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Here our draft opinion on the European Commission staff
consultation on employee financial participation:
DRAFT
October
19, 2001
OPINION OF
THE EUROPEAN FEDERATION OF EMPLOYEE SHARE OWNERSHIP
on the
COMMISSION STAFF WORKING PAPER
on " Financial participation of employees
in the European Union "
(Document
SEC(2001)1308 of the 26.7.2001)
Synopsis:
1. About EFES
2. EFES’ opinion - synthesis
3. Method and collected
opinions
4. Employee share ownership and
participation, key elements of a European strategy for employment
5. The concept of financial participation
is obsolete; it is advisable to substitute for it employee share ownership and
participation
6. The program of the European Commission
7. An adequate funding
8.
To set up
a "permanent working party" and a European institute for employee share
ownership and participation
9.
Conclusion
1. ABOUT EFES
EFES – the
European Federation of Employee Share Ownership was constituted following the
decision taken in May 1998 in Brussels, by a conference which brought together
250 participants from 28 countries.
The Federation was quickly organized, under the statute of a
not-for-profit international organization approved by the Belgian
Government.
EFES’
objective
is to act as the umbrella organization of employee owners and all persons,
companies, trade unions, experts, researchers, institutions looking to promote
employee share ownership and participation in Europe.
This
ambition is being carried out. EFES
counts members in the majority of the European countries, as well in the
European Union as in the candidate countries. Among the members of EFES, there are
individuals, companies, associations, trade unions, experts, researchers and
national federations. The Board of
Directors of EFES counts 22 representatives of 14 countries, and its Executive
Office 7 people, who meet monthly.
…/…
2. EFES’ OPINION - SYNTHESIS
In
substance, EFES’ opinion is as follows:
Yes, the
European Commission should plan for a Community initiative aiming on employee
share ownership and participation.
We speak well about "employee share ownership and participation",
rather than of "financial participation".
This distinction is significant.
Indeed, the concept of "financial participation" had its originality and
its relevance at the end of the years ' 80. Since then, the practices and research
showed that it is now largely obsolete.
Among the practices gathered under the concept of "financial
participation", some appeared beneficial and the other negative ones. The practices of employee share
ownership joined to participative management were characterized by their
positive impact on economic and social dynamics.
Actions
should be taken in the European Union, and also in the candidate countries.
It is
necessary to lay down general principles at European level to encourage greater
and more efficient recourse to employee share ownership and participation
schemes.
The
general principles and the actions which the Commission should include in its
next Communication and its Action Plan are those defined in the "European Action
Programme" of the European Federation of Employee Share Ownership.
This
programme is based on the Resolution of the European Parliament of January 1998
and it was written in conclusion of a workshop which had joined together, within
the European Parliament in Brussels, the whole European institutions, as well as
the social partners and the organizations of employee share ownership.
This
action programme awaits the European Commission particularly:
· to set up
a permanent working party;
· to
implement a programme with an adequate funding;
· to set up
a European institute for employee share ownership and participation.
This
action programme is joined in its entirety to the present opinion, of which it
forms integral part.
3. METHOD AND COLLECTED
OPINIONS
To prepare
its opinion, EFES met and consulted a broad range of people and
organizations: representatives of
governments, members of the European Parliament, trade-union representatives at
European level, employers’ organizations, organizations promoting employee share
ownership, etc.
EFES also
organized a web forum on the topic of the consultation organized by the
Commission. Some characteristic
collected opinions are reproduced in appendix.
The
reactions which we collected from a broad range of actors have the same general
tonality:
One can only be delighted
by the will affirmed by the Commission staff "to relaunch the debate on
financial participation at European level, associating all the players
concerned".
There are
many positive aspects in the document, but one omission in the general
principles and a glaring lack of proposals for action.
The good
points are:
The
Commission staff precisely affirms the preference for all employee schemes.
The Commission staff highlight the fact that financial participation
boosts productivity. This is the
argument with the widest appeal, as productivity is associated with
competitiveness, profitability and higher salaries and/or more leisure time.
The Commission staff shows
that financial participation is being recognized widely as important.
The
Commission staff also shows why it is necessary to take initiatives at the
European level, not just the national level. This is
important.
The
general principles stated by the Commission staff contain a major omission. Indeed, many studies show conclusively
that financial participation only really works strongly when it is situated in a
regime of participative management.
The document emphasises clarity and transparency, which are aspects of
communication by managers, but not involvement and consultation of employees in
the management process of the business.
