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Re: EFES: EFES DRAFT OPINION ON EC CONSULTATION ON FINANCIAL PARTICIPATION
Marc
Your report is to the point and hard hitting as other have commented
upon. However, I am concerned that it often uses the word
"participation" without explaining that this applies to
management and/or control and not just to finance or ownership.
You clearly make the important distinction between financial
participation and employee ownership but do not consistently make the
equally important need to associate ownership with control and/or
management.
This problem is shared by the COG mission statement which ignores the
need to spread control with ownership.
Australia has a wider spread of share ownership than any other country
but control is getting more highly concentrate in management through the
use of share trusts and by pension funds being centrally managed.
So spreading ownership can be counter productive unless control is also
distributed. This is the subject of some of my articles. The
most relevant is Reforming capitalism with worker owners
<http://cog.kent.edu/lib/Turnbull-ReformingCapitalismWithWorkerOwners.htm>
This points out that workers become second class citizens with ownership
is spread through share trusts like they are force to be in the
UK.
Best regards
Shann
At 06:04 AM 20/10/2001, you wrote:
Here our draft opinion
on the European Commission staff consultation on employee financial
participation:
<?xml:namespace prefix = o ns =
"urn:schemas-microsoft-com:office:office" />
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 The concept of financial participation is obsolete; it is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.
Shann Turnbull Ph.D.
P.O. Box 266 Woollahra, Sydney, Australia, 1350
Ph: +612 9328 7466 office; +612 9327 8487 home; Fax: +612 9327 1497;
Life long E-mail: sturnbull@mba1963.hbs.edu
Alternate:sturnbull@optusnet.com.au
with other papers & book at
http://cog.kent.edu/library.html
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