WORKERS’ PARTICIPATION
IN THE OWNERSHIP OF ENTERPRISES. LATIN
AMERICA’S CURRENT SITUATION
AND ITS PERSPECTIVES.
(October,
2002)
Juan Guillermo Espinosa C.[1]
I.
Latin
America’s Setting.
The possibility of
developing a “workers’ participation system in the ownership of enterprises” is
given in those countries where a medium and large group of enterprises, with a
duly organized and extensively applied economic and social legislation network
–especially on labor legislation- , has been established.
This level of
institutional and legal development has particularly been achieved by the seven
leading economies of South America which, notwithstanding some degree of lag,
have in some way been following–- modern economic and organizational
development patterns. In view of the
former, in this brief study we shall principally refer to these 6 or 7 leading
economies, not taking into consideration at this time the fourteen small
Caribbean economies nor the five Central American economies, where information
is more difficult to obtain.
The leading
economies mentioned in the preceding paragraph are, in a first level: Brazil, Mexico, and Argentina; and, in
a second level: Venezuela, Colombia,
Chile, and Peru. Among these seven economies, Mexico’s
economy will not be considered since it is included in other COG’s studies and,
furthermore, because of its close linkage to North America rather than to South
American countries.
The principal
features which characterize the aforementioned six Latin American economies
are: the large internal inequity; a productive and entrepreneurial structure
focussed in a few productive sectors; an increasing proportion of informal
employment within each economy; a credit structure provided by the financial
system directed mainly to the large enterprises and, consequently, a highly
concentrated enterprise ownership pattern; all of which is reflected on the
diverse span and significance of Commodities Exchange in Latin America,
confronted to the importance of listed securities in the North American
setting.
With regard to the above
characteristics, one of the most adverse features of Latin American economies
as a whole, together with those six especially mentioned in this study, is the
extreme inequity in income and wealth distribution within each economy.
According to the comparative studies performed by the United Nations and the
World Bank, these internal disparities are the most acute and extreme in the
world, as can be observed in the enclosed graphic (see enclosed Graphic about
income distribution in the different continents).
In general, these
deep levels of inequality in the Latin American economies are certainly one of
the most important obstacles for the economic and social development. At the
same time, they are also obstacles for the installation or further development
of the workers’ ownership participation in the enterprise. A severe level of inequality represents in
each economy strong dissimilarities in: wages; educational levels; styles and
types of life and cultural levels, which cannot be ignored. Consequently, a
large level of internal inequality translates into entirely different spheres
and cultures of behaviours and approaches between businessmen and executives,
on one hand, and workers and employees, on the other hand.
In relation to the way enterprises are structured in
the main economies under consideration (based in a universe of around 12
million of firms, corresponding to
Argentina, Brasil, Colombia, Chile, Perú y Venezuela), we can see the
summary table included of the enterprises in Latin America.
Enterprises in the Main Economies of Latin America
|
|
Micro
|
Small
|
Medium |
Large |
TOTAL |
|
Number of Units |
9.891.447 |
1.738.497 |
251.782 |
107.907 |
11.989.633 |
|
% of the Total |
82,5% |
14,5% |
2,1% |
0,9% |
100% |
|
Labor- Enployment |
50,31% |
20,02% |
12,78% |
16,89% |
100% |
|
Total Sales |
5% |
9% |
9,3% |
76,7% |
100% |
Source: UNDP (1996) y UNCTAD (1997).
We can say– in a
few words- that of the whole universe of enterprises, the large and the medium enterprises
add to approximately 3% of the
total universe, whilst the small and
micro enterprises add up to the
remaining 97%.
With regard to the labor force, nearly 30% is employed
by large and medium enterprises, while 70% of the workers are employed by small
and micro enterprises.
At the same time, the large economic concentration can
be assumed from the sales contribution
these subgroups make; that is, the large
and medium enterprises (3% of
the total) carry out 86% of the total sales, whilst only 97% of the small and micro enterprises
contribute with 14% of the total sales.
In relation to employment in Latin America, this is
one of the most severe and adverse spheres for developing possibilities of
workers’ ownership participation in the property of enterprises. As a matter of
fact, unemployment is one of the highest in the developing world and it usually
runs way off the official figures of unemployment, due to the statistical
barrenness and of the poor design of samples to obtain figures at national
scale. Particularly, an incidental
expression of the concealed unemployment levels existing in the countries of
the region is the magnitude to which, what has been denominated “informal employment”, has arrived,
reaching in average more than 56% of
all labor force in Latin American countries. An important proportion of what is
known as informal work is composed of microentrepreneurs, small trades or
roving salesmen who are desperately trying to obtain an income in any activity
which may offer them that chance.
