1st Congress of Economic Democracy: For a Share in the Future.
On October 6, 2022 the Institute for Economic Democracy held the first Slovenian Congress of Economic Democracy (KED) – For a Share in the Future in the City Museum in Ljubljana.
At the event, we discussed the best Slovenian and international practice of employee ownership, we connected relevant stakeholders in the field of employee ownership, and announced the Vision 10-30, which sets the goal of having 10% of workers in private sector as co-owners of businesses by the end of 2030.
- Robert Golob PhD, Prime minister of Slovenia
- Luka Mesec, Minister of Labour, Family and Social Affairs
- David P. Ellerman, President of IED
- Stephen Smith, Director of Amsted Industries
- Employee ownership in Slovenia (Jure Knez, Matjaž Čemažar, Peter Kosin, moderated by Tej Gonza)
- A step towards the European network of economic democracy (Nicolas Aubert (FR), Fred Freundlich (ES), Pascale Nieuwland-Jansen (NL), and Ermanno Celeste Tortia (IT), moderated by Prof. Aleksandra K. Mrčela)
Summary of main points
Tej Gonza, Director of IED, explained that the first ESOP pilot projects have been established in Slovenia; the Institute for Economic Democracy (IED) has implemented sloESOP ownership structure in four companies or will do so by the end of 2022. The institute has also provided training in financial literacy, participatory management, and ownership culture for employees and management in enterprises. The models developed by the IED received a lot of international attention, and the institute is looking to disseminate the European ESOP to other EU countries. IED put Slovenia on the world map of economic democracy. Gonza announced the 10-30 vision, which aims to make 10% of the private workforce in Slovenia co-owners of the companies where they work by the end of 2030. Gonza argues that the objective is achievable, but only if the relevant stakeholders from politics, the financial sector, social partners, experts, and others collaborate on that goal.
Robert Golob, the Primer Minister of Slovenia, expressed the government’s support of the concept of employee ownership in private companies and even non-profit institutions. He finds employee ownership to be a policy that makes everyone better off – it increases added value in the economy, builds affiliation and a competitive advantage in the globalized world. He emphasized that Congress is only the first step in the promotion of economic democracy in Slovenia.
David Ellerman, former advisor to Joseph Stiglitz at the World Bank and the President of IED, introduced the most successful contemporary examples of employee ownership – ESOP in the US and EOT in the UK. Both models build ownership through a separate legal entity that holds shares of the company on behalf of employees. ESOP companies in the US now employ 10% of the private sector workforce. Since the EOT law was passed in 2014 in the UK, almost 1,000 companies have transitioned to employee ownership. He explained that the Institute for Economic Democracy has developed a model that builds on the best practice and further improves it. This model is the European ESOP, which was presented in the technical paper published in 2020 and later updated in 2022. It is the model on which the pilot implementation of ESOP in Slovenia is based.
Luka Mesec, the Minister for Labour, Family, Social Affairs, and Equal Opportunities, spoke of the role that economic democracy can play in providing a socially responsible model for the Slovenian economy. He argued that economic democracy yields positive social externalities – especially in empowering and building the autonomy of individuals, which can positively contribute to political participation. He assured that the economic democracy was one of the priorities of his mandate.
Stephen Smith, the CEO of Amsted Industries, introduced Amsted as the company with 17,000 employee-owners, who own 100% of the shares of the company through the ESOP trust. Amsted Industries is a leading manufacturer of industrial components for railways, transportation vehicles and construction. Smith has repeatedly pointed out that employee ownership is their competitive advantage and a business model; and one of the important reasons for the company’s success. The US is very actively supporting employee ownership through various measures, which enables employee-owned companies like Amsted. Experience shows that, on average, employee-owned companies are more productive, more resilient in times of crisis, and provide better working conditions for employees. Smith argued that the ESOP in the US is a solid proof that employee ownership contributes to added value and social responsibility, and that the Slovenian government should provide support for the policy promoting employee ownership.
The first panel hosts three directors of employee-owned companies. Peter Kosin (Inea d.o.o.) talked about financing challenges they have faced when transitioning to a 100% ESOP in order to address the succession problem. One challenge was to convince the retiring owners that the company should continue with employee ownership, and another challenge was to assure the banks about the ownership structure. He thinks that the government could help with the financing problem. Finally, he acknowledged that employee ownership must be accompanied by appropriate knowledge and culture shared among the employees and the managers.
Jure Knez (Dewesoft d.o.o.) compared the sloESOP model with the direct share purchase plan for employees. Direct ownership provides more flexibility, while the ESOP model anchors ownership among employees over the long term; it ensures inclusiveness, predictability and stability of ownership for employees and builds a culture of ownership among all employees in the company. He argues that the models are compatible and could co-exist in companies devoted to employee ownership. Knez praised Mondragon as an example of cutting-edge employee ownership practice, and talked about his vision for Katapult d.o.o., the entrepreneurial accelerator, which will provide services to start-ups through employee-owned infrastructure.
