#ESOaction14 Conference Summary
The conference “Taking Action: Promotion of Employee Share Ownership” on Thursday 30 Jan 2014 in Brussels gathered high level representatives of all relevant stakeholders in EU policy-making to discuss options to promote Employee Share Ownership (ESO) in Europe. In line with the Commission’s initiative as well as the European Parliament’s resolution of 15 January 2014, the following five priorities broadly shared by the participants can be summarised from the discussions:
1. Establishing a Legal Framework on ESO
We should work to create an optional legal framework at the EU level that in particular would fa-cilitate cross-border ESO schemes. An EU framework is needed to establish a level playing field that would especially create opportunities for SMEs which are most affected by the consequences of the financial crisis. SMEs should receive more policy support, in particular considering the signifi-cant unexploited potential for ESO. In this context establishing a so-called 29th regime on Employee Financial Participation (EFP) appears a promising option. Hence, it seems justified that the Pilot Project should include a preliminary impact assessment of such a regime.
2. Promoting the exchange of best practice
In order to establish a functioning exchange of best practice, systematic processing and editing of information is very important. Rather than producing “another study for the shelf”, we should look into the creation of one-stop shops. A “Virtual Centre for EFP” (as presented during the confer-ence) could be a first step in that direction.
3. Providing transparency with regard to fiscal treatment and tax incentives
Tax incentives are not a prerequisite for successful implementation of ESO, but they do effectively promote such schemes. Therefore, while harmonisation is not a condition, transparency with re-gard to the different national fiscal treatment of ESO is key. In particular, an Effective Tax Rate Cal-culator (as presented during the conference) could provide a useful decision-making tool for com-panies with cross-border activities that plan to introduce EFP schemes.
4. Combining economic and labour market policies and reducing inequality
ESO fits logically into the EU’s multi-dimensional approach of combing economic and labour mar-ket policies. ESO schemes may help to create and secure jobs, reactivate unemployed and facilitate business succession in SMEs. In order to establish equality of arms, we should develop recommen-dations at EU level for fiscal and other incentives for SMEs interested in implementing ESO schemes. In this respect, investigating and promoting the transferability of best practice ESO schemes like the Sociedades Laborales and Employee Stock Ownership Plans (ESOPs) is important.
5. Incorporating ESO into Corporate Governance and Long-Term Investment strategies
Turning workers into shareholders of their employer company helps to improve corporate govern-ance by promoting transparency, sustainability and responsibility in corporate decision-making, which is one of the main objectives of the EU’s corporate governance policy. Therefore, integrating ESO into this policy should be strongly considered. Further, as ESO can foster growth of SMEs and facilitate business succession, financing ESO schemes should become one of the objectives of the Commission’s Long-Term Investment strategy. In particular it should be considered to integrate ESO in the EIB products for SME financing and incorporate ESO into the Commission’s proposal for the regulation on European Long-Term Investment Funds (ELTIFs).
In order to achieve these aims, social partners and all other relevant stakeholders should be closely involved in the process. Further, any promotion of ESO should respect the relevant fundamental princi-ples as identified by the 1992 Commission Recommendation on EFP and reiterated in the EP Own-Initiative Report of 15 January 2014. After many years of research and fruitful discussion the time has come for concrete actions: Let’s make ESO a positive priority in Europe!
Tags: Business, capital ownership, EFP, Eigentum, Employee Financial Participation, employee ownership, employee stock ownership plan, Employment, ESOP, European Economic and Social Committee, European Union, financial crises, finanzielle Mitarbeiterbeteiligung, Iraj Hashi, Jens Lowitzsch, Louis O. Kelso, ownership, piece of the cake, Politics, productive capital, productivity, Produktivkapital, profit sharing, property, Small and medium enterprises, Social justice, social market economy, Sociedades Laborales, Stock Ownership, Sustainability