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On February 13, the Ministry of Strategy and Finance (MOSF) announced the results of the 3rd national survey on co-operatives. This survey has been conducted every two years since 2013.

 

This co-operative survey was carried out in two phases to a total of 10,615 registered co-operatives as of the end of 2016 including 9,954 general co-operatives, 604 social co-operatives, and 57 associations. This is an increase of 4,380 co-operatives from the second survey that was carried out on the basis of co-operatives as of end of 2014. Industry, wholesale and retail sector accounted for 23.6%, education service industry 13.7%, agriculture and forestry 10.3%, manufacturing 8.7%, and arts and sports 8.6%.

 

The total number of members was 313,000, and the average number of them was 61.6, which was 14.8 more than the second survey (46.8 members). The total number of workers was 6.9 million, and the average number of workers was 13.5, which was 5.3 more than the second one (8.2 workers). In particular, the percentage of the employment of the vulnerable social group increased among total workers from 20.2% in the second survey to 34.7% in the third survey. The average monthly work salary based on 34 working hours per week was KRW147,000 for regular workers and KRW920,000 for irregular workers. (In Korea, the average monthly salary is KRW18.6 million based on 174 hours of legal working hours per month.)

 

 

Image credit: Alex Pearce

 

The co-operatives’ total incomes were KRW 1.48 trillion (average KRW 290 million per co-op) increased by more than twice as compared to the second survey of KRW 691.6 billion (average KRW 230 million); the total turnover reached KRW 1.387 trillion (average KRW 270 million) from KRW622.1 billion (average of KRW 210 million). The average assets were KRW 140.2 million up from KRW 56.3 million while sales increased from KRW 210.39 million to KRW 272.7 million. The total revenue rose from KRW 233.99 million to KRW 290.9 million. However, according to the MOSF, due to the nature of co-operatives, the net profit decreased from KRW 19.35 million to KRW 3.73 million since co-operatives value the interests of members rather than the maximization of profits. For example, wholesale co-operative purchase at a higher price from their members or workers’ co-operatives cover the higher share of wages and education expenses. Also, an increase in financial costs due to scaling businesses can be one of the reasons.

 

The financials depended mainly on internal methods such as increasing the contribution of members (42.3%) and loans from board members (39.6%) and from financial institutions (21.1%) The reasons that financial institutions rank the third place were the burden of loan collateral (24%), excessive documentation (16.7%), and submission of financial performance (16.1%).

 

Of the 9,547 co-operatives registered, 53.4% run businesses, slightly lower than the second survey (54.6%) as 4,447 co-operatives have not operated: 2,994 of them stopped their businesses and 1,453 were closed. The reasons for the suspension and closure of business were lack of profit models, lack of funds for business operation, and disagreement among members.

 

Based on the results of the surveys, MOSF stated that co-operatives have scaled up over the five years since the enactment of the Framework Act on Cooperatives in 2012, and that they have put efforts to create jobs, contribute to communities, and hire the vulnerable social group. However, the public still has low awareness of co-operatives. Also, MOSF pointed out the challenges of harder access to financial services, professional training, and market development. Based on the results, it plans to set up a tailor-made policy for each steps of co-operatives’ growth from establishment to business development and scale-up so that co-operatives can grow into a central axis of the social economy.