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Dear Shann,
Thank you very much for your contribution. I think that we agree with you
on "participation".
We had a deep discussion in EFES in 1999: should we support just "financial
participation" or participation as a whole. We chose "participation" as a whole.
We are not an association for financial participation but well for "employee
ownership and participation". If you look back to the preamble to our statutes,
I think this is deeply explained (see the page "mission" on the web site).
Now in the draft opinion for the consultation organized by the European
Commission", we write.
Would you please read it again and let me know if something should be
added:
"EFES
thinks that it is employee share ownership and participation which should be the subject of a
Community initiative, rather than "financial participation".
The
concept of financial participation is too general: many studies, among which
some supported by the Commission or the Dublin Foundation, have shown that
financial participation can have all its social and economic benefits
only if it is associated with a participative
management. It is thus
necessary to speak, as EFES suggests, of employee share ownership and
participation, rather than of financial
participation.
This
difference is very significant. Indeed, the concept of "financial participation"
had its originality and its relevance at the end of the 80’s. Since then however, practices and
research have shown that the concept of financial participation, covering even
contradictory multiple practices, is now largely obsolete.
Indeed,
the concept of financial participation used by the Commission covers three
categories of practices:
profit-sharing;
employee
share ownership;
stock
options.
Research
shows that employee share ownership and participation have a positive impact on
productivity, on economic and social dynamics in general and on the volume of
activity and employment:
When
all-employees share ownership schemes are connected to participative management,
the impact is particularly positive.
When share
ownership does not include all employees, but is targeted at certain categories
only (as is often the case in stock options schemes), the impact is positive but
by far lower than the preceding case.
Lastly,
profit-sharing has little impact, or even a negative one.
Consequently,
the conclusion should be drawn: one
cannot any more, as at the end of the 80’s, to include in the same plan these
various or contradictory practices.
It is
indeed "employee share ownership and participation" which should be the purpose
of a specific support, rather than the former obsolete concept of "financial
participation". This difference was
already the subject of several deepened debates, in particular within the
framework of the European Workshop of April 1999.
In
addition, the working paper of the Commission staff understates the effects of
employee share ownership, when it states that "employee share ownership provides
for employee participation in enterprise results in an indirect way, i.e. on the
basis of participation in ownership, either by receiving dividends or the
appreciation of employee-owned capital after the selling of the shares...
".
Here
still, the practice differed from concepts of the late 80’s. Employee share ownership has been shown
to be effective and significant, not only as participation in the financial
results, but especially as a factor of commitment in ownership, motivation,
company decision and management.
This is also why the connection with participative forms of management
has been shown to be a key element.
Let us
repeat, it is the combination of employee share ownership and participation
which has proved particularly beneficial.
It is that which the Community actions should encourage.
We
observed on this point a great convergence between our organizations of employee
share ownership and the analysis made by trade unions."
Best
regards
Marc
----- Original Message -----
Sent: Sunday, October 21, 2001 3:10
PM
Subject: Re: EFES: EFES DRAFT OPINION ON
EC CONSULTATION ON FINANCIAL PARTICIPATION
Marc
Your report is to the point and hard hitting as
other have commented upon. However, I am concerned that it often uses
the word "participation" without explaining that this applies to management
and/or control and not just to finance or ownership.
You clearly make
the important distinction between financial participation and employee
ownership but do not consistently make the equally important need to associate
ownership with control and/or management.
This problem is shared by the
COG mission statement which ignores the need to spread control with
ownership.
Australia has a wider spread of share ownership than
any other country but control is getting more highly concentrate in management
through the use of share trusts and by pension funds being centrally
managed. So spreading ownership can be counter productive unless control
is also distributed. This is the subject of some of my articles.
The most relevant is Reforming capitalism with worker owners
<http://cog.kent.edu/lib/Turnbull-ReformingCapitalismWithWorkerOwners.htm>
This points out that workers become second class citizens with ownership is
spread through share trusts like they are force to be in the UK.
