While we plan to return in
later blogs to the Mondragon Cooperative, we'd like to begin to address
American worker cooperatives! We will examine what potential they might have to
help eleviate rapidly deteriorating working conditions of the American working
class, what obstacles they face and which American cooperatives are surviving
in the current economic climate and why.
Below is a video clip of
Shift Change - a new documentary on worker cooperatives at home and abroad. It
includes footage taken of Mondragon workers as well as several U.S.
cooperatives we might choose to cover in blogs to come.
In our first two blogs we have presented
Mondragon’s business structure and corporate values with an emphasis on those aspects
we find particularly important in vouchsafing the health and safety of its
workers. Here, we’d like to address a few problems with the Mondragon
experience as a “worker cooperative” corporation as it has undergone expansion
and evolution over the past 30 years.
Expansion of the company:
By the
mid-1980s it had become apparent to Mondragon’s that many of its products were
in directcompetition with other multinational
companies. Since retooling their company to make other products would be
difficult and costly, it was decided that the company would instead adapt to current global
practices rather than dramatically change their own products (2,5). This
meant, for example, that Mondragon would embrace expansion abroad,
Erosion
of “worker collective” values:
Mondragon
opened new plants in Mexico, Morocco, Egypt, Argentina, Thailand and China to name a few and, while Modragon insists it tries
to ensure good working conditions in its international plants, its
international workforce have not been offered member-ownership. Even within
Spain, Mondragon-owned popular Spanish food chain Eroski, did notoffer its 40,000 employees a
chance to become worker-owners until 2009 (7, 5, 9, 2). This resulted in
a loosening of Mondragon’s grip on its own stated values as a worker-owned
cooperative.
Today, roughly one-third of Mondragón workers are
nonmembers out of 256 companies. This exceeds the original Mondragón commitment
to never employ more than
10% nonmembers.
“Temporary”
labor and gender inequality:
Gender equality in their hiring practices is also
an issue. As with other globally competitive capitalist corporations we’ve seen
(e.g.. Foxconn) when Mondragon experiences an increase in demand from the
marketplace they draw from a pool of temporary workers to fill the labor gap.
Temporary hires at Mondragon are overwhelmingly female, thus many lower
positions within the company are being occupied by females while blue-collar jobs
at Mondragon’s coops remain largely male (10). Temporary female workers often
receive less pay and, by definition, have less job security. This social stratification of workers by
gender is the anti-thesis of workplace democracy.
Alienation:
In the mid-1960s alternative approaches (in the
form of Scandinavian work groups) were introduced to Ulgor workers in an effort
to replace the rote and alienating line work Taylorism had brought. The
recession of the 1980s, however, created a shift away from alternative
manufacturing processes as the coops began to be more concerned with their
bottom line (11). By the early 1990s several lean production practices had been
accepted, including just-in-time
inventory along with other manufacturing practices to increase productivity
such as shift work (10). It’s hard to imagine in a company where workers
have a share in power the actual organization of work within its factories has
been left basically untouched. These practices bring into question the ability of Mondragon to support
workplace democracy and whether all member-owners are truly active in
decision-making within the company. (9,5,10).
Conclusion:
Mondragon
is doing, many things right as we discussed in our previous two blogs re the
company. However, given
their commitment to the goals of worker participation and improved worker
health, one would think they would extend offers of membership to their foreign
employees, take a stand on gender inequality (possibly through outreach through
their educational branch) and do more to encourage democracy and participation
on the work floor.
As reported recently in the New York Times,
signs of change can be seen in Foxconn’s factories. Protective foam has been
placed on low stairwell ceilings inside factories and automatic shut-off devices
have been added to many machines. Some workers have also received more
comfortable chairs (1,2). Hourly wages are reportedly also up and hours of work
per week are down. All this is supposedly good news for workers at Foxconn.
In fact, according to the Times, Foxconn has already carried out
more than 280 of 360 changes recommended by the Fair Labor Association (FLA ref
2).
