Public sector
The Public Sector, sometimes referred to as the state sector is a part of the state that deals
with either the production, delivery and allocation of goods and services by and for
the government or its citizens, whether national,regional or local/municipal.
Examples of public sector activity range from delivering social security, administering urban
planning and organizing national defenses.
The organization of the public sector (public ownership) can take several forms, including:
Direct administration funded through taxation; the delivering organization generally has
no specific requirement to meet commercial success criteria, and production decisions
are determined by government.
Publicly owned corporations (in some contexts, especially manufacturing, "state-owned
enterprises"); which differ from direct administration in that they have greater commercial
freedoms and are expected to operate according to commercial criteria, and production
decisions are not generally taken by government (although goals may be set for them by
government).
Partial outsourcing (of the scale many businesses do, e.g. for IT services), is considered
a public sector model.
A borderline form is
Complete outsourcing or contracting out, with a privately owned corporation delivering
the entire service on behalf of government. This may be considered a mixture of private
sector operations with public ownership of assets, although in some forms the private
sector's control and/or risk is so great that the service may no longer be considered part
of the public sector. (See the United Kingdom's Private Finance Initiative.)
In spite of their name, public companies are not part of the public sector; they are a
particular kind of private sectorcompany that can offer their shares for sale to the general
public.
Role of the public sector
The role and scope of the public sector and state sector are often the biggest distinction
regarding the economic positions of socialist, liberaland libertarian political philosophy. In general,
socialists favor a large state sector consisting of state projects and enterprises, at least in
thecommanding heights or fundamental sectors of the economy (although some socialists favor a
large cooperative sector instead). Social democrats tend to favor a medium-sized public sector
that is limited to the provision of universal programs and public services.
Economiclibertarians and minarchists favor a small public sector with the state being relegated to
protecting property rights, creating and enforcing laws and settling disputes, a "night watchman
state".
Private sector
the private sector of Indian economy is the past few years have delineated
significant development in terms of investment and in terms of its share in
the gross domestic product. The key areas in private sector of Indian
economy that have surpassed the public sector are transport, financial
services etc. in economics, the private sector is that part of the economy which is run by
private individuals or groups, usually as a means of enterprise for profit, and is not controlled by
the state. By contrast, enterprises that are part of the state are part of the public sector; private,
non-profit organizations are regarded as part of the voluntary sector.
Indian government has considered plans to take concrete steps to bring
affect poverty alleviation through the creation of more job opportunities in
the private sector of Indian economy, increase in the number of financial
institutions in the private sector, to provide loans for purchase of houses,
equipments, education, and for infrastructural development also. The private
sector of Indian economy is recently showing its inclination to serve the
society through women empowerment programs, aiding the people affected
by natural calamities, extending help to the street children and so on. The
government of India is being assisted by a number of agencies to identify the
areas that are blocking the entry of the private sector of Indian economy in
the arena of infrastructural development, like regulatory policies, legal
procedures etc. The most interesting fact about the private sector of India
economy is that though the overall pace of its development is comparatively
slower than the public sector, still the investment of private sector in the
recent past, i.e. in the first quarter of 1990 registered approximately 56 %
which rose to nearly 71 % in the next quarter, accounting for an increase of
15 %. Certain steps taken by the Indian government are acting as the
stepping stone of the private sector continued journey to success, include
industrial delicensing, devaluation that was implemented previously.
The private sector of Indian economy is also adversely affected by the huge
number of permits and enormous time required for the processing of
documents to initiate a firm, however the central government has decided to
abolish MRTP Act and incorporate a Competition Commission of India to bring
the public sector and the private sector at the same platform.
The participation of the private sector of Indian economy is desired by the
government of India for infrastructural development including specific sectors
like power, development of highways and so on. As the contribution of public
sector in these sectors have been arrested due to the shift of the attention of
the Indian government to issues like population increase, industrial growth.
The main reasons behind the low contribution of the private sector in
infrastructural development activities are that:
The small and medium scale companies in the private sector of Indian
economy suffer from lack of finances to welcome the idea of extending their
business to other states or diversify their product range.
The private sector of Indian economy also suffer from the absence of
appropriate regulatory structure, to guide the private sector and this speaks
for its unorganized framework
The unorganized framework of the private sector is interrupting the proper
management of this sector resulting in the slowdown of its development.
Cooperative
A cooperative (also co-operative; often referred to as a co-op) is a business organization
owned and operated by a group of individuals for their mutual benefit.[1] Cooperatives are defined
by the International Co-operative Alliance's Statement on the Co-operative
Identity asautonomous associations of persons united voluntarily to meet their common
economic, social, and cultural needs and aspirations through jointly owned and democratically
controlled enterprises.[2] A cooperative may also be defined as a business owned and controlled
equally by the people who use its services or by the people who work there. Cooperative
enterprises are the focus of study in the field of cooperative economics.
