Co-operative Movement in Slovakia

History and potential for employment

The idea of co-operatives was brought forth in the first half of the 19th century as a respond of individual producers to unfavourable economic and social conditions of the time. In the town of Rochdale, English weavers founded the Society of Equitable Pioneers the first consumer co-operative society in the world opened for business on 21 December 1844.

In less than three months later on 9th of February 1845 quite independently of the said Association, the “Gazdovský spolok” (Farmer's Association) was founded as the first credit cooperative society at Sobotište in Slovakia. Its founder, Samuel Jurkovič inspired other followers and consequently other co-operatives were constituted in many Slovak villages in the difficult Ugrian conditions of the time. However, many of them perished after the 1948 – 49 revolution events.

Since, co-operatives have in our country a very long tradition, more than 160 years. During this time, they have received an important position in Europe, although they have various power and role in the individual European countries.

Co-operative Movement in Slovakia survived for a very long time: two world wars, meny social systems – from feudalism through capitalism and socialism over head market economy. During their long existention, meny generation of its members managed to that it is a vital and functional form of business.

The success of a single type of co-operative forms was changed according to economic, social and political conditions of our country.

Because of that, we divide Co-operative Movement in to a 5 phases in period:

1. The beginning of Co-operative Movement, period 1845-1918
2. Development of Co-operative Movement, period 1819-1948
3. Deformation of Co-operative Movement, period 1949-1989
4.Transformation of Co-operative Movement, period 1990-2004
5. Globalisation proces in Co-operative Movement, period since 2004 -

1. The beginning of Co-operative Movement, period 1845-1918

In Slovakia, first period begins with establishing of co-operatives and ends after world war 1th.

The proces of establishing Co-operatives for first starts in a country-side to activate population as a result of a very bad economic and social conditions.

As we said on 9th of February 1845 “Gazdovsky spolok” (Farmer's Association) by Samuel Jurkovič at Sobotište in Slovakia was established. It was the first credit co-operative created in the world and second one at all.

In the sixties and seventies of the 19th century especially credit and consumer co-operatives societies were founded.

Daniel G. Lichardus an economist, tried to coordinate the activities of these co-operatives societies on the pages of his magazine OBZOR (HORIZON). Further growth of the co-operative movement in Ugria could be seen at the end of the 19th century. This boom included some co-operatives founded by the concious Slovak intelligentsia. In this respect Pavol Blaho (in West Slovakia), Milan Hodža an distinguished politician (when the national office was founded) and subsequently Fedor Houdek, all played an extremely important role.

2. Development of Co-operative Movement, period 1819-1948

In the second period, mainly at the and of the world war 1th co-operatives was a very monumental movement in Slovakia.

The basic principles of co-operative movement are:

• voluntariness
• reciprocity
• equality
• self support

These principles remained valid despite the changing conditions, character and gradually constituted various composition of co-operatives that played more and more multiple roles. Co-operative societies proved their viability very quickly and took deep roots among the population.

In this period of time, the Central Cooperative Society was founded with its headquarters located in Bratislava; in 1925, the Zväz hospodárskych družstiev (Union of Economic Cooperatives) and Zväz roľníckych vzájomných pokladníc, (Union of Mutual Agricultural Exchequer) were founded.

In 1934, Obchodné ústredie pre potravinárske družstvá /NUPOD/ (Food Cooperative Purchasing Centre) was founded and, Vyššia poľnohospodárska škola družstevná (Higher Cooperative Agricultural School) commenced its activity.

At the time, craft, building, housing, employment and civil cooperatives were conducting their activities in Slovakia besides co-operative societies of agricultural type.

During this period Co-operative movement wasn't integrated in to the one – it was divided according to kind of business activities:

• credit co-operatives
• noncredit co-operatives

The great negative impact in this period into the development of co-operatives had the World War II.

Negative impact:

• decrease of labor force
• absence of investments

After the World War II the co-operative movement spread to another expansion. Number of co-operatives increased about 18 % (since 1945 – 1947 ) and the co-operatives members increased nearly to 100 thousand individuals.

Maximal number of co-operatives ( 2 661) in Slovakia was in a 1947, 957 was credit co-operatives and 1704 was noncredit co-operatives.

The number of individual members reached more than 813 thousand members.

3. Deformation of Co-operative Movement, period 1949-1989

After the 1949 co-operative movement was interpreting as a half-private and business form, which continuously joined into national sector.

Formation of the political monopoly of the Communist party of Czechoslovakia, the co-operative movement suffered enormous material and moral losses. Slovak co-operative societies had taken the form that survived until 1989 despite the massive reform processes of the year 1968.

In this period co-operatives was divided into:

• agriculture co-operatives
• non-agriculture co-operatives (producers co-operative, consumers co-operative, housing co-operative)

In this period, the centralized way of co-operative management was pursued in which the influence of party structures was perceptible. Despite this complicated period, a large number of the co-operative societies were able to be relatively well orientated, mobilize their strength and resources and preserve the possible maximum from their progressive traditions. It was in consequence of these facts that in the seventies and eighties, Slovak cooperative societies often achieved better economic results than comparable state-owned enterprises.

