The development of employee financial participation in Estonia

Baltic Journal of Management - Tập 3 Số 2 - Trang 218-231 - 2008
RaulEamets1, NielsMygind2, NataliaSpitsa3
1University of Tartu, Tartu, Estonia
2Copenhagen Business School, Frederiksberg, Denmark
3Inter‐University Centre, Free University of Berlin, Berlin, Germany

Tóm tắt

PurposeThe purpose of this paper is to provide an overview of the development of employee financial participation in Estonia from patterns of employee ownership which was promoted during the privatization of enterprises in the transition period, to the emergence of different forms of employee participation, including employee share ownership and profit sharing schemes. The analysis of the changing institutional setting and legislation in Estonia in the context of EU accession serves as a basis for examining the actual diversification of forms of employee financial participation, and provides some suggestions of likely further development.Design/methodology/approachThe study combines results from earlier research, analysis of Estonian legislation from the late 1980s to the present time, interviews with social partners, data collected through enterprise surveys during the transition period and case studies, examining recent examples of financial participation.FindingsThere is no historical tradition of employee financial participation in Estonia. By far the most important development was in relation to early privatization, with the employee takeover of many small enterprises. However, majority ownership by employees in these firms has changed quite rapidly, so that now the dominant ownership pattern is of ownership by managers and outside owners. This phenomenon was observed both in quantitative studies and in case studies. There are very few cases of profit sharing. The need to transform acquis communautaire into national law in connection with the EU accession has recently led to debates about employee participation in decision making. Although the government and other influential political players do not promote financial participation, the discussion on the implementation of EU directives shows that the issue will be addressed and even new legislation could be adopted if an EU act on financial participation of employees were approved.Research limitations/implicationsIn contrast with employee share ownership, the incidence of which was quite recently assessed in a survey study of January 2005 for 722 enterprises, profit sharing has not been the subject of regular and/or recent studies. Thus, one should be cautious when estimating the extent of the spread of diverse forms of financial participation in Estonian companies.Practical implicationsDescription of the current status of employee financial participation can be important for policy makers for further development of the labour market in Estonia. Development of legislation following the trend in the EU, together with changes in the taxation system, could promote different forms of financial participation by employees, and could lead to strengthening employee motivation and productivity, especially in knowledge‐based companies.Originality/valueThe paper is a comprehensive description of the development and current status of employee financial participation in Estonia. The paper provides suggestions for further research.

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Baltic Journal of Management

Tập 3 Số 2

218-231

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