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Financial Participation

Trade unions in Germany traditionally remain sceptical on employee share ownership and profit-sharing. One major reason stated for opposing employee financial participation is that it will either reduce the scope for wage settlements or that employees may suffer financially if company earnings deteriorate. Nonetheless the fact that employees in a number of companies had come into favourable contact with employee financial participation schemes since the turn of the century has led to a broader discussion and recognition of participation schemes in trade union circles.


The trade union debate of the past few years has seen a noticeable shift in positions on employee financial participation. Representatives from IG Metall have now joined their counterparts from IG BCE in supporting the introduction of participation schemes under certain conditions. The DGB, Germany's trade union umbrella organisation, even conducted its own project focusing on employee participation as part of its 2006-2008 Trendwende-Initiative (turn-around initiative). The introduction of participation schemes is however seen in conjunction with general conditions governing wages and their individual components. One condition is that the leeway for wage increases must not be restricted by participation schemes.


Generally speaking, the positions of individual unions with regard to the underlying conditions and handling of employee financial participation schemes share a number of commonalities. There are however differences in details. One aspect is the different views on the priority the issue has on the political agenda. Another aspect is the different possibilities open to individual unions for putting employee financial participation onto the collective bargaining agenda and pushing through demands. Certain unions have had no great leeway in recent years for pushing through demands and are quite content to just achieve wage increases and important agreements of employment security and non-relocation, without having to push for additional employee participation schemes. German trade unions have in common the basic principle that all participation schemes must be voluntary and "on top" of existing provisions governing wages.


Experience gained in the financial and economic crisis 2008/2009 has also led to a further noticeable opening of the trade union debate over employee share ownership. The DGB concept of "staff capital as an attractive anti-crisis component" from 2010 is a good example of this shift in views. The concept focuses on an enhanced usage of employee share ownership to help companies in difficulties. According to the concept, "pooled staff capital" can help boost a company's liquidity and equity and reduce dependency on banks. Though seen initially as a short-term anti-crisis measure, it could be further developed to allow the overall involvement of staff and employee representatives in the development of companies. The proposals foresee employees of companies in difficulties leaving up to €12,000 a year of their wages within the companies, with the money being converted into company shares free of tax and social security contributions in accordance with an agreement worked out by the social partners. Such an involvement in helping a company to get out of a crisis would be offset in the long term by concessions in wages or working hours. The voting rights of the shares involves could be pooled in an employee participation company and used en bloc where necessary. However any risk taken should be foreseeable. This could also be an anti-crisis option acceptable to parts of IG Metall and IG BCE.

Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.