Workers buyouts a growing trend in Italy, 50 companies saved by workers in last 5 years.

About fifty companies have been rescued by their employees over the past five years, preserving 1,200 jobs and revenue of €178 million.

These were limited liability companies that became cooperatives when employees took on the role of entrepreneurs, helping the businesses avoid bankruptcy and liquidation.

Workers buyouts (WBOs) were introduced first in the US largely through the intervention of pension funds. In Italy, while not accounting for a significant volume of business, they are nonetheless starting to take root in response to increased competition and high unemployment.

Institutionalized by a 1985 law (the Marcora Law, revised in 2001 to account for legal issues tied to state aid) in response to the collapse of ceramics maker Richard Ginori, these bailouts of foundering companies by their workers have numbered about 300 over the past 31 years: the companies stayed in business and some 15,000 workers were able to keep their jobs.

These deals are financed by workers’ salary advances and savings and backed by CFI (Cooperazione Finanza impresa), the institutional investor for cooperatives.

In the early 1990s, the most interesting cases were mainly in Tuscany, the Marche and Veneto. Today, Emilia-Romagna is the region with the most WBOs, with 16 co-ops that saved 386 jobs and €72 million worth of wealth.

The economic crisis accelerated the phenomenon as did the revisions to the Marcora Law that harmonized the pathway for a company to become a WBO, changing the scope of direct aid from CFI.

The process usually reduces the size of a company by half and each worker turned entrepreneur puts an average of about €12-€15,000 of their own money on the line.

“Considering that the co-ops that have been created in recent years have an average of 50 workers and that the capital they put out was doubled by CFI, we’re talking about capitalization of more than €1 million,”explains Maurizio De Santis, a consultant for CFI.

Every story is different. Take, for example, the Arbizzi co-op in Reggio Emilia, created in July of 2014 when the owner, Emilio Arbizzi, decided to step aside and make a deal with workers. He agreed to hand over ownership of the manufacturer of packaging materials, which is now run by 17 former employees who each invested €5,000 and kept the business growing (€9.2 million in revenue in 2015). Arbizzi is one of 56 cooperatives created by workers in Emilia-Romagna that saved 1,200 jobs using the Marcora Law.

“We are building a portal for WBOs, like we did for statups,” says Palma Costi, regional head of manufacturing activity in Emilia-Romagna. “We’re looking to connect everyone who participates in creating WBOs to quickly identify tools, trends and opportunities within the network. The time issue is crucial so a company in crisis does not lose its market position. The bankruptcy process is too long. They need help and support for a business plan, credit and retraining to speed up the transformation.”

De Santis noted that “even regions in the South are moving. Campania introduced a revolving fund for WBOs; Basilicata passed an ad hoc law to facilitate WBOs; and Calabria is revving up now with a highly effective mechanism to use European funds to finance worker co-ops with a system of vouchers similar to rebates.”

“We’re talking about 700,000 jobs at risk in Europe over the next four years, of which 70,000 to 10,000 are in Italy,” said Giorgio Prodi, a researcher in applied economics at the University of Ferrara and member of the Co-op consulting group. “WBOs could be one way to respond to the job crisis and create opportunities.”

(I. Vesentini,, 27.09.2016)

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