What equity participation model should be selected?

The political parties in Germany agree that equity participation schemes are necessary, but there are wide differences as to what models to implement. The latest issue of ifo Schnelldienst provides an overview of the current discussion. Karl-Josef Laumann, Minister for Labour, Health and Social Affairs in North-Rhine Westphalia, describes the concept developed by the CDU and CSU, “Company Alliances for Social Capital-Partnerships”. What is especially important is to create a framework at the company level within which social partnerships can be realised. Olaf Scholz, general secretary of the SPD parliamentary delegation, argues that the “Germany Fund” proposed by his party is the better model: Employees would buy shares in the Germany Fund. The Fund, in turn, would make the deposits of the employees available to the corresponding employing company as equity capital. Economist Oliver Stettes, Institut der deutschen Wirtschaft in Cologne, favours other methods of staff participations, namely profit sharing schemes. This is a task for the partners involved in wage negotiations, who should create a frame-work for companies and staff to work out distributory schemes. Profit sharing could also take the form of moderate pay-scale increases. Claus Schäfer, economist at the Wirtschafts- und Sozialwissenschaftlichen Institut of the Hans Böckler Foundation, see two key, unresolved problems: creating additional in-come for employees and avoiding risks for earnings and savings. Also in the opinion of Alexander Gunkel, Bundesvereinigung der Deutschen Arbeitgeberverbände, all of the advantages and goals associated with staff capital-participation can be “achieved more simply and more effectively in other ways”.