You might remember from our previous blogs,
Foxconn and Apple both made numerous commitments to change working conditions
at the plants after meeting with the Fair Labor Association (FLA), whose report(released in March of 2012) identified numerous major problems at
Foxconn including very long work hours (up to 80 hours per week), excessive and
often unpaid overtime, safety violations as well as inhumane housing
conditions.
Foxconn announced that by July 2013, no employee
would be allowed to work more than an average of 49 hours a week (the limit set
by Chinese law) and promised to increase wages so employees’ total pay would not
decline when overtime hours are cut. Wages were raised for some workers in Shenzhen by 16 to 25
percent (6,7). However, despite
the higher hourlywages,
Foxconn’s partial compliance with Chinese weekly work limits has resulted in an
average overall decrease in
salaries for many workers leading to complaints by many who need the extra
hours and the income to provide for their families. As we were completing this article China Labor Watch reported that workers
at Foxconn Group’s Xin Hai Yang Precision Factory had gone on strike January 11th
to protest low wages. (see ref 11)
The
story from the NY Times also reports that other reforms arebeing implemented by Foxconn in areas
like health and safety, environmental protection, compensation, grievance
systems, workplace conduct and discipline, and termination and retrenchment policy
though it’s unclear in the article exactly what changes are being made (2).
Even with these reforms, chronic problems remain
at the plant. Envoyé
Spécial,
a60 Minutes-like program from a public TV
station in France, went undercover at the Zhengzhou iPhone 5 Foxconn factory and
reported several days ago that it had found workers living in dormitories still
under construction without electricity
or running water. Reporters also met with lower-paid student workers who
claimed they were required to continue working at the factory in fear of losing
their diplomas as well as workers who claimed that much of their upgraded $290
monthly salary was still being absorbed by the company through housing,
insurance and food (3,5).
Just this past September, (six months after
Foxconn agreed to a Fair Labor Association request for new internship rules),
two worker advocacy groups found that students in nonmanufacturing courses were
being improperly forced to work at a Foxconn plant in north central China (4). One
student studying preschool education said she was prohibited from quitting her
internship and was compelled to work night shifts. Afterward, Mr. Gou of
Foxconn issued apologies to wronged interns and the responsible official was
fired (1).
Earlier
in the year reports surfaced from
Students & Scholars Against Corporate Misbehavior (SACOM) finding that the
year's multiple Apple product launches put added pressure on the factories, allegedly
pushing workers into overtime and forcing them to endure
"humiliating" disciplinary action, including the writing and reading
of confession letters, and manual labor duties like toilet cleaning.
This
climaxed in early October when a riot broke out at the Chengdu, China plant
involving thousands of workers after a clash with security staff. Dozens of
Foxconn employees were arrested. Only
12 days later, 3,000 to 4,000 workers at Foxconn’s Zhengzhou plant walked
off the job when fights broke out between quality control inspectors and line
workers on the iPhone 5 (8,9).
Though Foxconn has reportedly been training
managers to treat employees less brusquely, foremen still use profanity and
intimidation, workers say. “The managers speak in a manner that often feels
like a threat,” said Mou Kezhang, who works in iPad quality assurance at the
Foxconn factory in Chengdu (1). Clearly,
the pressure on Foxconn for increased production of various Apple components
has led to oppressive management practices and shortcuts to increase
production.
The important issue of poor psychosocial work environment at the
plants and the role work stressors play in the negative health outcomes of
workers continues to be ignored.Work stressors include; work intensity and speed-up, long work hours (this appears to have been partially
addressed), organizational justice, effort-reward imbalance, low social support, job strain and threat-avoidant vigilance, to name a few. Recent research
publications from China indicate that job strain
and effort-reward imbalance may play important roles in the
development of musculoskeletal disorders and also physical injuries among chinese
workers (10,11). The FLA as well as watchdog groups such as China Labor Watch
have ignored these psychosocial factors or aren’t aware of their importance.
