Employee participation in profit and ownership: A review of the issues and evidence

Profit sharing and employee share ownership cover at least 17 million employees in the European Union. The paper reviews international research evidence on the effects of employee financial participation on productivity and employment, and the implications for policy. There is remarkable agreement across studies from more than 20 countries in Europe concerning several tens of thousands of enterprises that financial participation has a positive or neutral effect on productivity. The magnitude of the effect may depend on employee involvement and participation in enterprise governance at various levels. The paper also looks at tax concessions, stability and risk issues under employee share ownership, employee-owned co-operative enterprises, and connections with the pensions debate, social dialogue and other aspects of the employment relationship such as gender and ethnic discrimination.