PARTICIPATIONISM. - The various forms of employee participation in the management or in the surplus profits of enterprises that have been implemented thus far represent substantially an attempt to engage more fully the collaboration of the employees themselves. According to Catholic social thought, which draws its inspiration from the pontifical teaching on the subject, such participation, in its many modes, should tend to introduce into the contract for the hiring of the employee's working capacity (the employment contract) elements of the partnership contract.
This entails that participationism must be judged as a solution to the problem of the relations between capital and labor that stands halfway between the pure and simple employment contract and the producers' cooperative, the latter being a company in the full sense of the term, with all the consequences. That is to say, whereas in the producers' cooperative the members, and therefore the workers themselves who belong to it, fully share in the fortunes of the enterprise, in the various forms of participation the employees normally acquire some advantage, in addition to the contractual wage, without thereby seeing their normal chances of losing, partially or totally, their labor income as a result of an unfavorable course of the enterprise increase. Hence some simplistically conclude that especially certain systems of participation involve participation only in the gains and not also in the losses of the enterprise.
The participation of employees in the life of the enterprise can take three forms: 1) collaboration in deliberations concerning technical and administrative problems of the enterprise; 2) profit-sharing; 3) employee shareholding. These three forms of participation are ideally arranged in a hierarchical scale, in relation to their lesser or greater capacity to make the 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. When the principle of the private ownership of capital is not invalidated, such collaboration normally does not go beyond participation in mixed bodies, charged with formulating general guidelines, in any case not strictly binding on the freedom of action of the head of the enterprise, or else simple councils, for the purpose 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 seniority of service or merit, of a portion of the distributable profit.
This is possible insofar as, on the one hand, the wage is a contractual element of the cost of production, that is to say of a predetermined magnitude, and on the other hand the availability of a margin of profit has emerged, between the proceeds from the sale of the products and their cost.
Therefore, profit-sharing is possible only when the existence of such a margin has been ascertained, that is, after the final results of the production period are known, while in a certain sense it represents an adjustment of the wage. In fact, the wage is the share of the enterprise's income belonging to the productive factor labor in relation to its (marginal) yield, 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; and likewise the remunerations of the other factors of production, including the managerial activity. Hence, at the close of a favorable period, it is possible to distribute adjustments drawn from the excess of income over the cost of production (largely resulting precisely from components determined in advance and in fixed measure).
The third form is akin to the second, insofar as the assignment of shares of the company to employees is often based on the availability of profits intended for distribution among the employees themselves and instead employed in the purchase of the shares to be registered in the latter's names. Employee shareholding confers on them the status of proportional members.
As regards the possibility and the scope of recourse to the three means indicated, it is observed that the participation of employees, or rather of their representatives, in the capacity of consultants, in decisions concerning the organization of production but not the policy of the enterprise, can bear good fruit in the general interest, can somewhat improve the conditions of the workers, while it does not present particular problems. The situation is different if participation extends to deliberations that concern the conduct of business (volume of production, sale prices, self-financing, etc.), because then problems of considerable delicacy arise, such as the unity of the governance of the enterprise, the assumption of responsibilities, professional secrecy and other similar matters.
The insertion, on the other hand, of representatives of the employees into boards of directors, while wishing to avoid the difficulties just mentioned - so that it does not exceed the limits of minority participation - proves of limited usefulness, having a predominantly symbolic value.
Profit-sharing raises questions of a purely economic nature, the greatest of which is represented by the identification of the real needs for reinvestment of the distributable profits, within the ambit of the individual enterprise. With regard, then, to the economy of a country, the advisability of profit-sharing can be evaluated insofar as it accords or conflicts with the general need for greater investments of capital or for an expansion of consumption. So that it does not seem possible to affirm that such participation is always advantageous or, on the contrary, always counterproductive, in terms of the progress of the enterprise and of the national economy.
As for employee shareholding, apart from the fact that the possession of a share of the company's assets implies the employee's participation also in the losses of the enterprise, it confers a certain moral standing on the employee-shareholder, when the portion of the share capital in the hands of the employees represents a significant percentage. One cannot overlook the difficulty connected with the transfer of the shares by the employees to third parties, or else the non-transferability itself of the shares, which would seek to remedy the other drawback. Considering the most recent experiences, it is noted that the first two forms of participation have greater diffusion and that profit-sharing finds wider application in economies, such as the North American one, characterized by a rapidly growing productivity, which normally requires a parallel development of consumption expenditures. In conclusion, the three forms of participationism illustrated here, which are the most common, fit into an economic-social system founded on private property (and initiative), whose excessive individualism they intend to temper.
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Franco Feroldi