Announcement of Seoul Metropolitan City’s basic plan to invigorate cooperatives
Date: February 13, 2013
Venue: Briefing Room, Seoul City Hall
Cooperatives are operated democratically—with each member having one vote—and are dedicated to the pursuit of community values. Today, I would like to announce the Seoul Metropolitan City Basic Plan for the Promotion of Cooperatives. The goal of this plan is to establish Seoul as a “City of Cooperatives,” where every citizen is a registered member of at least one cooperative.
Living in Seoul is not so easy, is it? I will tell you a little bit about how Seoul citizens live.
In 2000, the per capita income of the top 20 percent of income earners was 21.2 times higher than that of the lowest 20 percent of earners, and in 2009, it more than doubled to 45.4 times. Middle income earners, which accounted for 71 percent of the whole in 2000, dropped to 64 percent in 2011, while the low-income bracket grew to 12 percent. Also, the number of single-person households doubled over the last 10 years, and the number of residents living in detached houses declined to 16.2 percent from 32.8 percent in 1995. As economic polarization has intensified in Korea, and the middle-income group has shrunk, communities are beginning to fall apart, and our society safety net has weakened significantly.
These social insecurity issues must be resolved for the well-being of the citizens, so the Seoul Metropolitan Government has taken the initiative. We need cooperatives that are established based on mutual benefit and cooperation, and that aim to restore communities and increase trust among residents, thereby strengthening our social safety net.
I’m sure you are all familiar with cooperatives. Cooperatives are businesses. They are organized by five or more people who have the same goals. But as each member has only one vote, decisions are made democratically. Cooperatives mainly focus on increasing the benefits of their members, but they also make significant contributions to the sustainable development of local communities. The objectives of cooperatives are fundamentally good and beneficial.
There are already many cooperative in Korea. In small villages, you often see Hansalim and Seoul Milk Cooperatives. And in foreign countries, there are many famous cooperatives, such as Sunkist, whose products are available at many supermarkets, and FC Barcelona of Spain, a famous football club.
Bologna, as you may know, is the capital of the Emilia-Romagna region in Italy. Although the city was quite poor up until the 1950s, it now has a per capita income of USD 40,000, double the national average of Italy.
The driver of such remarkable economic growth was its cooperatives. Bologna, with a population of 420,000, has 400 cooperatives, which account for 45 percent of the whole economy. As a result, the unemployment rate is only 6.4 percent, much lower than the national average of 10.6 percent.
As the case of Bologna shows, cooperatives play a key role in solving social and economic problems, including unemployment. Cooperatives focus on people rather than capital, on cooperation rather than competition, and on communities rather than individuals. They can solve the problem of economic polarization, realize economic democratization, and create stable, sustainable jobs by preventing the collapse of small businesses.
Furthermore, they make it possible to rebuild neighborhood communities and strengthen the social safety net. Above all, the main benefit of cooperatives is that they help create stable, sustainable jobs. In the face of economic crises, cooperatives reduce salaries rather than cut jobs.
I will give you one example. These days, there are many dual-income households, and while it seems like there are enough daycare centers, it is quite difficult to find one that is completely reliable. Stories that reflect quite badly on daycare centers are often being releasing by the press, adding to the worries of mothers. However, if we establish a collaborative childcare cooperative, parents could directly participate in the care of their children, thereby solving the problems of sanitation and safety. In addition, by reducing the stress on both parents and children caused by the competitive childcare environment and forming connections among families, children can make more friends and have more fun. In other words, it would establish a superior environment in which children can be raised with few problems.
What about job cooperatives for irregular workers? Temporary jobs, such as cleaners, security guards, and construction workers, and irregular jobs, such as parcel delivery, chauffeur service, and home-study material delivery, are unstable and difficult to retain due to low salaries, long hours, inherent job insecurity, and insufficient access to social insurance system. Nevertheless, it is possible for parcel delivery service employees, for instance, to organize an employee cooperative that can help reduce high commission rates and share basic operating costs, thereby ensuring higher earnings for such workers. Moreover, this instills greater pride and sense of ownership in the workers, as they have some power to determine their own employment and working conditions.
The Seoul Metropolitan Government plans to increase the number of cooperatives up to 8,000 over a period of ten years and expand their scale to reach KRW 14.37 trillion, or 5 percent of the GRDP.