Nor has anyone examined the impact of these psychosocial stressors on the
negative psychological health outcomes plaguing this population of workers -
observable by the significant number of suicides the plant has experienced over
the last few years. These issues need to addressed along with work hours and
wages for work life at Foxconn to significantly improve. Without these changes we
can expect continued and andd increasing negative health outcomes.
Colleagues, Here (inserted below) is a short article from Personnel Today (January 2013) which discusses the impact of job strain on the cardiovascular health of older male workers.
Work stress linked to heart attack risk in older men
Older men with stressful jobs and little power to make decisions are more likely to suffer with heart disease than their peers with less job strain, according to a study published in Occupational Medicine, the journal of the Society of Occupational Medicine.
The researchers from University College Cork found that older male workers who had had a heart attack or had unstable angina were four times as likely to have high job strain as those that did not.
Job strain, or the combination of high job demands and low control at work, has long been associated with coronary heart disease, but this latest research looked specifically at its effects in the older workforce.
Intriguingly, it found there was a clear difference between younger and older workers - the association was not found in younger people.
Lead author Vera McCarthy said: "This study is important as it provides information on older workers necessary to inform policy-makers, clinicians, OH physicians and employers."
The society argued that as the UK's working population ages, employers will need to make work more attractive and feasible for older workers, implementing changes that enable them to work up to and beyond state pension age.
To this end, investing in OH services will become increasingly important in keeping people economically active and helping to ensure that older workers remain healthy and fit, it added.
"Employers need to ensure that they are looking after the health of their older employees, making the necessary adjustments and being flexible about the jobs they do and their working practices," said society president Dr Richard Heron.
According to Mondragon, its business
philosophy is contained in its corporate values statement: Co-operation, Participation, Social Responsibility and Innovation. “The
Corporation’s Mission combines the core goals of a business organization
competing on international markets with the use of democratic methods in its
business organization, the creation of jobs, the human and professional
development of its workers and a pledge to development with its social
environment” (1,5).
Mondragon
seeks to maintain worker participation in decision-making through worker-shared
ownership and its “one worker one vote” system. After a probation period,
workers are given the option to become members, meaning they can vote in the
annual General Assembly (1,2). The membership fee is €13,400 (equal to approximately
one year’s pay/profit which is the company’s income after non-labor costs) and
can be borrowed from Mondragon’s co-operative bank where monthly and year-end
losses are credited or debited (5).
Each
worker’s vote in the general assembly carries the same weight regardless of
placement or title within the coop. This is the key to democracy within the
company. The general assembly controls production, income spread and elects
members of the board. The elected board of directors then appoints management
as well as a watchdog council to monitor management (8).
Another
way in which Mondragon promotes egalitarianism is through it’s fixed ratio
between upper management and workers wages which cannot exceed 70 percent of
the equivalent in other companies in the market and is generally 3:1 to 5:1
before taxes (2). “For instance, the CEO of the entire Mondragon Corporation
earns only 9 times as much as the lowest paid worker in the entire complex”
(5). As a consequence of Mondragon’s policies, the lowest pay is generally higher than the
local equivalent for similar work.
This
social structure has led to a healthy and robust company, even in the face of
economic downturns. Spain has gone through several troublesome periods over the
last 20 years. In the 1980-83 recession the Basque
country lost 20% of its jobs. Many companies in the area were forced to lay-off
heavily or close. Yet there were very few layoffs at Mondragon during this
time, helping to stabilize the region’s economy (8). In order to avoid lay-offs, workers voted
to take an 11% pay decrease, paid time off or be reassigned to other working
factories. In 2008 worker-owners
at the struggling Fagor appliance co-operative elected to give up their
Christmas bonuses and cut their overall pay by 8% in order to spare layoffs and
secure the competitiveness of their company (6).
What seems the
most profound about Mondragon’s policies is its focus on the sustainable
relationship of mutual benefit between worker and company. In contrast to most
capitalist companies, whereby the measure of a successful company is almost always
based on maximum profitability, the cooperative model offers an alternative approach
that supports democracy in the workplace through an egalitarian voting system, while
at the same time promoting job security for worker-members, social justice and
community responsibility (10% of Mondragon profits go back into the community)
(4,7).
