ourEconomy

Another town is possible: community wealth building in the Basque Country

Thanks to its unique economic model, the town of Oñati has a history of adapting successfully to economic disruption.

Ben Wray
10 July 2020
Image: Theklan, CC BY-SA 4.0

For decades towns have been buffeted by economic headwinds that feel out of the control of local communities. De-industrialisation, austerity and the rise of e-commerce have hollowed out many towns, leaving high streets barren.

The pandemic has, if anything, deflated hopes of a better future for town economies further, crushing local businesses and entrenching digitalisation, while once again raising the spectre of a generation scarred by unemployment.

For those who have experienced these economic cycles before, the temptation is to look for the next big investment to come, whether from the central state or a corporate giant riding into town – or both. The notion that recovery could start with community control, and that this could then be used to adapt to crises in the future so that ruptures are not accompanied by the destructive processes of unemployment and industrial dislocation, would appear like wishful thinking to many.

Oñati, a town in the centre of the Basque Country’s Gipuzkoa region, is an example of a community wealth building approach which has emerged stronger out of crises before, and is well placed to adapt to the shock of the pandemic.

In 2011, El Pais ran a piece titled ‘Oñati, capital del empleo’. At that time, the town had an unemployment rate of 5.4%, the lowest of any town with a population over 10,000 people in the whole of Spain. This is a function of its economic DNA: a strong manufacturing sector which is predominantly co-operative run, producing well-paid, secure jobs in firms which are – crucially – adaptable.

Adapting to the crisis

Xabier Igartua is President of Oñati town council’s Finance & Socioeconomic Committee. He works part-time for the municipality, and part-time in a local co-operative factory. Adaptation has defined both parts of his work since the pandemic hit in early March.

“We had to respond at our factory by reducing our hours and salary adaptions, because our sales suddenly collapsed overnight,” he explains. “We don’t have time to fight among one another; it is our business so we need to make the changes now. But because we are a co-operative we can make these fast adaptations while looking after each other. We work less but we maintain a base level income for everyone and maintain jobs.”

In the council, his task was perhaps even greater – what to do about the local retailers, bars and restaurants in the town which had suddenly been closed by the lockdown? A local digital technology firm, Magnet Coop, developed a digital platform for local businesses shutdown during the crisis. Shoppers could buy a coupon which offered a 20% discount on purchases at local businesses. The value of the discount would then be covered by the town council.

Over €200,000 was spent in Oñati’s shops through the digital platform, with the Town Council paying €40,000 to the local businesses to cover the discount value.

“The reason why Magnet supports the local businesses is because they live in Oñati, they know each other, and they think ‘what could we do to support’; they have a feeling of responsibility to the community,” Igartua says. “They came to us [at the Council] and we said ‘this is a great idea, but what about if we give them an incentive through a discount, and we will cover the difference’.

“One thousand people used the site and there is only around 11,000 in Oñati, so you can imagine; this was surprising to everyone, and a big success.

“Now we try to turn this into a permanent digital platform on the town council website, and we are working with Magnet to build this.”

At the municipal level in the Basque Country, local government has important economic powers, including over taxes and a sizeable investment budget. Last year, Oñati town council, led by left pro-independence party EH Bildu, utilised citizen budgeting methods to ask residents to vote on priority options for €500,000 of public investment. The process was split into phases with citizens involved at each stage, first to define the options for investment through face-to-face sessions which were open to attend, and then, in the final stage, residents voted for their ten priorities: whether to invest in improved street lighting, cleaning the rivers, improving wheelchair access, etc.

“Always the community goes one step further than the administration,” Igartua says, explaining what he calls the council’s ‘community model’. “It is our job to bring the toolbox, but it is the local people who use the tools.

“I think this is a different way of thinking about local politics – that you support the community to change things themselves.”

It’s not all been plain sailing. While the co-operatives protect the jobs of their members, they also employ non-members, many of whom were let go when the crisis hit. Unemployment rose from 6% to 8% in the town in the four months from February to June, still significantly below the rate in Gipuzkoa (11%), the Basque Autonomous Community (13%) and Spain (15%) but nonetheless a rapid increase in a town used to economic stability.

‘Nature has warned us’

The biggest employer in the town is Ulma and Fagor, two parts of the Mondragon Corporation Group, the world’s largest and most renowned co-operative which – as the name suggests – is based in nearby Mondragon, one town over from Oñati. Mondragon too has adapted rapidly to the crisis, becoming a major mask supplier to the Spanish Government almost overnight, with a contract for 340 million masks per year. They have also started manufacturing automatic respirators for ICU units, protective visors for health service staff and solutions for pathogen-free sanitation of spaces and surfaces.

“We need to generate a national industry of sanitary protection equipment,” Iker Alberdi, general manager of Onnera, a Mondragon co-operative based in Corboba in the south of Spain which is leading its mask production, said in El Pais. Manufacturing for the health service within Spain would ensure that PPE was “adjusted to the conditions and regulation of the national market”.

At the same time, Mondragon Corporation is itself reliant on the international market. The production lines used for mask production at Onnera were built at its Chinese subsidiary in record-quick time, arriving in Spain in late April. Mondragon workers outside of Spain are not co-operative members. This is a pragmatic co-operativism.

All parties promise support for jobs at the 12 July election, with the Basque government projecting 68,000 jobs will be lost by the end of the year, raising unemployment to 13.7%. The election has inevitably had a narrow focus on the jobs metric, with the headline commitment of the Basque Nationalist Party (PNV), the largest in the BAC, to reduce unemployment below 10% in the next parliamentary term. But with 90% of all job creation in the BAC since 2013 being temporary jobs, and little by way of a plan to improve the quality of work, this is not exactly an appetising future.

The Basque Country also has to contend with only 14.5% of its energy consumption currently coming from renewable sources; more than half of its population set to be aged 50 or above by 2031; and 50% of all jobs requiring replacement by the end of the decade due to technological transformation, according to Orkestra, the Basque Institute for Competitiveness.

“This crisis reinforces these challenges,” Miren Estensoro, an economist at Orkestra, says. "The response to this recovery needs to be thought of in combination with the big socio-economic challenges we have in this country.”

Indeed, the Basque Country had its own ecological crisis in February before the pandemic, with the collapse of a landfill site in Zaldibar, a town in the Bizkaia region, killing two people. The bodies have still not been found, the collapse caused a toxic air pollution which forced residents to stay indoors one month before the COVID lockdown was announced.

The PNV-led government was criticised for its slow response to the crisis, and a manifesto signed by 84 Basque academics and cultural figures said the Basque economic model was “exhausted", and called for "an energy, ecological and social transition”.

“Nature has warned us to guarantee a liveable Basque territory for future generations,” the manifesto concludes.

Igartua and his colleagues have not lost focus on this challenge. They are soon to unveil plans to reduce industrial waste in the town through a “circular economy” model built in partnership with citizens and local firms.

“We know that we cannot go on the same way with exhausting natural resources, so the best way is to as much as possible be self-sufficient in the community,” he says.

Oñati provides some optimism that another town is possible, one where the community navigates its way through a future which will surely be defined by waves of economic rupture.

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