Inequality is a huge problem around the world — and it’s getting worse. A 2020 study by the United Nations showed that the world’s richest 1% increased their share of income between 1990 and 2015, while the bottom 40% earned less than a quarter of income in every country surveyed.
I’ve been concerned about inequality for many years. In 2014, I came across a study at Harvard University which said that 90% of citizens are impoverished by private sector business practices. For example, US CEOs get 380 times the average worker’s pay.
Around the same time, I saw a documentary about worker cooperatives in Spain and the US called Shift Change. It reported that the ratio between top and lowest paid workers in the Mondragon Co-ops, where there are 100,000 workers, averages just 5:1. And in societies where this kind of worker-owned businesses are widespread, wealth is spread more fairly.
Inspired by this, I developed the FairShares Model, a new way of running a business based on sharing wealth and power among the entire workforce, rather than concentrating it at the top. Over the last seven years, I’ve led a team at Sheffield Hallam that has influenced the spread of the FairShares Model across 37 countries around the world.
But first, let’s explain the basics.
What is a social enterprise?
FairShares is a way to organise a social enterprise as a cooperative, so that every active participant has a stake in the company.
The most familiar example in the UK is John Lewis, but there are lots of smaller cooperatives — including credit unions and building societies. The cooperative business model is widely used around the world — for example, in Bangladesh the biggest provider of rural banking and telecoms is a cooperative.
For me, what stands out in a social enterprise is that the business puts just as much weight on social concerns as it does on making money.
What is the FairShares Model?
Under the FairShares Model every active contributor to the business is a member, whether they’re a worker, a customer or an investor. It means everybody is properly committed to the future of the enterprise.
It’s also a way of redistributing wealth and power. Profits are shared more equally. And instead of a hierarchy of line managers, everyone works together in a series of management circles. This gives everyone a voice in the company, and more control over their own work.