Financial participation of employees in the EU-27 / Jens Lowitzsch.

Format:

Book

Author/Creator:

Lowitzsch, Jens.

Series:

Studies in economic transition

Language:

English

Subjects (All):

Employee ownership--European Union countries.

Employee ownership.

Employee ownership--Law and legislation--European Union countries.

Employee ownership--Law and legislation.

European Union countries.

Physical Description:

xxvi, 327 pages : illustrations ; 22 cm.

Place of Publication:

Basingstoke : Palgrave Macmillan, 2009.

Summary:

In 2003 the European Parliament issued a report on asset formation, calling on the Commission to launch an initiative to promote the financial participation of employees. This book is a response to this report, describing all aspects and forms of financial participation as well as providing a summary of the development of employee financial participation in the EU-27 and an overview of the situation across the member and candidate countries as of 2008. It advocates a European platform for financial participation, and proposes a European policy, the 'Building Block Approach', which draws upon the experience of employee financial participation in Western Europe as it relates to the European integration process.

The authors provide an outline of functional changes in property rights in Europe and of the legal framework for the implementation of financial participation at both the supranational and the national level, including tax incentives. The US Employee Stock Ownership Plan (ESOP) is presented as an example of an advanced model of financial participation. Twenty nine country profiles report on the attributes of governments and social partners as well as on the respective legal framework. For the first time, comparable empirical evidence of employee financial participation in the EU member and candidate countries is made available.

Contents:

Part I A European Platform for Financial Participation

1 The Building Block Approach to a Common European Model / Jens Lowitzsch 3

1.1 Introduction 3

1.2 Objective and context 5

1.2.1 Socio-economic background 5

1.2.1.1 The function of ownership 5

1.2.1.2 Capital concentration is dysfunctional 6

1.2.1.3 Insufficient legal foundations 7

1.2.2 European initiatives 7

1.2.2.1 The PEPPER Reports 7

1.2.2.2 Finding solutions for a 'New Social Europe' 9

1.2.2.3 Summary of the postulate of the European policymakers 9

1.2.3 The current reform process 11

1.2.3.1 Actual tendencies of property development - A challenge for social policy 11

1.2.3.2 Status quo 12

1.2.3.3 Recent studies 13

1.2.4 The path to a European regulation 14

1.2.4.1 Focus: Legislating financial participation schemes 14

1.2.4.2 Unanimous decision versus majority vote 15

1.2.4.3 Different contexts, different approaches: The building block approach 15

1.3 The current situation in Europe 16

1.3.1 Policy issues 16

1.3.2 Problems related to the legal framework and transnational obstacles 17

1.3.3 The national level 19

1.3.3.1 The situation in the old Member States of the EU 19

1.3.3.2 The situation in the new Member States and candidate countries 19

1.4 Towards a European concept of financial participation 19

1.4.1 Choosing a building block approach 19

1.4.1.1 Module One: Profit-sharing (cash-based and deferred) 36

1.4.1.2 Module Two: Employee shareholding (employee shares and broad-based stock options) 37

1.4.1.3 Module Three: ESOPs and share-based profit-sharing 39

1.4.1.4 Specific features of ESOPs 40

1.4.2 Options for creating the legal foundations of a European concept 43

1.4.2.1 Recommendation according to Article 249 paragraph 1 (1) ECT 43

1.4.2.2 Directive level: Amending existing European company law 43

1.4.2.3 National level: Building on existing national company law 44

1.5 Conclusions and summary 52

1.5.1 Compliance with the postulates of the European policymakers 52

1.5.1.1 Achieving competitiveness while maintaining diversity 52

1.5.1.2 The building block approach: Meeting essential principles ... 53

1.5.1.3 ... and overcoming transnational obstacles 54

1.5.2 ESOPs: A thrust for innovation 54

1.5.2.1 ESOP as a vehicle for business succession 55

1.5.2.2 ESOP enhancing cash flow 56

1.5.2.3 The private equity buyout versus the ESOP 57

Part II The Legal Background

2 The Challenge: Functional Changes in Property Rights in Europe / Herwig Roggemann, Jens Lowitzsch 73

2.1 Ownership in the welfare state and in post-socialist transformation 73

2.2 Legal foundations of property 74

2.2.1 Functions of ownership 74

2.2.2 The changing content of property 75

2.2.3 Ownership and control of productive property 76

2.3 Ownership in European law 77

2.3.1 European Community law in a narrower sense 78

2.3.2 Ownership and European fundamental rights 79

2.4 The problem: Unequal distribution and concentration of capital 80

2.5 The German example 81

3 The Legal Framework for Implementing Financial Participation at the Supranational Level / Jens Lowitzsch, Natalia Spitsa 85

