Women’s cooperatives are crucial for addressing socio-economic well-being in informal economy

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Self-Empolyed Women’s Association (SEWA), Ahmedabad, was the first organization in India to include many of the activities such as healthcare, childcare, and insurance into the cooperative movement. These cooperatives now function alongside other formal organizations in their respective areas of business. Excerpts from the International Labour Organization (ILO) study “Advancing cooperation among women workers in the informal economy: The SEWA way” (July 2018):

The building of SEWA’s cooperative movement has faced challenges. Many of these challenges are related to factors in the external environment. These not only create difficulties for the cooperatives in relation to other organizations, but they also affect the internal stability and growth of the cooperatives. There are some challenges that appear to be internal to a cooperative but, in fact, would benefit from an enabling external environment.

Resistance from cooperative officials

SEWA has observed that a challenge faced by many of the earlier cooperatives was resistance from the officers in the cooperative registrar’s office. They initially refused to register these cooperatives, not believing that poor women with limited literacy skills could manage their own cooperatives. They also did not understand the social nature of activities that SEWA promoted under these cooperatives, such as healthcare and childcare.

For instance, when the health cooperative or the childcare cooperative was formed, the cooperative office asked SEWA: “What product will you sell?” SEWA’s response was that the cooperative would develop and sell health services or childcare and earn revenue by charging nominal fees for the services, and thus would become viable.

For all these reasons, registration was a challenge for several years in the beginning. Procedural restrictions were imposed on proposals with the word ‘Mahila’ (meaning women) in the name of the cooperative.2 Files would go missing or by-laws would be interpreted contrary to SEWA’s interests (SEWA Cooperative Federation).

In recent years this scenario has changed and SEWA’s cooperatives are widely recognized and noted for being successful enter- prises and organizations.

As a result, when VimoSEWA was being registered as a cooperative in 2009, it took just nine months for the registration to get completed, a remarkably short time given that it was the first national, all-women’s insurance cooperative in the country.

Exclusion of cooperatives from the “new economy”

SEWA has noted that cooperatives in India may not be considered as part of the ‘new economy’, even though they represent an important strategy for joint and democratic production of goods and services, especially among the poor in the urban informal and rural economies. While most economic policies are quite supportive towards the growth and expansion of private enterprises in general, the regulatory environment remains more stringent for the formation and expansion of cooperative enterprises.

It is in this context, for instance, that Ruaab, the artisans’ cooperative in Delhi, was registered as a producer company instead of a cooperative. Also, while the insurance sector in India has been de-regulated and several private players, including multinational insurance companies, have been licensed, the licensing of microinsurers, serving the low-income market, continues to be a challenge. The capital requirement for both large insurance companies and microinsurers is INR 1 Billion or approximately $15 Million.

This huge capital requirement is a significant barrier for VimoSEWA which wants to convert itself into a full-fledged insurer but does not have access to this volume of capital. Further, this amount of capital is not required for cooperatives serving workers who can afford premiums of INR 50 ($0.75) per annum to a maximum of INR 1,200 ($18) per annum.

Tensions between political alliances and ethical practices

The SEWA cooperatives have avoided any political affiliations although the organized membership of cooperatives is often seen as a potential support base by political parties. SEWA’s approach underlines the need for cooperatives to maintain their autonomy and independence from political interventions. The SEWA cooperatives follow ethical practices in their production of goods and services, which can at times put them at a disadvantaged position compared to other private operators in the market.

For example, Ekta Organic Produce Cooperative is often unable to access subsidized seeds and fertilizers which get diverted to organizations with clear political affiliation and influence. Similarly, Ruaab has to compete with garment manufacturers who are able to reduce their costs and prices by following unethical practices. Saundarya Cleaning Cooperative has lost cleaning contracts in the past because they have refused to offer bribes to officials who decide to whom to award contracts. The organized memberships of cooperatives are often seen as an opportunity for capture by political parties. Hence, cooperatives need to be aware and alert to such dangers and be on guard against them.

Bureaucratization and politicization of cooperative departments

SEWA has observed the bureaucratization and politicization of the cooperative departments in several states of India. Even though the government of India has promoted the formation of cooperatives as a constitutional right for all Indians since 2012,5 the promotion and support for the growth and development of existing and new cooperatives remain limited.

