Published 2019-01-10

This post is also available in Swedish

Employee-owned companies good for sustainability

In her book A Sweden with Employee Ownership Sophie Nachemson-Ekwall, PhD in Business Administration, has surveyed companies in Sweden and abroad that are owned by their employees.
One conclusion is that workplaces owned by the employees contribute to a more sustainable society.

In A Sweden with Employee Ownership, Sophie Nachemson-Ekwall, PhD in Business Administration, has surveyed employee-owned companies in Sweden and abroad. The book, which is published jointly with Global Challenge, the Stockholm-based independent think tank, describes examples of employee ownership in Sweden and in other countries, such as the UK, France and the US.

By international standards, Sweden has a small proportion of employee-owned companies. Excluding partner-owned businesses such as law firms, Nachemson-Ekwall estimates that there are some 100 such companies, but statistics are lacking. Most are small or medium-sized enterprises (SMEs); some are run as cooperatives and others in the form of limited companies. The employees can own the whole company, or just a minority stake.

Internationally, employee ownership, with its democratic elements, is often regarded as part of the non-profit sector, along with foundations and cooperatives. The Swedish non-profit sector makes up about 3 per cent of the country’s economy, this too being a relatively small proportion.

‘The figure’s significantly higher in several other countries — in some, up to 10 per cent. In these countries, too, employee ownership represents a limited part of the economy. However, in France, Canada and the UK, there’s a top-level political discussion about encouraging employee ownership.’

International experience shows that employee-owned companies make a positive contribution to the economy. In the private sector these businesses may, for example, be fully or partly owned by employees, through staff foundations or share ownership. Other such enterprises may be people jointly running work cooperatives, developing the civil society of the non-profit sector or starting a platform cooperative in the new digitised economy.

An increased element of employee ownership should fit well into Swedish society’s pursuit of sustainability, not only financially but also socially and environmentally, Nachemson-Ekwall thinks.

‘Companies where the employees are highly influential often rank high on sustainability. They work for the long term, investing in their own further professional development, but also have local roots and take on great responsibility for their own local environment.’

Particularly successful are those companies in which employees both participate financially and exert influence, according to Nachemson-Ekwall. She argues that increased employee ownership should be included in Swedish efforts to deliver the UN’s Sustainable Development Goals (SDGs) as part of Agenda 2030.

‘Sweden has made good progress in global environmental work, and we have lots of venture capital for start-ups. But as for the social dimension of sustainability and inclusion, we still rely largely on our welfare state and social partners.’

Shared ownership can also be a way to support marginalised groups that find labour-market entry difficult, such as newly arrived migrants, people with disabilities and women trapped in outsiderdom, she says. Ordinary and work-integrated social enterprises work with precisely such groups, but have received little support from Swedish society to date.

‘In areas of outsiderdom, we need to think about creating systemic solutions. Participation is connected with it. Employee ownership is also about empowerment and co-creation.’

Various types of employee ownership have been on the increase internationally, especially in the wake of the recent financial crisis, but not in Sweden. The issue has no real place in Swedish public debate, Nachemson-Ekwall says.

‘Sweden has got stuck in the division of ownership into either public or private, which is easily interpreted as either socialisation or profit maximisation. But that’s limiting. With more varied ownership models, in which staff ownership in various forms is encouraged as well, we’ll gain greater confidence in the market economy. Employee ownership is no right-wing or left-wing issue.’

It should be possible for politicians from the whole political spectrum to embrace steps to generate greater diversity of ownership models, Nachemson-Ekwall thinks. In the US, the issue unites Republicans and Democrats, in the UK Theresa May and Jeremy Corbyn. In each of these countries, there is a social fabric that promotes employee ownership: investment funds that advance loans and credit guarantees to employees, cooperative banks, and advisors who assist with restructuring. Employee ownership has tax benefits for both the founder who sells and the workers who buy.

‘Employees who own the whole or parts of the companies employing them will never be a widespread phenomenon. However, it’s one of several jigsaw pieces needed for a well-functioning market economy, and for the whole of Sweden to thrive.’