Concept of employee privatisation returns

Nearly 20 years after the first attempt to introduce employee ownership schemes, the Polish government is to revive the idea with the help of public financial support offered to companies in which either employees or local government are involved. The concept has been positively assessed by the social partners and is currently being transformed into draft legislation.

Employee privatisation in the 1990s

In the early 1990s, the Polish economy saw a huge wave of denationalisation. One of the paths of direct privatisation envisaged by the Act of privatisation and commercialisation of state-owned enterprises (hereafter called ‘the Act’) was so-called ‘employee leasing’. The law allowed for companies that were to undergo privatisation to become ‘employee companies’, with shares owned by employees. Those companies were given the right to lease the enterprise.

Over the period 1990–2008, more than 60% of the 2,105 enterprises that underwent direct privatisation used the ‘employee leasing’ mode. However, the ultimate results proved disappointing. According to the study ‘Working Poles 2007’ (Pracujący Polacy 2007), just 2% of those surveyed admitted being employed by such companies. The majority of ‘employee companies’ evolved into ‘managerial companies’ due to ownership transfer from the ordinary employees to managerial staff.

Government intention to revive employee ownership schemes

In the autumn of 2009, a programme entitled ‘Supporting privatisation with bank sureties and guarantees offered to companies with participation of employees and local government’ was accepted by the government, and subsequently transformed into a comprehensive set of amendments to the Act to allow for the introduction of new privatisation schemes.

The main provisions of the programme are as follows.

  • A new entity called ‘company of civic activity’ (spółka aktywności obywatelskiej) has been created, defined as either a limited liability company or a corporation in which at least 33% of shares or stock is held by at least 30% of the staff of the state-owned enterprise or a company entirely owned by the State Treasury at the time of privatisation. The remaining shares or stock can be acquired only by farmers or fishermen, local government entities or individuals who have been cooperating with the former state-owned enterprise for at least two years prior to privatisation.
  • The state-owned Bank Gospodarstwa Krajowego (BGK) will launch a bank surety programme for the purpose of privatising state-owned enterprises. The surety will apply to credits for financing employee leasing (in the case of employee companies) or the acquisition of shares or stock by companies of civic activity.
  • Employee companies, employee cooperatives and companies of civic activity are named as the beneficiaries.
  • The surety programme will be available for the following endeavours: employee leasing, other forms of privatisation, auctioning of companies declared bankrupt, companies of civic activity, companies with employee ownership financing the acquisition of shares with loans, and companies with employee ownership acquiring shares with the aim of offering them to employees.
  • The same conditions apply to state-owned enterprises or companies that have declared bankruptcy.

Social partner views

The social partner reactions to the programme have been positive.

The All-Poland Alliance of Trade Unions (Ogólnopolskie Porozumienie Związków Zawodwych, OPZZ) and Trade Unions Forum (Forum Związków Zawodowych, FZZ) are supportive of the project.

In its official statement (in Polish, 31Kb PDF), the Confederation of Polish Employers (Konfederacja Pracodawców Polskich, KPP) assesses the proposed amendments favourably. However, KPP is critical of the planned provision restricting the group of external parties entitled to become share- or stockholders in companies of civic activity to individuals only, and argues that eligibility should also be granted to legal entities. KPP also highlights the need to provide precise definitions of ‘employee company’ and ‘company of civic activity’ in future legislation.

Next steps

The draft legislation is currently undergoing intra-government review, which will be followed by discussion within the tripartite social dialogue bodies. After these discussions, the proposal, including potential modifications, may be sent to parliament. Although no specific schedule has been set, the process will probably be complete by the end of the year.

Commentary

Today, the Polish economy is largely in private hands, so this is probably the last opportunity to establish a significant element of employee ownership in national trade and industry. Considering that the initiative has come from the government and that some of the representative social partners are supportive of the project, it seems likely that the draft will be passed into legislation.

Jan Czarzasty, Institute of Public Affairs (ISP)

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