Best
regards
Shann
At 06:04 AM 20/10/2001, you wrote:
Here our draft opinion
on the European Commission staff consultation on employee financial
participation:
<?xml:namespace
prefix = o ns = "urn:schemas-microsoft-com:office:office"
/>
DRAFT
October 19,
2001
OPINION OF THE EUROPEAN FEDERATION
OF EMPLOYEE SHARE OWNERSHIP
on the COMMISSION
STAFF WORKING PAPER
on " Financial
participation of employees in the European Union "
(Document
SEC(2001)1308 of the 26.7.2001)
Synopsis:
1. About EFES
2. EFES€™ opinion - synthesis
3. Method and collected
opinions
4. Employee share ownership and participation, key
elements of a European strategy for employment
5. The concept of
financial participation is obsolete; it is advisable to substitute for it
employee share ownership and participation
6. The program of the
European Commission
7. An adequate funding
8. To set up a "permanent working party" and a
European institute for employee share ownership and participation
9.
Conclusion
1.
ABOUT EFES
EFES €“ the European Federation
of Employee Share Ownership was constituted following the decision taken in
May 1998 in Brussels, by a conference which brought together 250
participants from 28 countries. The Federation was quickly organized,
under the statute of a not-for-profit international organization approved by
the Belgian Government.
EFES€™ objective is
to act as the umbrella organization of employee owners and all persons,
companies, trade unions, experts, researchers, institutions looking to
promote employee share ownership and participation in Europe.
This ambition is being carried out. EFES
counts members in the majority of the European countries, as well in the
European Union as in the candidate countries. Among the members of
EFES, there are individuals, companies, associations, trade unions, experts,
researchers and national federations. The Board of Directors of EFES
counts 22 representatives of 14 countries, and its Executive Office 7
people, who meet monthly.
€/€
2. EFES€™ OPINION - SYNTHESIS
In substance, EFES€™ opinion is as follows:
Yes, the European Commission should plan for a
Community initiative aiming on employee share ownership and
participation.
We speak well about "employee
share ownership and participation", rather than of "financial
participation". This distinction is significant. Indeed, the
concept of "financial participation" had its originality and its relevance
at the end of the years ' 80. Since then, the practices and research
showed that it is now largely obsolete. Among the practices gathered
under the concept of "financial participation", some appeared beneficial and
the other negative ones. The practices of employee share ownership
joined to participative management were characterized by their positive
impact on economic and social dynamics.
Actions should be taken in the European Union, and also in the
candidate countries.
It is necessary to lay
down general principles at European level to encourage greater and more
efficient recourse to employee share ownership and participation
schemes.
The general principles and the
actions which the Commission should include in its next Communication and
its Action Plan are those defined in the "European Action Programme" of the
European Federation of Employee Share Ownership.
This programme is based on the Resolution of the European Parliament
of January 1998 and it was written in conclusion of a workshop which had
joined together, within the European Parliament in Brussels, the whole
European institutions, as well as the social partners and the organizations
of employee share ownership.
This action
programme awaits the European Commission particularly:
· to set up a permanent
working party;
· to
implement a programme with an adequate funding;
· to set up a European institute for
employee share ownership and participation.
This action programme is joined in its entirety to the present
opinion, of which it forms integral part.
3. METHOD AND COLLECTED
OPINIONS
To prepare its opinion, EFES met and
consulted a broad range of people and organizations: representatives
of governments, members of the European Parliament, trade-union
representatives at European level, employers€™ organizations, organizations
promoting employee share ownership, etc.
EFES
also organized a web forum on the topic of the consultation organized by the
Commission. Some characteristic collected opinions are reproduced in
appendix.
The reactions which we collected from a
broad range of actors have the same general tonality:
One can only be delighted by the will affirmed by the Commission
staff "to relaunch the debate on financial participation at European level,
associating all the players concerned".
There are
many positive aspects in the document, but one omission in the general
principles and a glaring lack of proposals for action.
The good points are:
The Commission staff precisely affirms the preference for all
employee schemes.
The Commission staff highlight the
fact that financial participation boosts productivity. This is the
argument with the widest appeal, as productivity is associated with
competitiveness, profitability and higher salaries and/or more leisure time.
The Commission staff shows that financial
participation is being recognized widely as important.
The Commission staff also shows why it is necessary to take
initiatives at the European level, not just the national level. This is
important.
The general principles stated by the
Commission staff contain a major omission. Indeed, 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
managers, but not involvement and consultation of employees in the
management process of the business.
However
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 this
field.
At side of the positive aspects, in a
general way, the reactions and the comments express perplexity as for
the intentions and the steps taken by the Commission, impression of an
unexplainable timidity, disappointment, this one expressing itself sometimes
even on a sharp tone (cf opinion reproduced in appendix: "consultation
or funeral?€)
Within the
European Federation of Employee Share Ownership itself, the impression which
prevails is that of a disappointment compared to the past action of the
Commission and waiting of a firmer and stronger action in the future.
