Fact Service May 2021

Issue 18

Low-income staff on share schemes ‘£11,000 better off’

More workers should be offered the chance to join employee share schemes, a think tank has said, after it found low-income participants could benefit by nearly £11,000 compared to those on similar salaries outside the schemes.

The findings are in the report A stake in success: Employee share ownership and the post-Covid economy, from cross-party think tank the Social Market Foundation.

Its analysis of Organisation for National Statistics (ONS) figures detected an employee share ownership “wealth premium”, with employee shareholder households across all income and age groups having much higher levels of median financial wealth. It found that employee shareholders in the lowest income quartile (“the poorest 25%”) have median net financial wealth £10,900 greater than those who are not employee shareholders.

Currently, less than 5% of UK workers own shares in the company they work for, due to factors such as scepticism, lack of awareness and of institutional support and leadership from government, it says. To address these, the report suggests:

• “nudging” businesses to offer employee share plans;

• modernising share plans to reflect the 21st century labour market;

• getting lower income workers on board;

• strengthening rights and voices of employee shareholders;

• introducing a new ownership model to encourage employee share ownership to form a key part of business planning;

• “supercharging” entrepreneurship and innovation; and

• getting government to lead the charge.

https://www.smf.co.uk/wp-content/uploads/2021/05/A-stake-in-success-May-21.pdf