Cooperatives as legal entities
A cooperative is a legal entity owned and democratically controlled by its members. Members
often have a close association with the enterprise as producers or consumers of its products or
services, or as its employees.
In some countries, e.g. Finland and Sweden, there are specific forms of incorporation for co-
operatives. Cooperatives may take the form of companies limited by shares or by guarantee,
partnerships or unincorporated associations. In the USA, cooperatives are often organized as
non-capital stock corporations under state-specific cooperative laws. However, they may also be
unincorporated associations or business corporations such as limited liability companies or
partnerships; such forms are useful when the members want to allow:
1. some members to have a greater share of the control, or
2. some investors to have a return on their capital that exceeds fixed interest,
neither of which may be allowed under local laws for cooperatives. Cooperatives often share their
earnings with the membership as dividends, which are divided among the members according to
their participation in the enterprise, such as patronage, instead of according to the value of their
capital shareholdings (as is done by a joint stock company).
Identity
Cooperatives are based on the cooperative values of "self-help, self-responsibility, democracy
and equality, equity and solidarity" and the seven cooperative principles.
1. Voluntary and Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy and Independence
5. Education, Training and Information
6. Cooperation among Cooperatives
7. Concern for Community[4]
In the tradition of their founders, cooperative members believe in the ethical values of honesty,
openness, social responsibility and caring for others. Such legal entities have a range of unique
social characteristics. Membership is open, meaning that anyone who satisfies certain non-
discriminatory conditions may join. Economic benefits are distributed proportionally according to
each member's level of participation in the cooperative, for instance by a dividend on sales or
purchases, rather than divided according to capital invested. Cooperatives may be generally
classified as either consumer cooperatives or producer cooperatives. Cooperatives are
closely related to collectives, which differ only in that profit-making or economic stability is placed
secondary to adherence to social-justice principles.[citation needed] Co-ops can sometimes be identified
on the Internet through the use of the .coop gTLD. Organizations using .coop domain names
must adhere to the basic co-op values.
Worker cooperative
Main article: Worker cooperative
A worker cooperative or producer cooperative is a cooperative, that is owned and democratically
controlled by its "worker-owners". There are no outside owners in a "pure" workers' cooperative,
only the workers own shares of the business, though hybrid forms in which consumers,
community members or capitalist investors also own some shares are not uncommon. In practice,
control by worker-owners may be exercised through individual, collective or majority ownership by
the workforce, or the retention of individual, collective or majority voting rights (exercised on a
one-member one-vote basis).[5] A worker cooperative, therefore, has the characteristic that the
majority of its workforce owns shares, and the majority of shares are owned by the workforce.
[6]
Membership is not always compulsory for employees, but generally only employees can
become members either directly (as shareholders) or indirectly through membership of a trust
that owns the company.
The impact of political ideology on practice constrains the development of co-operatives in
different countries. In India, there is a form of workers' cooperative which insists on compulsory
membership for all employees and compulsory employment for all members. That is the form of
the Indian Coffee Houses. This system was advocated by the Indian communist leader A. K.
Gopalan. In places like the UK, common ownership (indivisible collective ownership) was popular
in the 1970s. Cooperative Societies only became legal in Britain after the passing of Slaney's Act
in 1852. In 1865 there were 651 registered societies with a total membership of well over
200,000.[7] There are now more than 400 worker co-operatives in the UK,[8] Suma Wholefoods
being the largest example with a turnover of £24 million.
Spanish law permits owner-members to register as self-employed enabling worker-owners to
establish regulatory regimes that support co-operative working, but which differs considerably
from co-operatives that are subject to Anglo-American systems of law that require the co-
operative (employer) to view (and treat) its worker-members as salaried workers (employees).
[9]
The implications of this are far-reaching, as this requires co-operatives to establish authority
driven statutory disciplinary and grievance procedures (rather than democratic mediation
schemes), impacting on the ability of leaders to enact democratic forms of management and
counter the authority structures embedded in the dominant system of private enterprise centred
around the entrepreneur.[10]
[edit]Volunteer cooperative
A volunteer cooperative is a cooperative that is run by and for a network of volunteers, for the
benefit of a defined membership or the general public, to achieve some goal. Depending on the
structure, it may be a collective or mutual organization, which is operated according to the
principles of cooperative governance. The most basic form of volunteer-run cooperative is
a voluntary association. A lodge or social club may be organized on this basis. A volunteer-run
co-op is distinguished from a worker cooperative in that the latter is by definition employee-
owned, whereas the volunteer cooperative is typically a non-stock corporation, volunteer-
run consumer co-op or service organization, in which workers and beneficiaries jointly participate
in management decisions and receive discounts on the basis of sweat equity.