Indeed, EFES observes that the Summit of Lisbon put
the point at the European social agenda. EFES meets a listening and
growing support from the governments. As regards the European
Parliament also, the supports for employee share ownership and participation
were strengthened. From the European Commission too, a better support
is awaited.
Among the questions and the
reactions collected, let us note particularly:
Why to have awaited the 1st of August to launch this
consultation? A worse date would be difficult, on full holiday.
Why such a short deadline for reply (until October 30). All that
discourages rather the reactions and hinder a real consultation.
Furthermore, you don€™t see, in the document, which could have prevented
from diffusing it 6 months or even a year before.
Of the Resolution of the European Parliament of
January 1998, the working paper of the Commission staff retains only a
general sentence, observing that "€the Parliament... made a number of
calls on the Commission... It requested the Commission in particular
to promote the exchange of information and best practice at transnational
level, to study the impact of financial participation schemes on employment
and wage flexibility, and develop pilot projects for financial participation
in public undertakings in the CEECs in connection with privatisation".
However, the Parliament€™s Resolution addressed to the Commission a whole
of concrete, precise, practical requests. Not only these requests were not
met by the Commission since 1998, but the document of consultation of the
Commission omits them.
Lastly, it is strange that
the document of consultation does not make mention anywhere of trade-unions.
Difficult to understand such main omission.
4. EMPLOYEE SHARE OWNERSHIP AND PARTICIPATION, KEY
ELEMENTS OF A EUROPEAN STRATEGY FOR EMPLOYMENT
Employee share ownership and participation should be in good place in
a European strategy for employment. It is still not the case.
There is an awakening which yet did not gain the political decision
makers.
Indeed the development of employee
share ownership and participation positively influences economic and social
dynamics and employment. This is not negligible, since it is estimated
at 1% a year additional growth of the GDP. In terms of employment in Europe,
that potentially represents million additional jobs after a few years.
In the document of consultation of the Commission,
this factor is precisely highlighted (pages 8 and 9).
In the opinion of EFES, this is a key point of the question.
Much remains to be made to carry the conviction of
governments and European decision makers in this direction. The
document of the Commission indicates rightly that the general principles set
forth in the PEPPER Reports have not been adequately incorporated into
national policies.
However, during these last
years, EFES developed its relations with many governments and those show
more and more their interest for employee share ownership and
participation.
In Belgium, the Belgian section
of EFES was, at the sides of the Belgian Government, an active craftsman of
a step which appears exemplary to us. Indeed, under the terms of a dialogue
which fully associated the social partners, a good new legislation was
adopted, directly inspired by PEPPER principles.
With the support of the Belgian Presidency of the European Union,
EFES organizes an international conference on November 23 2001 in
Brussels. The aim is to encourage the European Union and the European
States to promote employee share ownership and participation.
We hope well that the European Commission will join
the organization and the holding of this event.
5. THE CONCEPT OF
FINANCIAL PARTICIPATION IS OBSOLETE; IT IS ADVISABLE TO SUBSTITUTE FOR
IT EMPLOYEE SHARE OWNERSHIP AND PARTICIPATION
EFES thinks that it is employee share ownership and
participation which should be the subject of a Community initiative,
rather than "financial participation".
The
concept of financial participation is too general: many studies, among which
some supported by the Commission or the Dublin Foundation, showed that
financial participation can have all its social and economic benefits only
if it is associated with a participative management. It is thus
necessary to speak, as EFES suggests, of employee share ownership and
participation, rather than of financial participation.
This difference is very significant. Indeed, the concept of
"financial participation" had its originality and its relevance at the end
of the years '80. Since then however, the practices and research
showed that the concept of financial participation, covering even
contradictory multiple practices, is now largely obsolete.
Indeed, the concept of financial participation used by the Commission
covers three categories of practices:
·
profit-sharing;
·
employee share ownership;
·
stock options.
Among the practices covered by the
concept of "financial participation", some appeared beneficial and the other
negative ones. The practices of employee share ownership joined to
participative management were characterized by their positive impact on the
productivity and economic and social dynamics.
Research show that employee share ownership and participation have
positive impact on productivity, on economic and social dynamics in general
and on the volume of activity and employment:
·
When all employees share ownership schemes are connected to participative
management, the impact is particularly positive.