Matjaž Čemažar (Domel d.d.) emphasized the local responsibility of employee-owned companies. He argued that the reason Železniki is the municipality with the best living standard in Slovenia is partly because the main employers in the area are two large employee-owned companies, Domel and Alples. He mentioned the succession challenge, and discussed the problem of taxing stock buybacks, which they used to consolidate ownership with employees. Čemažar agrees that sloESOP offers a more sustainable and long-term solution to employee ownership.
The international panel hosted Ermanno Celeste Tortia (University of Trent, ITA), Pascale Nieuwland-Jansen (Institute for Financial Participation, NL), Nicolas Aubert (Aix-Marseille University, FRA) and Fred Freundlich (Mondragon University, ES). The panel discussed the potential of a more unified front in employee ownership research and policy, but also as a business network that connects employee-owned companies around Europe. They all agreed that employee ownership in Europe is fragmented and that each country has its own idiosyncratic schemes, which presents certain challenges. They identified the need for a more unified European front that would provide additional leverage at the EU institutions. In terms of the European model for the SME sector, Slovenia could provide a precedent with the sloESOP.
Bios and quotes from the speakers
David Ellerman, PhD, President of IED
David Ellerman has written about the theory and practice of worker co-operatives and democratic employee stock ownership plans (ESOPs) for about half a century. After a decade in the World Bank, he is now retired and living in Ljubljana, Slovenia, where he is a co-founder of the Institute for Economic Democracy. His writings can be found on his website: www.ellerman.org.
Tej Gonza, Managing Director of IED
Tej Gonza is a Co-Founder and a Director of IED, where he works on policy, legislation proposals, and practical implementation of employee ownership models. He graduated from Economics at the Faculty of Economics in Ljubljana and continued his studies at Erasmus Institute for Philosophy and Economics at Rotterdam University, where he developed his interest in economic democracy. Currently, he is a PhD candidate working on employee ownership. Gonza co-designed the European ESOP, Platform ESOP, and European Marcora as three different generic models for spreading worker ownership
Stephen Smith, CEO of Amsted Industries
Stephen Smith is the CEO of Amsted Industries, a global manufacturer in the transportation equipment and construction industry that has been employee-owned since 1986. He previously served as Chair of Employee-Owned S Corporations of America (ESCA), an organization which advocates for employee ownership in the United States.
“I am pleased to see employee ownership spread to other parts of the world like Slovenia, as I envision a day when a global company can be owned by workers throughout the world.”
Jure Knez, co-founder of Dewesoft
Jure Knez, PhD was born on July 15th 1974 in Trbovlje, where he also attended primary and secondary school. He continued his studies at the Faculty of Mechanical Engineering in Ljubljana, where he earned his PhD.
In 2000, he co-founded Dewesoft, a multinational company producing highly innovative data acquisition software. With an annual growth rate of more than 20%, Dewesoft is one of the fastest-growing companies in the industry, as well as one of the Slovenian-owned companies with the highest value-added.
The company also stands out for its ownership structure. Since the very beginning, Jure Knez has been supportive of employee ownership, as he believes the best guarantee for the long-term success of his company are its own employees. Dewesoft is currently owned by more than 80 of its employees.
“In Slovenia, we urgently need to recognize the value of our domestic capital. It’s more patient, socially responsible, and gives back to the community. We have to move on from the idea that foreign capital is more valuable.”
Matjaž Čemažar, Chairman of the Board of Directors of Domel Holding d.d.
Since 2018, Matjaž Čemažar is the Chairman of the Board of Directors of Domel Holding d.d. Previously, he has worked as Head of the R&D department responsible for the development of Domel’s product range. As a member of the governing body of the University of Ljubljana, he represents the interests of industry in decisions about strategic development. Since becoming Chairman, Čemažar has been active in the field of employee ownership and associated legislation.
“Employee-owners feel closer to the company, they make decisions that are economical and rational. Ownership culture develops because employee-owners consider their share as a long-term investment for which they are responsible but which also grants them certain rights.”
Peter Kosin, CEO, Inea d.o.o.
Peter Kosin, sportsman and numismatist at heart, is a trained electrical engineer. He has worked at Inea since 1994. In 2004, he became a co-owner of the company, and since 2010 he is its CEO. Kosin, who enjoys strong support among staff and has gained plenty of educational and professional experience abroad, has had a pivotal role in the processes of bringing Inea to international markets and putting the company on a path to internal ownership. He is guided by realistic optimism, common sense and a strong sense of care for others.
“Already by next year, Inea will most likely have more than 100 employees. If we want to continue to feel at home in our company and if we want it to benefit its employees and remain immune to external influence, then collective ownership is the only right answer.