With regard to the credit structure of the banking and
financial system to enterprises in comparison to the size structure of the
so far existing enterprises, credit is highly concentrated in large
enterprises and it only reaches medium enterprises in an inadequate manner
and, in the case of small or micro enterprises, is very occasional, scarce or
even non-existent. In its turn, small and medium size enterprises that have
access to banking credit, must pay it with high interest rates and with
an excessive surcharge in comparison to those obtained by large
enterprises. Also, frequently the
scarce credit obtained is allocated as working capital only (they are small,
short-term loans). In general, the
financial market in Latin America is highly oriented to working capital
credit and short-term credit. For this reason, even large enterprises
generally do not find enough resources for investment credit.
The credit structure
described above explains, in the light of cold reason, why capital ownership
in large and medium enterprises in Latin America is highly concentrated and
usually in the hands of less than 5% of the highest income in each
country. This capital ownership
concentration allows us to understand why the Stock Exchange in Latin America
(the transaction of listed securities) is not as developed as in the United
States, where more than 50% of the adult population have, as a common and
standard method for savings, shares or bonds ownership of the principal
enterprises of that country.
The two former
characteristics reflect, therefore, the fundamental differences in the
financial market performance, in the ownership of enterprises and in the
performance of the Stocks Exchange between what can be observed nowadays in the
financial and capital world of the United States and Latin America.
II. Analyses and Some Policies to be Followed
in view of the Current Situation.
In view of the situation described above, if a policy for stimulating
and encouraging the workers’ ownership participation of enterprises is to be
pursued, it is necessary to take into account that this breakthrough should
be “assisted” and it will not take place by the simple progress of ideas or
by spontaneous generation. On the
contrary, for this new approach to progress and advance it will be necessary to
take into consideration several steps and policies, of which we shall mention
here only a few basic ideas, with the purpose of starting an extensive debate
that will include points of view of different places and various experiences
which have precariously been developed until this date.
Under the premise that the idea of workers’ ownership
participation in enterprises is an argument that may have a good response and
that there are several sectors willing to promote and apply it –all of which is
not necessarily true-, in the following paragraphs we will refer mainly to the
recommendations that can be made facing the three significant problems or
difficulties which the promotion of this new perspective finds today in the
real world. In the first place, the
difficulties dealing with high unemployment and deep inequality; in the second
place, the obstacles placed by the enterprises’ structure and the stock market
concentration; and, thirdly, the significant complication which large credit
concentration represents–that, as we shall see, is a double detrimental problem
for the progress of workers’ ownership participation in enterprises.
1. In light of
the important inequality and unemployment problems that prevail in
the productive and social setting in Latin America, we have to bear in mind
that inequality imposes us, in the first stage of the program, the
unfeasibility of considering all workers (or at least attracting them) in a homogeneous manner to participate in a
workers’ ownership of enterprise program.
That is, it is quite likely that in a first stage the professionals or
technicians and the middle-level management will be interested in a larger
proportion than the rank workers, which only along time and when the first
become interested could then apply to be considered for the program. In relation to high unemployment, it is
important to remember that this is almost always the result of low and
inadequate educational and health levels and that, in its turn, unemployment is
the main explanatory factor for the extended levels of poverty found in most
places. Likewise, training and higher
educational levels are usually the most important factors which allow workers
to obtain and maintain their job opportunities.
The first recommendation that can be made in order to
carry on a workers’ ownership of enterprises participation program (from now on
COG Program), is that support and work should be seek jointly with training
programs for enterprises offered either by the Governments or by the same
enterprise organizations, emphasizing the contents or scope not only of
technical nature for the improvement workers productivity, but also for
improving the results of enterprises when workers participate in
decision-making and in the property of the same. That is to say, COG should develop a wide program of
dissemination and training, in addition to training and qualification programs
existing nowadays in most countries.
In the second place, in order to carry out a COG
Program, it should be associated with some well-known university training
programs directed to business administrators, so as to incorporate these
approaches to its learning programs, which up to now, are quite unknown in Latin America. The idea is to take advantage of the present circumstances, wherein the traditional viewpoint regarding
management of human resources inside the enterprises is being modified and,
also, because more European investments are arriving to the Latin American
Region, bringing about a wider humanist approach with greater labor
participation in the productive processes than those involved in the North
American vision.
