1.1 European Union & Employee financial participation (EFP)

These facts give legitimacy to the current discussions of new forms of employee financial participation. For the first time The European Union (EU) expressly commits itself to the European Social Model as one of the pillars of its policy in the European Reform Treaty signed in 2007 in Lisbon. In 2006 the European Commission (EC) stated in the PEPPER III Report (Promotion of Employee Participation in Profits and Enterpise Results – initiative of the EC since 1990’s to promote employee financial participation in all member states) that a stronger link between pay and performance is one possible way to reform the labour markets.

As Jaen Claude wrote in the Foreword to the The PEPPER IV Report from 2009: “One can furthermore witness a significant number of trends in the labour markets that constitute serious challenges to a further broadening the scope of financial participation schemes. A ‘hire and fire’ mentality is a hardly compatible with the long-term motivation financial participation of staff is supposed to achieve. Employment is not only about labour needs of companies, it is also about family life, long-term personal projects, the basic assurance that also in three months time, mortgages can be repaid and weekend trip planned.”[1]

However, there is a lack of general support to the EFP approach by governments, trade unions and employers’ association, and therefore we propose the following strategy to support EFP and change this dismal state:

  1. Focus on reducing the lack of information / Education.
  2. Promotion of the positive experiences via case studies / Best practices.
  3. Initiation of steps to conquer the ideological myth.
  4. Identification of legislative obstacles & drafting of relevant legislative changes.

[1]    The PEPPER IV Report: Benchmarking of Employee Participation in Profits and Enterprise Results in the Member and Candidate Countries of the European Union, Jens Lowitzsch, 2009

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