·
When share ownership are not all employees schemes, but targeted at certain
categories only (as it is often the case in stock options schemes), the
impact is positive but by far lower than the preceding case.
·
Lastly, profit-sharing has little impact, or even a negative one.
Consequently, the conclusion should be drawn:
one cannot any more, as at the end of the years '80, to put on the same plan
these various or contradictory practices.
It is well
"employee share ownership and participation" which should be the purpose of
a specific support, rather than the former obsolete concept of "financial
participation". This difference was already the subject of several
deepened debates, in particular within the framework of the European
Workshop of April 1999.
In addition, the
working paper of the Commission staff is, on the point of employee share
ownership, exaggeratedly reducing, when it states that "employee share
ownership provides for employee participation in enterprise results in an
indirect way, i.e. on the basis of participation in ownership, either by
receiving dividends or the appreciation of employee-owned capital after the
selling of the shares... ".
Here still, the
practice differed with concepts of the late years '80. Employee share
ownership appeared effective and significant, not only as participation in
the results, but especially as a factor of commitment in ownership,
motivation, company decision and management. This is also why also,
the connection with participative forms of management appeared to be a key
element.
Let us repeat it, it is the combination of
employee share ownership and participation which proved particularly
beneficial. It is that which the Community actions should
encourage.
We observed on this point a great
convergence between our organizations of employee share ownership and the
analysis made by trade unions.
6. THE PROGRAM OF THE EUROPEAN COMMISSION
In its Resolution of January 1998, the
European Parliament requested from the Commission "an adequately financed
programme".
That the actions of the Commission
answer a programme, appears indeed to us a significant condition of
transparency and effectiveness.
It also appears very
significant to us that the results of the actions taken or supported by the
Commission would be published and made available.
The Commission precisely stresses through its various actions the
importance of the exchanges of information in Europe. It would be
desirable that the Commission itself takes fully part in these exchanges and
supports the communication between the actors. The Commission herself
has information which should be accessible to these actors, in particular on
the studies, conferences and other initiatives that she finances or causes,
including through the European Foundation for the improvement of the living
and working conditions.
The purpose of this
communication and this information on behalf of the Commission on financed
actions, will be in particular:
· To support the
exchanges and co-operation between actors, carrying projects.
·
To establish criteria and righter, equitable and transparent procedures of
selection.
· To support the
complementarity of projects.
In addition, in
practice, the Commission finances currently only conferences, whereas the
budgetary heading B3-4000 intended to finance actions aiming at the
promotion of financial participation speaks " to support actions of
promotion of good examples and networks as well as studies and measures of
occupational qualification ".
The means are
not adequate, but also, the Commission did not propose a true program.
This one should support:
· Research, studies,
surveys, analyses.
· Training (this
concept being much broader than that of "measures of occupational
qualification").
· Conferences,
seminars, meetings (as it is currently the case).
· Actions of
information and communication supplementing what precedes:
publications, periodicals, web sites, reports and any action intended to
disseminate the results of the studies and surveys and to make known by the
public and the actors various aspects of employee share ownership and
participation in Europe (stakes, obstacles, experiments and practices...)
·
Web portals, catalogues... allowing to have an overall picture of the state
of research and current debates, not only in the EU, but also in other
countries. Currently, it the web portal opened by EFES (www.efesonline.org )
which answers this function best, but with too limited means.
7. AN ADEQUATE FUNDING
It
appears significant to us that a policy of promotion of employee share
ownership and participation should have a well dedicated budgetary heading.
It is in this direction that the European Parliament
in its Resolution of January 1998 went, by requesting from the Commission an
adequate financing.
When EFES was constituted,
the first PEPPER Report went already back to some 10 years and many
participants were astonished to note that the Commission still did not have
dedicated budgetary means.
How indeed could we speak
about policy or actions, if no means are implemented to?
After the Resolution of the European Parliament of
January 1998 and after the European Workshop organized by EFES at the
European Parliament in April 1999 (workshop in which took part the
Commission), one was still more astonished to see that no initiative seemed
to be taken to assign means to the budget 1999.
The astonishment was even larger, seeing the draft budget 2000, which
did not provide for anything either. Fortunately, EFES could discuss
with a number of Members of the Parliament, and the draft budget was
amended, by dedicating a share from the B3-4000 line "social dialogue" to
assign it to the promotion of financial participation (and the situation
reproduced for budgets 2001 and 2002, since again, no initiative came from
the Commission).
