The Marcora Law supporting worker buyouts for thirty years

11 Sep 2015

Thirty years ago the then Italian Minister of Trade and Industry, Giovanni Marcora passed a law that aimed to support worker buyouts. The law, which came to be known as the Marcora Law, has helped to create 257 new employee owned firms, saving or creating 9,300 jobs.

Almost all of these were set up as worker co-operatives, owned and managed by their employees. “The idea behind the law was to consider the ever increasing and huge use of forms of unemployment benefits as a diversion of resources that could instead be used to expand the production base and involve unemployed workers into a productive function through forms of co-operative self-entrepreneurship and management,” explains Camillo De Berardinis, Managing Director of Co-operation Finance Enterprise, one of the two financial companies established under the Marcora Law to support of worker co-operatives and social co-operatives.

A recent paper published by the European Research Institute on Cooperative and Social Enterprises (EURICSE) looks at the impact of the Marcora Law in Italy.

Gianluca Salvatori, chief executive of Euricse, says: “The Marcora Law in Italy was instrumental in facilitating employee buyouts, primarily by providing a framework that enables collaboration among all of the various stakeholders involved in the process, and also by making available financial support schemes that can help these enterprises navigate the difficult economic conditions they often face.

“The law has also made it easier for the co-operative sector to play a major role in supporting employee buyouts, both through the work of the national federations and through the key role of CFI, to coordinate and facilitate employee buyouts, also acting as a primary institutional investor.”

Once they group into a worker co-operative employees can begin the process of purchasing part or all of the target company via share capital purchases. Each worker contributes a minimum of €4,000 to the start-up capital.

The members of the new co-op can also access technical assistance and know-how and secure share capital or debt capital financing through the co-operative movement’s mutual fund (fondo mutualistico). All Italian co-operatives contribute 3% of their yearly net income to this fund in order to help set up new co-operatives. The state has also made available two funds for worker buyouts that help secure employment in times of crisis as well as convert businesses into co-operatives.

Italian industrial co-operatives also have a better survival rate than other enterprises. Between 2007 and 2013, the survival rate of Italian enterprises was 48.30% (after 3 years from their creation), whereas co-ops set up after 2007 as a result of worker buyouts had a survival rate of 87,16%.

Photo: Giovanni Marcora