Employment protection regimes in worker co-operatives: dismissal of worker members and distributive fairness

This paper discusses the possibility of strong employment protection in co-operatives (exclusion of dismissal) and of the imposition of a minimum wage equal for all worker members in worker co-operatives. It maintains that the worker co-operative has unique features in its ability to reach employment stabilization. It shows, both theoretically and with reference to existing empirical evidence, why and how worker co-operatives are able to overcome the lay-off of workers, strongly reducing employment fluctuation when compared to other organizational forms. The development of more thorough and radical regimes of employment protection and distributive justice fulfil satisfaction of basic needs, workers’ right to work and to keep the job position. While stricter constraints on layoffs can cause inefficiencies (e.g. make it more difficult to dismiss under-performing workers), they also serve an insurance function against unemployment, favor the accumulation of firm-specific human, relational and social capital, and can increase performance in the medium to long run. Voluntary resignation, not involuntary layoff would the dominant mechanism allowing allocation of labor resources to the most productive occupations.