Upload
pamela-summers
View
219
Download
1
Tags:
Embed Size (px)
Citation preview
Financial Participation in SA in Comparative Perspective. A
Cross-National [email protected]
Erik Poutsma, Paul Ligthart, Institute for Management Research, Radboud University Nijmegen
Ulke Veersma, University of Greenwich Business School
1ILERA FP Workshop Capetown
September 2015
ILERA FP Workshop Capetown September 2015 2
Why FP (despite crisis?)
Focus on Broad Based FP: employee share ownership
Corporate objectives; (principle – agency)employees as stakeholders with an
interest as capital owners HPWS paradigm Changing employment relationship: how much? Alignment between interests of owner, manager
and worker Rousseau & Shperling, 2004
Attraction – Motivation – Retention - Productivity; Pay off HR investments
Why FP? Critical: potential to deconstruct the underlying
unitarist, best practice approach with managers interests put first Marchington & Gurgulus, 2000
Gain tax benefits; Flexibility of pay; reduce labour costs
Self enrichment; artificially boosting earnings with short term results;
Circumvent unions and collective bargaining: win-win or zero-sum?
Insider coalition – takeover defence as a corporate interest
3ILERA FP Workshop Capetown
September 2015
Why FP?
Macro objectives: Wage flexibility; Income and Wealth redistribution (Germany) Sustained community investments
In practice mixed objectives -> Different historically determined institutional
arrangements lead to different configurations of interests, motives and outcomes
ILERA FP Workshop Capetown September 2015 4
ILERA FP Workshop Capetown September 2015 6
Comparative Research FP Australia, France, Germany, NL, UK and
South Africa, with focus here on last three countries
Qualitative: Interviews with main actors: governments, trade unions, employer federations (Pendleton & Poutsma, 2004); additional information for SA
Quantitative: CRANET data; Across the six countries -1999 and 2008/2009
Business units with > 200 employees
6
ILERA FP Workshop Capetown September 2015 7
The institutional embeddedness of financial participation(see Pendleton & Poutsma 2004)
GOVERNMENT Philosophies and
policies on financial
participation
LEGISLATIONFinancial participation
TaxationSecurities lawCompany law
Employment law
Company financial participation practice
‘Business systems’Labour management
Corporate governanceAccounting standardsOwnership structures
TRADE UNIONS
ConfederationsSectoral/
occupational/general unions
EMPLOYERS’ ASSOCIATIONS
ConfederationsSectoral/regional
associations
Sect. agreements
National agreements
Powerful employers
Powerful
unions
ILERA FP Workshop Capetown September 2015 10
Different histories - objectives; different institutional designs of
national FP system
Income and wealth redistribution
Corporate objectives
Individual
Collective basis
UKNL
F
G
10
SA?
IR and trade unions in SA
Trade unions part of resistance against Apartheid regime: community based unions
25.3 % union density in formal sector COSATU largest of three major TU centres
(1.8 mill. Members) politically linked with ANC as the ruling
party in government Community based and craft based unions
ILERA FP Workshop Capetown September 2015 11
IR and trade unions in SA (contnd.)
Voluntary system with tripartite elements Regulation of rights of trade unions and
employers; not specifically regarding the content and level of collective bargaining
Establishment of bargaining councils in sectors
Scepcis towards impact and objectives of FP
ILERA FP Workshop Capetown September 2015 12
Regulation of (fair) employment
New Labour Relations Act (LRA): regulating collective bargaining and dispute resolution. Also addresses employee participation in decision-making
Employment Equity Act (1998): equity in the workplace by (a) promoting equal opportunity and fair treatment in employment through the elimination of unfair discrimination, and (b) implementing affirmative action to ensure their equitable representation of designated groups, and equal pay, in all occupational categories and
levels in the workforce.
