Co-ops and Mutuals offer solution to jobs and skills shortages

05 September 2022

• Jobs and skills shortages not just a supply side issue
• Co-ops and mutuals return greater share of income to wages
• In the case of financial mutuals the share of income to wages is more than double the listed sector
• Greater diversity of business models needed to help solve crisis

The peak body representing Australia’s $34.4 billion co-operatives and mutuals sector has urged the Federal Government to invest in businesses that allow workers to share in productivity gains as part of its strategy to address jobs and skills shortages.

“The jobs and skills summit heard a lot about the need for structural changes to get more people into the workforce, but this is not just a supply side issue,” Business Council of Co-operatives and Mutuals Chief Executive Melina Morrison said.

“If we want both supply and demand sides to work, we need to encourage investment in businesses with a proven track record of investing in people.

“Co-ops and mutuals invest in people by committing a higher share of income to wages, by investing in skills and training and by ensuring people keep their jobs through bad times as well as good.

“We saw this with the recent challenges posed by natural disasters and the pandemic, when co-ops and mutuals increased their workforce, while other companies were laying off or furloughing staff.”

Ms Morrison said research commissioned by the BCCM and prepared by SGS Economics & Planning showed that co-ops and mutuals had returned a larger share of their income to labour than other businesses.

The top 100 co-ops and mutuals combined delivered 66 per cent of income to wages in 2020/21, according to the SGS research. The share was similar across agribusiness and financial service co-ops and mutuals, with each delivering 68 per cent to employees. This compares with Reserve Bank of Australia figures showing less than 30% of Finance industry incomes, and 60% of other industries’ incomes are paid out to workers as wages, with the remainder distributed as profits.

“This shows that the pay and rewards of staff in co-ops and mutuals are aligned to delivering the business purpose of service and price for members rather than capital growth for investors as in shareholder firms,” Ms Morrison said. “It’s a big difference that underpins behaviours and ultimately outcomes that spread wealth more equitably.”

Co-operatives and mutuals are member owned businesses that exist for the benefit of their members rather than external shareholders. They include household names such as Norco, NRMA and HCF and directly employ 76,000 people. Eight out of every 10 Australians are members of at least one co-op or mutual.

“We heard the Prime Minister speak about the need for a more inclusive economy, which cuts workers into the benefits of productivity,” Ms Morrison said. “These figures demonstrate how co-ops and mutuals are already making this happen.

“We need to build sufficiently scaled businesses that have the capacity to employ people, invest in their future, and re-invest into the local economy, which then builds more productivity.

Ms Morrison called on the Government to improve regulation around the establishment of co-ops and mutuals and to appoint a Minister to have responsibility for the sector.

Read Are cooperatives and mutuals one answer to Australia’s weak wages growth? on ABC News, 5 September 2022

Listen to  ABC RN Breakfast, with interviews with Simone Tregeagle, CEO rt Health and Mark Genovese, CEO Westfund and Melina Morrison, CEO BCCM