George Osborne’s plan to offer workers company shares in return for giving up employment rights has been slammed as “awful” by an American group that exists to encourage share ownership.
The National Center for Employee Ownership told me that Mr Osborne’s proposals were a “very bad idea” and that no “rational person” would give up employment rights for a small capital gains tax break.
The California-based NCEO is a not-for-profit group that provides “objective” information to its 3,000 members including companies, consultants and employment academics.
Corey Rosen, the group’s founder, told me that he was an “unabashed advocate of employee ownership” who spent his career making the case for workers to own more stock and options.
“There is a lot of employee ownership in our country,” he said. “But not one of these employees and not one of these plans asks employees to give up any employment rights to get any of the various tax benefits associated with employee ownership.”
The idea had never been suggested in the US, “no one, Republican or Democrat, right or left”, he said. “It simply does not make sense for an employee to give up rights that could potentially be worth a great deal of money or job security in return for saving a few thousand pounds in possible capital gains taxes.”
Mr Osborne’s proposals would involve staff giving up rights on unfair dismissal, redundancy, flexible working and time off for training in return for a capital gains tax exemption on £2,000 to £50,000 of shares.
The NCEO’s views should be of interest to British policy-makers because the US is far ahead of Europe in terms of the number of staff with equity in the business they work for. About a third of the employees who work for companies with stock own stock in these companies, according to the group’s figures.
Mr Rosen said that those who would be attracted to the trade-off would tend to be highly-paid staff who felt their job security was already high.
“Would John Lewis have really been a partnership that everyone is talking about as a model if the partnership were functionally limited to a small number of higher-paid people?” he said.
He added that companies with the most successful employee-ownership companies had cultures that valued staff. “Asking employees to give up employment rights for ownership hardly sends that message.”
Mr Rosen welcomed the fact that British politicians were talking about employee ownership as a priority for economic growth.
“But this proposal should be a non-starter,” he said. “There are far better ways to encourage employee ownership that will work both for companies and employees.”