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You find hereafter the opinion of EFES for the consultation organized by
the European Commission on financial participation.
This is
the definitive version that we sent to the Commission.
October
23, 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. EFES’ opinion - synthesis
2. About EFES
3. Method and opinions
collected
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is obsolete; it is advisable to substitute for it employee share ownership and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. Adequate funding
8.
To set up
a "permanent working party" and a European institute for employee share
ownership and participation
9.
Conclusion
October
23, 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)
1. EFES’ OPINION - SYNTHESIS
In substance, EFES’ opinion is as follows:
Yes, the
European Commission should plan for a Community initiative aimed at employee
share ownership and participation.
The term we use is "employee share ownership and participation",
rather than "financial participation".
This distinction is significant.
Indeed, the concept of "financial participation" had its origin and its
relevance at the end of the 80’s.
Since then, practices as well as research have demonstrated the need for
greater precision of terms. Among
the different practices gathered under the concept of "financial participation",
some have been shown to be beneficial and others negative ones. What we have seen though through the
last decade is how practices of employee share ownership joined with
participative management were characterized by their positive impact on economic
and social dynamics. Share
ownership and participation are simply two independent organizational variables.
Neither the one or the other do in themselves
necessarily lead to any significant improvements of company performance although
they both may be appreciated for their own sake. It is first when joined that
the potential of both are really released.
Actions
should be taken in the European Union, and also in the candidate countries.
It is
necessary to lay down general principles at the 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 as the conclusion of a workshop which had gathered together,
within the European Parliament in Brussels, all European institutions, as well
as the social partners and the organizations of employee share ownership.
This
action programme calls on the European Commission particularly:
· to set up
a permanent working party;
· to
implement a programme with adequate funding;
· to set up
a European institute for employee share ownership and participation.
This
action programme is attached in its entirety to the present opinion, of which it
forms an integral part.
The present opinion of EFES was discussed and concerted with CECOP –
the European Confederation of Workers’ Co-operatives, Social Co-operatives and
Participative Enterprises; let us recall that CECOP is member of EFES, and
reciprocally, EFES is a member partner of CECOP.
2. 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, in the candidate
countries as well as in the European Union. 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.
3. METHOD AND OPINIONS COLLECTED
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
tone:
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 – perhaps understandably - 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. Yet is does not mention which degree of
ownership is necessary, nor whether the increase in contingent on other factors
as well.
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. In fact, 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.
Besides
the positive aspects, in a general way, the reactions and the comments
express perplexity to the
intentions and the steps taken by the Commission, an impression of inexplicable
timidity, and disappointment, this expressing itself sometimes even in 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 with the past action of the Commission and
the expectation of a firmer and stronger action in the future.
Indeed,
EFES observes that the Summit of Lisbon raised the point in the European social
agenda. EFES has uncovered a
listening and growing support from the governments. As regards the European Parliament also,
the supports for employee share ownership and participation has been
strengthened. From the European
Commission too, better support is awaited.
Among the
questions and the reactions collected, let us note particularly:
Why wait
until the 1st of August to launch this consultation? A worse date would be difficult to find,
given that it was a universal holiday.
Why such a short deadline for replying (until October 30)? All that rather discourages the
reactions and hinders a real consultation.
Furthermore, it is not clear from the document, what could have prevented
it from being diffused 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 were these requests
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. It
is difficult to understand such major omission.
4. EMPLOYEE SHARE OWNERSHIP AND
PARTICIPATION, KEY ELEMENTS OF A EUROPEAN STRATEGY FOR EMPLOYMENT
Employee share ownership and participation should be highly placed in
a European strategy for employment.
This is still not the case.
There is an awakening which still has not reached 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 a million additional jobs after a few
years.
In the
consultation document 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 done 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 yet been adequately incorporated into
national policies.
However,
during these last years, EFES has developed its relations with many governments
and those show more and more interest in 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, good
new legislation was adopted, directly inspired by PEPPER principles.
With the
support of the Belgian Presidency of the European Union, EFES is organizing 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, 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 just 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.