However
with this argument we can win over trade union support, which is generally
lacking, and which is necessary if we are to make progress in Europe in this
field.
At side of
the positive aspects, in a general way, the reactions and the comments
express perplexity as for the
intentions and the steps taken by the Commission, impression of an unexplainable
timidity, disappointment, this one expressing itself sometimes even on a sharp
tone (cf opinion reproduced in appendix:
"consultation or funeral?”)
Within the
European Federation of Employee Share Ownership itself, the impression which
prevails is that of a disappointment compared to the past action of the
Commission and waiting of a firmer and stronger action in the future.
Indeed,
EFES observes that the Summit of Lisbon put the point at the European social
agenda. EFES meets a listening and
growing support from the governments.
As regards the European Parliament also, the supports for employee share
ownership and participation were strengthened. From the European Commission too, a
better support is awaited.
Among the
questions and the reactions collected, let us note particularly:
Why to
have awaited the 1st of August to launch this consultation? A worse date would be difficult, on full
holiday. Why such a short deadline
for reply (until October 30). All
that discourages rather the reactions and hinder a real consultation. Furthermore, you don’t see, in the
document, which could have prevented from diffusing it 6 months or even a year
before.
Of the
Resolution of the European Parliament of January 1998, the working paper of the
Commission staff retains only a general sentence, observing that "…the
Parliament... made a number of calls on the Commission... It requested the Commission in
particular to promote the exchange of information and best practice at
transnational level, to study the impact of financial participation schemes on
employment and wage flexibility, and develop pilot projects for financial
participation in public undertakings in the CEECs in connection with
privatisation". However, the Parliament’s Resolution addressed to the Commission
a whole of concrete, precise, practical requests. Not only these requests were
not met by the Commission since 1998, but the document of consultation of the
Commission omits them.
Lastly, it is strange that
the document of consultation does not make mention anywhere of trade-unions.
Difficult to understand such main omission.
4. EMPLOYEE SHARE OWNERSHIP AND
PARTICIPATION, KEY ELEMENTS OF A EUROPEAN STRATEGY FOR EMPLOYMENT
Employee
share ownership and participation should be in good place in a European strategy
for employment. It is still not the
case. There is an awakening which
yet did not gain the political decision makers.
Indeed the
development of employee share ownership and participation positively influences
economic and social dynamics and employment. This is not negligible, since it is
estimated at 1% a year additional growth of the GDP. In terms of employment in
Europe, that potentially represents million additional jobs after a few
years.
In the
document of consultation of the Commission, this factor is precisely highlighted
(pages 8 and 9).
In the
opinion of EFES, this is a key point of the question.
Much
remains to be made to carry the conviction of governments and European decision
makers in this direction. The
document of the Commission indicates rightly that the general principles set
forth in the PEPPER Reports have not been adequately incorporated into national
policies.
However,
during these last years, EFES developed its relations with many governments and
those show more and more their interest for employee share ownership and
participation.
In
Belgium, the Belgian section of EFES was, at the sides of the Belgian
Government, an active craftsman of a step which appears exemplary to us. Indeed,
under the terms of a dialogue which fully associated the social partners, a good
new legislation was adopted, directly inspired by PEPPER principles.
With the
support of the Belgian Presidency of the European Union, EFES organizes an
international conference on November 23 2001 in Brussels. The aim is to encourage the European
Union and the European States to promote employee share ownership and
participation.
We hope
well that the European Commission will join the organization and the holding of
this event.
5. THE CONCEPT OF FINANCIAL PARTICIPATION
IS OBSOLETE; IT IS ADVISABLE TO
SUBSTITUTE FOR IT EMPLOYEE SHARE OWNERSHIP AND PARTICIPATION
EFES
thinks that it is employee share ownership and participation which should be the subject of a
Community initiative, rather than "financial participation".
The
concept of financial participation is too general: many studies, among which
some supported by the Commission or the Dublin Foundation, showed that financial
participation can have all its social and economic benefits only if it is
associated with a participative management. It is thus necessary to speak, as EFES
suggests, of employee share ownership and participation, rather than of
financial participation.
This
difference is very significant. Indeed, the concept of "financial participation"
had its originality and its relevance at the end of the years '80. Since then however, the practices and
research showed that the concept of financial participation, covering even
contradictory multiple practices, is now largely obsolete.
Indeed,
the concept of financial participation used by the Commission covers three
categories of practices:
·
profit-sharing;
·
employee
share ownership;
·
stock
options.
