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Financial Participation

Various forms of employee financial participation are already in operation in a number of German companies. However, as a proportion of all German companies, the incidence is low. An exact figure on employee financial participation incidence is not available for Germany. However, there are regular annual estimates. The most recent estimates come from the IAB company survey.1 The IAB company survey 2011 puts the incidence of employee share ownership in German companies at 2% and of profit-sharing at 10%.

The IAB company survey also provides a concrete picture on the distribution of employee financial participation programmes according to company size and sector. Both profit-sharing and employee share ownership are under-represented in small companies. Whereas a mere 9% of companies with under 50 employees have profit-sharing schemes, more than a third of all companies with more than 500 employees share their profits with some or all employees (36%). Employee share ownership incidence follows the same lines, at 2% among companies with up to 49 employees and 7% at companies with 55 employees or over. Profit-sharing is most prevalent in finance and insurance, as well as ICT, with a good 25% of such companies offering schemes. In the building sector, along with agriculture and forestry, the incidence of profit-sharing schemes is a mere 3%. There would seem to be little sectoral differentiation with regard to employee share ownership. The survey also shows that employee financial participation is more widespread in West German companies than East German ones.

A current estimate provided by AGP ("Arbeitsgemeinschaft Partnerschaft in der Wirtschaft e.V.“) and GIZ ("Gesellschaft für innerbetriebliche Zusammenarbeit") shows the following picture on employee financial participation incidence in Germany according to the form of participation


Table: Companies offering employee financial participation in Germany (AGP & GIZ 2007/2009)

Form of

participation

Total

companies

Companies

(in %)

Total employees (in 1000)

Employees

(in %)

Capital

(in EUR billion)

Capital

(in %)

2007

2009

2007

2009

2007

2009

2007

2009

2007

2009

2007

2009

Loans

580

534

15.47

12.5

113

97

5.49

4.2

450

406

3.46

3.5

Dormant partnership

1,040

1,292

27.73

30.2

269

339

13.06

14.9

1,345

1,627

10.35

14.0

Indirect participation

490

555

13.07

13.0

97

119

4.71

5.2

475

524

3.65

4.5

Participation right

430

474

11.47

11.1

133

154

6.46

6.8

1,070

1,180

8.23

10.2

Employee stock

620

727

16.53

17.0

1,423

1,537

69.08

6.,6

9,500

7,648

73.08

6.,0

Cooperatives

340

378

9.07

8.8

17

19

0.83

0.8

40

42

0.31

0.4

Participation in Ltd.

250

315

6.67

7.4

8

10

0.39

0.4

120

162

0.92

1.4

Total

3,750

4,275

100

100

2,060

2,274

100

100

13,000

11,589

100

100


More than a quarter of all schemes practiced involve mezzanine employee participation in the form of dormant partnerships.2 Only every sixth company offers employee shares. The incidence of participation is greatly dependent on the size and the legal form of companies. With regard to the number of employees involved, participation schemes are most common in public companies.

Germany occupies an average position internationally with regard to employee financial participation. According to the results of the “European Company Survey“, a survey of more than 27,000 HR managers in Europe conducted in 2009, 14% of private-sector German companies with 10 or more employees offer their employees a profit-sharing scheme. This corresponds exactly to the 30-country European average. The incidence of employee profit-sharing schemes in Germany rises along with company size. 13% of companies with 10-49 employees, 21% with 50-199 employees, and 22% of companies with more than 200 employees have a profit-sharing scheme.3 According to the results of the “European Company Survey“, 3% of German private-sector companies offer their employees share ownership schemes. This puts Germany below the European average of just over 5%.

Employee financial participation schemes are much more frequent in foreign companies located in Germany than in German-owned companies, regardless of size. The higher incidence of employee financial participation schemes in other countries has an effect on foreign-owned companies in Germany.4

According to the Deutsche Aktieninstitut, the German institute tracking share ownership patterns, the number of holders of company shares sank between 200 and 2008 from 1.6 million to 946,000. However an increase can be observed from 2009 onwards, with 1.29 million holders of company shares registered in the first half of 2013. Thus less than 2% of the German population holds staff shares.5

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.