The EESC, an EU consultative institution composed of representatives of employers, employees and civil society, recently issued its opinion on Employee Financial Participation (EFP) in Europe. The practices of EFP may consist of three schemes: profit sharing; employee shares of stock options; and a collective employee share ownership model financed from a profit share additional to remuneration.

In Malta, however much we may believe in the precept of linking pay with productivity, such practices of workers’ participation are neither well diffused not broad-based.

The employees at HSBC Bank (Malta) are offered three different share-ownership schemes to which they can subscribe. The employees of the Bank of Valletta at their retirement age benefit from a trust fund which is built up by dividends accruing from a number of shares held at the bank. This fund is administered by a committee elected by the employees. These two practices may be the only two examples of EFP in Malta.

EFP has never formed part of the espoused ideology or the mindset of the Maltese trade union movement

This almost total absence of EFP in Malta may be due to a lack of a support structure in form of legal framework and of an ideological base. As a concept, EFP has never formed part of the espoused ideology or the mindset of the Maltese trade union movement. Neither has it featured on the platform of the main Maltese political parties or in the agenda of the employers’ associations.

The absence of this ideological base should have acted as a spur to the five Maltese EESC members to disseminate the contents of this report which can provide relevant material to MCESD members to discuss what has been hailed as the gradual emerging reform of the post-industrial society.

The salient points of this report, given below, may provide food for thought to persons who are interested in innovative ways of employment and industrial relations.

The first point is that the EFP must be independent of pension scheme but may be an individual complementary resource for employees once they are retired. The EFP may bring desirable benefits such as: a high quality component of good corporate management which helps to improve incomes through participation in a company’s success; a high motivating effect which contributes to a greater senses of identification with the company, reducing staff turnover; and it could, depending on its form, be a partial compensation for losses of purchasing power and correct for recurring fluctuations but it should not replace wage progression.

EFP can also increase employees’ loyalty and identification with the company in good and bad times. EFP thus contributes to securing the future in a sustainable way.

Employees’ justified self-interest in the company’s profitability and thus its long term success will have a positive impact.

There are other benefits. Companies which issue large number of employee shares have a group of demanding but patient and loyal shareholders – their own employees, supporting them in resisting the prevailing short-termism of the financial markets.

Sustainable corporate decisions and acceptance of long-term corporate social responsibility by managers rather than excessive risk-taking are desirable side effects of his kind of EFP.

For the shareholders in the company, it is an advantage to know that they have the company’s employees on board as shareholders pursuing the same objectives.

Positive participation by employees based on ownership rights and the resulting sense of responsibility can contribute to better corporate governance.