Almost half of Slovenian business owners will exit ownership in the next 10 years. As many as 65% of them have no succession plan. At 3rd Congress of Economic Democracy (KED24) we discussed the role of employee ownership in addressing the development risks associated with generational disengagement from ownership of Slovenian companies in front of almost 120 participants from politics, science, the financial sector and business.

The silver tsunami is coming 

Tej Gonza, Director of the Institute for Economic Democracy, KED24 opened with the data that Slovenia is approaching a mass transfer of ownership - almost 50% of companies will face a change of ownership in the next decade. According to SPIRIT Slovenia, family succession is appropriate for one in ten businesses, which raises the question of how to keep businesses in local communities. Selling to competitors, financial investors or localising ownership through an ESOP model of employee ownership?

Workers' co-ownership law at the door

The government and key stakeholders, including PM Golob and ministries, support the ESOP Bill, the baseline of the proposal was adopted in June 2024. KED24 is Luka Mesec, Minister for Labour, Family, Social Affairs and Equal Opportunities, expressed support for the idea of employee co-ownership and for pending legislation. James Bonham, Director of the ESOP Association and Chief Ambassador of the ESOP model in Washington, pointed out that the ESOP model has already been successfully implemented in the US, resulting in 14.7 million employee-owners with a total of 2.3 trillion in assets.

In a remarkable speech, which you can read on this link, highlighted the strategic opportunity in employee ownership for Slovenia.

The challenges of introducing an ESOP model are surmountable

The first panel Primož Kokalj, Director of Etiketa, Miglena Dobreva from the European Investment Bank and Jure Kvaternik from the Regional Bank of Slovenia led by Katja Šteblaj from Capital Genetics discuss examples of good practice in the field of employee ownership in Slovenia, one of which is the company Etiketa, whose localised ownership ensures stability and maintains added value in the local community - in Žire, where it has a strong presence. The panel guests highlighted some examples where ownership in the hands of financial investors leads to more difficult working conditions and sometimes to relocation of production to "cheaper" environments. The lack of legislative regulation and financial instruments was highlighted as a major challenge in moving to an ESOP model. In this context, the possibility of SID Bank and EIB working together to develop financial tools to facilitate ESOP transactions was mentioned.

Strong local businesses are the solution

The second panel, moderated by Tilno Christmas found at Matija Kovač, Mayor of the Municipality of Celje, Marko Funkl, Mayor of the Municipality of Hrastnik and Tadej Beočanin, Mayor of Ajdovščina. They talked about the stability of local communities based on strong local businesses, especially those that are embedded in communities. The importance of intergenerational transitions in the ownership of these businesses was highlighted, as were a number of other community projects that are important for municipalities. Our Institute will also participate in the MAG-NET project, which deals with youth retention measures in Celje and Prebold. 

Only one in ten descendants interested in taking over a company

Chair of the Expert Committee on Economic Democracy, Aleksandra Kanjuo-Mrčela, pointed out that we are facing the second biggest turning point in economic development since de-nationalisation in the 1990s. The ownership shifts that are coming in the next few years present a huge opportunity to move towards localised ownership. As many as 25 per cent of all owners surveyed in the University of Ljubljana survey expressed a strong interest in a shift to employee ownership, while a quarter were undecided about this form of ownership, suggesting the need for more intensive awareness-raising. For the vast majority of owners, legislative support, tax incentives and dedicated funding are important factors in their decision to switch to employee ownership.

It will be important for all to work in a coordinated way

The issue of succession in Slovenian companies is becoming one of the key development topics in the economy. With the support of appropriate legislation and financial incentives, employee ownership could become a powerful tool for stabilising local communities and preserving jobs, while at the same time such policies often increase added value and enhance business agility around the world.

We are pleased to see that more and more professionals in Slovenia are joining the initiative to strengthen employee ownership - contact us and join the movement!

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Watch the full recording of the 3rd Congress of Economic Democracy (KED24):