News from Germany

by Alexander Beard, on Jan 31, 2019 12:01:18 PM

Market – Trends; Beyond traditional employee benefits:

Let’s forget about 2016 and all these debates and discussions about Brexit. There is no need to discuss what went wrong and who is to blame. We need to focus on our children’s future.

In Germany as in most other Western countries we are facing more nationalism and more egotism, and following these trends, more populism, encouraged by anonymous new media options. The reason for these trends seems to be, that even after 10 years of prosperity in peace not all have profited: The rich became richer, the poor became poorer.
Germany’s success for a long period following the WWII is based on a Social Market Economy (=> “Ordo-Liberalism”: Ludwig Ehrhard, Walter Eucken, Franz Böhm, Leonhard Micksch, Alfred August Arnold Müller -Armack). We need to keep this success going- a challenge that will be hard to win. Those who work should also be rewarded. Employee benefits are in need of a redesign.

Societies need to grapple with these developments – We need to embrace this challenge!

There are “Corbyns” and “Hamons” all over the place, seeing the solution in reallocation only. However there is no country in my mind where these reallocations worked out well for long – term.

Some 50 years ago we had some entrepreneurs who thought about a different way. However it also didn’t get the right acceptance from the majority of people. Philip Rosenthal or Elmar Pieroth i.e. offered an equity participation in their family- owned companies. All employees became copartners of the owner. Shareholders in the real meaning: Sharing the effort, the risk and the profit. “Mitbestimmung” – codetermination had been developed in these past days.

This is neither new nor unique, however many mid-sized or small companies also today try to avoid the risk to losing control. Of course in times with lowest interest rates the argument to build proprietary capital is less convincing than in times of high debt costs. But we have to keep in mind that future developments in our industries might lead to a fast divergence between those who have work and jobs and those who don’t. “Labour” from humans will be less needed; robots will take over and this will happen not only in factory buildings but also in hospitals, banks, logistic centers, buses or mail delivery services. We should let “our” machines do our work and gain from their profitability. De facto this will be close to the idea of a “basic income” for all. But it will be the return on investment, as soon as employees will become capital (co-) owners instead of a recipient of social charity or state handouts. Simultaneously it will increase the employee's loyalty and their engagement. Tax advantages could help to make these ideas happen, hopefully soon enough before German society will have been separated in two antagonized camps.
Maybe Europe will join its ideas to come up with real solutions valid for the 21st century. A European Social Market Economy with employees being the co-owners of their enterprises could be a start.

Topics:Alexander BeardbenEmployeesEurope