Building a Homegrown Economy: The Case for Employee Ownership in Ireland
November 20, 2024, 4:44 am
Ireland stands at a crossroads. The landscape of its economy is shifting. Multinational corporations have long been the darlings of the Irish economy, but their dominance is waning. The future lies in the hands of homegrown businesses. To nurture this potential, a new model is emerging: employee ownership. This approach could reshape the economic fabric of the nation, fostering resilience and innovation.
The call for a shift towards employee ownership is gaining momentum. Alan Coleman, the founder of Wolfgang Digital, is leading the charge. He argues that the next government must incentivize business owners to "sell-in" to their employees rather than "sell-out" to foreign buyers. This sentiment echoes through the halls of the Irish ProShare Association (IPSA), which advocates for Employee Ownership Trusts (EOTs). These trusts have proven successful in the UK, where they have transformed businesses and empowered employees.
The statistics tell a compelling story. In the past five years, the number of Irish businesses sold to foreign owners has more than doubled. From 72 in 2018 to 150 in 2023, this trend raises alarms. Each sale represents not just a loss of ownership but a loss of potential. These are often the companies with the greatest promise, snatched away before they can flourish. The cost is not merely financial; it is a loss of jobs, innovation, and local investment.
In contrast, employee-owned businesses tend to thrive. They are more productive, resilient, and committed to their communities. Employees who have a stake in the company are more likely to invest their time and energy into its success. They become partners in the journey, sharing in both the risks and rewards. This culture of ownership fosters a sense of responsibility and pride. It transforms the workplace into a community.
The UK serves as a beacon of what is possible. Since the introduction of EOT legislation, over 1,750 employee-owned companies have emerged. Approximately 124,000 employees have become part-owners. The benefits are clear: increased job satisfaction, better working conditions, and a more robust economy. The Irish government must take note. It must create a framework that encourages this model to take root in Ireland.
Currently, the tax framework in Ireland acts as a barrier to employee ownership. Unlike the UK, where EOTs enjoy significant tax advantages, Irish business owners face higher tax rates when selling to employees. This disincentive must change. The government should consider tax exemptions for capital gains and inheritance, as well as income tax exemptions on bonuses for employees. These changes would pave the way for a vibrant employee ownership landscape.
The potential for employee ownership extends beyond individual businesses. It represents a shift in how we view economic growth. Instead of relying solely on foreign investment, Ireland can cultivate its own talent and resources. This approach aligns with the broader goal of building a sustainable economy. A homegrown economy is not just about profits; it is about people. It is about creating opportunities for all.
However, the push for employee ownership is not the only issue on the table. The Irish SME Association (ISME) has also raised its voice. With 272,500 SMEs employing over 1.2 million people, the importance of this sector cannot be overstated. ISME is calling for a dedicated minister for SMEs, emphasizing the need for focused attention on this vital part of the economy. The next government must prioritize the interests of SMEs, ensuring they have the support they need to thrive.
The challenges facing SMEs are manifold. Rising costs, housing shortages, and an uncertain economic climate threaten their survival. ISME advocates for practical solutions, such as reducing VAT and energy costs. These measures would alleviate some of the financial pressures on small businesses, allowing them to invest in growth and innovation.
Moreover, the call for infrastructure investment is critical. A robust infrastructure supports business growth. It enhances connectivity and accessibility, making it easier for companies to operate and expand. The government must recognize that investing in infrastructure is investing in the future of the economy.
As the political landscape shifts, the implications for Irish businesses are profound. The election of Donald Trump as US President signals a potential change in foreign policy that could impact trade and investment. Ireland must be prepared to navigate these waters. Building a strong, independent economy is essential. This means fostering indigenous businesses and reducing reliance on external factors.
In conclusion, the future of Ireland's economy lies in its ability to embrace employee ownership and support SMEs. The government must act decisively to create an environment where these models can flourish. By incentivizing business owners to sell to their employees, Ireland can build a more resilient and dynamic economy. The time for change is now. The opportunity is ripe. Let us seize it and cultivate a homegrown economy that benefits all.
The call for a shift towards employee ownership is gaining momentum. Alan Coleman, the founder of Wolfgang Digital, is leading the charge. He argues that the next government must incentivize business owners to "sell-in" to their employees rather than "sell-out" to foreign buyers. This sentiment echoes through the halls of the Irish ProShare Association (IPSA), which advocates for Employee Ownership Trusts (EOTs). These trusts have proven successful in the UK, where they have transformed businesses and empowered employees.
The statistics tell a compelling story. In the past five years, the number of Irish businesses sold to foreign owners has more than doubled. From 72 in 2018 to 150 in 2023, this trend raises alarms. Each sale represents not just a loss of ownership but a loss of potential. These are often the companies with the greatest promise, snatched away before they can flourish. The cost is not merely financial; it is a loss of jobs, innovation, and local investment.
In contrast, employee-owned businesses tend to thrive. They are more productive, resilient, and committed to their communities. Employees who have a stake in the company are more likely to invest their time and energy into its success. They become partners in the journey, sharing in both the risks and rewards. This culture of ownership fosters a sense of responsibility and pride. It transforms the workplace into a community.
The UK serves as a beacon of what is possible. Since the introduction of EOT legislation, over 1,750 employee-owned companies have emerged. Approximately 124,000 employees have become part-owners. The benefits are clear: increased job satisfaction, better working conditions, and a more robust economy. The Irish government must take note. It must create a framework that encourages this model to take root in Ireland.
Currently, the tax framework in Ireland acts as a barrier to employee ownership. Unlike the UK, where EOTs enjoy significant tax advantages, Irish business owners face higher tax rates when selling to employees. This disincentive must change. The government should consider tax exemptions for capital gains and inheritance, as well as income tax exemptions on bonuses for employees. These changes would pave the way for a vibrant employee ownership landscape.
The potential for employee ownership extends beyond individual businesses. It represents a shift in how we view economic growth. Instead of relying solely on foreign investment, Ireland can cultivate its own talent and resources. This approach aligns with the broader goal of building a sustainable economy. A homegrown economy is not just about profits; it is about people. It is about creating opportunities for all.
However, the push for employee ownership is not the only issue on the table. The Irish SME Association (ISME) has also raised its voice. With 272,500 SMEs employing over 1.2 million people, the importance of this sector cannot be overstated. ISME is calling for a dedicated minister for SMEs, emphasizing the need for focused attention on this vital part of the economy. The next government must prioritize the interests of SMEs, ensuring they have the support they need to thrive.
The challenges facing SMEs are manifold. Rising costs, housing shortages, and an uncertain economic climate threaten their survival. ISME advocates for practical solutions, such as reducing VAT and energy costs. These measures would alleviate some of the financial pressures on small businesses, allowing them to invest in growth and innovation.
Moreover, the call for infrastructure investment is critical. A robust infrastructure supports business growth. It enhances connectivity and accessibility, making it easier for companies to operate and expand. The government must recognize that investing in infrastructure is investing in the future of the economy.
As the political landscape shifts, the implications for Irish businesses are profound. The election of Donald Trump as US President signals a potential change in foreign policy that could impact trade and investment. Ireland must be prepared to navigate these waters. Building a strong, independent economy is essential. This means fostering indigenous businesses and reducing reliance on external factors.
In conclusion, the future of Ireland's economy lies in its ability to embrace employee ownership and support SMEs. The government must act decisively to create an environment where these models can flourish. By incentivizing business owners to sell to their employees, Ireland can build a more resilient and dynamic economy. The time for change is now. The opportunity is ripe. Let us seize it and cultivate a homegrown economy that benefits all.