4. Transformation of Co-operative Movement, period 1990-2004

The economic development that followed the year 1989 and formation of market economy marked a series of complicated problems not only for co-operative societies but also for the whole Czechoslovak economy. The market disintegration in the states of the former Rada Vzájomnej Hospodárskej Pomoci (Council of Economic Mutual Aid) and also serious financial problems of the domestic market, where the customers were incapable of paying for the goods taken-over, had negative impact on all-society development.

After the 1990 political scene set up, the questions of further cooperative perspectives were markedly manifested, which was evident also in the development of cooperative legislation.

During this period co-operatives was accused by the system, that it hadn't have any justification in market economy – because it's a memento of socialism.

In the year 1991 when Transformation Act was being prepared, the collaboration of the Slovak cooperative movement with the international cooperative movement and its representatives in Geneva prevented the cooperative system liquidation.

After the said problems had been settled and the Cooperative Union of the Czechoslovak Federative Republic disintegrated, the Cooperative Union of the Slovak Republic commenced official conduct of its independent activities as from 1st January 1993. In the circumstances of the independent Slovak Republic, the respective types of cooperative societies were overcoming a number of problems and impediments in the interest of preservation of this essential and important enterprising form existence. In the complicated legislative and economic circumstances, these cooperatives societies struggled for life and, in spite of this fact, they found the way of promoting their products.

In this period two types of co-operatives was functioned:

• transformed co-operatives
• non-transformed co-operatives (new types of co-operatives, which was established in 1992)

In the year 1990-1992 starts separating of co-operatives, for example the number of agriculture co-operatives increase from 680 in 1990 to 946 co-operatives in 1992. The highest increased was recorded in west part of Slovakia, new co-operatives raised up there at 66 %.

Current situation in Slovakia on 31. 12. 2004:

Slovak co-operatives was together 727 :

* agricultural co-operatives were 460 (population delivery rate were more then 50 %)

* consumer co-operatives were only 33 ( generates account and had rate more then 20 % in a food market)

* producer co-operatives were 132 

* housing co-operatives 102

Co-operatives create and maintain employment – In Slovakia, the Co-operative Movement represents more 700 co-operatives who connect nearly 477 thousand individuals (in 2004).

Producers and agricultural co-operatives are medium enterprises, it has 68-80 members in average. Consumer and housing co-operatives are large enterprises with more then thousand members.

Consumer co-operatives reached higher retail turnover as in the year 1990 (more then 30 mld. Sk/crowns). Housing co-operatives still keeps more then 200 thousand unites in Slovakia.

5. Globalisation proces in Co-operative Movement, period since 2004 –

After the extensive transformational changes within cooperatives that took place in the nineties and gradual exacting stabilization within the market economy and, in consequence of the accession of the Slovak republic in the European Union on 1st May 2004, the next stage of the cooperative movement development and its integration in the EU cooperatives has been implemented at present.

In a period of globalisation the slovak co-operatives needs to assimilated in to the integrated European market. Accession of the Slovak republic in the European union, the co-operatives achieve new opportunities in a form of attaching finance resources from EU foundation. In other hand, trades and producers will have more strict rules in a way of quality afford services and consumer protection.

At present, cooperative societies represent an important element affecting the development and independence of the Slovak Republic.

Co-operatives in Slovak republic – current situation in 2006:

Slovak co-operatives was together 700 :

• agricultural co-operatives: about 500 -with 22 000 employees and co-operatives members
• consumer co-operatives: 32 – with 13188 employees
• producer co-operatives : 103 – with 7000 (in 2005) employees
• housing c-operatives: 95 – with 2796 employees

Conclusion

Transformation of co-operatives are assuring us in our conviction that co-operatives in Slovakia are still a perspective entrepreneurial form. However, it is necessary to realize their internal revitalisation, mainly more effective motivation to increase capital involvement of working members and management on business and economical results of co-operative.

At the moment, 11.2 % of Slovaks are individual members of some co-operative. It is important that they better use advantages of co-operatives.

Currently, we have four dominant types of Co-operatives in Slovakia:

• agricultural co-operatives
• consumer co-operatives
• producers co-operatives
• housing co-operatives

There is also need to increase a popularity of other forms of co-operatives, which are successful abroad, but not know yet in Slovakia, for example medical, pharmaceutical, educational, tourist, etc.

New forms of co-operatives are successful mainly in Europe (Italy, France and Greece etc.), but they are also in Canada. It could be a good example also for Slovakia. In process of globalisation, only those co-operatives will by successful, which will be able to react flexibility and promptly to the needs of their members. Collaboration must be spread not only within and between co-operatives, but on international and local levels as well.

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