In the past, Australia has missed golden opportunities to develop an effective employee ownership policy. Given looming demographic pressures, any future failure to promote commitment and productivity in the workplace will have a serious effect on this nation’s prosperity. Ordinary Australian workers must have the chance to become significant co-owners of the businesses in which they work.
The Employee Ownership Group (EOG) in Australia is a network of corporations committed to promoting Employee Share Ownership Plans (ESOPs) for all employees. The EOG envisages an Australia in which employee share plans will be widespread in the workplace and run deep within businesses.
The purpose of employee ownership is to provide a means by which the mass of employees can become direct co-owners of the businesses where they work.
Employee share ownership has been developed as a way of reforming one of the key problems confronting the free enterprise economy: how to share the ownership of society’s capital resources among the widest number of people without compromising either private ownership or economic freedom. Employee Share Ownership preserves both of these principles. It does so by providing employees with the means to purchase a personal stake in the enterprise that employs them. In sum, employee ownership aims to assist employees to become genuine ‘capitalists’.
In Australia today the chief beneficiaries of ESOPs are the employees of publicly listed companies. However, the overwhelming majority of private sector employees work for unlisted companies and private companies – and these often face insuperable barriers to implementing employee share plans.
Without the kind of widespread joint ownership offered by employee share plans across the economy, there is no sure ground upon which to reconcile the old hostility between capital and labour. This is because the basis of that antagonism has been precisely the ownership – and (or) control – of capital on one side and the lack of capital on the other. For this reason ESOPs offer an historical opportunity to address a source of major social and economic dislocation and conflict and to strengthen, in a fundamental way, the free enterprise system.
There are also certain implications that flow from employee ownership, and the structure of employee share plans, which provide additional incentives for strong, pro-ESOP policies.
For example, research indicates that companies whose employees share substantially in the ownership of the business decisively outperform their rivals whose employees are not shareholders in the firm. This is because companies with high levels of employee ownership demonstrate higher measures of commitment to the interests of the business by their employees and, consequently, higher productivity and profit levels, than their peers with lower levels of employee ownership, or none at all.
The EOG therefore is calling on the Australian Government to implement the following ESOP legislative and regulatory reform measures:
o A single share plan with tax-exempt and tax-deferred elements;
o Tax to be applied only when the value of shares is realised;
o Growth in share value to be taxed as capital rather than as income;
o The flexibility to offer a wider range of equities than simply ordinary shares;
o More advanced share plan integrity measures; and
o Streamlined disclosure requirements.