The report was presented in the plenary yesterday. At that occasion, rapporteur Phil Bennion (ALDE) explained the benefits of EFP for companies and especially SMEs as “a concrete way for companies to share success”. In the Strasbourg hemicycle, Bennion called for the EU to act, pointing out the lack of information within the EU, the lack of legislative incentives in some Member States, the different national taxation as well as the multitude of existing ESO models hampering companies that operate cross-border. To overcome these problems, Bennion proposes to share best practice examples between the Member countries, possibly leading to mutual recognition of these schemes. At this regard, Bennion refers to the current EU pilot project and the benefits that a Virtual Centre for EFP as well as an effective tax rate calculator could bring in order to augment the available information. Finally, he invited the Commission to conduct an impact assessment for a 29th regime for EFP.

– These topics will be part of our Brussels conference “Taking Action: Promotion of Employee Share Ownership” that will take place on the 30th of January 2014. –

In the following contributions, MEP Sari Essayah (EPP) pointed out the importance of the exchange of information between Member States. Shadow rapporteur Evelyn Regner (S&D) mentioned the Spanish Sociedades Laborales (click here to read more about this topic) as a well-working example for alternative EFP models. She also highlighted the voluntary character of EFP schemes which should always come on top of basis pay.

In his speech Commissioner Janez Potočnik emphasised the role of EFP as a source for long-term investment and he underlined Barnier’s support for the idea of a 29th regime. He further referred to the conference on ESO on 30 January, presenting an opportunity to get the feedback from the various stakeholders.

So what can be done? The Economist states that the goal should be to strengthen workers without hamstringing firms. In fact, “a good antidote to labour’s falling share of national income would be to boost ordinary workers’ share of capital.”

The Economist is right when underlining “ugly consequences” of this development. Since the rich own most of the capital – i.e. in 2008 the richest 20% of the population in Germany owned 80% of all capital assets – the increase of the share going to capital worsens inequality even more.

This effect is reinforced by the technological progress due to which the labour input in production decreases in comparison to the capital input and, as a result, the owners of productive assets receive a growing share of the income whereas the owners of human labour receive a proportionally ever-smaller share.

So the question is how productive property can be financed for the many. This is what the Employee Stock Ownership Plan, the ESOP, invented more than 50 years ago by American lawyer and investment banker Louis O. Kelso does. It uses the borrowing power of a company to acquire shares of that very company for its employees.

Click here to read more about leveraged ESOPs.

Read the full article from The Economist (Nov 2nd 2013) here:

A shrinking slice – Labour’s share of national income has fallen

Find a second article on the topic (from the same edition) here:

Labour pains – All around the world, labour is losing out to capital