It has also established the vision “Cooperative City Seoul,” which aims to make Seoul a city where the people work together through cooperatives to build and enjoy better lives, and will encourage every citizen to join at least one cooperative so that cooperatives can become part of their everyday activities. To achieve this vision and these goals, the Seoul Metropolitan Government will provide active and systematic support for those who wish to establish cooperatives to protect their own views and interests, and we will conduct training and education sessions tailored to the needs of trainees and their level of preparation. The Cooperative Support Center and Social Enterprise Development Center will be operated to assist prospective business owners by offering detailed guidance regarding the basic concept, establishment, and operation of cooperatives.
The training sessions provided by the Seoul Metropolitan Government will be very basic but will still meet the needs of trainees. We will provide regular citizens with basic education and educate the members and staff of cooperatives on their responsibilities and operational know-how. Those planning on establishing a cooperative will learn how to run a business and the general operational characteristics of cooperatives, including relevant laws and the reporting and filing of documents to the government. The Cooperative Support Center, to be opened in May, will provide citizens comprehensive assistance through consultation, training, and meetings. The Center will provide various kinds of education, including basic sessions, intermediate sessions for citizens preparing to establish cooperatives, and professional consulting on accounting issues, taxes, and legal matters. It will also consolidate the existing Cooperative Consultation Centers that have been operating in four zones of Seoul since last November.
The Cooperative Consultation Centers have conducted 2,750 consultations from November 2012 to February 1, 2013. Seoul citizens showed great interest in cooperatives, and diverse, creative meetings and consultations and help sessions were held. Prospective cooperatives have included various activities and groups of people, such as the Seongsu-dong handmade shoemakers, junk shops, cancer patient meetings, delivery men, the homeless, and students of private institutes. The Social Enterprise Support Center that was opened in February will support the education efforts and projects related to cooperatives, provide assistance for consortium projects, and develop social franchise models.
Furthermore, an ecosystem for the growth and promotion of cooperatives will be built. To achieve this, a promotion ordinance for cooperatives will be created, fundraising activities will be planned, participation in government procurement markets and services will be encouraged, and the operation of the federation of cooperatives will be strengthened.
First, to lay the groundwork for cooperatives, we will develop and enact the Cooperative Promotion Ordinance. The ordinance, which will serve as an institutional basis for the realization of “Cooperative City Seoul,” aims to promote solidarity and knowledge sharing among various socioeconomic organizations. Furthermore, the Cooperatives Fund will be established as a funding conduit for social investment in Korea, through which long-term, low-interest loans will be provided to prospective applicants. In addition, cooperatives will be divided into two types of social enterprises in order to encourage participation in public purchasing transactions. As such, cooperatives will be allowed to participate in the public procurement market, and government administrative services will be allocated to social enterprises. Also, the function of the Federation of Cooperatives will be strengthened to promote solidarity among cooperatives and participation in government services, so as to invigorate cooperatives. Collaborative projects will receive assistance, and deposits needed to rent offices and training locations and part of the operating expenses of the secretariat will be supported. Training and consulting projects will be carried out as well. Cooperatives will be invited to become involved in the governance of the Seoul Metropolitan Government and gu offices.
In particular, support for cooperatives in seven strategic areas will be strengthened so as to build a successful business model. These seven areas—collaborative childcare, public health, housing, traditional markets, small businesses, baby boomers, and irregular workers—aim to resolve the wealth gap, solidify the social safety net, and solve various social problems.
As a first step, the Seoul Metropolitan Government will help develop business models during the planning phase of cooperatives in those seven areas. When the cooperatives have been organized, we will provide up to KRW 100 million in support for office lease deposits and up to KRW 80 million for project costs over a two-year period. Also, consulting, education, and meetings will be provided, and the ideas of cooperatives will be reflected in the policies of the Seoul Metropolitan Government.
Once cooperatives have been launched, our efforts will be focused on maintaining stable operations through promotion and publicity.
An information portal website for cooperatives will be run to collect and provide information on domestic and overseas cooperatives, and social economy columnists will upload articles regularly. Such information will be of great benefit to our citizens!
We will also hold a social economy fair in October. The fair will be an opportunity for domestic cooperatives to build a social economy network with international organizations and cities around the world, and participants will be able to share their vision and experiences of social economy and become part of an international movement for social economy.
In addition to all of this, the Seoul Metropolitan Government will launch tailored education programs in April, organize support centers, and develop business models in strategic areas to support the activities of cooperatives.
Five people or more can come together to establish a cooperative, and we will help you every step of the way.
Cooperative City Seoul, a city where everyone shares food, power, and dreams.
This should not be a difficult goal to realize.
You are here, and the Seoul Metropolitan Government is with you. Thank you.