Force is to note that the
assignment of a fraction of the B3-4000 line to financial participation is a
lame solution, which still does not give the "adequate€ financing for a
program aiming at the promotion of employee share ownership and
participation.
Indeed, to reduce the promotion
of employee share ownership and participation in a simple facet of social
dialogue is exaggeratedly reducing.
Secondly,
to put actions promoting employee share ownership out of balance with the
promotion of social dialogue, it is to cause arbitrations which do not take
place to be.
Lastly, it is still not to
recognize the promotion of employee share ownership and participation its
specific value.
8. TO SET UP A "PERMANENT WORKING PARTY" AND A EUROPEAN
INSTITUTE FOR EMPLOYEE SHARE OWNERSHIP AND PARTICIPATION
The points exposed here are still in the
wire of the Resolution of the European Parliament of January 1998 and the
European Action Programme of EFES, namely:
To
develop indeed actions or a policy, one needs not only "an adequately
financed programme", as the Parliament asked. It is also necessary to
indicate bodies of execution and persons in charge. Without that, nothing
organized will be done and, at best, things will remain in state.
To take in hands the execution of a Community action
or a policy, the European Parliament suggested the setting-up of a
"permanent working party" associating all main interested parties:
representatives of both sides of industry, of employee share ownership
organizations, Members of the European Parliament and Commission
experts.
In the prolongation of this working party,
what is wished is the installation of a European institute for the promotion
of employee share ownership and participation.
At the time of the European Workshop of April 1999, all interested
parties decided for the creation of such a working party (except the notable
exception of the Commission representatives, who gave a report on
hesitations).
In fact, the Parliament€™s
Resolution did not receive any continuation and the defect of body of
execution explains certainly to a great extent, trampling observed these
last years.
9. CONCLUSION - EFES€™
OPINION
As a conclusion, EFES€™ opinion is
as follows:
1. Yes, the European Commission should
plan for a Community initiative aiming on employee share ownership and
participation.
We speak well about "employee
share ownership and participation", rather than of "financial participation.
Among the practices gathered under the concept of "financial participation",
some appeared beneficial and the other negative ones. The practices of
employee share ownership joined to participative management were
characterized by their positive impact on economic and social
dynamics.
2. Yes, actions should be taken in
the European Union, and also in the candidate countries.
3. Yes, it is necessary to lay down general
principles at European level to encourage greater and more efficient
recourse to employee share ownership and participation schemes.
4. The general principles and the actions which the
Commission should include in its next Communication and its Action Plan are
those defined in the "European Action Programme" of the European Federation
of Employee Share Ownership.
This programme is
based on the Resolution of the European Parliament of January 1998 and it
was written in conclusion of a workshop which had joined together, within
the European Parliament in Brussels, the whole European institutions, as
well as the social partners and the organizations of employee share
ownership.
5. This action programme awaits the
European Commission particularly:
· to set up a permanent working party;
· to implement a programme
with an adequate funding;
· to set up a European institute for
employee share ownership and participation.
This action programme is joined in its entirety to the present
opinion, of which it forms integral part.
For EFES,
Marc Mathieu
Secretary General
In appendix
:
Appendix 1: « European Action Programme »
of EFES, adopted as the conclusion of the European Workshop of 30 April 1999
at the European Parliament in Brussels ; the programme gives an appendix
reproducing the Resolution of the European Parliament of January 1998 and
other reference documents.
Appendix 2: Some typical
opinions collected through the forum on the
web.
Marc
Mathieu
Secretary General
EFES - EUROPEAN FEDERATION OF EMPLOYEE
SHAREOWNERSHIP
FEAS - FEDERATION EUROPEENNE DE L'ACTIONNARIAT
SALARIE
Avenue Voltaire 135, B-1030 Brussels
Tel/fax: +32 (0)2 242 64
30
E-mail: marc.mathieu@ping.be
See our web
site: http://www.efesonline.org
EFES' objective is to act as the umbrella organization of employee
owners and all persons, companies, trade unions, experts, researchers,
institutions looking to promote employee ownership and participation in
Europe.
Shann Turnbull Ph.D.
P.O. Box 266 Woollahra, Sydney, Australia, 1350
Ph: +612 9328 7466 office; +612 9327 8487 home; Fax: +612 9327 1497;
Life long E-mail: sturnbull@mba1963.hbs.edu
Alternate:sturnbull@optusnet.com.au
with
other papers & book at http://cog.kent.edu/library.html
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