Blueprint for a Canadian Employee Ownership Economy

An updated report released today by Social Capital Partners (SCP) includes new research that backs up calls for Canadian policymakers to bring employee ownership to Canada.

TORONTO, March 3, 2022 /CNW/ - Building an Employee Ownership Economy contends that developing a made-in-Canada approach to employee ownership trusts would address multiple public policy challenges and serve as part of a positive inclusive growth agenda. Given the momentum behind this policy across the political spectrum, it makes the case for urgency as Canada's aging business owners begin to retire in great numbers.

Employee-owned companies — where a broad base of employees own a significant stake in their employer - are associated with better company performance, stronger local economies, long-term investment and higher wealth and income for workers. Employee ownership trusts are the world's most successful form of employee ownership, and are most prominent in the United States and the United Kingdom.

In the US, policies to support employee ownership trusts have led to 14 million American workers at 6,400 companies sharing in $1.4 trillion USD in wealth. In the UK, in 2021 alone, 210 business owners sold to employee ownership trusts, creating around 20,000 new worker owners. Employee ownership trusts do not exist in Canada, leading to much less employee ownership in this country.

This new report builds on an earlier version, released in October 2020, with new research demonstrating the ongoing benefits of employee ownership. Throughout the COVID-19 pandemic, employee owned companies have proven to be more resilient than their privately owned counterparts. In addition to data about the performance of employee owned companies throughout the pandemic, this report includes new research into the benefits of employee ownership for women and people of colour. 

"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.

As demographics change and a generation of business owners sell their companies, Canada has a historic number of opportunities to see Canadian companies transferred to employees, and accrue the related benefits - like growing middle-class wealth for workers and protecting local jobs.

"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.

The federal Budget 2021 included a commitment to investigate the potential for employee ownership trusts. As the government of Canada turns its attention to affordability for Canadian families, SCP encourages the government to solidify its commitment to employee ownership in the 2022 Budget as part of an optimistic pro-growth agenda.

Recent Research on Employee Ownership:

• A 2021 survey by the Canadian Federation of Independent Business (CFIB) found that, when it comes to selling their businesses, Canadian owners highly value protecting their employees and would strongly consider selling to employees if better policies were in place.
• According to a report from the Aspen Institute on US-ESOPs, employee-owners of colour have 30% higher wage income, and women employee-owners have 17% higher wage income, than peers at other companies. Both groups reported wealth above the US national median.  
• A study from the Rutgers School of Management shows that during the COVID-19 pandemic, ESOP companies significantly outperformed other companies in employee retention, maintaining hours and salaries, and enacting health and safety measures to protect employees.

Learn more about employee ownership at www.employee-ownership.ca. Follow @CanadaEO on twitter for more on employee ownership.

Social Capital Partners is a nonprofit that focuses on designing and implementing new financial tools that broaden economic opportunity. Learn more about what we do at www.socialcapitalpartners.ca. Follow us on twitter at @SocialCP.

SOURCE Social Capital Partners

Media Inquiries: Daniel Skilleter, Director of Policy, [email protected]