooperazione Finanza Impresa University of Toronto - OISE Ontario Institute for Studies in Education - Centre for Learning, Social Economy & Work (CLSEW) THE ITALIAN ROAD TO RECUPERATING ENTERPRISES AND THE LEGGE MARCORA FRAMWORK Italy’s Worker Buyouts in Times of Crisis Marcelo Vieta, 1 Sara Depedri, 2 Antonella Carrano 3 ABSTRACT Recent years have witnessed a re-emergence of business rescues and buyouts of failing firms or of firms with succession issues to cooperatives. In our current times of lingering economic crises and austerity, in particular, worker-initiated business conversions to cooperatives - or worker- recuperated enterprises - are directly addressing chronic under- and unemployment, rising rates of firm closures, and business transfer issues. They also suggest ways of bringing economic control back to the hands of workers and communities via practices of collective entrepreneurship. This report focuses on Italy’s experiences with worker-recuperated enterprises as worker buyouts (WBOs). They have been facilitated by Italy’s extensive cooperative, business, and labour legislation and enabling environment, spearheaded by its Legge Marcora (Marcora Law) policy and funding framework - a unique collaboration for business rescues and saving jobs between workers, the state, and the cooperative movement. With particular emphasis on the resurgence of WBOs since the latest period of economic crisis spawned by the Great Recession, this report reviews and updates research we have been conducting at the European Research Institute on Cooperative and Social Enterprises (EURICSE) by specifically exploring: the political economic conditions from out of which Italian WBOs emerge; Italian and European policies on business transfers; the legal and financial supports that facilitate WBOs in Italy; Italian WBOs’ economic sectors of activity, geographic spread, territorial concentration, and demographic dimensions; and their organizational makeup and conversion processes. This report strives to contribute to bridging knowledge gaps concerning business conversions to worker cooperatives more broadly, and Italy’s WBOs and Legge Marcora framework more specifically. It also aims to establish a research agenda for studying worker buyouts that aspires to uncover their long-term potential as solutions by workers to micro- and macro-economic crises and for informing policy and future research considerations. This report brings to a close the Italian phase of a broader research initiative entitled New Production and Worker Cooperatives and the Employee Buyout Phenomenon in the “Innovative Models” research stream spearheaded by EURICSE . This broader research initiative seeks to bring into clearer view the dynamics of the conversions of businesses into worker cooperatives and other forms of labour-owned and community-centred firms via an interdisciplinary political economic and sociological research program. 1 PhD, Assistant Professor, Program in Adult Education and Community Development and the Centre for Learning, Social Economy & Work (CLSEW), Ontario Institute for Studies in Education of the University of Toronto. 2 PhD, Senior Researcher, Euricse. 3 PhD, Independent Researcher. ii ACKNOWLEDGEMENTS This report and research would not have been possible without the kind assistance of the following institutions and people: Cooperazione Finanza Impresa (CFI) has collaborated with the authors of this report by kindly making available its database of worker buyouts, offering us guidance regarding the cooperatives they have worked with, assisting us in contacting numerous Italian worker buyout experiences, helping us in understanding the Legge Marcora framework more completely, and by generously supporting this research initiative from the beginning. We especially would like to thank CFI’s Franco Di Nuzzo, Armando Castrichelli, and Alessandro Viola for their continuous assistance since the beginning of this project. We are also in deep gratitude to Dr. Alberto Zevi, president of Italy’s Legacoop’s Centro Studi and former president of CFI, who has also been extremely helpful and supportive over the years with this project, contacting WBO-enabled cooperatives on our behalf and encouraging us throughout the preparation of this report. Professors Carlo Borzaga, Antonio Fici, and Ermanno Tortia have also been very helpful in assisting us with better understanding Italian cooperatives and offering feedback. Many thanks also to Gianluca Salvatori for his continued support and promotion of this project. A deep thank you is also due to the many people who have been a part of this work at particular moments over the past few years, including: Brandon Bertram, Aleksandra Bobic, Riccardo Bodini, Chiara Carini, Adriano Cataldo, Vittoria Fontanesi, Martina Facci, Alessandra Faccio, Barbara Franchini, Deborah Fraccaro, Giulia Galera, Elisa Gobbi, Felice Scalvini, Chiara Strano, Stefania Turri, and