Including workers in the democratic ownership of companies via employee stock ownership plans may be a viable option to broaden ownership of the economy, write David Ellerman and Michelle Galloway
The scheme, already successful in the US, could easily be instituted in SA to broaden ownership of the economy and empower workersThe ANC’s 2019 election manifesto released in January refers to the need to broaden ownership of the economy and “a focus on extending worker ownership across the sectors” as an essential part of transformation. Including workers in the democratic ownership of companies via employee stock ownership plans may well be a viable option to achieve that goal.
The sham Esops are mainly oriented towards getting some fig-leaf black economic empowerment compliance without having any genuine worker ownership. Our goal here is to explain how a genuine Esop works, and how the widespread uptake of genuine Esops could have a significant effect on income and wealth distribution in SA.
The co-op then takes out a loan to buy shares, or the seller of the shares could supply the credit by exchanging some shares for a promissory note. The loan is guaranteed by the company and shares are held in a suspense account while the company pays off the loan. The Esop has a collective labour contract with the company for some fixed percentage, say 5%, of the members’ labour.
The original idea of Esops came from an eccentric San Francisco lawyer, Louis Kelso, who feared that automation would cause so many people to lose their jobs. He felt that society could only be stabilised if people had a capital income in addition to their labour income. Esops were pushed through the US congress by senator Russell Long, son of populist Huey Long, and were supported by legislation and tax breaks.
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