Salinen Austria, Austria: Make work pay – make work attractive
Austria’s leading salt producer Salinen Austria AG, which has about 340 employees, was state-owned until 1997. In the course of privatisation, the successful bidder offered a financial participation model for the employees. This model was in the form of a private foundation, which would hold 10% of the company’s shares. While the first dividend was put into a social fund, all dividends since have been equally disbursed to every employee.
Salinen Austria AG is Austria’s leading salt producer with a market share of 60% to 70%, chiefly in Austria. Its main products are road salt, industrial salt and food salt. Salinen Austria AG operates in five Austrian locations and has its headquarters in Bad Ischl. There are satellite companies in Austria, Croatia, the Czech Republic, Hungary and Slovenia.
Altogther there are 341 employees: 95% male, 85% skilled workers, 10% with a school-leaving certificate and 5% university graduates. The average age is 39 years, which is the Austrian average in this industry sector. Almost the entire staff works full time, only 1% works part time and 1% is employed marginally. Permanent contract workers comprise 97.5%, and 2.5% are temporary workers. There is a blue-collar works council and a white-collar works council. Worker’s representatives are all male. Around 90% of the employees are members in the trade union. The company is a member of the Austrian Federal Economic Chamber.
The Salinen Austria AG was formerly owned and administered by the state-owned Austrian Industries AG. In 1997, the company was privatised and sold to the Androsch/RLB OÖ/Thomanek consortium, which now holds 78% of the shares.
Description of the initiative
In the 1990s the state-owned Salinen Austria AG was up for sale in order to get privatised. One of the bidders was the Androsch/RLB OÖ/Thomanek consortium, whose bid included the offer of a financial participation model for the employees. The consortium got the award and bought the company in 1997.
The financial participation model was worked out by the central works council in coordination with representatives of the trade union and the Austrian Chamber of Labour. A lawyer was consulted for additional legal advice. The model was regularly discussed and eventually decided with the main shareholders. This process took around one-and-a-half years. In 2000–01, the financial participation model was eventually put into operation and a private foundation was founded. The foundation holds 10% of the shares of the company, donated by the main shareholders.
The nature of a private foundation implies a range of legal implications, governing aspects such as the structure of committees. The foundation has the following elements:
- A board of directors, which consists of two worker’s representatives (head of central works council and his substitute) and the executive director.
- A supervisory board, consisting of nine worker’s representatives, including the head of the works council of each location.
- An auditor, who supervises cash flow and operating procedures, in adherence with the foundation’s aim.
The foundation model consists of two features: the disbursement of the dividend and a social fund.
According to the foundation’s law, the dividend is disbursed to every employee who has been working for the Salinen Austria AG for more than a year. Part-time workers receive a portion, according to their working time. Apprentices receive a portion based on the portion of their already completed apprenticeship. Apart from that, every worker receives the same amount of money out of the dividend. All workers fulfilling the criteria are automatically included in the scheme. The disbursement is not dependent on any other form of bonus or wage system.
The social fund is responsible for financial help in cases of crisis among employees: for example, after a big flood in 2002, in case of sickness for one year longer than covered by law, buying a wheelchair for an employee’s child.
The manner of disbursement of the dividend is decided by the foundation’s board of directors. The first disbursement was used to fill the social fund. The following dividends have been nearly entirely disbursed to the employees. Minimal amounts were needed to keep the social fund buoyant. Dividends have been disbursed every year since inception.
Employees were informed about the start of the foundation and the way it works through seminars held at each location. Periodic information about the economic situation of the company and expected dividends are given at meetings of the supervisory board, and are transferred to the workforce afterwards by intranet, placards and works meetings.
The employee’s foundation has a positive effect on workers’ motivation in promoting a collective sense among the workforce, and in working towards achieving goals in a joint effort. The amount of the yearly disbursement also serves as an important indicator for the economic situation of the company for every worker.
The works council’s representative is pleased with the way the foundation works, and especially with the over-representation of worker’s representatives in the foundation’s committees.
The foundation has served as a prototype for a similar employee participation model at Vienna Airport.
An unusual aspect in this case is that the initiative was formed in the course of the privatisation of the company and the accompanying bidding process. The bidder consortium that eventually won was the only one offering any form of worker’s participation. This aspect is said to have contributed to the decision of the award. As the privatisation of the company is described as a ‘highly emotional process’ (HR manager), the offer also seemed to have pleased the workforce and its representatives. The process itself was led by the works council with the support of the trade union and Chamber of Labour.
The scheme is very simple. The only condition to be included is that the scheme is to be used by Salinen Austria AG for more than one year. Every employee fulfilling the criteria is automatically included in the scheme. The disbursement of the dividend is independent of any pay arrangements and is an additional income to the standard wage. Every worker receives the same amount of the dividend, proportional to the amount of working time fixed in the contract (however, only 2% of the staff is not working full time). Besides yearly financial bonuses for the workers, the foundation also fulfils a social role with its social fund.
The operation of the foundation and important decisions, like the manner of pay-out or use of saved money, is in the hands of worker’s representatives, who are over-represented in the foundation’s committees. So far, the dividend was disbursed every year, except for the first year, when it was put into the social fund.
Though the proportion of shares would mean the opportunity to participate in the management of the company, participation is mainly achieved through the seats held by worker’s representatives in the supervisory board and not in their function as a shareholder.
Exemplary and contextual factors
In this case, the fact that the impulse for a financial participation model came from a bidder in the course of a privatisation process is exemplary. The model was determined by the works council, in consultation with the trade union and the Chamber of Labour, and in discussion with the main shareholders. Worker’s representatives also have a high proportion of seats in the foundation’s committees.
Maria Klambauer, FORBA, Vienna