The Congress of Economic Democracy provides us with a platform to help companies dealing with the problem of succession to transition to employee ownership. I hope that together with other advocates we can convince the sceptics that cooperative ownership is not a step backwards, but a step forward.”
Aleksandra Kanjuo-Mrčela, Professor of Sociology of Work and Economic Sociology at the Faculty of Social Sciences, University of Ljubljana
Between 1999 and 2001, she was a visiting scholar at the London School of Economics and Political Sciences. She has been a member of the European Commission’s expert networks in the field of gender equality and employment since 2004. She was vice-dean at the Faculty of Social Sciences between 2007 and 2011. Economic democracy is an important topic of her research and pedagogical work. From 2015 to 2021 she was the head of the Doctoral Study at the University of Ljubljana. From 2021 she is the head of Centre for organisations and human resources research at the FSS UL. She is a co-founder of the IED and a member of the IED expert committee.
Pascale Nieuwland-Jansen, Director of SNPI
Pascale Nieuwland-Jansen, MA studied International Business and Indonesian Languages at the University of Leiden and Erasmus University Rotterdam (1997). In 2005 and 2008 she studied Human Resource Management (ISBW) and did a master HRM. Since 2013, Pascale Nieuwland is Director of SNPI. Before becoming a director, she had worked as a Consultant at SNPI for 8 years. SNPI, the Netherlands Participation Institute, is a non-profit foundation for the promotion of employee share ownership in the Netherlands.
“It is important that more European countries start promoting financial participation for employees. It is evidence-based that all forms of broad-based financial participation of employees are adding value to the company, the employees, and the national economy.
The European Union is united in many ways, but not when it comes to financial participation. There are countries with many fiscal incentives for financial participation and there are European countries without any fiscal incentives.
It is time that we are seeking for a more central approach to financial participation in Europe.”
Fred Freundlich, Professor of Cooperative Enterprise
I am an American, transplanted to the Basque Country of Spain in 1995. As a professor at Mondragon University there and a member of its Lanki Institute for Cooperative Research, I teach courses on cooperatives and ownership of enterprise and do research and company training on intercooperation among cooperative firms and the effects of shared ownership at work.
“This Congress is a central piece of a strategy that will move Slovenia toward economic democracy, that is, more sustainable and fair enterprise development and general prosperity. Broadly shared business ownership is crucial to this strategy and the Mondragon cooperative group (to which my university is affiliated) is perhaps the most successful example of shared worker ownership in the world, an integrated network of over 90 advanced manufacturing and service firms and tens of thousands of working people. I hope to contribute to the Congress by explaining intercooperation in Mondragon – cooperation among cooperative companies – a series of interwoven policies and practices that make up a cornerstone of Mondragon’s success and durability over the last 60 years. These might well be adapted to the Slovenian context and help fortify the county’s efforts to build its own version of economic democracy.”
Nicolas Aubert, Professor at Aix-Marseille University
Nicolas Aubert is a Professor at Aix-Marseille University and a fellow at the Institute for the study of employee ownership and profit sharing at Rutgers University. His research focuses on the effects of employee ownership on corporate performance and governance and on the financial risk of employee ownership. He is a member of the scientific council of the French federation of employee ownership.
For more information: https://sites.google.com/site/niaubert/
“I can contribute to the conference by talking about employee ownership practices in French companies and possible development paths in smaller companies where it is less developed. Moreover, another way of developing employee ownership in Europe is to be part of sustainable finance practices.”
Ermanno Celeste Tortia, Associate professor at the University of Trento
Tortia is an associate professor at the University of Trento, Department of Economics and Management. His research activity focuses on institutionalist theory of the firm, organizational studies, personnel economics and HRM, applied to research on third sector organizations: social enterprises, non-profit organizations and cooperative enterprises, with particular reference to worker cooperatives. He has also participated in research on the economic development of local systems.“As John Stuart Mill and Professor David Ellerman have stated, economic democracy and worker cooperatives represent the most advanced form of organization in the production and exchange of goods and services because they are capable of realizing the full liberation and self-realization of workers in the productive sphere. Because Prof. Ellerman has devoted several decades of his work to developing a model of worker cooperatives that can effectively replace capitalist enterprises, combining effectiveness and efficiency with workers’ rights and participatory governance, this event aims to discuss his model and other models of worker cooperatives that exist and thrive in competitive settings, such as the Italian and Spanish ones (particularly Mondragon). Comparing different models can provide further crucial insights into how worker cooperatives can evolve and achieve mainstream status in contemporary economies. My role will be to bring the Italian experience of worker cooperation into the discussion and to compare it with that of Spain and Slovenia. I will also provide some insights related to my research on worker cooperatives, particularly on the role of layoff and collective capital (indivisible reserves) in this form of ownership.”