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Financial Participation

Employee share ownership plays no major role in Slovakia. Unlike in other Eastern European economies, the privatization process which started at the beginning of the 1990s did not have a significant impact on the emergence of participation schemes. By contrast, the incidence of profit-sharing in Slovakia is fairly high by European comparison. Financial participation does not enjoy much attention in the public debate at present.

 

The privatization process in Slovakia goes back to before the dissolution of Czechoslovakia. Many reforms had been launched before 1993, but their outcomes became clear only after the break-up of Czechoslovakia, so that privatization and its outcomes developed on slightly different paths in Slovakia and the Czech Republic, though with many common features.

 

 

Just as in the Czech Republic, very few concessions to insiders were made in the privatization process in Slovakia in terms of participation. As a consequence and different to other Eastern European countries, the share of employee ownership stemming from large-scale privatization programmes was quite low.

 

 

The privatization techniques used in the early 1990s followed mainly the same pattern: small firms were privatized through auctions and tenders, medium-sized firms were sold by tender and large enterprises were transformed into joint-stock corporations. Their shares were distributed during the voucher privatization, either being sold or transferred for free. Employee share ownership was created in this way.

 

 

After the break-up of Czechoslovakia voucher privatization was stopped and the remaining enterprises affected from the large-scale privatization programme were privatized through direct sales.1 Moreover, a special programme regarding employee privatization was set up with employee participation in established companies and the issuing of employee shares foreseen. However, this programme had no notable results and most enterprises were privatized through direct sales favouring inside management. These sales were implemented in the form of management employee buy-outs (MEBOs), with the management holding more than 50% of the shares.

 

Today, foreign ownership is the most common ownership form in the Slovak economy, while employee share ownership plays only a marginal role.

 

Cooperatives account for only a small part of the Slovak economy. Immediately after the break-up of Czechoslovakia, cooperatives still made up about 9% of all firms, most of them agricultural cooperatives.2 Their number and incidence decreased continuously in the following years, reaching about 3% in 2002. This was mainly due to the reform of the legal framework for cooperatives, which intended to set the whole system on a new, modern basis and accelerated the market exit of those cooperatives which were rather weak.

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.