Marcora law
Christina Rees MP
I didn’t realise when I started reading about “employee ownership” how much it would take over my life. And I’m very pleased that I have become somewhat obsessed with it, using every available Parliamentary procedure to make sure that the UK Government share my passion.
There are examples of employee ownership schemes around the world, for example in the Canadian provinces of British Columbia, Manitoba, Ontario, and in Quebec. Spain has enabling legislation called the Sociadades Laborales (SAL). But my favourite is Marcora Law, operated by the Cooperazione Finanza Impresa (CFI) on behalf of the Italian Ministry of Economic Development.
On 8th September last year, I set out the benefits of Marcora Law in a Westminster Hall Debate I secured on “Co-operative Purchases of Companies”, and on 14th December I did so again in another Westminster Hall Debate on “Co-operatives and Mutuals”.
Marcora Law was created by the former Italian Industry Minister Giovanni Marcora who established the worker buy-out system over 30 years ago during the economic crisis of the 1980s. It gives workers the pre-emptive right to save their jobs, and in so doing, retains the skills and experience of the Italian workforce. When an employer company is at risk, or an owner decides to close the business without succession planning, or a company has been sequestered or confiscated due to organised crime, the CFI supports workers to set up a worker production or social co-operative. Workers can take their redundancy entitlements, plus three years of projected social security payments as a lump sum, to invest in a new worker owned co-operative company supported by Italian Government Loans and advice administered by the CFI. This promotes, increases, and safeguards employment, by helping co-operatives to grow and compete. The average investment per worker is 12,040 Euros, and is considered non-taxable for these purposes.
Marcora Law is open to SMEs with an annual turnover of less than 50 million Euros, and with a maximum of 250 employees. The funding is granted for not more than 2 million Euros, not more than 5 times the share quota, lasts for between 3 and 10 years, with a grace period of 3 years, at 0% interest. Workers gradually pay off the funding by deferred 6 monthly instalments on 31st May and 30th November of every year. The CFI holds a temporary and minority share in the Co-operative for not more than 10 years, with a repayment of 25% due in the fifth year.
The decision to grant funding is dependent on positive outcomes of checks on workers for tax, social security contributions, and public aid, using the National State Aid Register.
The CFI has a success rate of 85% from investing over 300 million Euros in 560 companies saving jobs of 25,000 workers, with a return of over 6 times the initial investment.
A few days after my Westminster Hall Debate last September I had a letter from Camillo De Berardinis, the CEO of the CFI, who had watched my speech and invited me to be the guest speaker at the 35th Anniversaryof the CFI in Rome last November, to celebrate the commitment of Italian workers who had transformed the failing companies they worked for into successful co-operatives. Unfortunately, I didn’t make it to Rome, but I was beamed in from Neath, and was honoured to take part.
The UK Co-operative Party organised an online event last October about worker buy-outs and Marcora Law. I invited Camillo to be our guest speaker, and was absolutely delighted when he joined us to tell us about his first-hand experience of implementing Marcora Law.
On 11th January, as a Labour and Co-operative MP, I introduced my Ten Minute Rule Bill to make provision about groups of employees at risk of redundancy buying out their employer company as a co-operative (Marcora Law). I told MPs that I was very proud that Robert Owen, born 14th May 1771, founder of the Co-operative movement, whose vision included villages of co-operation, a “new world order” of mutual help and social equality, was born in Powys in Wales. And that the Co-operative Party was formed with an electoral agreement with the Labour Party. UK co-operators believe that too much power rests with a small number of investors, shareholders, and executives, and that decisions are often made for the benefit of the powerful and wealthy, not for communities, workers and the environment.
I waxed lyrical about the benefits of Marcora Law and ended by stating that the Chancellor created the Furlough scheme which saved many jobs and he could save many more jobs by creating a UK Marcora Law. We could call it Sunak’s Law. My Bill had cross-party support from 11 co-sponsors, and receives its Second Reading on Friday 18th March 2022.
The response from the UK Government to the co-operative sector, and to my obsession with Marcora Law, has been so disappointing compared with the Welsh Government.
Mark Drakeford and his Welsh Labour Government were overwhelmingly re-elected last May on a manifesto which pledged to provide greater support for worker buy-outs and Mark has stated many times that he will work with the co-operative sector and the Wales Co-operative Centre to double the number of worker-owned businesses in Wales.
I commend my old friend Huw Irranca-Davies, MS for Ogmore and former MP, who is chair of the Senedd Co-operative Group, for securing a back bench debate on a legislative proposal on Employee Ownership and a Welsh Marcora Law, which was supported by members of the Senedd Co-op Group, Plaid Cymru, and the sole Liberal Democrat, but opposed by the Conservatives who described it as a hard-left throwback to the Italy of the 1980s!
Christina Rees is the MP for Neath