It’s written in the stars. Except when it isn’t…
This time last year I made a pretty bold forecast in the area of remuneration and reward.
I forecast that 2017 would be the year when the British government announced some pretty punchy tax-driven policy initiatives encouraging the development of employee profit sharing schemes and wider employee share ownership.
You can read my first 2017 blog here.
“Boldness be my friend: Arm me audacity from head to foot!”, wrote Shakespeare. Well, not this time. Not for me… or Theresa May.
The June 2017 general election result changed everything.
Any hope I harboured that Theresa May’s government would have the strength and vision to radically reform the domestic agenda evaporated at approximately 10.01pm on election night as the exit polls forecast a hung parliament.
Even before the general election the whole of Whitehall was consumed by the enormous legal, technical and practical implications of making Brexit happen.
If there was very little government bandwidth to pursue radical new policy initiatives before the general election, a Prime Minister fighting for her political life for the remainder of 2017 was hardly going to be the catalyst either.
Hope springs eternal
But, the problems of intergenerational fairness, inequality, and a growing sense that capitalism isn’t working, have not gone away.
If anything, the problems have become amplified during the course of 2017, most obviously manifesting themselves in the form of Corbynism.
One of the better quotes from an MP last year was: “How can millennials believe in capitalism when they have little chance of owning any capital?”
It is self-evident to me and many others that capitalism needs new expression, a new fan base, a makeover.
If politicians want to get elected in the future, they will need new solutions to deal with the quantitative easing-driven rise in wealth inequality.
And if a by-product of quantitative easing is higher inflation, then 2018 will probably see workers demanding a bigger slice of the pie – and politicians will want to make sure that it happens.
So I remain convinced that we are going to see more state intervention as politicians look to shift profits away from executives and shareholders to workers.
And what better way to achieve this shift than through a more diverse form of business ownership – employee ownership.
Employee ownership (to which I will also add profit sharing) works on the basis that spreading ownership of capital, or embedding the right to claim a share of pure profit, is more ethical, productive, democratic and generationally fairer, than what we have at the moment – what I like to call shared capitalism.
It is about recognising that in an era of globalisation and disruptive technology, the power and advantages of owning and having access to capital has the potential to overlook, or even neglect, the valuable contribution made by all employees at keeping their employer’s show on the road.
The idea of sharing ownership and profits with a broad base of employees is of course hardly new, but it is an idea that can easily be upgraded, refreshed and modernised. For example:
- What about offering companies tax incentives for operating an employee share plan or profit-sharing plan?
- How about making SAYE plans (the most popular share plan for ordinary employees) completely exempt from capital gains tax?
- Or, should we make opting into an employee share plan compulsory? Similar to pension auto- enrolment, employees would be opted into an employee share plan and would have to physically opt out if they wished to be excluded from participation.
- How about expanding the very successful and flexible EMI share option regime into larger companies or allowing EMI to operate at the subsidiary level?
- Could we better incentivise the growth of employee ownership trusts? EOTs are growing in popularity but that popularity could easily be accelerated. The think tank IPPR has put out an interesting research document on the subject.
- What about giving employees the ‘right to request’ that an employee share plan should be established?
I may have called it too early last year (and probably this year as well), but I am in no doubt that increased employee ownership and profit sharing will become a common feature of the corporate and business landscape.
To quote Shakespeare again: “True hope is swift, and flies with swallow’s wings.”