Among the practices
covered by the concept of "financial participation", some appeared beneficial
and the other negative ones. The practices of employee share ownership joined to
participative management were characterized by their positive impact on the
productivity and economic and social dynamics.
Research
show that employee share ownership and participation have positive impact on
productivity, on economic and social dynamics in general and on the volume of
activity and employment:
·
When all
employees share ownership schemes are connected to participative management, the
impact is particularly positive.
·
When share
ownership are not all employees schemes, but targeted at certain categories only
(as it is often the case in stock options schemes), the impact is positive but
by far lower than the preceding case.
·
Lastly,
profit-sharing has little impact, or even a negative one.
Consequently,
the conclusion should be drawn: one
cannot any more, as at the end of the years '80, to put on the same plan these
various or contradictory practices.
It is well
"employee share ownership and participation" which should be the purpose of a
specific support, rather than the former obsolete concept of "financial
participation". This difference was
already the subject of several deepened debates, in particular within the
framework of the European Workshop of April 1999.
In
addition, the working paper of the Commission staff is, on the point of employee
share ownership, exaggeratedly reducing, when it states that "employee share
ownership provides for employee participation in enterprise results in an
indirect way, i.e. on the basis of participation in ownership, either by
receiving dividends or the appreciation of employee-owned capital after the
selling of the shares... ".
Here
still, the practice differed with concepts of the late years '80. Employee share ownership appeared
effective and significant, not only as participation in the results, but
especially as a factor of commitment in ownership, motivation, company decision
and management. This is also why
also, the connection with participative forms of management appeared to be a key
element.
Let us
repeat it, it is the combination of employee share ownership and participation
which proved particularly beneficial.
It is that which the Community actions should encourage.
We
observed on this point a great convergence between our organizations of employee
share ownership and the analysis made by trade unions.
6. THE PROGRAM OF THE EUROPEAN COMMISSION
In its
Resolution of January 1998, the European Parliament requested from the
Commission "an adequately financed programme".
That the
actions of the Commission answer a programme, appears indeed to us a significant
condition of transparency and effectiveness.
It also
appears very significant to us that the results of the actions taken or
supported by the Commission would be published and made available.
The
Commission precisely stresses through its various actions the importance of the
exchanges of information in Europe.
It would be desirable that the Commission itself takes fully part in
these exchanges and supports the communication between the actors. The Commission herself has information
which should be accessible to these actors, in particular on the studies,
conferences and other initiatives that she finances or causes, including through
the European Foundation for the improvement of the living and working
conditions.
The
purpose of this communication and this information on behalf of the Commission
on financed actions, will be in particular:
·
To support
the exchanges and co-operation between actors, carrying projects.
·
To
establish criteria and righter, equitable and transparent procedures of
selection.
·
To support
the complementarity of projects.
In
addition, in practice, the Commission finances currently only conferences,
whereas the budgetary heading B3-4000 intended to finance actions aiming at the
promotion of financial participation speaks " to support actions of promotion of
good examples and networks as well as studies and measures of occupational
qualification ".
The means
are not adequate, but also, the Commission did not propose a true program. This one should support:
·
Research,
studies, surveys, analyses.
·
Training
(this concept being much broader than that of "measures of occupational
qualification").
·
Conferences,
seminars, meetings (as it is currently the case).
·
Actions of
information and communication supplementing what precedes: publications, periodicals, web sites,
reports and any action intended to disseminate the results of the studies and
surveys and to make known by the public and the actors various aspects of
employee share ownership and participation in Europe (stakes, obstacles,
experiments and practices...)
·
Web
portals, catalogues... allowing to have an overall picture of the state of
research and current debates, not only in the EU, but also in other
countries. Currently, it the web
portal opened by EFES (www.efesonline.org )
which answers this function best, but with too limited means.
7. AN ADEQUATE FUNDING
It appears
significant to us that a policy of promotion of employee share ownership and
participation should have a well dedicated budgetary heading.
It is in
this direction that the European Parliament in its Resolution of January 1998
went, by requesting from the Commission an adequate financing.
When EFES
was constituted, the first PEPPER Report went already back to some 10 years and
many participants were astonished to note that the Commission still did not have
dedicated budgetary means.
How indeed
could we speak about policy or actions, if no means are implemented to?
After the
Resolution of the European Parliament of January 1998 and after the European
Workshop organized by EFES at the European Parliament in April 1999 (workshop in
which took part the Commission), one was still more astonished to see that no
initiative seemed to be taken to assign means to the budget 1999.
