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The rise of freelancer co-operatives

The rise of self-employment is creating a new wave of freelancer co-operatives, as Ed Mayo explains

Last week I went to Walthamstow for the launch of the latest outlet for the fast-growing freelancer co-operative, IndyCube, working with the support of the union Community.

The initiative has been brokered by the local Labour & Co-operative MP, Stella Creasy, who explained that nearly 15% of residents in Walthamstow are now self employed, with many facing insecurity in their incomes as well as losing considerable time and money trying to stay afloat’.

With wonderful symbolism, the setting is a former Co-operative Bank on Hoe Street. Through the Hive programme, the Co-operative Bank has been directly supportive of a new generation of co-operatives, such as freelancer co-ops. We are likely to see local events or support from the Hive perhaps now delivered via this setting in east London.

The rise of freelancer co-operatives is now being seen in the UK – and Co-operatives UK is publishing a new guide to this area, due out this autumn, in partnership with the TUC and Co-operative College – but we are also seeing a similar trend in other countries.

In South Korea, after the framework act on co-operatives took effect in December 2012, a swathe of new freelancer co-operatives has been formed. During the first 30 months after the act took effect, Koreans founded 7,132 co-operatives, of which more than 74% are small entrepreneurial co-operatives.

Smart, which started as a mutual of artists in Belgium, and is now a co-operative for self-employed people across a range of European countries, is one of the new emerging models.

Alex Bird, co-author of Not Alone, a landmark report for Co-operatives UK that helped to inspire IndyCube, tells the story of Smart as a case study and there is one chapter which I found inspiring when I first heard about it.

This is the story of how the co-operative’s biggest single financial loss turned into its biggest marketing success.

Since 2001, Smart has guaranteed payment for all work invoiced through the system, underwritten by mutual funds built up within the organisation. Members are paid within seven days, and don’t have to worry about defaulters. This is not unusual in a wider business setting, in the form of factoring, but is an inspired offer for freelancers.

People who work as self-employed are extraordinarily varied (‘different tribes’ as the Royal Society of Arts puts it), but as Philip Ross, freelancer and associate of Co-operatives UK, says, ‘the one thing that unites everyone who is self-employed is that we all want to get paid’.

As part of its growth in Belgium and France, Smart recruited hundreds of Take Eat Easy cycle couriers. Smart was involved in negotiations with the company, and helped secure an agreement for their members to pay the couriers per shift, rather than per delivery.

In July 2016, disaster happened. Take Eat Easy went into bankruptcy, partly as a result of competition from Deliveroo.

Living up to its guarantee, Smart paid out to its members, to the tune of €340,000. But it turned out to be the best recruitment tool that it had had. The members told everyone about the co-operative and how it had stood by them. Nothing else on the market matched this offer from Smart and freelancers flocked to join, for the assurance that membership offered and having had the proof point of the collapse of Take Eat Easy that the co-operative was on their side.

Despite the shock and crisis, this was a good news story for Smart. It was a financial shock, but one that it was able to weather, having built adequate reserves in a guarantee fund over time. Every penny spent on the guarantee for cycle couriers who lost out was recouped in new membership fees over the period that followed.

Losing money turned out to be the biggest boost this enterprise could have.

Small is beautiful, but it is not secure. Small becomes powerful when it comes together.

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