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Employment protection regimes and dismissal of members in worker cooperatives

Tortia, Ermanno C. (2021): Employment protection regimes and dismissal of members in worker cooperatives.

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Abstract

This paper discusses the possibility of strong employment protection regimes (EPRs) in worker cooperatives (WCs), a unique organizational form in which employees coincide with members who hold control rights. Worker control is reported by several theoretical and empirical contributions to stabilize employment better than other proprietary forms. We leverage key theoretical insights from evolutionary theory and systems to discuss the possibility (benefits and critical elements) of constraining the dismissal of WC members to further strengthen employment stabilization and enforce member rights. Strong EPRs would be functional to meeting workers' needs for a decent life and job security. While stricter constraints on layoffs can cause short-term inefficiencies (e.g. preventing the dismissal of shirking workers), they also perform an insurance function against unemployment, favor the accumulation and conservation of firm specific human, relational and social capital and improve the equity of distributive patterns. It is also hypothesized that performance would increase in the medium to long run. Voluntary resignation, not involuntary dismissal would be the dominant mechanism allowing for the allocation of work to the most productive occupations.

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