Good morning everyone. I’m delighted to have been asked to officially launch this book.
Thank you to Allens for hosting us today.
The project was funded by the Australian Research Council and is a joint initiative of the Centre for Corporate Law and Securities Regulation, the Centre for Employment and Labour Relations Law, and The Tax Group.
This book is the first detailed discussion of the theory, policy and practice of employee share ownership plans in Australia.
The topics examined in the book are key legal and policy issues relevant to employee share ownership plans and include why employers implement them and why employees participate in them.
Congratulations to everyone involved, especially the authors Professors Ian Ramsay and Ann O’Connell, and Research Fellow Ingrid Landau.
The changing nature of work
We work to a globalising economy that demands knowledge and technology intensive services.
We know that Asia will continue to rise and that heterogeneous Asian economies will keep emerging strongly.
Our labour force is changing—the participation of women in the workforce has increased dramatically, and both men and women are working well past traditional retirement ages. Increasingly, both men and women play a juggling act to balance caring responsibilities with their work commitments.
The way we work is also changing—many of us work around the clock to meet the demands of international stakeholders.
Today about 1.4 million Australians work from home—many of us rightfully seek flexibility in our working arrangements.
With an ageing population and shrinking workforce in the future, we know that increasing productivity will be essential for maintaining and improving our standard of living.
The Government is considering how best to support the development of a dynamic, flexible and inclusive workforce that offers people quality jobs, and provides for a sustainable and productive Australia.
Some of you will know that the Australian Industry Group published a paper last year on high performance organisations.
Some of the characteristics of high performance organisations are that they promote participatory decision making, use teamwork and have quality management.
We know instinctively that people in happy, engaged, safe and well managed workplaces will simply give more.
Recent research confirmed this when it compared workplaces performing well on employee satisfaction, wellbeing and commitment to workplaces not performing as well.
The high-performing workplaces were 12 per cent more productive. They had 23 per cent less staff turnover. Their average profit margin ratio was 15 per cent compared with 5 per cent in the low-performing workplaces, amounting to a 40,000 dollar difference in profit per full-time employee per year.
Engaged employees are good for the bottom line.
Centre for Workplace Leadership
To respond to Australia’s increasing need to boost productivity and remain competitive in the Asian Century, the Australian Government is creating the Centre for Workplace Leadership.
The centre is a flagship initiative of the Government and will play an important role in supporting our aim to increase productivity in the workplace and the quality of jobs by improving leadership capability.
It will encourage the development of these organisations by assisting managers and leaders at all levels to create workplaces where people give their best through their everyday relationships at work.
The Government’s vision is to see high performing workplaces across Australia, led by highly capable leaders and managers. If we can improve leadership capability, productivity will improve through individual actions in the workplace.
The centre will be a partnership of industry and government, with corporate contributions to the centre supporting the ongoing development of leadership in Australia.
It will inform and educate managers and leaders at all levels of organisations on the importance and practice of good leadership, workplace culture and employee engagement.
The centre will focus on small and medium enterprises, and help firms to improve their performance ‘on the ground’.
The selection process for a centre provider is almost complete and I anticipate that it will be up and running this financial year.
Employee engagement and Employee Share Schemes
I note with interest the quote in your book from the UK Deputy Prime Minister, Nick Clegg, on employee share ownership plans. In particular, his comment that employee share ownership could result in a more ‘responsible capitalism’ and significant benefits for participants and the wider economy.
The research in Incentivising Employees prompts the debate on how we can encourage more employers and employees to offer, and take up, employee share ownership plans and encourage us in Government to consider the policy framework.
I am pleased that employee share schemes enjoy general support across both sides of politics, as pointed out in your book.
I was particularly interested in your comments that the reasons that Government supports employee share ownership may not be well aligned with the reasons that employers offer these schemes and employees take them up.
You point out that the Government has promoted employee share schemes as a way to align the interests of employees and employers, which would in turn promote workplace cooperation and employee involvement in decision making and improve productivity.
However, the findings of your surveys suggest that financial considerations, such as employers and employees sharing in the financial success of the company, employers showing employees that they are valued, and building up savings for employees, are more significant motivations than building productivity for employers or having a greater role in decision making for employees.
These are valid points for us in Government to consider when we consider regulation of employee share schemes.
The Government supports employee share schemes through tax concessions. I understand that these concessions have been the subject of some debate in the past and we welcome your contribution to that debate.
The income threshold introduced in the 2009-10 Budget was designed to better target the employee share scheme tax exemption to low and middle income earners.
The Government understands that current regulatory arrangements can create difficulties for some sectors of the economy, in particular start-up companies.
That is why we will be consulting with industry on the impact of the tax and administration requirements for employee share schemes.
I would like to congratulate you on the publication of Incentivising employees: Theory, policy and practice of employee share ownership in Australia.
This book represents a valuable contribution to our knowledge about the regulation of employee share schemes in Australia and what motivates employers to offer, and employees to take up, these schemes.
This is an important contribution because, as your book suggests, there has been limited research into the use and benefits of employee share schemes in Australia.
I think one of the take-home points for us from your surveys and analysis of international research on the impact of employee share schemes in workplaces is that they can form part of the answer to developing a high-performing workplace with positive working relationships between employers and their employees, engaged employees and continuous productivity improvement, but they do not provide the whole answer.
Developing a high performing workplace requires other management practices that increase employee engagement and participation in decision making. Our aim is that the Centre for Workplace Leadership will build the capability of managers in Australian companies to do just that.