Lessons in social enterprise from the Basque country
The Guardian Online, by Randeep Ramesh
Staff in the Basque country voted to take pay cuts and work longer hours and the region is now steaming ahead. Is this David Cameron’s vision of the future?
If David Cameron wants to create an environment for charities to do more of the state’s work, then he’d do worse to take a few lessons from Spain’s Basque country. An hour’s drive out of Bilbao to the hi-tech testing track of the Epsilon Formula One team, the PM could see a radical attempt to put social enterprises to work. There, in a cavernous space, 20-something researchers hunch over laptops and life-sized plastic models testing a new concept in urban travel: a folding electric car that is rented for journeys in city centres.
The car, called Hiriko, is designed to be assembled locally – meaning it would generate 200 jobs in every city that adopts the technology. While it would need a change in thinking and investment in city-wide car parks along the lines of the space allocated to London’s bicycle rental scheme, the plans have attracted the attention of politicians in Berlin, Hong Kong and San Francisco, who see the opportunity for reducing car numbers, creating jobs and cutting pollution in urban areas.
Hiriko is the brainchild of Carlos Fernández Isoird, a former engineer-turned-social entrepreneur who aims to solve some of society’s most intractable problems. Started with a €15m (£13.2m) loan from the Spanish government, Hiriko aims to create a new technology for Basque industry to conquer the world. It’s no empty boast: Mercedes sources so much of its components from the region that it named a car, the Vito, after the state capital, Vitoria.
But what sets Fernández Isoird apart is his vision: Hiriko will be a not-for-profit co-operative, with workers almost certainly owning the company. The idea was spun out of a social enterprise park he set up.
Fernández Isoird and his partner Gorka Espiau explain the key to understanding what makes the Basque country such fertile soil is a mix of nationalistic pride and social cohesion. People in the Basque country want to keep industries in their own hands. To prevent foreign takeovers, Basque politicians promoted worker co-ops and social enterprises. The idea was not to make bumper profits at the expense of staff. Espiau says that "according to the UN human development index parameters, the Basque region ranks as one of the world’s most socially balanced countries".
The area is now an industrial powerhouse – something the coalition sees as crucial to revitalising Britain. But the key to the Basque region’s success is that staff voted to take pay cuts and work longer hours. When steel and shipbuilding collapsed in the 1980s, the response was not class war, but a workforce ready to bear pain.
The result is nothing short of astonishing. Almost a third of the Basque country’s economy is made up of manufacturing – compared to a European average of 20%. The Basque country’s totemic company is Mondragon, the world’s largest industrial co-operative and Spain’s seventh largest business group, with a €14bn turnover and 85,000 people employed globally in more than 250 companies.
Could Britain, or more likely England, be recast as a bigger version of Basque society? It would fit a certain kind of Tory idea. First, this new England would be nationalistic. Second, workers would take pay cuts as long as managers did not get paid too much. At Mondragon, the best-paid manager gets eight times as much as the lowest-paid employee. Yet the Basque country is wealthy, with average per capita GDP of €31,800, Ω 36% above the European average. Perhaps most important for the Basque region was the recovery of self-government in 1979 from Madrid, which Eurosceptic Tories might compare to the self-renewal the nation could see if powers were repatriated from Brussels.
In the UK, the credit crunch means that the debate over the role of the state is likely to last a decade. Cameron’s call for social enterprises to become the engine of society will, if the Basque country is anything to go by, mean they end up powering the economy.