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Recent
data on employee share ownership in Europe
confirms the major trends noted over the last
ten years. Employee share ownership in large
European companies is deteriorating. The main
factor in this deterioration has now been
clearly identified.
On
the other hand, the dynamics of employee share
ownership in Europe are shifting towards SMEs.
In just a few years, the UK has established
itself as Europe's number one country for
employee ownership in small and medium-sized
companies.
In
large companies, the number of employee shareholders
is stagnating and has not managed to return
to the level reached in 2011 (Graph 1).
It is lower today than it was ten years ago,
with 6.85 million employee shareholders now
counted in large companies. If we add a million
employee owners in SMEs, the total number
in Europe is 7.9 million, compared with 8.2
million in 2011.
The
rate of democratisation of employee share
ownership continues to fall (Graph 2),
employee share ownership is becoming less
and less democratic in Europe. One employee
in five is still a shareholder in their company
today, compared with one in four previously.
The fall was particularly drastic in France.
Employment has risen sharply in large French
companies, but the number of employee shareholders
has not kept pace. If the rate of democratisation
had been maintained, large French companies
would have 3.7 million employee shareholders
today instead of the 2.9 million recorded.
Finally,
the third indicator of employee share ownership
in Europe is that the proportion of employees
in the capital of large European companies
has stopped growing. It will be just 3.01%
in 2023, compared with 3.10% in 2013 (Graph
3). The proportion of ordinary employees
(excluding executive directors) fell to 1.60%,
its lowest level since 2007.
On
the positive side, an increasing number of
large European companies are introducing employee
share ownership schemes and seeing a greater
uptake in employee share ownership. In 2023,
95% of large companies had employee share
ownership and 58% had democratic plans for
all their employees, while 32% had launched
new plans, a percentage that tends to increase
from year to year.
As
for employees, the trend is still towards
growth in the capital they hold in their company
shares, amounting to €441 billion in 2023.
Millions of employees benefit from the scheme,
which represents an average of €34,400 for
each employee shareholder (excluding executive
directors). All the figures show that employee
shareholders in large companies are committed
to the long term, seeing that the balance
of risks and rewards is clearly in their favour.
As
a result, employee share ownership continues
to be popular with both companies and employees
who have access to it. So why is there a downturn
in employee share ownership in large European
companies?
Because
employee share plans and policies are becoming
less and less effective in large companies.
Because policies remain national, while the
employees of large companies are increasingly
based outside their home country. This is
the well-known phenomenon of job relocation
(Graph 4).
Without
support, employees generally do not have the
means to invest financially in their company.
Promoting democratic employee share ownership
is a political choice, generally supported
by tax incentives. Today, only 35% of the
employees of major European companies are
still based in their home country. As a result,
only a small minority of them are able to
benefit from the tax incentives for employee
share ownership set out in national legislation.
Employee
share ownership policies, for example, have
lost 30% of their effectiveness in just a
few years because they remained national in
scope. This explains why recent legislative
efforts in several countries (Loi Pacte in
France, fourfold increase in tax incentives
in Germany) have had no significant impact
on employee share ownership in large companies.
This
reflects Europe's failure to promote a democratic
employee ownership policy.
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Employee
share ownership in Europe in 2023
