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Financial Participation

Estimates put the number of employees in Austria financially participating in the companies where they work at 100,000 in large companies and a further 60,000 in small and medium-sized companies (SMEs). This is about 6% of the total workforce and means that Austria is no longer lagging behind most other European countries (as was the case only a few years ago). Its participation rate now corresponds to the European average.

The subject of employee financial participation, and especially employee share ownership, only started coming into focus in the middle of the 1990’s, in connection with the wave of privatizations that reached such companies as the Post, Telekom, AUA, OMV, Voestalpine or Flughafen Wien (Vienna Airport). Before 1993 hardly any financial participation schemes were to be found, but this changed in 1994 and a more dynamic development began. One important milestone came in 2001 when tax concessions were introduced. The Income Tax Law was amended to provide for the distribution of free or discounted employee shares.

The macroeconomic effects of employee financial participation were long discussed only rudimentarily. Participation was a hardly used instrument of national economic policy and subject to barely any scientific research. This was the background for the decision of the Austrian Chamber of Commerce (WKÖ) and the Federal Labour Chamber (BAK) to commission a joint study on the subject of employee financial participation.1

Most employee financial participation schemes are voluntary and are to be found in large companies listed on the stock exchange, where company law and the tax system provide a clear and explicit framework. It becomes complicated in practice in limited companies and joint partnerships where arrangements may have to signed by a notary, the company register modified or new partnerships created. But there are practicable models for such company forms, and this has led to a higher uptake of participation schemes in SMEs.

The issue of employee financial participation has lost a lot of its practical relevance since the onset of the economic and financial crisis in 2008. In the pre-crisis period it was a question of letting employees participate in the success of prosperous companies. With no new IPOs in recent years, there have been no new initiatives on employee financial participation in Austria.2

The issue came back to life in the general election campaign in 2013. The Austrian People’s Party (ÖVP) called for profit-sharing schemes that expand tax incentives in its election programme.3

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.