Leading companies pressurise government on financial participation

A media campaign, organised at the end of 1998 by 60 leading companies, is trying to force the Belgian government to act on a promise concerning financial participation for employees. The companies include some of the largest and most important in Belgium, and the main employers' organisations have also supported the campaign.

Financial participation is one of the new management techniques used by companies in Belgium to remunerate and motivate their employees. A number of companies that have been using such schemes have, however, been involved in fiscal lawsuits. The issue concerns the treatment by the taxation authorities of this element of the remuneration package. The key question centres on whether or not it is part of the wage or salary, and hence taxable.

Companies view financial participation as an element of pay, but point out that shareholders are taxed at the rate of only 25% whereas employees are taxed at the level of their highest income bracket. They are urging a new form of taxation of this kind of wage component. Since the government is not taking any decisive action on the matter, contrary to past promises, in December 1998, a group of companies placed an advertisement in a number of Belgian newspapers to prompt it to act. The companies include some of the largest and most important in Belgium: Ackermans en Van Haren, Colruyt, HBK, Barco, Mercator en Noordstar and Picanol. The Federation of Belgian Enterprises and the National Christian Federation of Small Firms and Traders have also supported the campaign.

Belgium clearly lags behind on financial participation, compared with the USA, France, the UK and the Netherlands. Several regulatory proposals have been tabled, and in 1996 the government promised to take action. The companies concerned are threatening the prime minister with running another media campaign (around the slogan "Jean-Luc [Dehaene] doesn't keep his promises") if the government does not provide a legal framework before the June 1999 general elections.

The Belgian trade unions are not exactly in favour of different forms of financial participation by employees, whether this takes the form of profit- or capital-sharing. They claim that it does not narrow the gap between capital and labour, nor does it consist of a form of industrial democracy. Furthermore, these schemes do not alter the power relations within the company. Employees, the unions claim, have very little impact on the profitability of the company. In addition, they allege that such a model leads to corporatism and weakens employees as a group. It opens the possibility of conflicts of interest between employees in different companies, or even of different groups within companies, thus reducing group solidarity.