Employee-owned business resilience and recovery – May 2021

The report provides insights into how the Covid-19 pandemic is impacting Employee-Owned Businesses (EOBs) in Scotland.

The research was carried out by the University of St Andrews on behalf of Co-operative Development Scotland (part of Scottish Enterprise) and Scotland for Employee Ownership, the industry leadership group. The survey took place between January and February 2021 and covered 133 EOBs and worker co-operatives operating in Scotland.

The EOB sector continues to be dominated by SMEs across a range of sectors. For the majority of EOBs (86%) employee ownership has not been a barrier to accessing Government-backed finance during the pandemic. While 23.5% of EOBs experienced turnover growth during the pandemic, just under half (47%) have experienced a reduction in turnover. This compares favourably to emerging evidence of the experience of turnover change for non-EOB SMEs during the pandemic. Overall, findings indicate that EOB resilience is both financial and social with a significant focus on people, job security, health, equality and wellbeing alongside financial resilience. There are therefore lessons to be learnt from the sector concerning a socially balanced, inclusive way of being economically and socially viable and resilient.

Many EOBs are demonstrating a socially balanced, inclusive way of being economically and socially viable and resilient, however not all do. EOBs with greater debt burdens going into the pandemic have less financial and social resilience, with a tendency to see reduced turnover and a focus on cost cutting measures. There is however a window of opportunity to proactively address the potential democratic scarring impact of Covid-19 on these EOBs since the data indicates that these EOBs are less likely to recognise the need for or seek out business support.