3.1 The legislative process 85

3.2 Legal sources for employee participation at a European level 87

3.3 Dealing with tax incentives 89

3.3.1 The problem 89

3.3.2 General taxation of PEPPER schemes in the EU 90

3.3.2.1 Employee share ownership 93

3.3.2.2 Profit-sharing 101

3.3.2.3 Intermediary entities 101

3.3.3 Specific tax incentives for PEPPER schemes in the EU 101

3.3.3.1 Share-based plans 103

3.3.3.2 Stock options 112

3.3.3.3 Cash-based profit-sharing 113

3.3.4 Conclusions 113

4 Systematic Overview of Financial Participation / Jens Lowitzsch, Axel Bormann 121

4.1 Participation in property rights: Control and returns 121

4.1.1 Participation in decision making 121

4.1.2 Financial participation 122

4.2 Employee Participation in Profits and Enterprise Results (PEPPER schemes) 123

4.2.1 Profit-sharing 123

4.2.2 Employee share ownership 124

4.2.2.1 Direct purchase of shares/share savings plans 124

4.2.2.2 Broad-based stock options 125

4.2.2.3 Employee Stock Ownership Plans 125

4.2.2.4 Privatisation-related voucher/coupon schemes 125

4.2.3 Employee share ownership versus profit-sharing 126

4.3 Asset accumulation and employee savings plans 127

4.4 Discussion: Pros and cons 128

4.4.1 Motivation, productivity and economic performance 128

4.4.2 Economic growth and distributive effects: Binary economics 129

4.4.3 Position of trade unions 129

4.4.4 Financial participation and participation in decision making 130

4.4.5 Failure rate of conventional and employee-owned companies 130

5 The US ESOP as an Example of an Advanced Model / John D. Menke, Stefan Hanisch, Jens Lowitzsch 136

5.1 Historical background 136

5.2 Foundations of the US Employee Stock Ownership Plan 137

5.3 Structural changes needed to implement ESOPs and profit-sharing schemes 138

5.4 Key tax incentives for ESOPs 139

5.5 The interim balance in 2007 141

5.6 Future prospects for ESOPs in the US 142

5.7 Models of financial participation - The US and French systems 143

5.8 Four case studies 143

5.8.1 Market Contractors, Ltd. (Business Succession ESOP) 143

5.8.1.1 The company 143

5.8.1.2 The plan 144

5.8.1.3 Buying out the owner 145

5.8.1.4 Average plan participant 146

5.8.2 Stone Construction Equipment, Inc. (Business Succession ESOP) 147

5.8.2.1 The company 147

5.8.2.2 The plan 148

5.8.2.3 Buying out the owner(s) 149

5.8.2.4 Average plan participant 149

5.8.3 Bad case: Golden Bear Packaging, Inc.

(Business Succession ESOP) 150

5.8.3.1 The company 150

5.8.3.2 The plan 150

5.8.3.3 Buying out the owner 151

5.8.3.4 Average plan participant 152

5.8.4 Bad case: Howland Electric & Electronic Wholesale Company, Inc. 152

5.8.4.1 The company 152

5.8.4.2 The plan 153

5.8.4.3 Financing the ESOP transactions (as opposed to a succession ESOP) 154

5.8.4.4 Average plan participant 154

Part III Empirical Evidence and Country Information

6 Benchmarking Financial Participation in the EU / Iraj Hashi, Richard Woodward, Jens Lowitzsch 159

6.1 Introduction: Assessing and benchmarking financial participation - The PEPPER IV Report 159

6.1.1 Aims of the project and specific difficulties to be dealt with 159

6.1.2 The benchmarking indicators 161

6.1.2.1 Sources 161

6.1.2.2 The indicators and their link to the Commission principles 164

6.2 Availability of financial participation schemes in EU companies 166

6.2.1 Percentage of firms offering broad-based FP to employees 166

6.2.2 Financial participation schemes by size and sector 168

6.2.3 Percentage of employees covered 171

6.2.4 Percentage of large (listed) firms with employee share plans 172

6.3 Take-up rate of financial participation schemes in the workforce 174

6.3.1 Percentage of employees participating in FP schemes 174

6.3.2 Percentage of employees participating in profit-sharing schemes with pre-defined formulas on a regular, ongoing basis 176

6.3.3 Percentage of employees holding shares in largest (listed) firms 177

6.4 Conclusions 178

7 Country Profiles / Jens Lowitzsch, Natalia Spitsa, Stefan Hanisch 181

For each of the 29 countries (I-XXIX)

Evolution and diffusion of FP schemes

General attitude (Social partners' attitudes and current government policy)

Legal and fiscal framework

Share ownership

Profit-sharing

Participation in decision-making

I Belgium 181

II Bulgaria 185

III Croatia 188

IV Cyprus 192

V Czech Republic 195

VI Denmark 199

VII Germany 202

VIII Estonia 207

IX Greece 210

X Spain 213

XI France 216

XII Hungary 222

XIII Ireland 111

XIV Italy 232

XV Latvia 236

XVI Lithuania 239

XVII Luxembourg 242

XVIII Malta 244

XIX Netherlands 248

XX Austria 250

XXI Poland 256

XXII Portugal 261

XXIII Romania 263

XXIV Slovakia 269

XXV Slovenia 272

XXVI Finland 277

XXVII Sweden 281

XXVIII Turkey 285

XXIX United Kingdom 290.

Notes:

Includes bibliographical references and index.

ISBN:

9780230224124

0230224121

OCLC:

317931201