Swedish funds: the utopian path to "democratize" companies

Swedish funds: the utopian path to "democratize" companies

A utopian alternative to respond to inflation would be found in the old Swedish funds, although not even the powerful unions in the Nordic country that promoted them in the 1970s could impose them in their original conception. Roughly speaking, it would be a matter of bags of money that would be filled with the surplus profits obtained by the companies due to price increases and that would be reinvested in the companies themselves on behalf of their workers, allowing them to enter the capital, even participate in the board of directors and in strategic decisions.

It would be a formula in line with the "democratization" of work centers that This same week, the Second Vice President and Minister of Labor, Yolanda Díaz, requested, and that if in the long term it would serve to reduce inequality and entrench employment, in the short term it works as compensation for the lower purchasing power implied by the rise in prices without an increase in wages. In this sense, the First Vice President and Minister of Economic Affairs and Digital Transformation, Nadia Calviño, pointed out that "it is a reflection and a debate that we have to have and see the different options that may be better for companies and sectors".

Perhaps, it could be seen as a sophisticated rent pact, with the same objective of dividing the damage between companies and workers, and going further. But the failure of the negotiation over a simple salary agreement prevents even imagining other horizons.

The 7.5% average inflation that he estimates the Bank of Spain for this 2022 It means losing a salary payment compared to last year. In concrete figures, if a worker's annual gross salary of 20,000 euros, who receives 1,429 euros in each of the usual 14 payments, the rise in prices gives that 7.5% bite, the cut in rent is about 1,500 euros. That is, he effectively loses a payment, which does not mean the same for low-income families than for others with more, or with many more.

The Government has been reiterating that its priority in the face of accelerating inflation is to protect the most vulnerable households. It has even approved a Shock Plan with temporary measures such as the discount of 20 cents per liter of fuel, the extension of the Minimum Vital Income (IMV), the reduction of VAT on electricity or the limit of 2% on rent updates. linked to the Consumer Price Index (CPI). And it has even obtained the approval of the European Commission to limit the price of gas to 50 euros per MWh in electricity generation, with the aim of lowering the bill.

These measures are palliative, without a doubt, although insufficient. Y some of them are not precisely aimed at protecting families with less income. The Executive itself has tried, in parallel, to promote an income pact that distributes the damage of inflation between companies and workers, with multi-annual salary increase agreements, which mitigate the loss of purchasing power in two or three years without sinking profit margins. business (the ability to profit from income after deducting all costs, such as electricity, raw materials or salaries). a negotiation in which employers and the majority unions have run aground.

And, meanwhile, price increases continue to be suffocating. Families suffer from inflation —caused, initially, by the explosion in demand at the end of the pandemic and the bottlenecks in world trade; and then, intensified by the impact of the war in Ukraine—which already requires more forceful answers, or perhaps more utopian.

One of them appears in the Spain 2050 Plan that the Government presented in May 2021, although with the spirit of reducing inequality in the long run. Instead, some economists have alluded to this alternative to respond to current inflation. These are the "salaried staff funds", as the Executive's strategic document calls them, in an epigraph in which it proposes "studying the creation of mechanisms aimed at promoting the participation of workers in the capital of their companies".

These funds, which as you well remember the Spain 2050 Plan It has its origin in Sweden and, in fact, they are popularly known as Swedish funds, they are defined in different ways, and have been designed in many others. According to the government document, they would be "collective investment funds of the workforce in business property, which reinvest the dividends obtained in their capitalization."

In short, funds nourished with part of the profits of the companies to be reinvested in the companies themselves, giving their workers access to ownership, being able to be represented on the boards of directors, and thus take an active part in strategic decisions. .

"These mechanisms can generate significant distributive benefits. Firstly, in the face of short-term propensities that sometimes weigh down corporate governance, they can contribute to promoting long-term investment in the territory and, with it, job creation. In secondly, they can help reverse the growing trend towards the concentration of property, rebalancing the distribution between income from capital and income from work", details the Spain 2050 Plan.

Albert Recio, professor of applied economics at the UAB and member of the Attac scientific council, gives another version of this mechanism. It would be a "more sophisticated option to compensate salaries, based on the fact that a part of the profits not distributed [de las empresas] will nurture these funds. This may be an alternative to the proposal to moderate salaries and not distribute dividends [aplicada por ejemplo respecto a las compañías que se beneficiaban de la subvención pública a los Erte]".

And, as he adds, "this part of undistributed profits could be used to finance a public fund with union control, which would eventually favor public property or even the payment of rents to workers." In short, "it is about converting moderation [salarial] in a change of the property model", explains the professor.

This same Wednesday, the general secretary of the Workers' Commissions (CCOO), Unai Sordo, indicated that it is "essential" to advance in the participation of workers in the company, given that one of the current "great deficits" is the "lack of democracy " in workplaces.

Deaf, in fact, gave continuity at the request of the vice president Yolanda Diaz, after knowing some positive unemployment datathat the workers are represented in the boards of directors of the companies and participate in their decision-making.

"As Marcelino Camacho said: trade unionism was the poor relative of the Transition and democracy remained at the doors of the workplace. This is true, and it must be corrected in our country," defended Unai Sordo together with the minister.

In various texts, Professor Mario del Rosal delves into the example of Swedish funds. "At the beginning of the 1970s, the Swedish Social Democracy, which had been in government for more than forty consecutive years, launched an economic proposal of unusual magnitude: the employee investment funds. In its original conception, this project was a step decided towards the socialization of capital through the collectivization of the ownership of the means of production and the delivery to the workers of the real power of decision in the companies", he starts.

This route "never came to be fully applied," he says. Its first objective was to avoid subtracting the extraordinary profits of companies (which they currently obtain if they transfer inflation to the final price of their goods or services without raising wages), through taxes, which would negatively affect business investment.

So, without touching taxes, "they would transfer [el exceso de beneficios] to some collective funds that would favor the capitalization of the economy, since they would be directly used in the acquisition of company shares".

The second objective of these Swedish funds would be to "free up workers' access to decision-making within the company," continues Mario del Rosal. And the third, to avoid the concentration of wealth and economic power.

The key is the theoretical operation, which the professor summarizes: "All those companies with more than fifty employees would be obliged to issue new shares each year for an amount equivalent to 20% of their gross profits. These shares —and the income derived from their ownership—they would be owned by the local unions as long as they did not account for more than a fifth of the total capital of the company.In case of exceeding that fraction, the shares would go to an investment fund managed jointly by representatives of the workers and the employers ".

After an intense national and international debate, and the frontal rejection of the bosses, its actual operation was far from these objectives, despite the strength of the Swedish unions and the dominant position of the social democracy in the politics of the Nordic country.

And some faded employee funds ended up inserted in the public pension system, until they were finally liquidated in 1991. Without the workers having access to the property of the companies, or to the boards of directors, with exceptions in very limited percentages, which today they also survive in other countries, such as Germany. Or even in Spain, in companies like Navantia, which Yolanda Díaz gave as an example. Or, in other cases, there are only advisory bodies.

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