[edit]Social cooperative
Main article: Social cooperative
A particularly successful form of multi-stakeholder cooperative is the Italian "social cooperative",
of which some 7,000 exist. "Type A" social cooperatives bring together providers and
beneficiaries of a social service as members. "Type B" social cooperatives bring together
permanent workers and previously unemployed people who wish to integrate into the labour
market.
Social cooperatives are legally defined as follows:
no more than 80% of profits may be distributed, interest is limited to the bond rate and
dissolution is altruistic (assets may not be distributed)
the cooperative has legal personality and limited liability
the objective is the general benefit of the community and the social integration of citizens
those of type B integrate disadvantaged people into the labour market. The categories of
disadvantage they target may include physical and mental disability, drug and alcohol
addiction, developmental disorders and problems with the law. They do not include other
factors of disadvantage such as race, sexual orientation or abuse.
type A cooperatives provide health, social or educational services
various categories of stakeholder may become members, including paid employees,
beneficiaries, volunteers (up to 50% of members), financial investors and public
institutions. In type B co-operatives at least 30% of the members must be from the
disadvantaged target groups
voting is one person one vote
A good estimate of the current size of the social cooperative sector in Italy is given by updating
the official Istituto Nazionale di Statistica(Istat) figures from the end of 2001 by an annual growth
rate of 10% (assumed by the Direzione Generale per gli Ente Cooperativi). This gives totals of
7,100 social cooperatives, with 267,000 members, 223,000 paid employees, 31,000 volunteers
and 24,000 disadvantaged people undergoing integration. Combined turnover is around 5 billion
euro. The cooperatives break into three types: 59% type A (social and health services), 33% type
B (work integration) and 8% mixed. The average size is 30 workers.
The volunteer board of a retailconsumers' cooperative, such as the formerOxford, Swindon & Gloucester Co-op, is
held to account at an Annual General Meeting of members
[edit]Consumers' cooperative
Main article: Consumers' cooperative
A consumers' cooperative is a business owned by its customers. Employees can also generally
become members. Members vote on major decisions, and elect the board of directors from
amongst their own number. A well known example in the United States is the REI (Recreational
Equipment Incorporated) co-op, and in Canada: Mountain Equipment Co-op.
The world's largest consumers' cooperative is the Co-operative Group in the United Kingdom,
which offers a variety of retail and financial services. The UK also has a number of autonomous
consumers' cooperative societies, such as the East of England Co-operative
Society andMidcounties Co-operative. In fact the Co-operative Group is something of a hybrid,
having both corporate members (mostly other consumers' cooperatives, as a result of its origins
as awholesale society), and individual retail consumer members.
Legacoop[11] in Italy has 414,383 employees, 7,736,210 members and turns over €50Bn per year
growing at a steady rate of 4.41%.[12]
Japan has a very large and well developed consumer cooperative movement with over 14 million
members; retail co-ops alone had a combined turnover of 2.519 trillion Yen
(21.184 billion US dollars [market exchange rates as of 15 November 2005]) in 2003/4.
(Japanese Consumers' Co-operative Union., 2003).
Migros is the largest supermarket chain in Switzerland and keeps the cooperative society as its
form of organization. Nowadays, a large part of the Swiss population are members of the Migros
cooperative – around 2 million of Switzerland's total population of 7,2 million[1] [2], thus making
Migros a supermarket chain that is owned by its customers.
Coop is another Swiss cooperative which operates the second largest supermarket chain in
Switzerland after Migros. In 2001, Coop merged with 11 cooperative federations which had been
its main suppliers for over 100 years. As of 2005, Coop operates 1437 shops and employs almost
45,000 people. According to Bio Suisse, the Swiss organic producers' association, Coop
accounts for half of all the organic food sold in Switzerland.
EURO COOP is the European Community of Consumer Cooperatives.[13]
[edit]Business and employment co-operative
Main article: Business and employment co-operative
Business and employment co-operatives (BECs) are a subset of worker co-operatives that
represent a new approach to providing support to the creation of new businesses.
Like other business creation support schemes, BECs enable budding entrepreneurs to
experiment with their business idea while benefiting from a secure income. The innovation BECs
introduce is that once the business is established the entrepreneur is not forced to leave and set
up independently, but can stay and become a full member of the co-operative. The micro-
enterprises then combine to form one multi-activity enterprise whose members provide a mutually
supportive environment for each other.
BECs thus provide budding business people with an easy transition from inactivity to self-
employment, but in a collective framework. They open up new horizons for people who have
ambition but who lack the skills or confidence needed to set off entirely on their own – or who
simply want to carry on an independent economic activity but within a supportive group context.
