Alongside initiatives in individual European countries the EU itself has cautiously taken the first steps towards the political support promotion of the idea of financial participation since the beginning of the 1990s.


Four PEPPER Reports (Promotion of Employee Participation in Profit and Enterprise Results, see Uvalić 1991, European Commission 1996 and Lowitzsch et al. 2006 and 2009) have been published and two expert groups set up to identify existing obstacles in the way of a further expansion of employee financial participation and to promote EU-level harmonisation (of conditions encouraging employee participation)

The PEPPER proposals for participation schemes are based on the following common minimum criteria for such schemes which at the same time to some extent represent the maximum achievable consensus in European countries in this area:

  • Participation schemes are voluntary actions by companies which are only indirectly promoted by government incentives.
  • Participation schemes are solely enterprise-related, that is, there are no sectoral schemes, pension plans, etc.
  • Participation schemes are to be open to all employees in a company (broad access).
  • Participation schemes should contain profit-sharing, that is, they are coupled to company performance without being part of stipulated wages and salaries.
  • There is a connection between participation and decision-making rights only to the extent that they derive automatically from capital shares, but not as a political initiative.

There have been a series of efforts and political initiatives in the European Union to harmonise the development of financial participation. In December 2003 an expert group published a report for the European Commission on the cross-border obstacles to employee financial participation. The expert group’s recommendations included, alongside a demand for tax harmonisation and standardisation of stock exchange rules, a proposal to develop a uniform scheme for employees’ participation at the enterprise level.

A second expert group set up for this purpose in 2004. It came up with a comprehensive concept in 2005 containing recommendations for standardising the framework conditions for promoting employee financial participation (more or less minimum criteria). However, implementation of a uniform scheme will not be achievable until such issues as differences between EU Member States in the taxation of employee financial participation have been resolved..

In September 2007, the French Minister of Finance, Christine Lagarde, announced the launch of a new “European participation model” planned in association with the French EU presidency in 2008. In October 2010, the European Economic and Social Committee adopted an own-initiative opinion on “Employee Financial Participation in Europe”. According to this, employee financial participation is seen as an “opportunity for businesses, employees and society as a whole to participate more, and more effectively, in the success of the increasing Europeanisation of economic activity”. The European Economic and Social Committee’s intention behind the opinion is to foster greater public awareness for the subject, with the ultimate aim of prodding Europe to develop a framework concept promoting social and economic solidarity in Europe. Such a concept would facilitate the application and practice of participation schemes on different levels (e.g. as workforce shares, profit-sharing or asset accumulation).

On 22 March 2012 there was a public hearing before the European Parliament on the topic of workers’ financial participation. Companies and social partners were invited to the hearing who emphasised that European regulation of financial participation was needed. According to some participants, in particular a uniform system for taxing participation schemes in EU member states should be introduced. In the view of the social partners employees should also be given a say in enterprise decision-making because ultimately they are shareholders.

In December 2012, the European Commission, in its Communication on the Action Plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies, declared in connection with employee share ownership that the interests of employees in the viability of the companies they work for is an issue that should be taken into account in working out a practicable governance framework. The involvement of employees in an enterprise’s affairs can occur through information, consultation and participation in the administrative or supervisory board. According to the Commission forms of workers’ financial participation are also appropriate in this respect, especially if the employees are or will be shareholders in their company. The Commission mentioned that employee share ownership has a long history in many EU countries and in many cases has been a success. This can play an important role in increasing the proportion of long-term oriented shareholders. The Commission thus considers it important to concern itself in detail – and with a view to the Internal Market dimension – with aspects of taxation, social security and labour law. It aims to find out which initiatives in Europe for promoting cross-border employee share ownership schemes are adequate. In this way potential obstacles to cross-border programmes can be determined and analysed, and appropriate measures can be taken to promote cross-border participation schemes.