During this pre-election period the political parties must be preparing or even finalising their political manifestos. Judging by some of the proposals that have been made it looks as if the parties intend to go for more generous social benefits.
Over the years this incremental approach has built a robust social welfare regime that provides a high level of social security to citizens. The time has come, however, to try to be more transformative by trying to rewrite the ground rules of the labour market.
The realities of our new brave digitalised world of work are putting pressure on management and policy makers to seek alternative and innovative employment relations. The financial participation of employees may turn out to be one of these innovative and transformative work practices in the Maltese labour market.
Such a participation is a form of remuneration additional to the pay system that enables employees to have a say in the profits of the enterprise. It embraces all schemes that give workers, in addition to fixed wage, a variable portion of income directly linked to profit or some other measures of the enterprises’ performance.
In this globalised economy, which is making higher demands for companies to compete, financial participation may gain more currency as it can be the means of stimulating the collective efforts of employees, thereby enhancing efficiency. Indeed, the concept of financial participation is based on the notion of enhancing both motivation and performance.
The two main forms of financial participation of employees are profit sharing and share ownership. Generally, profit sharing schemes apply to all employees or groups of them, in most cases to those in managerial positions. Share ownership can be of various types: shares distributed free, shares sold at the market price or under preferential conditions, shares sold at a lower price through a form of delayed payment or being given priority in public share offerings.
Such practices tend to be conspicuously absent in the Maltese labour market. Indeed, this form of employment relations has never been part of the ideology of the mainstream Maltese political parties. Nor have they ever featured in the mindset of the Maltese trade unions or employers’ associations. Thus, as a concept of work practice it has never featured in the Maltese industrial relations scenario.
The financial participation of employees can also enhance corporate management- Saviour Rizzo
One of the steps that must be taken to make this concept a reality is to build a support structure in the form of a legal framework which could serve as an ideological base for a gradual reform of the post-industrial society. The Malta Council for Economic and Social Development could serve as a platform for the possible implementation of this ideological base.
The European Economic and Social Committee, an EU consultative institution, which like the MCESD is composed of representatives of employers, trade unions and civil society, says in a 2014 opinion that positive participation of employees can instill in the workforce a sense of responsibility that can contribute to better corporate governance.
In one way or another the financial participation of employees can also enhance corporate management, and by the same token, increase the loyalty of the employees and their identification with the company in good and bad times. It can contribute to secure the future in a sustainable way as it can transform the workforce into patient and loyal shareholders.
If properly handled and planned, financial participation can act as a catalyst for change in the industrial relations system as it has the potential to empower workers and usher in a new form of employment relations that is more consonant with the principles of the new millennium.
Being seen as an innovative reform of the post-industrial society that is untrammelled by the contours of state socialism, it appeals to a wide political spectrum.
The European Trade Union Confederation (ETUC) expressed its approval of this participative form of industrial relations with a proviso that financial participation should not act as a replacement or substitute for wages or salaries and should not increase inequalities. In other words, participative schemes should not serve to exacerbate income differentials or insecurity.
This is the vision that should guide the Maltese political parties contesting the election this year. The key challenges in this globalised economy demand a high level of commitment and bold decision making that can resist the prioritisation of short termism.
The globalised economy and the digitalised world of work are beckoning policy makers to seek and implement alternative ways of employment relations.
Saviour Rizzo is the former director of the Centre for Labour Studies, University of Malta.