|▲ “Do you have five people who have the same mind?”This is a phrase containing the message of cooperatives, which Seoul City Hall is currently promoting to the public.|
According to the ICA, the International Cooperative Association, a cooperative is simply a company that is jointly owned and operated democratically. Thus, it is a company that seeks a mutual goal of providing services or products to fill the economic, social and cultural needs of the people. Simply, it is a voluntary organization made by people who share the same thoughts about running a democratic company.
The first Cooperative Association was started in 1761, by Robert Owen, a social reformer in Scotland. He made a social group for weavers in Fenwick and East Ayrshire to provide oatmeal at cheap cost. This single program later grew into different fields such as loans, savings, education, and so on. Afterwards, Owen expanded on the basic idea of cooperatives through presenting theoretical courses and in his writings.
As for Korea, the government planned a new law on January 26th, to create a basis for setting up cooperatives. This law was implemented on December 1st, 2012, and allowed the standard for creating cooperatives to change. In the past, the laws limited the establishment of cooperative to eight fields including national agricultural cooperative and fisheries. Also, the number of partners had to be around 100 or over. Even the government restricted the establishment of new cooperative associations.
Apart from this, there still were many limitations and boundaries to what cooperatives could do. Nevertheless, with the new rule, people were now allowed to create new cooperatives in any field, with as few as five people. In addition, the complex procedure for founding a cooperative was reduced to simple and easy steps. All people have to do is gather a promoter, fill out the article of incorporation, gather five people who share the same mindset to be a co-partners, and report for the establishment of their company. This would be sent to the local city hall, where the local government will request investment and approve the incorporation of the cooperative association. According to Joo In-sun, an employee of the Office of Economic Promotion, to help stabilize the newly created cooperatives, Seoul City Hall will be lending a hand to them. Several methods of support that the government will provide include providing information through counseling and helping first timers to understand how to maintain a business. In addition, City Hall will build an institutional infrastructure to create an environment for cooperatives to become self-sustaining.
Overall, due to the easier procedures in creating a cooperative and the newly changed law that allows five people to report the establishment of a cooperative, many people are now joining to create or to be part of a cooperative association. Currently, the number of daily establishment report was known to be around 6.5 and the total numbers counted around 224 reports in 2013 January and 248 reports in February. These numbers are still on the rise as this cooperative program is being constantly promoted.
Cooperatives have three characteristics which make them different from other organizations. Firstly, cooperatives are non-profit organizations. Most cooperatives are formed to give more benefits to customers and producers, and any extra income is often used for reinvestment. Secondly, cooperatives are democratic organizations. Members in cooperatives make joint decisions when they run and participate in cooperative. No matter how much money individual members invest into the cooperative, each member has only one right to vote when deciding an issue. Thirdly, cooperatives are local development-oriented organizations. Cooperatives are in most cases run by local people, for the local people, and of the people that cooperatives have strong motivation to increase local development more than other organizations. Therefore, often cooperatives try to purchase and sell local products and services, for example, education, and childcare services.
Because of these characteristics, cooperatives act as socially friendly operations. Cooperatives hire disabled people, elders and students with reasonable wage. Cooperatives contribute to stable price by making group purchases, conducting direct transactions to reduce the delivery margin, and provide cheap and fine quality products to customers and stable and sustainable income to producers through this process. In addition, cooperatives provide cultural and welfare benefits to their members.
After the proclamation of the basic cooperative law and becoming more aware of cooperatives’ characteristics, society could expect some positive effects which come from the cooperatives. Since cooperatives try to hire people from disadvantaged social class they provide a working welfare system which encourages them to support themselves. Cooperatives raise the competitiveness of small businesses by helping them to improve their position against the big franchisees and companies, and through this, they also stimulate the local economy, because the small businesses don’t have headquarters in major cities or abroad. In addition to this, in Korea, it is expected that the new law can contribute to the promotion of the culture of donation. It was prohibited to donate money as a civil association before, but the new law makes donating money possible through the cooperatives, which can also be defined as a kind of civil association within a broader definition.
|▲ The Dongguk Cooperative is providig diverse events to inform the students about themselves.|
Another type of cooperative would be worker’s production cooperative, which helps by producing products or service at a reasonable price, while maintaining the quality, knowledge and productivity of workers. One very example is “Kyunghee Tutoring Cooperative.” This cooperative provides tutoring service to elementary to high school students by receiving 150 thousand won which is half the original price. All students have to do is pay 3,000 won to get connected to parents who want a tutor.
