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Associated Press story features Mondragon,Spain worker co-op success story
In wealthy and business-savvy Basque region, the largest employer is a network of cooperatives

6 October 2003
(c) 2003. The Associated Press. All Rights Reserved.

MONDRAGON, Spain (AP) - The Basque country may boast some of Spain's most powerful banks and a center-right government with close ties to business, but its largest employer is a network of charity-minded, employee-owned cooperatives.

The Mondragon Cooperative Corporation started off as a handful of young engineers building oil stoves and paraffin heaters in the 1950s as Spain rebuilt from its ruinous civil war of 1936-39.

It now employs 66,000 people in 37 countries -- some as far away as Latin America and China -- and sits on euro15 billion (US$17.4 billion) in assets that range from a supermarket chain to assembly lines for auto parts. The corporation has been described by Forbes magazine as one of the 10 best European companies to work for.

Pay can be as low as euro12,000 (US$13,900) a year, although the benefits are myriad and sometimes rare in Spain: subsidized health care, housing and primary and secondary education for employees' children. Permeating the entire grid of 160 companies is an egalitarian spirit.

The founding engineers were taught by a humble but go-getting Basque priest, Jose Maria Arizmendiarrieta, who started a school for farmers' children in 1943.

"Those who opt to make history and change the course of events themselves have the advantage over those who decide to wait passively for the results of the change," Arizmendiarrieta once said.

Workers own the cooperatives, and pay a hefty quota up front in order to join -- the equivalent of a year's salary. There are bosses in each cooperative, but decisions are largely made collectively at assemblies. Ten percent of each year's profits go to charity, 40 percent are reinvested in the company and 50 percent serve as collateral for workers to seek loans from the corporation's own savings bank, the Caja Laboral Popular. The corporation also boasts an insurance company, supermarket chain and travel agency.

And the latest proud addition is Mondragon University, with 4,000 students earning degrees in sciences and humanities.

The company has not released profit figures for last year but said its revenue was up 14 percent at euro9.2 billion ($US10.6 billion).

The main offices are in Mondragon, a modern town of 24,000 inhabitants located in the geographical and spiritual heart of the Basque country, home to 2.5 million people. More than 1,500 people work in a head- quarters with large windows overlooking a mountain dotted with pine trees.

Miren Etxebarria, a 20-year-old engineering student, seems happy with the prospect of working for the corporation. "The salaries might be a bit lower than in some other firms, but to work in a co-op is to get a job for life," she says. Spain's unemployment rate is about 11 percent.

In the 1950s the egalitarian spirit was so strong that there was little difference between the salaries of blue- and white-collar workers -- the chairman's salary was only three times that of an apprentice's wage.

But that's changed. In the 1980s, some executives left for more lucrative remuneration in other companies and the old system started to crumble. Now, the corporation chairman earns 10 times as much as an average worker. Although there is no official figure, it is believed his salary is around euro130,000 a year ($US150,000).

Antonio Cancelo, a former chairman of the corporation, says executives in many of today's companies make ridiculously large salaries.

"When you reach a certain economic level your professional motivation should be concentrated on other aspects rather than on money," he said. "Our system is more humane, the workers consider the cooperative as something of their own and their performance is better," adds Jesus Catania, a 60-year-old engineer who is the current chairman of the group.

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Last updated: February 10, 2004
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