EFES: Tr: EUROPEAN CONSULTATION ON FINANCIAL PARTICIPATION

["Marc Mathieu" <marc.mathieu@pi.be>]

 Dear participants to the COG's EUROPEAN POLICY GROUP (EFES GROUP):
 
 Hereafter the first contribution to the discussion about the consultation
held by the European Commission on financial participation in Europe.
David Erdal (Job Ownership Ltd, UK) wrote: "Yes, we need an initiative..."
Please, send your comments to my e-mail address: marc.mathieu@ping.be
Best wishes

Marc Mathieu
 
 
 ----- Original Message -----
From: David Erdal

Marc
 
You asked for comments on the consultation paper on financial
participation (FP).
 
I appreciate that when a consultation document is published at the
end of July, that does not appear to be calculated to achieve good
participation.
 
I think there are many positive aspects, but one omission in the
principles and a glaring lack of proposals for action. The good
points are:
 
in 2.1: the commission is interested in ALL EMPLOYEE schemes
 
in 2.2 it highlights the fact that FP boosts productivity. This is in
my view the argument with the widest appeal, as productivity is
associated with competitiveness, profitability and higher salaries
and/or more leisure time.
 
in 2.3 it shows that FP is being recognised widely as important
 
in 3 it shows why it is necessary to take initiatives at the European
level, not just the national level. This is important.
 
in 4.1, the general principles, there is in my view one omission.
Many studies show conclusively that financial participation only
really works strongly when it is situated in a regime of
participative management. The document emphasises clarity and
transparency, which are aspects of communication by the managers, but
not involvement and consultation of employees in the management
process of the business. With this argument we can win over trade
union support, which is generally lacking, and which is necessary if
we are to make progress in Europe. In the UK, John Monks the General
Secretary of the TUC has written strongly in favour of employee share
ownership provided it is combined with participative management.
 
in 4.2 they say they have to organise the gradual convergence of the
tax and social security systems across the EU. That is a big task,
but I think the conclusion is accurate.
 
4.3 is very weak. They are not suggesting any actions at all really.
One of the best things we in EFES could do is list a series of
concrete action steps for them to take, and get support for that list.
 
e.g.
- publish a summary of measures in the advanced countries
- publish a booklet on 'why financial participation' for managers and
trade union leaders
- publish a summary of the main research papers and conclusions
- create a joint website with EFES as, or fund the development of the
EFES website into, a really important source of material from all
over the EU
- produce an agreed statement on 23rd Nov in Brussels
- create a funded department for the promotion of FP
- organise a conference and force the social partners to take part
- organise a series of conferences in the major capitals to promote FP
- make sure that each country has one MEP officially responsible for
promoting FP
- develop a proposal for a basic trans-European all-employee share
scheme which would be free of national tax and social security
payments in every country
 
My responses to the questions in 5 are:
yes we need an initiative - definitely, without question and it needs
to be a big one
 
Yes it is helpful to lay down principles. I have no objection to
theirs, but they should add one: that employees should be consulted
at every level and involved in the process of improving the
management of the company.
 
action measures: see list above. I am sure that we can agree some more

obstacles. I think the most important obstacles are:
1. the design of share capital. The provider of capital is given a
contractual right to appropriate the future net product of all the
people working in the company for ever into the infinite future. This
is what gives share capital its great financial value and volatility.
These instruments should be time limited, with the ownership rights
gradually transferring to the employees over time. Surely a right
given over the product of the future work of people yet unborn is
against human rights.
 
2. the vested interests of shareholders and their servants, the
managers, and their counterparts in the employee organisations the
trade union leaders, and above all the fact that this division is
built in to the constitution of Europe. The existing owners and
managers do very nicely out of the present system, and so do the
trade union leaders. Wide employee ownership of companies will reduce
the power and privilege of the owners and managers and also make the
position of the trade union leaders much more dependent on their real
performance for the employees. So they all see more risk than
advantage in promoting real employee ownership.

I cannot think of new strands at present, but if we discuss (after
preparation) at our September meeting, perhaps we can make a
constructive contribution.
 
yours
David
--
David Erdal, Executive Director, Job Ownership,
Abford House, 15 Wilton Road, London SW1V 1LT
tel: +44(0)20 7821 9298 fax: +44 (0)20 7828 5013
mob: 07884 188 364
www.jobownership.co.uk
Promoting Employee Ownership