Among the practices
covered by the concept of "financial participation", some have been shown to be
beneficial and others negative. The practices of employee share ownership joined
to participative management were characterized by their positive impact on
productivity and economic and social dynamics.
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 is just targeted at certain categories only (as is often the case in
stock options schemes), the impact is positive but by far lower than when all
employees are included.
·
Lastly,
profit-sharing may certainly have some impact, but a little 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 merely
"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.
In addition, convergence is full with the movement of workers’
co-operatives represented at the European level by CECOP – the European
Confederation of Workers’ Co-operatives, Social Co-operatives and Participative
Enterprises. Let us recall that
CECOP is member of EFES, and reciprocally, EFES is a member partner of
CECOP. The present opinion of EFES
was discussed and concerted with CECOP.
In this
connection, it is advisable to specify that, with the term "employee share
ownership" (in French “actionnariat salarié”), we cover any situation where the
employee is at the same time owner of a share of the capital of the company
which employs him, in the form of shares (stocks), of shares of capital, social
shares, shares of co-operators or other schemes, such as workers’
co-operatives.
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 fulfil 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 a fully part in
these exchanges and supports the communication between the actors. The Commission itself has information
which should be accessible to these actors, in particular on the studies,
conferences and other initiatives that it finances or causes, including through
the European Foundation for the improvement of 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, implementing projects.
·
To
establish criteria and correct, equitable and transparent procedures of
selection.
·
To
encourage projects to complement each other.
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 says " 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 programme. This one should support:
·
Research,
surveys, case-studies, cross-comparative including across-country 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 the preceding: publications, periodicals, web sites,
reports and any action intended to disseminate the results of the studies and
surveys and to make known to 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 is the web
portal opened by EFES (www.efesonline.org )
which answers this function best, but with too limited means.
7. ADEQUATE FUNDING
It appears significant to us that a policy of promotion of employee
share ownership and participation should have a properly dedicated budgetary
heading.
It is in
this direction that the European Parliament in its Resolution of January 1998
went, by requesting from the Commission adequate financing.
When EFES
was constituted, the first PEPPER Report went already back some 10 years and
many participants were astonished to note that the Commission still did not have
any dedicated budgetary means.
How indeed
could we speak about policy or actions, if no means are allocated to it?
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 the Commission took part), one was still more astonished to see that no
initiative seemed to be taken to assign means to the budget for 1999.
The
astonishment was even larger, seeing the draft budget for 2000, which did not
provide for anything either.
Fortunately, EFES was able to discuss this with a number of Members of
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 was<reproduced for the budgets for 2001 and
2002, since again, no initiative came from the Commission).
It must be noted that the assignment of a fraction of the B3-4000
line to financial participation is a lame solution, which still does not give
"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 to give it insufficient recognition.
Secondly,
to equate actions promoting employee share ownership with the promotion of
social dialogue, is to cause unnecessary arbitrations.
Lastly, it
is still not to recognize the specific value of the promotion of employee share
ownership and participation.
8. TO SET UP
A "PERMANENT WORKING PARTY" AND A EUROPEAN INSTITUTE FOR EMPLOYEE SHARE
OWNERSHIP AND PARTICIPATION
The points expounded here are still in line with 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 as they are.
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 in
favour of the creation of such a working party (with the notable exception of
the Commission representatives, who gave a report giving reasons to hold
back).
In fact,
the Parliament’s Resolution did not receive any continuation and the lack of a
body of execution explains certainly to a great extent, the lack of progress
observed these last few years.
9. CONCLUSION
- EFES’ OPINION
As a conclusion, EFES’ opinion is as follows:
1. Yes,
the European Commission should plan for a Community initiative aimed at employee
share ownership and participation.
We use the term "employee share ownership and participation", rather
than "financial participation. Among the practices gathered under the concept of
"financial participation", some have been shown to be beneficial and others
negative. 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 as the conclusion of a workshop which had gathered together,
within the European Parliament in Brussels, all European institutions, as well
as the social partners and the organizations of employee share ownership.
5. This
action programme expects the European Commission particularly:
· to set up
a permanent working party;
· to
implement a programme with 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.
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