EC initiatives to promote financial participation schemes in Europe
Alongside initiatives in individual European countries the EU itself has cautiously taken the first steps towards the political support promotion of the idea of financial participation since the beginning of the 1990s.
Four PEPPER Reports (Promotion of Employee Participation in Profit and Enterprise Results, see Uvalić 1991, European Commission 1996 and Lowitzsch et al. 2006 and 2009) have been published and two expert groups set up to identify existing obstacles in the way of a further expansion of employee financial participation and to promote EU-level harmonisation (of conditions encouraging employee participation)
The PEPPER proposals for participation schemes are based on the following common minimum criteria for such schemes which at the same time to some extent represent the maximum achievable consensus in European countries in this area:
- Participation schemes are voluntary actions by companies which are only indirectly promoted by government incentives.
- Participation schemes are solely enterprise-related, that is, there are no sectoral schemes, pension plans, etc.
- Participation schemes are to be open to all employees in a company (broad access).
- Participation schemes should contain profit-sharing, that is, they are coupled to company performance without being part of stipulated wages and salaries.
- There is a connection between participation and decision-making rights only to the extent that they derive automatically from capital shares, but not as a political initiative.
Efforts in the European Union to harmonise the development of financial participation so far have not been very successful. In December 2003 an expert group published a report for the European Commission on the cross-border obstacles to employee financial participation. The expert group’s recommendations included, alongside a demand for tax harmonisation and standardisation of stock exchange rules, a proposal to develop a uniform scheme for employees’ participation at the enterprise level.
A second expert group set up for this purpose in 2004. It came up with a comprehensive concept in 2005 containing recommendations for standardising the framework conditions for promoting employee financial participation (more or less minimum criteria). However, implementation of a uniform scheme will not be achievable until such issues as differences between EU Member States in the taxation of employee financial participation have been resolved..
In recent years there have been further political initiatives on an EU level promoting the development and expansion of employee financial participation. In September 2007 for instance, the French Minister of Finance, Christine Lagarde, announced the launch of a new “European participation model” planned in association with the French EU presidency in 2008. In October 2010, the European Economic and Social Committee adopted an own-initiative opinion on “Employee Financial Participation in Europe”.1
According to this, employee financial participation is seen as an “opportunity for businesses, employees and society as a whole to participate more, and more effectively, in the success of the increasing Europeanisation of economic activity”. The European Economic and Social Committee’s intention behind the opinion is to foster greater public awareness for the subject, with the ultimate aim of prodding Europe to develop a framework concept promoting social and economic solidarity in Europe. Such a concept would facilitate the application and practice of participation schemes on different levels (e.g. as staff shares, profit sharing or asset accumulation)