Lee Keon-wook, one of the founders of the Kyunghee Tutoring Cooperative, claimed that the start of the cooperative happened in a course where the students had to create a program to help out society. This later grew into the current tutoring cooperative. Now, there are around 120 students participating in the cooperative. One of the reasons why so many students are participating is that there is no middleman who takes commission fees. According to Lee, he wishes that through expanding the territory of the tutoring cooperative, in the distant future, parents will be able to reduce the economic burden of teaching their children and students will be able to maintain a consistent part time job.
Credit cooperatives are cooperatives which provide low-income families or individuals with bad credit with relatively low interest rates for personal loans to support themselves, compared to using banks or private loans. Also, depending on the cooperative goal, some credit cooperatives lend money to people who want to run their own businesses, or provide money to other cooperatives and organizations.
For example, the “Todak Todak Cooperative” is the case of a credit cooperative which was set up especially for youths, and for university students. One of the founders of “Todak Todak Cooperative,” Cho Gum-deuk, said that she thought it was miserable reality for many young people who often have to work in inadequate work situations. Since, university students and youths usually work as part time workers it is difficult to enforce the laws to protect them. Therefore, they are often exposed to improper treatment. She had a lot of part time jobs when she was a university student and after talking with other students, she wanted to make an organization which provides place for them to share their difficulties, emotions, and which would be open to all young people. To achieve this, she found some people who shared the same ideas, and they founded the “Youth Community Union”.
Acting as union member, she participated in union work actively to make a better society for young people. However, the more she worked within union, the more she felt that there has to be more financial and support -organizations for the youths. She explained, “This is the reason why I joined to make this credit cooperative. One writer whose name is Choi Go-eun passed away in 2011 from starvation in her room. I think if she had had somewhere to borrow money easily, she might still live. Credit cooperative is for people like her.” She added, “Since many young people just need small amounts of money for short term living, I thought it could be solved if there were other people to help them.”
|▲ The Todak Todak Cooperative provides students with economic aid and support after students recieve Todak Todak Seed through volunteer works.|
The Post asked her how the cooperative lent money, and the criteria for borrowing money. She answered with a quiet attitude. “That was the most important problem for us. We made a cooperative to help them, but we are still dealing with the money, and to operate properly we have to receive money back in order to give more benefit to others. It was a contradiction for us. If we set the interest rates high, the cooperative can grow faster and can cover more people, but then we can’t achieve our goal which is helping young people by lending them money at low interest rates. We are small organization so that even a small amount of money can make us lose liquidity. To solve this problem, we created the idea of a “Todak Todak seed.” We found some similar cases and we developed them as the seed. We use the “seed” idea when we lend money. Members who want to take a loan should meet the “seed condition” depending on which kind of loan they want. Members can get seed when they participate in the education, meetings and others in cooperative. Through this process to get seed, people become close and it is hard to betray people you are close to, so that the possibility of paying the money back increases. Only emergency situations allow members to get loans without seed.”
At the end of the interview, she added that she hopes that more university students including Dongguk students have more interest in cooperatives, and come to care about society more. She also said that she expects that through social cooperatives, the Korean society would be better place to live in, and that human rights will be increased through the cooperation. “Cooperation is most important factor to live in globalized and complex society, we can’t live alone,” she said.
|▲ The advertisement reads "Cooperative makes the world a better place to live in."|
However, to advance the status of students’ cooperative culture, there are some issues to be resolved as soon as possible. Firstly, the government should support the students’ cooperative when they initiate to run the cooperative. Students’ cooperative can rarely compete with big companies and franchises. Secondly, the concept of cooperatives and knowledge on how to run them is an unfamiliar one to most students. Therefore, training course for students need to be established. Thirdly, students’ cooperatives themselves have to have professionalism. After the proclamation of the new basic cooperative law, students can set up their own cooperatives easily, but it doesn’t mean that running a cooperative is easy. Since cooperative is also an organization, it needs a lot of effort to maintain the cooperative and keep it running efficiently.
Recently, following the cases from abroad, establishing cooperatives is becoming more popular and many university students are trying to form their own cooperatives. Although the law and support is not perfect to cover all requirements, if students and governments pay attention to cooperatives, cooperative can become more beneficial for students. Since there are many cooperatives that are helpful for students, there is a need for the students to become more aware of the role and functions of cooperatives.
Lee Dong-jun, Kim Du-hyeon email@example.com, firstname.lastname@example.org
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