One notable recent effort at consulting with cooperatives across India, including those sup- ported by SEWA, was undertaken by the National Advisory Council (NAC) of the Government of India. The NAC finalized a set of recommendations to enable cooperatives of different kinds to develop further through greater access to financial services, flexible and simpler regulations and appropriate capacity-building.

There was a special focus on women’s cooperatives, including recommendations to support women’s leadership, representation in cooperatives and their boards, and access to social security, including childcare to enable their active participation. However, these recommendations, while accepted by the government at that time, were not followed through for implementation.

Limited financial assets of cooperatives

An important challenge for cooperatives is limited access to finance. In the case of the Ekta Organic Produce cooperative, for instance, they are having difficulty getting a loan as they do not have assets to put up as collateral. In the case of Saundarya Cleaning Cooperative, the limited assets of the cooperative make it harder for them to put up the deposit required in order to submit a tender.

The challenge may appear internal, but it is the result of non-conducive environmental factors such as the lack of financial support available for cooperatives. Ekta Organic Produce Cooperative is using the government route to get organic certification instead of going to a private organization. However, government procedures take much longer and the cooperative has been awaiting the certification for over a year now. Engaging with external public and private actors to raise awareness about these new types of cooperatives to secure support emerges as an area for follow-up action for the SEWA Cooperative Federation.

Management skills as a challenge to reaching scale in the cooperatives

A challenge some cooperatives have faced in recent years is around increasing the scale of operations and outreach. This is in part due to limited managerial capacities of the current leaders who have found it difficult to take care of larger operations. For example, it is difficult for the smaller dairies to compete against the larger dairies, which are typically run by men.

Dealing with these challenges remains a work in progress. In some cases, the current cooperative leaders aptly manage the cooperatives at their current sizes. There is, however, uncertainty about further expansion and their abilities to manage growth. There have been cases where a leader or a small group of members exercise complete control or take over a cooperative. This prevents not only the cooperative’s growth, but also its transparent and democratic functioning. Managing growth emerges as a key area for deeper learning and exploration for cooperatives supported by SEWA.

Retaining membership in a community with high mobility

A challenge faced in the case of the Surat Credit Cooperative is the difficultly in retaining a membership base for a cooperative in a context where the members are not stable residents of the communities, being migrants and/or seasonal workers.

While these informal economy workers require the services from various cooperatives, such as the credit cooperative, the health cooperative and the insurance cooperative, they do not have permanent homes or jobs and are vulnerable to sudden changes in their work and living place.

This makes it a challenge to sustain working with this population as members. This internal constraint of retaining members is linked to the external employment situation of unstable and informal work opportunities.

Lessons learned

Organizing and managing a cooperative is a fundamental and crucial strategy for addressing social and economic well-being of workers in the informal economy. It is an effective way to organize informal economy workers and formalize their work. For example, cooperatives help members to access government schemes by creating economies of scale and by generating negotiating power through collective voice. By joining a cooperative, a woman worker gets access to several services and social protection for the first time in her life.

SEWA members never knew that they could have access to childcare or insurance, for example. They obtained these services once they joined their cooperative, as it is easier for the government, private providers and even SEWA’s own service providers to reach them when they come together.

As a cooperative, the members are able to give visibility to their work and can compete in the marketplace. Through the cooperative, members earn a regular income, start saving and take loans when needed, thus joining the formal financial system.

Cooperatives promote decentralized, democratic governance, and can be considered schools for democracy. In a country like India which became independent only 70 years ago and where, until recently, most people did not have first-hand experiences of practicing democracy, the contribution of cooperatives to deepening people’s understanding of democracy is significant. Cooperatives give voice and representation to the hitherto voiceless, especially to informal women workers, through their own organization.

Educating cooperative members both about cooperative values and about their specific trades is very central to the success of the cooperatives. SEWA has found that educating members in cooperative values builds the members’ commitment to collective and participatory organizations like cooperatives. Equally important is ongoing member education and skill-building in the trade the cooperative is engaged in. This is critical for establishing and maintaining the organization in the face of external competition.

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