So much is wrong
with the way work is presently organized in America, you could look in almost
any direction and find something terribly amiss. Part of this is surely due to
the steady pressure of globalization on the world’s companies to compete as
they strain against a slumping economy. We have a serious problem in the
world of today’s work.
Can a business
survive/stay competitive in these volatile times without sacrificing their own
worker’s health and financial security? Are there any viable alternatives to
the current business model? We believe there are. These come in the form of
companies and organizations which have gotten something right in terms of
working out the balance between their bottom line and the health, safety and
personal growth of their labor force. These companies recognize that their
assets are weighed not only in gold, but also in the health, longevity and
productivity of their workers.
Mondragón
Co-operative Corporation (MCC) is one of these. MCC is the world’s largest
worker cooperative. A multinational company based in the Basque region of
Spain (7th largest company in Spain), with 256 different businesses under
it’s umbrella, 80,000+ employees (each cooperative supporting anything from 6
to 2,000 workers), 43 schools, one college, and more than $4.8 billion of
business annually in manufacturing, services, retail and wholesale
distribution, Mondragon has become one of the world’s most successful story of
a worker-owned company (1,4).
How did it
become so successful and on what principles is it built? The Basque region has
a long history of organized labor in the form of craftsman guilds, but it wasn’t
until 1941 when a priest called José María Arizmendiarriet arrived and,
seeing the need for education free and open to all began a democratically run
Polytechnic School (1,2).
In 1956, the
threat of unemployment in the area from the shutdown of a local factory that
manufactured petrol-based heaters and cookers led José María Arizmendiarriet to
encourage several students (and workers) from his school to purchase and manage
it themselves. ULGOR, now called Fagor Electrodomésticos, was the result (3,4).
Mondragon’s
following first cooperatives founded the Caja Laboral Popular credit
co-operative bank, helping to secure the financial success and independence of
the company. It was the Business Division of Caja Laboral that served as the
catalyst for the evolution of MCC into what it is today. In our next blog we
will describe how Mondragon’s workers relate to the company and to each other
(2,3).
Last Friday, only 12 days
after the riot at Foxconn’s
Taiyuan factory which involved thousands of workers, 3,000 to 4,000 workers at
Foxconn’s Zhengzhou plant walked off the job when fights broke out between
quality control inspectors and line workers (1,2).
Workers at the plant were reportedly
being subjected to work intensification as the plant struggled to meet demand
for the recently released iPhone 5. Already operating under tight deadlines and
high quotas, Apple responded to iPhone consumer complaints about cosmetic
defects to the phones’ outer cover by pressuring Foxconn to increase quality
regulations at the plant
(2,3).
This created tensions
between line workers and quality control inspectors as heightened quality
standards mean fewer
products leave the production line and volume targets are harder to meet. Li
Qiang, of China Labor Watch, points out that "they have such high
expectations for these products, even if you raise the demands a little bit it
makes a huge difference to the pressure on the workers”(3,4). China Labor Watch also
found that lack of additional training, paired with already inadequate training,
exacerbated the issue. Some workers were also reportedly upset by having to
work though China’s weeklong national holiday (which began on September 30th and ended on the 7th of October) in order to
meet production demands for the new iPhone (3).
Foxconn denies forcing
people to work and points out that workers who “volunteered” to work on the
holiday received additional compensation as required by the government.
This strike comes at a difficult time
for Apple - having just released the iPhone 5 this September. Though Foxconn
maintains that the strike did not halt production on the phone, China Labor
Watch reports that several lines manufacturing the phone stopped production
while workers protested (1,4).
So, here is a very
straightforward example of how the needs of American consumers directly affect
the quality of life of the Chinese workers assembling our products.Apple Corporation and Foxconn - as well as the American consumer - may each
want to assign responsibility elsewhere, but they are all in some way profiting
off of this process.
