Inštitut za ekonomsko demokracijo

Wealth inequality, crisis and employee ownership

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In times of crisis and continuous deprivation of material and social conditions of the working people, structural changes of our economy are needed. Recent article by Christopher Marquis at Forbes recognized a great potential to do so behind employee ownership (EO). 

“[T]here are many reasons that employee ownership, where employees have an ownership stake and decision-making power, may be a much more sustainable and resilient business model over the long term. In addition, as the “K-curve” recovery from COVID-19 continues to increase the divide between rich and poor, sharing ownership has proven to be one way to more evenly distribute wealth across all income levels. […] Responsible businesses have to take that head on, get over their fears about giving employees access to their financial statements, and understand they’re being agents of wealth concentration if they’re not committed to employee ownership.”

Marquis continues that there are many reasons in addition to social responsibility for businesses to seriously consider EO. One can try to ensure mission by including workers in company’s ownership. For example, EO can ensure employees’ “engagement with the company and its mission”.

A report of Fortune magazine’s 100 Best Companies To Work For bears this out by showing that employee owners “were substantially more likely to say that their company had a collaborative management culture, that they were getting a fair share of compensation, and that their company was an ‘excellent place to work.”

Furthermore, EO businesses benefit from much lower voluntary turnover rates, “where median tenure [of employee owners] with their current employer is 5.2 years, compared to 3.4 years for the non-employee-owners”.

Finally, EO guarantees greater material security for their workers. “In 2018, the  National Center for Employee Ownership found that workers in ESOPs obtained an average retirement balance of $170,326, which is more than twice the national average of retirement balance.”

Read more at Forbes.



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