In the third place, to carry on a COG Program, it is very important to provide
information about the program and offer support to the principal Professional
Schools of Engineers and Business Administrators . The same goes to the most important trade unions of the different
countries where confronting conceptions and wage demands are still prevailing,
without examining these new visions of the end of the XXth Century that
consider a more ample labor participation in the management and ownership of
the enterprises.
2. Taking into
consideration the second major problem faced by the countries in Latin America,
the size structure of enterprises
and the large stock market ownership concentration, some
practical recommendations can be made that will allow, in the near future, to
start a COG Program:
First of all, in view of the large concentration in the productive
structure and in the sales level of the largest enterprises due to the big
influence of the larger enterprises in our countries in advertising, commercial
and, in general, public image matters on the public view, the first steps
towards a COG Program should be approached with greater realism; that is, to
work on this first stage precisely in these large enterprises were workers
having a better culture and labor formation are positioned. At the same time,
these workers are better organized and are much willing to learn, to be
informed and to imitate the tendencies prevailing in more developed countries.
In general, the participation formula of workers’
ownership in the property of the enterprise, is not entirely opposed to by
entrepreneurs, being either executives or owners of the large enterprises. In specific cases, businessmen consider the
possibility of delivering certain titles of ownership to the workers as a means
of compensation payments or wages which, more than giving the workers greater
influence within the enterprise, can awake their interest for the company,
giving them at the same time a compensation payment which is less expensive to
the businessman than rising salaries.
Nevertheless, for the union or labor leaders of large
enterprises, in general, the formula of handing over individual ownership
titles to the workers is not seen as an adequate salary formula, nor is it seen
as a way of rising their influence in decision-making inside the enterprises. This is so, because at present, when
unemployment has increased and great employment volatility is perceived at all
levels, the individual ownership title formula is felt absolutely ephemeral and
of short-span life. As stated above, if
labor leaders are interested in a workers’ ownership participation program,
they are more interested in forms of collective ownership of a group of
shares, so as not to loose the influence of the shares of the worker
leaving the enterprise, either if he is being laid-off or if he is resigning
for a job in another place.
Then, in this scope, today it is perfectly possible to
recommend Governments or public authorities to allot tax incentives in
order to increase the participation of the workers in the equity ownership of
the enterprises and, preferably, that these tax incentives be applied in a
clear and determined manner when this share ownership is collective. Furthermore, as of this day, the collective
ownership workers’ formula is particularly possible in public companies whose
authorities are considering to put into private ownership (privatization) or to
keep under the public authority, but that its operation may be simplified or
improved due precisely to this workers’ ownership participation of the same.
3. In relation to
the large credit concentration taking place in most
Latin American countries, it is a double detrimental problem because, on one
side, it excludes not only the small and microentrepreneurs which are the
largest number and the principal source
of job opportunities in most countries, but it also restricts investments which
are the source for creating new job opportunities, due to the fact that there
is mainly credit for working capital and very scarce credit for investment in
the banking and financial systems of Latin America. The actual credit only exists for the large enterprises and is
almost non-existant for the small and micro enterprises. Even for obtaining working capital credits
and short-term credits the latter have to provide personal guarantee or collateral
of individual property guarantee, which rises strongly their vulnerability in
the business world.
In this field, therefore, a COG Model Program can recommend Governments
and international organizations to initially establish , “guarantee funds”,
wide-ranging and with sufficient resources so as to analyse and give the
necessary backup to a large number of medium, small and micro enterprises that
today, in a large proportion, are excluded from the credit market in the
majority of the countries.
In the second place, within the “guarantee funds” programs we have to
propose smaller guarantees to those enterprises that gave property ownership to
its workers, with the purpose not only of diversifying the property and
improving income distribution, but because it has to be publicly understood
that they constitute a better payment guarantee.
As a matter of fact, the ownership in the property of the enterprise
should be disseminated and it should give the image that it is a better payment
guarantee, thus resulting in a better interest rate in the credit system, or in
default whereof, in a subsidy of the public sector to the interest rate for
those credits given to enterprises in which workers participate in the
ownership of same.
The preceding statements are just some of the recommendations that can
be made in order to spread a participation system of workers’ ownership of
enterprises in Latin America. It is
expected that through an exchange of comments before the COG’s Conference,
scheduled for October 9-11, 2002, some additional proposals may be gathered
that might increase the possibility of installing this system, in the near
future, in all the countries of the Region.