Financial participation, in the forms of profit-sharing and share ownership, has been a feature of employee participation in the EU for many years. While financial participation has been supported in some Member States through tax incentives and other forms of legislation, there is a wide divergence in approaches to be found in different countries. There is also concern at European level that costs and administrative complexities have hampered the large scale introduction of financial participation schemes.
Financial participation has been the focus of attention by the European Commission since the publication of the Pepper reports. In an effort to move the issue forward, the Commission published a Communication in 2002 on a framework for the promotion of employee financial participation. Opinions drafted by the European Economic and Social Committee and the European Parliament resolution further underline the importance of financial participation, particularly in relation to small and medium sized enterprises. In 2004, the European Commission published the report from the high level expert group on various transnational barriers which currently impede the introduction of schemes in companies with several establishments in Europe.
The following Eurofound reports deal with benchmarking of financial participation policies and practices across the EU:
- Financial participation in the EU: Indicators for benchmarking outlines the scale of financial participation across the European Union, highlights differences in national policies and pinpoints characteristics that could act as barriers to the widespread uptake of financial participation schemes.
- Financial participation in the EU: a benchmarking study of Slovenia aims to ‘road test’ Eurofound's financial participation indicators by applying them to a real life case, and to consider options for dealing with the lack of complete data.
In 1999 Eurofound initiated a research project which aimed to provide a comparative overview of the nature and extent of financial participation in the EU. The first study, Recent Trends in Employee Financial Participation in the EU updates the legislative and financial practices in the EU Member States and the information in the European Commission's Pepper I and II reports. This report focuses on four areas of financial participation: cash-based profit-sharing; deferred profit-sharing; employee savings plans; and employee share ownership. It also contains quantitive data from the Foundation's EPOC survey on the relationship between forms of direct and financial participation in EU workplaces. A report summary is also available.
The incidence and characteristics of share ownership and profit-sharing schemes in the EU Member States (excluding Luxembourg) was examined in the second phase of research. This study was undertaken with Cranfield University and involved analysis of data from the CRANET E survey, measured against a range of workplace issues, in enterprises with more than 200 employees. Altogether 2,500 business units were included in the study. The report, Employee share ownership and profit-sharing in the European Union provides a comprehensive overview of the structural, participation and human resource management characteristics of business organisations with financial participation throughout Europe. A report summary is also available.
Eurofound has investigated the extent to which national organisations and institutions influence aspects of financial participation and the impact financial participation has on employee relations and human resource management policies. This phase of the project was carried out in eight EU Member States: Belgium, France, Germany, Italy, the Netherlands, Portugal, Sweden and United Kingdom. The resulting report Financial participation: the role of governments and social partners provides a comprehensive picture of the current situation, and examines to what extent governments, trade union confederations and employer organisations influence the shape of financial participation measures within each country.
Further research activity was focused on quality aspects of financial participation aimed at developing criteria for the monitoring of new developments in financial participation schemes and especially in small and medium-sized enterprises (SMEs) within the Member States. The report on Financial participation for small and medium-sized enterprises: Barriers and potential solutions explains the concept of financial participation and what it means for SMEs. It explores the reasons for introducing financial participation in SMEs, the barriers and challenges that are encountered and also highlights the positive role that financial participation can play.