At the end of 2012, the Cuban government approved a law that permitted for the first time the formation of non-agricultural co-ops. Passed at the end of the United Nations-designated International Year of Cooperatives, the new Cuban legislation permitted, as the New York Times reported at the time, “workers to collectively open new businesses or take over existing state-run businesses in construction, transportation and other industries.” As of July 2014, 257 new co-op businesses have launched as a result of this legislation.

Last month, spurred by these events, the National Cooperative Business Association, the leading organization of cooperatives in the United States, assembled a delegation of 13 people to visit Cuba and become acquainted with the new Cuban co-ops. I was a part of this delegation, along with people hailing from the U.S. Federation of Worker Cooperatives, National Cooperative Bank, National Rural Electric Cooperative Association, Pachamama Coffee, Sol2Economics, CDS Consulting Cooperative, Cooperative Coffees, and Food Co-op Initiative.

Cuba’s co-op legislation is called “experimental” and with good reason. Although the majority of agricultural produce in Cuba is cooperatively grown, non-agricultural co-ops are barely gaining their footing, with the first non-agricultural co-ops starting operations for the first time only a little more than a year ago. One sign of the fragility of the new co-op sector is that of the 498 co-ops that have gotten government approval to begin operations, only 257 have actually launched.

Another interesting wrinkle is that only worker cooperatives are authorized by the legislation. Consumer cooperatives, which both in the United States and throughout the world are far more common than worker cooperatives, are not yet contemplated in Cuban cooperative law.

It is anticipated that a more permanent legislative framework for co-ops will be approved in Cuba by the end of 2016. The early startups, in essence, are meant to provide at least some experience for shaping longer term, more comprehensive legislation.

Another challenge is that most co-ops that are being formed are really more of a push by the government to offload businesses that it no longer wants to run (typically for financial reasons), rather than a group of self-empowered workers who seek to form their own businesses. The chart pictured below, taken from a presentation of Cuban professor Camila Piñeiro Harnecker of the University of Habana, illustrates the paths that non-agricultural co-op formation can take.

To date, according to government data, about 23% of approved co-op petitions (114) have been start-ups, while the other 77% (384) are conversions of formerly state-owned enterprises.

On our tour, in addition to meeting with members of a number of the longer standing agricultural co-ops, we met with members of a number of new non-agricultural co-ops, including workers at an auto shop co-op known as Novedades (pictured below), a transportation service co-op known as Servipas, a textile co-op, and a grocery co-op.

These co-ops were originally state-owned enterprises. Workers were given the choice to transfer to another state-owned enterprise (and, in a small number of cases, those who were not performing their jobs at an acceptable level were dismissed) but most stayed where they were. At least initially, the results have been highly positive. Salaries have often tripled or quadrupled, although it should be cautioned that this is from highly depressed levels (a typical state salary is about US$25 a month) and at least in part is a result of the freedom given to the new businesses to price their products higher. Still, the sense of empowerment is impressive. As one Cuban co-op manger noted, “This has had a tremendous impact on the member-owners and has increased both productivity and the quality of production.”