ILERA FP Workshop Capetown September 2015 13
FP in SA
ESOP legislation Trust acquires shares from the company
(contribution by employer company) Shares allocated to employees Rights to dividends and net capital Participants ‘locked in’ for 5 years; tax
exemption. After 5 years, capital gains tax will be applied
ILERA FP Workshop Capetown September 2015 14
FP system in SA
Embedded in the Broad-based Black Economic Empowerment framework (BBBEE)
Wider distribution of ownership to the lower ranked in terms of race and gender
ESOP Offer should be broad-based: > 90% of personnel eligible
Total value of distributed shares max R3000 per employee per year
Sweetener for employer: tax deductions
ILERA FP Workshop Capetown September 2015 15
ILERA FP Workshop Capetown September 2015 16
Implementation of agreements and role for unions NL: FP agreed between the social partners, but no
specification how this should take place. Consultation by Works Councils with implementation
UK: implementation should be left to the company level
SA: Left to company level - no specific requirement to agreement with unions or employee reps. However, according to BBBEE and EEA, employees need to be informed
Specific cases of involvement of unions in ESOP agreements (mining, bustransport and fisheries)
ILERA FP Workshop Capetown September 2015 17
Attitude of individual employers
Favourable - loyalty and commitment of staff; supporting recruitment and retention
Wage flexibility and decentralisation of bargaining (but not in cases where there is already decentralised forms (UK)
Freedom for companies to implement Demand for absence of restrictions by governments
and IR regulatory frameworks – SA employers more reluctant
Problematic for SMEs
ILERA FP Workshop Capetown September 2015 18
Attitude of Unions
Negative (left) – Scepticism – Selective acceptance (Liberal; professional unions)
Too risky – acceptable if equity and limited risk Unions in conflicting position as representation of both
capital and labour Use of FP for union avoidance FP used to decentralise, and therefore, fear for
undermining collective bargaining. SA: focus on immediate cash benefits for union members
Consequence: Unions largely ignore FP or are not able to be involved
18
ILERA FP Workshop Capetown September 2015 19
Results Qualitative Governments differ in positions and attitudes;
major tax incentives in F and UK Employers go for flexibility: alignment argument
for FP Unions go for security, but are less involved in
ESO development; more with PS FP develops separate from collective
agreements; more likely with PS Often selective plans; less in case of PS Seldom (effective) take-over defence
19
20
Incidence of FP broad based (% of organisations; >200)
ILERA FP Workshop Capetown September 2015
2121
Determinants for existence of broad basef fp
ILERA FP Workshop Capetown September 2015
Determinants ESObb se
CountryUnited Kingdom 1.378+ [0.264]France 0.482** [0.116]Germany 0.305** [0.068]The Netherlands 0.477* [0.153]Australia 1.267 [0.306]SouthAfrica (ref.cat.)
Size 1.355** [0.060]Industry
Construction 1.182 [0.303]Transportation 1.238 [0.341]Banking and finance 1.885** [0.357]Chemicals (energy; non-energy) 1.533* [0.313]Other industries (eg services) 1.14 [0.171]Manufacturing (refcat)
Multinationals 1.476** [0.196]Trend
Year 1999 (refcat)Year 2008 0.787 [0.116]
StocklistingNo stocklisting (refcat)stocklisting 5.951** [0.745]stocklisting (missing) 1.423 [0.312]
Collective BargainingNational or regional broad-based Bargaining 1.025 [0.058]Company or site broad-based Bargaining 0.984 [0.047]Individual broad-based Bargaining 0.983 [0.052]
UnionisationNo unionisation (refcat) 1-25% 1.267 [0.227] 26-50% 0.852 [0.196] 51-75% 1.022 [0.245] 76-100% 0.775 [0.207]missings 1.036 [0.227]
Joint Work CouncilNo JWC (refcat)JWC present 1.123 [0.156]
Alternative Financial ParticipationAvailability PS 2.059** [0.258]Availability ESO
Results quantitative
ESO: Large Listed companies and MNCs In addition in SA: significant negative
effective of high unionized companies Level of collective bargaining does not
influence the adoption Almost no sectoral differences
ILERA FP Workshop Capetown September 2015 22
ILERA FP Workshop Capetown September 2015 23
What do we learn from this?
Different configurations of financial participation in different economies
BB-FP in SA mainly determined by historical institutional regulations AND less by corporate objectives: relationship with performance?
Unions usually do not want (or are not able) to be involved.
When implemented: Managerialist approach may dominate with possible transfer of risks to employees
23
FP in SA: conclusion and dilemma’s IR system resembles elements of both LME (UK)
and CME (NL) Regulation emphasises corporatist elements Unions community based with political orientation FP embedded in regulation aimed at equity and
fairness Schemes however focused primarily on short term
gains: how much impact on underpriviliged workers?
ILERA FP Workshop Capetown September 2015 24