Flaviano Zandonai. Above all, we would like to thank the many workers of Italy’s imprese recuperate who have collaborated with us in this project with their time and personal testimonies. iii TABLE OF CONTENTS ABSTRACT II ACKNOWLEDGEMENTS III TABLE OF CONTENTS IV LIST OF FIGURES VI LIST OF TABLES VII LIST OF ACRONYMS VIII INTRODUCTION 1 EXECUTIVE SUMMARY – THE ITALIAN ROAD TO RECUPERATING ENTERPRISES 4 The Relevance of Italy’s Worker Buyouts 4 The Goals of the Report 6 The Advantages of Transferring Businesses to Workers 7 Key Findings 8 The Seven Pillars of Italy’s Worker Buyouts 14 1. BUSINESS TRANSFERS TO WORKERS AND EUROPEAN POLICY IMPLICATIONS 16 1.1 Still Much to Learn about Business Conversions to Worker Cooperatives 16 1.2 The European Policy Landscape: Securing Employment, Rescuing Businesses, and Proposals for Business Transfers to Workers 18 1.3 Looking Forward 29 2. WORKER -RECUPERATED ENTERPRISES AND WORKER BUYOUT : DEFINING KEY TERMS , INTRODUCING THE ITALIAN EXPERIENCE 31 2.1 Introduction 31 2.2 What are Worker-Recuperated Enterprises? 31 2.3 What are Worker Buyouts? 35 2.4 Italy’s Worker Buyouts: A Brief Overview 39 2.5 Macro-Economic Conjunctures in the Emergence of Worker Buyouts in Italy 43 2.6 Conclusion 52 3. THE ITALIAN ROAD TO WORKER BUYOUTS : AN INNOVATIVE MODEL OF WORKER , STATE , AND COOPERATIVE MOVEMENT COLLABORATION 53 3.1 Introduction 53 3.2 General Overview of Creating a Worker Buyout in Italy 53 3.3 Italy’s Legal Framework for Worker Buyouts 58 3.4 CFI’s Involvement with Worker Buyout 73 3.5 Conclusion 81 iv 4. TERRITORIAL AND DEMOGRAPHIC DIMENSIONS OF ITALY ’S WORKER BUYOUTS (1979-2014) 83 4.1 Introduction 83 4.2 IRL Database of Italian Worker Buyouts 83 4.3 Overarching Features of Italy’s Worker Buyouts 87 4.4 Demographic Dimensions of Italy’s Worker Buyouts 106 4.5 Conclusion 129 5. ORGANIZATIONAL DYNAMICS AND TYPES OF WORKER -RECUPERATED ENTERPRISES IN ITALY 130 5.1 Introduction 130 5.2 An Empirical Analysis of the Organizational Dynamics of Italian Cooperatives Emerging from Worker Buyouts 130 5.3 Three Types of Worker-Recuperated Enterprises in Italy as Viewed Via Ten Case Studies 137 5.4 Conclusion 152 6. CONCLUSIONS , IMPLICATIONS , AND FUTURE RESEARCH 154 6.1 Seven Pillars of Italy’s Worker Buyouts 154 6.2 Hypotheses for the Resilience of Italy’s Worker Buyouts and Recommendations 157 6.3 Towards New Theories of the Firm 160 6.4 Future Research: Towards a New Cross-National and Comparative Research Agenda 162 6.5 Final Thoughts 166 APPENDIX – INTERACTIVE MAP OF ITALY ’S ACTIVE WORKER BUYOUTS (AS OF 31 DECEMBER 2014) 167 REFERENCES 168 v LIST OF FIGURES Figure 1 Mapping Italy’s WBOs by region and Legge Marcora periods, as per the IRL Database 15 Figure 2 Key countries with extensive experience of worker-recuperated enterprises 34 Figure 3 Active WBOs per year compared to openings and closings per year, as per the IRL Database 44 Figure 4 The rate of unemployment and the emergence of WBOs in Italy (1979-2014) 45 Figure 5 The growing gap between business closures and start-ups in the Italian manufacturing sector (1995-2013) 46 Figure 6 Various socio-economic indicators and the emergence of WBOs in Italy (1995-2013) 48 Figure 7 Geographic distribution of WBOs in Italy (1979-2014) 49 Figure 8 Size of Italy’s WBOs by number of workers (members and hired) (1979-2014) 50 Figure 9 Aggregated economic sector breakdown of WBOs in Italy 51 Figure 10 Cooperative federation affiliations for WBOs in Italy (1979-2014) 66 Figure 11 CFI’s WBO interventions for both Legge Marcora periods (1987-2014) 79 Figure 12 CFI’s WBO interventions only during Legge Marcora I period (1987-2001) 80 Figure 13 CFI’s WBO interventions only during Legge Marcora II period (2002-2014) 80 Figure 14 CFI’s contacts and interventions for non-WBOs only for Legge Marcora II period (2002-2014) 81 Figure 15 Openings and closings of WBO firms in Italy (1982-2014), as per the IRL Database 87 Figure 16 Active WBOs per year compared to openings and closings per year (1982-2014), as per the IRL Database 89 Figure 17 WBO openings and closings compared to first CFI interventions per CFI-financed WBOs (as of 31 Dec. 2014), as per the IRL Database 92 Figure 18 Economic sector of activity for WBOs with known ATECO2007 categories 96 Figure 19 Manufacturing sector breakdown for WBOs with known ATECO2007 categories 97 Figure 20 Geographic distribution of Italy’s WBOs by Legge Marcora period (1979-2014) 100 Figure 21 Economic sectors of seven major regions with “WBO business clusters” and with known ATECO2007 codes (active and inactive) (as of 31 Dec. 2014) 105 Figure 22 Lifespans of WBOs in Italy (1979-2014) 107 Figure 23 Percentage of WBO firm exits by lifespan cohort (of WBOs that eventually closed) (1990-2014) 108 Figure 24 Percentage distribution of active and inactive WBOs by geographic area (1979-2014) 110 Figure 25 WBOs by lifespan cohort per geographic area (as of 31 Dec.