More British workers buying a stake in the firms they work for
Despite the threat of further large-scale layoffs and short-time work affecting British industry and pushing unemployment toward the 3 million mark by the end of 1981, many workers are showing confidence in their companies' future by buying shares in companies or saving to become stockholders.
The trend toward workers' purchasing shares in their employers' businesses has been long and gradual in the United Kingdom, but the programs for profit sharing established by the giant Imperial Chemical Industries (ICI), the John Lewis Partnership stores, and the nationalized British Aerospace company have attracted considerable attention in many other sectors of commerce. British Aerospace has issued 33 free shares each to 58,000 employees, and almost half the work force has taken out extra investment units, which look like paying good dividends.
Within the past year, encouraged by the easing of government taxatin on workers' share plans, 300 companies have opened the doors of shareholders' meetings to employees wishing to buy a stake in the businesses or looking for advice about financial commitment to their workplace. The Finance Act of 1978 lays down the conditions relating to the purchase of employees' shares -- most worker-involvement projects come under the act; and staff members who hold on to investments for seven years are exempt from taxes collected from others who cash in units after just a few years.
Companies are restricted to selling a limit of L1,000 ($2,100) worth of shares to each employee within a tax year. Workers who earn more than L3,000 ($ 6,300) in profits annually may be subject to capital gains tax.
ICI started its profit sharing plan in 1953, but the present economic recession has led to a dramatic drop in the company's profits and there have been no dividends for workers this year. Yet a survey carried out by one of Britain's experts on employees' investments with their companies has shown that a growing number of workers wish to become involved in the shareholding.
Jo Grimond, former leader of the Liberal Party, has been particularly active in promoting plans that encourage workers to take out shares at their places of employment. The Confederation of British Industry (CBI) and the Conservative Party, both fiercely opposed to increasing Labour Party interest in workers' control of industry, have also backed the concept of more employee involvement with company employers by buying of shares.
Many trade unions are suspicious of profit-sharing arrangements, charging that they are attempts to convince working people that employees somehow have a significant say within the general body of shareholders or even in the board room. A minority of unions see no harm in profit-sharing arragements, and some trade unionists have welcomed the nationalized British Aerospace company's profit-sharing project, on grounds that it makes the giant aircraft manufacturer much less bureaucratic.
Yet the Sir Hugh Fraser Company, one of the biggest enterprises in the United Kingdom, and considered to have a powerful bureaucracy, recently appealed to the shareholding employees on its staff of 29,000 to refuse a tempting takeover bid by the giant international company Lonrho. "Tiny" Rowland, Lonrho's chief executive, recently bought the Observer newspaper and intends to launch new papers in the U.K.
The Glasgow-based Sir Hugh Fraser -- his company owns stores in Glasgow, Edinburgh, Copenhagen, and Newcastle, and also Harrods in London -- has been fighting a complicated battle with Mr. Rowland to resist a final takeover bid by Lonrho for the Fraser stores, and the Glasgow firm thinks its employees may play a decisive part in the complex struggle for its control.
Sir Hugh has been eager to keep the control of his extensive U.K. shopping centers within Scotland. The Scottish millionaire, who had done much to help Scotland's tourist trade and has funded major industrial research at Glasgow's Strathclyde University, sees the loyalty of thousands of shareholding staff as something that may pay the Fraser group handsome results in stopping the bid by Lonrho to try to take over his company.