Platform Co-operatives In Context and Relevance

Not For Profit promoting North Melbourne service providers in the gig economy

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9 April 2021 - Written by Hamideh Iraj

In July 2020, Incubator COOP Australia interviewed Dr Jose Mari Luzarraga from Mondragon Team Academy. The conversation was around platform cooperatives. This article is a high-level summary of the interview. Dr Luzarraga talked about the competitive advantage of having a platform business. Platform companies turned out to be economically successful; they created convenient and efficient systems for customers. They came in with the promise of liberating people and allowing people to work as entrepreneurs, but in practice, they provided poor working conditions for platform workers and externalised employees work under conditions that are unacceptable in conventional companies. This is why in Spain platform workers are called “fake self-employed people”.

Platform companies considered only profit as their main key performance indicator (KPI). Moreover, these companies scaled up quickly and conquered other players in the market thanks to the scalability of the platform business model and their ability to arbitrage labour laws and of course at the expense of their workers. As a result, small businesses were gradually wiped out and left their market share to the solo player, i.e. the platform company. These companies also charged service providers (such as drivers, restaurants, etc) high commissions to add to their profit margins.

What is the solution then? Dr Luzarraga believes that fighting these existing systems is unfruitful. We need to establish new cooperatives that consider their social, environmental and happiness impact on workers as well as the economic impact of their activities. Cooperatives are organisations with social imperative and their purpose is to serve the local community versus becoming rich. We need to start small and create successful platform cooperative examples to showcase this alternative business model as valid and viable. If these cooperative companies can take 60% of the market, other companies will follow their practices and the beneficial impact of cooperatives will be replicated in different companies and sectors. Dr Luzarraga believes that the youth need to be active players in the cooperative movement to build their future. In the past, cooperatives were associated with old people. This image is to be changed by young people from different countries in the world who are fed up with having no say in the reality of their lives and want a better destiny for humanity. These platform cooperatives can be successful change agents to bring in systemic social changes and improve the lives of people, so being socially driven is their distinctive value proposition.

In Loconomics, we put the local community at the centre of the platform business model. We think digital platforms have the potential to bring people together and strengthen social ties rather than alienating people. We have recently received a grant from the Darebin council in Victoria and we focus on solving workforce problems with the community mindset and the community brainpower.

The full interview is available here: