Marcora Law

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The Marcora Law ­- Multiplying the employees’ stakes

See also: Co-operative News article 22 Sep 15

Italy’s Marcora Law (law 49/85) allows redundant workers to use their accumulated unemployment benefit to capitalise a buyout co-operative. It thus forms part of the welfare bridge from unemployment to self-employment.

A summary of the Marcora Law’s provisions

  • FONCOOPER, a fund for the general promotion of co-operatives
  • CFI, a revolving loan fund invested in phoenix co-operatives
  • employees’ investment matched threefold
  • maximum of three years’ unemployment benefit can be capitalised
  • corporate investors permitted up to 25%, providing networking support
  • specialist monitoring and advisory body established
  • €40m invested
  • 89 businesses and 3,100 jobs saved (by end 1992)
  • 10% failure rate of co-ops
  • 5% of capital and jobs lost through failures

The institutional set-up

The Marcora Law was passed on 27 February 1985, and provided state backing for two funds to support co-­operatives. The first, FONCOOPER, is a general fund for the promotion and development of all types of co­operatives. The second, the Compagnia Finanziaria Industriale (CFI), is a special fund to help save companies in crisis. It invests only in new co­-operatives set up by employees who have been laid off when companies close or downsize. CFI was capitalised by the state, and is managed on an ad hoc basis by the co­-operative federations.

CFI invested in the share capital of phoenix co­operatives, up to three times what the employees invest, up to a maximum limit of three years' unemployment benefit. In return for this capital input, the employees lost their right to unemployment benefit during that period, should the co­operative fail. At the end of the period, the employees could buy the shares at face value from the fund, or they could be sold externally. The law also introduced the innovation that other outside shareholders – co­operatives, private companies or public bodies – could also contribute up to 25% of the co­operative's share capital. Up to this point, private enterprises had not been able to invest in co­operatives in this way in Italy.

Encouraging risk­taking and adequate capitalisation

The effects of the Marcora Law were as follows:

  • It helped workers save their jobs by taking the entrepreneurial risks themselves.
  • It incentivised employees to contribute capital, because the amount of outside financing was directly related to the workers' own shareholdings. This was important because it created co­operatives which were adequately capitalised, and many co­operatives are undercapitalised. The average employee shareholding in co­operatives supported by CFI was €5,500, and in cases is as high as €15,000, which meant the co­operatives were strong, had a good relationship with their banks and could grow faster.
  • Thirdly, the link between the external capitalisation and unemployment benefit meant that there was a powerful incentive to make sure the enterprise worked; it also meant that workers were unlikely to start a co­ operative which was likely to fail.

About a quarter of CFI-­financed co­operatives have some corporate shareholding. In some cases this is a public body or a local financial organisation, and this helps the local community get involved. In other cases, it is other co­operatives which see such a shareholding as offering the potential for synergy and ways of moving forward with greater solidarity. Or it may be a private company that is seeking the benefit of organisational or industrial synergy. In general the involvement of non­co­operative shareholders has been beneficial, as it has brought in useful experience, prevented mistakes being made, and has stopped the co­operatives from becoming isolated. On the other hand there have been cases where outside shareholders have tried to take advantage of the inexperience of the co­operative members, and have tried to divide them up.

CFI feels that overall the Marcora Law worked very well. By 30th June 1992 it had invested €40 million in 89 co­operatives. These co­operatives employed more than 3,100 workers, 80% of whom were members. Their turnover exceeded €230 million. There were of course failures, and in 1992 nine co­operatives, 10% of the total, were in liquidation. However these were the smaller co­ operatives, and represented only about 5% of the capital and 5% of the jobs. Furthermore, this loss was compensated by asset and employment growth within the successful co­operatives. This experience shows that the availability of capital is a necessary condition for setting up new co­operatives, but is not sufficient on its own – other types of support are also necessary.

The benefits of a specialist institution

One decisive factor in this success was that the state aid was made available in the form of equity, not grant, and has been administered by a specialist institution. This meant firstly that the co­operatives had a partner who took an active interest in their performance, and who could bring its contacts and experience to assist the co­op. Secondly, the dividend paid on the investments (about 15%) was returned to the movement, to help promote the growth of new co­operatives. CFI's monitoring, training and support was very similar to that provided by the Caja Laboral Popular in Mondragón.

The provisions of the Marcora Law were originally limited to an experimental period, but its success was such that parliament extended it for a further two years. However CFI was aware of the danger of becoming reliant on public financing, and actually refused additional public funding of €30 million because the government wanted it to act too hastily; it preferred to forego the extra money rather than invest in unsound co­operatives and bring the mechanism into disrepute.

This experimental law was instituted to provide an option for people who were made redundant, but its value went beyond that. First, it is important that among the workers there is a nucleus that is prepared to become entrepreneurs. Secondly, the Marcora Law provided the means to surmount some of the traditional obstacles that new co­operatives face: it provides incentives that help co­ops succeed. The Marcora Law provides a very good example for pan­European legislation.

Reconfiguration post-2000

The programme was suspended the 1990s because it was deemed to contravene European competition law by giving over-generous state support to one form of business model - worker self-management. The Marcora Law re-emerged post 2000 reconstructed to offer financial support to workers on a 1:1 basis rather than 3:1 (CFI to worker contribution) for worker co-operative buyouts. Professor Alberto Zevi of CFI reported in 2011 that the Marcora Law was working well, with 11 buyouts assisted in recent months.

Judicial barrier to the development of the social economy: this Act was in force since it was passed until 1996, when it was suspended because the European Community deemed it to be a form of state aid that was incompatible with European regulations. It was reformed under Act No. 59 of 5/03/2001. This reform introduced many new aspects and its sphere of activity was broadened. Now it benefits not only new cooperatives but also existing workers' cooperatives and social cooperatives. The national fund also disappeared: the Ministry uses available resources to subscribe directly to the share capital of existing financing companies.

The CFI has redefined its strategy by broadening its sphere of activity to support operations for the creation, development, consolidation and repositioning of cooperative companies. It therefore supports the implementation of the cooperative company model, stimulating the business capacity and management of worker shareholders, promoting employment and boosting the growth and competitive capacity of the cooperative sector. The operative instruments that it currently uses are not only risk capital, but also funding to back fixed investments, as well as technical and human advice ofinancial, strategic and management planning. It partners with more than 270 cooperatives, Invitalia as well as the Ministry of Economic Development, given the social interest in its activity. The CFI intervenes by financing the fixed investments of a cooperative with loans, equity loans, convertible bonds, sureties or property leasing.

See: Best practices in public policies regarding the European Social Economy post the economic crisis, EESC, 2018


Source: Alberto Zevi, Compagnia Finanziaria Industriale (CFI) at the Strategies for Democratic Employee Ownership conference organised by Industrial Common Ownership Movement (ICOM) in London on 13-14 November 1992. Report by Toby Johnson. ISBN 1 870018 09 5

Text also quoted in Insolvency, Employee Rights & Employee Buyouts. A Strategy for Restructuring by Anthony Jensen, Ithaca Consultancy for the Common Cause Foundation, available at:,%20Employee%20Rights%20&%20Employee%20Buyouts.pdf

Description on Confcooperative site:

Update: Saving business through worker co-operatives, Co-operatives UK, 2012: