"If employee co-ownership is so good, why isn't it there anymore?"  

The above question is one of the more common doubts or mistrust about our Institute's agenda, i.e. the spread of economic democracy in the Slovenian economy. The rhetorical interviewer usually answers the question why economic democracy is almost non-existent: 

• "This will never work. We had self-management, companies were inefficient, they were taken over by political management." 
• "Employees as owners have no motivation to do a good job, management loses the tool of control, people will start taking home office desks and chairs." 
• "Workers don't want to own the companies they work for, they want jobs, they want eight-hour days, they want to be free of responsibility." 

For experts working on modern forms of employee ownership - whether academics, activists or people with practical experience - the above answers are, of course, quite ridiculous. But they should be addressed nonetheless, because they can be very successful in guiding public opinion and thus public policy. 

Economic democracy - i.e. employee ownership and participatory methods of running businesses - is not a return to a self-managed past. Unlike the Yugoslav experience, companies are actually in the hands of employees, both profit and capital value, and are controlled not by political management but by democratic representation in the owners' assembly.  

Worker-owners work better than workers who are just hired labour. The logic is quite simple and intuitive - people take much better care of their own than of others. Employees in these companies are on average much better educated about finance and business, they understand the tough managerial decisions that are in the long-term interest of the company. And it's true, research almost unanimously showsthat employee-owned businesses are more productive, grow faster, are more resilient in times of crisis, enjoy more employee loyalty, etc. 

The question of whether workers even want to become co-owners of businesses is more complex. It is necessary to understand that we live in a cultural framework that for decades has divided us into hired hands (workers) and those who "create" (entrepreneurs and business owners). We humans tend to justify what is, our position within the system. This may explain the lack of interest in changing the structure of the economy. 

Of course, there is also the possibility that the accusation of lack of interest is completely off the mark. When we look at practice abroad (in different parts of the world, from Scandinavian countries, Anglo-Saxon, Germanic and Latin nations), the interest of employees always follows the real possibility of being involved in co-ownership. This is proven by thousands of democratic companies and millions of workers.  

Recently, we have seen a similar story in Slovenia, where a rather large collective of employees went on strike to prevent the existing owners from selling the company to outside investors, foreigners without a serious interest in business responsibility. The strike has ensured that the company will now pass into the hands of the employees. But more about this wonderful story another time. 

It is also worth thinking about generational changeswhich are already causing problems for established corporate governance trajectories. Millennials and zoomers do not recognise authority for its own sake - authority must be justified, legitimate, democratic. They also demand more autonomy, the possibility of creation and flexibility of working hours. They demand to be an equal part of the organisations where they work, not second-class citizens. 

The fact is that most of the stereotypes served up to us by some common-sense do-gooder are completely wrong. However, the opening question remains - why then are there no more employee-owned companies? 

After several years of research in this area, we have found that the answer to this question is multifaceted. A large part of the responsibility lies in the legal environment that encourages (or discourages) different forms of corporations. A great example of this are the laws in the US and the UK, the former in 1974 and the latter in 2014.  

We've written a lot about ESOPs in the US - and we will continue to do so. The important thing for this article is that, thanks to the favourable institutional environment, today 10% private sector workers own the companies where they work. 

We have said less about Employee Ownership Trusts (EOTs) in the UK. EOTs are employee ownership trusts; they are remarkably similar in their logic and mechanisms to ESOPs. The basic idea is that business owners get tax relief if they sell shares to employee trusts, which in turn fund the buy-out from the company's own revenues.  

Since the law was passed in the UK, we have seen the explosion of employee-owned companies. In seven years, more than 700 companies have changed hands, more than a third of them in the last year and a half of the kovid-crisis. The largest number, 40%, of the companies changed hands in the professional services sector, a good tenth in the manufacturing sector, as did 11% in the construction sector. 

The largest employee-owned company in the UK is the John Lewis Partnership with over 80,000 employees, followed by the Arup Group with 15,600 employees and the Matt MacDoland Group with 15,200 employees. Most of these companies are small and medium-sized, i.e. between 50 and 250 employees.  

V in a recent survey In the UK, 77% of respondents say that "making a positive contribution to society and the environment" is an important part of what employee-owned companies do. The opening question, which questions the lack of economic democracy, therefore also questions the lack of socially responsible practice in business.  

Where laws are appropriate, the practice of economic democracy and the practice of social responsibility grow. The political strategy for the future is to find ways to encourage and positively discriminate against such practices and to cause an explosion of economic democracy in Slovenia as well.