Communiqué, issue 5, 2003
Articles
- Approaching enlargement
- Changes in Europe's financial services market
- Foundation seminar: living and working conditions in 2010
- EIRO expands to cover ten enlargement countries
- Promoting employee financial participation
- Enlargement: longer working hours in the acceding and candidate countries
- European Restructuring Monitor
- Observers from the acceding countries join the Administrative Board
Previous issues of Communiqué
The Foundation is preparing to draw up a new set of indicators to benchmark measures promoting employee financial participation schemes in the EU Member States.
Financial participation has become more widespread throughout the EU during the 1990s, following new and extensive legislative measures and tax concessions in all EU Member States. However, still only one third (31%) of Europe’s companies with more than 200 employees have an employee share ownership scheme in place, raising concerns that costs and administration hinder the large-scale introduction of such schemes.
A share in the profits
Financial participation is when employees participate in the financial results of the activity of the firm. This may take the form of a share in the profits, over and above the remuneration normally paid to employees, or a share in the ownership of the firm.
New products from EIRO
In 1999, the Foundation began a major research project on the nature and extent of financial participation in the EU. The results, published in the report Recent trends in employee financial participation in the EU, illustrated large differences in the levels of use and types of financial participation schemes. More importantly, the report revealed a strong relationship between broad-based financial participation and team-based work structures, and between financial participation and representative participation. It also showed that financial participation does not weaken the role of trade unions or works councils.
France and the UK lead the way
Employee financial participation schemes are fairly evenly distributed between those that are broad-based – covering all employees (52% of cases) – and those that are narrow-based – targeting management and higher-level staff (48% of cases). Profit-sharing schemes are more common, being found in more than 45% of companies, and a higher proportion of such schemes tend to be broad-based.
France has the highest number of profit-sharing schemes, supported by mandatory regulations and promotional activities, while the United Kingdom, with its established tradition of financial participation, has the highest number of share ownership plans in the EU.
Benchmarking to measure success
The second phase of the Foundation’s financial participation project, which was launched in May of this year, will see the establishment of a set of indicators aimed at measuring the success of national policies and practices of financial participation arrangements in EU Member States.
"We also hope to explore and explain what barriers European small and medium-sized companies have to overcome in introducing financial participation schemes," says Christian Welz, research manager at the Foundation.
Social partners warm to the idea
Although Foundation research suggests that employer organisations and trade unions at confederate level are increasingly in favour of financial participation, employers associations and trade unions tend to be largely absent in the detailed regulation of financial participation schemes at corporate levels.
For more information, please contact Marina Patriarka.