PARTECIPAZIONISMO. — The various forms thus far implemented of employees’ participation in the management of enterprises or in their excess profits essentially represent an attempt to secure the employees’ collaboration to a greater extent. According to Catholic social thought, which draws its inspiration from the papal teaching on the subject, such participation, in its many forms, should tend to introduce into the contract for the hire of the employee’s labor capacity (employment contract) elements of a partnership contract.
This entails that p. should be judged as a solution to the problem of relations between capital and labor lying midway between the straightforward employment contract and the production cooperative, the latter being a society in the full meaning of the term, with all the consequences thereof. That is to say, whereas in a production cooperative the members, and therefore the workers themselves who belong to it, fully share the fortunes of the enterprise, in the various forms of participation employees normally acquire some advantage, in addition to the contractual wage, without thereby seeing their normal likelihood of partially or wholly losing their labor income increase as a consequence of an unfavorable performance by the enterprise. Hence some simplistically conclude that certain participation systems in particular entail participation only in the profits and not also in the losses of the enterprise.
Employees’ participation in the life of the enterprise may take three forms: 1) collaboration in decisions concerning the enterprise’s technical and administrative problems; 2) participation in profits; 3) workers’ shareholding. These three forms of participation are ideally arranged in a hierarchical scale, according to their lesser or greater capacity to make employees participants in the life of their enterprise.
The first of the three forms mentioned is also referred to as collaboration in the management of the enterprise. Where the principle of private ownership of capital has not been invalidated, such collaboration normally does not extend beyond participation in joint bodies entrusted with formulating general guidelines, which in any event are not strictly binding upon the freedom of action of the head of the enterprise, or beyond simple advisory functions, with the aim of increasing the efficiency of the enterprise itself and improving the working and living conditions of the personnel. The second form provides for the distribution to the personnel, in addition to the wage and according to length of service or merit, of a portion of the distributable profit.
This is possible because, on the one hand, the wage is a contractual element of the cost of production, that is, an element of predetermined magnitude, and, on the other, a profit margin has become available between the proceeds from the sale of the products and their cost.
Thus, participation in profits is possible only once the existence of such a margin has been established, that is, after the final results of the productive financial year are known, while in a certain sense it represents an adjustment of the wage. Indeed, the wage is the share of the enterprise’s income accruing to the productive factor of labor in relation to its (marginal) productivity, and the enterprise’s income coincides with the proceeds from the sale of production. In practice, it is not easy to determine the wage on the basis of its marginal productivity; nor is it easy to determine the remuneration of the other factors of production, including managerial activity. Hence, at the close of a favorable financial year, it is possible to distribute adjustments drawn from the excess of income over the cost of production (much of which consists precisely of components determined in advance and in a fixed amount).
The third form is related to the second, insofar as the assignment of shares in the company to employees is often based on the availability of profits intended for distribution among the employees themselves but instead used to purchase shares to be registered in the latter’s names. Employee shareholding gives them the status of members in proportion to their holdings.
Concerning the possibility and scope of recourse to the three means indicated, it may be observed that the participation of employees—or rather of their representatives, in the capacity of advisers—in decisions concerning the organization of production but not the policy of the enterprise can yield good results in the general interest and can improve workers’ conditions to some extent, while presenting no particular problems. The situation is different if participation extends to decisions concerning the conduct of business (volume of production, sale prices, self-financing, etc.), because problems of considerable delicacy then arise, such as the unity of the enterprise’s management, the assumption of responsibilities, professional secrecy, and others of a similar nature.
The inclusion, on the other hand, of employee representatives on boards of directors, while seeking to avoid the difficulties just mentioned—so that it does not exceed the limits of minority participation—proves of limited usefulness, having predominantly symbolic value.
Participation in profits raises questions of a purely economic nature, the most important of which concerns the identification, within the individual enterprise, of the actual need to reinvest distributable profits. With regard to a country’s economy, moreover, the advisability of participation in profits may be assessed according to whether it accords with or conflicts with the general need for greater capital investment or, alternatively, for an expansion of consumption. It therefore does not seem possible to assert that such participation is always advantageous or, conversely, always counterproductive, in terms of the progress of the enterprise and of the national economy.
As for workers’ shareholding, apart from the fact that ownership of a share of the company’s assets entails the employee’s participation in the enterprise’s losses as well, it gives the employee-shareholder a certain moral status when the portion of the share capital held by employees represents a significant percentage. One must not overlook the difficulty involved in employees’ transferring their shares to third parties, or in the shares’ being made nontransferable in an attempt to remedy the other drawback. Considering the most recent experience, it may be noted that the first two forms of participation are more widespread and that participation in profits finds broader application in economies such as that of North America, characterized by rapidly increasing productivity, which normally requires a parallel development of consumer expenditure. In conclusion, the three forms of p. illustrated here, which are the most common, fit within an economic and social system founded on private ownership (and initiative), whose excessive individualism they seek to temper.