The
astonishment was even larger, seeing the draft budget 2000, which did not
provide for anything either.
Fortunately, EFES could discuss with a number of Members of the
Parliament, and the draft budget was amended, by dedicating a share from the
B3-4000 line "social dialogue" to assign it to the promotion of financial
participation (and the situation reproduced for budgets 2001 and 2002, since
again, no initiative came from the Commission).
Force is to note that the assignment of a fraction of the B3-4000
line to financial participation is a lame solution, which still does not give
the "adequate” financing for a program aiming at the promotion of employee share
ownership and participation.
Indeed, to
reduce the promotion of employee share ownership and participation in a simple
facet of social dialogue is exaggeratedly reducing.
Secondly,
to put actions promoting employee share ownership out of balance with the
promotion of social dialogue, it is to cause arbitrations which do not take
place to be.
Lastly, it
is still not to recognize the promotion of employee share ownership and
participation its specific value.
8. TO SET UP A "PERMANENT WORKING PARTY"
AND A EUROPEAN INSTITUTE FOR EMPLOYEE SHARE OWNERSHIP AND PARTICIPATION
The points
exposed here are still in the wire of the Resolution of the European Parliament
of January 1998 and the European Action Programme of EFES, namely:
To develop
indeed actions or a policy, one needs not only "an adequately financed
programme", as the Parliament asked.
It is also necessary to indicate bodies of execution and persons in
charge. Without that, nothing organized will be done and, at best, things will
remain in state.
To take in
hands the execution of a Community action or a policy, the European Parliament
suggested the setting-up of a "permanent working party" associating all main
interested parties: representatives of both sides of industry, of employee share
ownership organizations, Members of the European Parliament and Commission
experts.
In the
prolongation of this working party, what is wished is the installation of a
European institute for the promotion of employee share ownership and
participation.
At the
time of the European Workshop of April 1999, all interested parties decided for
the creation of such a working party (except the notable exception of the
Commission representatives, who gave a report on hesitations).
In fact,
the Parliament’s Resolution did not receive any continuation and the defect of
body of execution explains certainly to a great extent, trampling observed these
last years.
9. CONCLUSION
- EFES’ OPINION
As a
conclusion, EFES’ opinion is as follows:
1. Yes,
the European Commission should plan for a Community initiative aiming on
employee share ownership and participation.
We speak well about "employee share ownership and participation",
rather than of "financial participation. Among the practices gathered under the
concept of "financial participation", some appeared beneficial and the other
negative ones. The practices of
employee share ownership joined to participative management were characterized
by their positive impact on economic and social dynamics.
2. Yes,
actions should be taken in the European Union, and also in the candidate
countries.
3. Yes, it
is necessary to lay down general principles at European level to encourage
greater and more efficient recourse to employee share ownership and
participation schemes.
4. The general principles
and the actions which the Commission should include in its next Communication
and its Action Plan are those defined in the "European Action Programme" of the
European Federation of Employee Share Ownership.
This
programme is based on the Resolution of the European Parliament of January 1998
and it was written in conclusion of a workshop which had joined together, within
the European Parliament in Brussels, the whole European institutions, as well as
the social partners and the organizations of employee share ownership.
5. This
action programme awaits the European Commission particularly:
· to set up
a permanent working party;
· to
implement a programme with an adequate funding;
· to set up
a European institute for employee share ownership and participation.
This
action programme is joined in its entirety to the present opinion, of which it
forms integral part.
For
EFES,
Marc
Mathieu
Secretary General
In
appendix :
Appendix
1: « European Action Programme » of EFES, adopted as the conclusion of
the European Workshop of 30 April 1999 at the European Parliament in
Brussels ; the programme gives an appendix reproducing the Resolution of
the European Parliament of January 1998 and other reference
documents.
Appendix
2: Some typical opinions collected through the forum on the
web.
Marc Mathieu
Secretary General
EFES - EUROPEAN
FEDERATION OF EMPLOYEE SHAREOWNERSHIP
FEAS - FEDERATION EUROPEENNE DE
L'ACTIONNARIAT SALARIE
Avenue Voltaire 135, B-1030 Brussels
Tel/fax: +32
(0)2 242 64 30
E-mail: marc.mathieu@ping.be
See our web site:
http://www.efesonline.org
EFES'
objective is to act as the umbrella organization of employee owners and all
persons, companies, trade unions, experts, researchers, institutions looking to
promote employee ownership and participation in
Europe.
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