This week, the interesting question as to whether employees should be financially involved in companies, was discussed in the plenum of the European Parliament. Taking part in the discussion was the competent Commissioner Věra Jourová, who made no secret of the fact that she saw only positive aspects regarding Employee Share Ownership (ESO). However, the EU Commission will only present a relevant draft proposal in 2016 though this will only take the form of a recommendation as ESO will continue to be a voluntary instrument that should not be regulated by the EU Commission.

Jourová: ESO increases motivation, creates jobs but must not be allowed to become a replacement for wages!

In Europe, the debate on employees financially participating in companies, for example in form of shares, time and again proves to be a long-burning issue. Supporters, among them the competent Commissioner Jourová, regard it as an opportunity to increase, among other, the motivation of employees as they would stronger identify with the company. However, Jourová also made it clear that ESO had to exist alongside remuneration and should not be allowed to be regarded as a replacement. She also regards the integration of social partners as essential. Exactly this point was also picked up by Jutta Steinruck, SPD MEP, who cited the Voestalpine Employee Participation as a model example; here, employees have been participating in the capital of voestalpine AG through the ownership of own shares since 2000. voestalpine's ESO is particular characterised by the fact that 23,500 employees are holding 22.3 million shares, that with 13.7 % of the voting rights, they are the second largest shareholder of voestalpine AG and that it is the only model in Europe that combines international pooling of voting rights with individual share ownership. It is absolutely justified to regard this model as an example for “internal social partnership” in action, for which voestalpine is well known.

However, ESO is not without risk

It is a well-known fact that ESO is not without danger. Substantial falls at stock markets or insolvencies might for many participating employees result in losses. Issues, which the Commissioner also regards as problematic. It is also a fact that a public limited company is able to design ESO, which differs greatly from small and medium-sized enterprises (SMEs). Hence, it is also important to lay down the right rules and to take account of the different circumstances in individual Member States. In Austria for example, ca. 1.5 % of employees hold shares in their company. Hence, compared to other European states, such as France or Great Britain, where almost 30 % of employees own shares in their company, Austria shows a rather below average participation quota. Commissioner Jourová wants to take this circumstance into account and therefore has no intention to present a legislative proposal on ESO on behalf of the Commission. In 2016, only non-binding recommendations will be made, which Member States may use as an orientation guide; in doing so ESO will remain a voluntary instrument.

Further information:

Study of the EU Commission on Employee Ownership and Participation 

AK INFO on Employee Participation (available only in German)