This time we are reporting from sunny Madrid, where the European Investment Bank's conference on financial instruments for micro-credit, the social economy and employee buyouts has just finished.

The event brought together experts in the field of employee ownership and representatives of the cooperative movement, the financial sector and the EU institutions.

Presentation of the ESF+ Study on Employee Buy-outs

The event marked the first public presentation of ESF+ study on employee buy-outscommissioned by the European Commission and the European Investment Bank, and co-authored by the Institute for Economic Democracy. The study provides a comprehensive overview of the existing practice of employee buyouts in the European Union and beyond, examines the scope for wider implementation at EU level, and makes concrete proposals to decision-makers at Member State and EU level. Slovenia, which is the focus of one of the study's a whole chapter, is highlighted as one of the leading countries in this field, alongside Italy, Spain and France. The study also pays particular attention to the European ESOP, which is emerging as a promising tool for addressing employee ownership succession that could be used by other Member States besides Slovenia.

Employee ownership in the European Union

Our colleague Kosta Juri represented the IED at a panel presenting the most advanced models for transferring ownership to employees in the European Union. Francesca Montalti presented the work of Legacoop produzione e servizi, which in Italy - with the help of the Marcora legislative framework and in close cooperation with financial institutions such as Cooperazione Finanza Impresa and how the Banca Etica - helps workers to save bankrupt companies. Pedro Blazquez from COCETA focused his speech on the Spanish experience of employee ownership, focusing on cooperatives, which account for 5 % of GDP in that country. Meryem Yilmaz of CG SCOPbriefed participants on the state of the cooperative sector in France. Unlike in Spain and Italy, cooperative conversions in France also address the issue of succession in profitable companies. Nevertheless, they remain relatively uncommon and, due to the difficulties employees face in securing financing, are largely confined to the service sector. In some cases, employees in this sector, who are on average better paid, are able to finance the buyout from their own savings.

Turning the challenge of ownership succession into an opportunity

In his speech, Kosta highlighted the urgent need to develop a European strategy for addressing the challenge of business succession through employee ownership. He cited European Commission data indicating that approximately 450,000 companies in the European Union undergo a change of ownership every year. These processes affect more than two million jobs, while one-third of business transfers are unsuccessful. He stressed that discussions of pressing issues such as strategic autonomy, competitiveness and security often overlook a crucial dimension: the ownership of companies. He noted that, if the European Union genuinely wishes to achieve its stated objectives, it must take a leading role in promoting succession solutions that keep ownership rooted in local communities. Employee buyouts represent one such tool. Although they are best known in Europe as a means of preserving jobs during times of crisis, models such as ESOPs and EOTs, which are widespread in countries including the United States and the United Kingdom, are well-established succession mechanisms for profitable companies.

The European ESOP provides a foundation for introducing such models in other EU Member States, including those already known for having well-developed cooperative sectors. In particular, it could help these countries remove the barriers that currently prevent employee buyouts from being implemented more widely as part of business succession strategies. The European Union can play a crucial role in this process, both by providing supportive financial instruments and by issuing guidance and recommendations. This would help ensure that the creation of an economically advanced continent goes hand in hand with social inclusion.

We are pleased to see that key decision-makers at the EU level also recognise the significant potential of employee buyouts to help build an economy that is both competitive and socially responsible. This was evident, among other things, in the remarks delivered by Andrea Da Pozzo, a Policy Officer at the European Commission, and Bruno Robin of the European Investment Bank.

A big thank you to Miglena Dobreva and the entire fi-compass team for the flawless organisation of the event.

Read more about the event here.