Social Capital Partners says the model is a solution to retirement of business owners and a good way to build broader wealth
Canadian workers could build their personal wealth while helping strengthen company performance and benefit their local economy according to a new report.
It says that developing a Canadian version of employee ownership trusts, most common in the US and UK, would address multiple public policy issues and help boost inclusive growth.
The report from non-profit Social Capital Partners says that building an employee-owned economy would be beneficial as Canada’s aging business owners retire.
And it says that benefits include better company performance, stronger local economies, long-term investment and higher wealth and income for workers.
While many businesses offer share options, mostly to executives, employee ownership sees a broad base of employees owning a significant stake in their employer, through trusts. Employee trusts do not currently exist in Canada, but the federal government agreed to examine the potential in its 2021 budget.
The report highlights how 14 million American workers at 6,400 companies shared in US$1.4 trillion in wealth.
"Employee ownership provides workers with pathways to wealth building that would not otherwise be available. Two years into the COVID-19 pandemic, many people with assets are financially better off, while those without assets have suffered," explained SCP founder Bill Young.
Now is the time
Young believes that acting swiftly is key, to drive employee ownership while the older generation of business owners look to sell their companies.
According to a CFIB poll last year, business owners put high value on selling their business to its employees.
"With so many owners retiring and selling their businesses, Canada will miss a huge opportunity if we don't act fast to put policies in place to support employee ownership. We know selling to employees is good for owners, workers and communities, and once a business is sold, that opportunity is gone forever," said Jon Shell, partner and managing director at SCP.
