Employee owned businesses in the UK booming

Nassos Stylianou
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John Lewis is the UK's biggest employee owned business (Source: Getty)

The number of employee-owned companies in the UK is on the rise, outstripping growth in all other businesses.

According to a recent report, the employee-owned sector grew 10 per cent in 2012, the last period for which figures are available, compared to 3.1 per cent for all businesses. Employee-owned businesses now account for 3 per cent of the country's gross domestic product (GDP).
With 2.6m people now working in such companies, the Financial Times reports, the UK is second only to France, where 4m people are employee owners.
The FT suggests that growth in these types of companies has been fuelled by the expansion in London's booming tech sector that offer employees payment in shares, much like their Silicon Valley counterparts in the US. Some professional services companies have also followed that ownership model.
A key feature of this approach is that employees will have their own shares, so the financial rewards of capital growth and dividend payments are intertwined with the success of the company, with high incentives for success driving productivity.
In a report released today to mark Employee Ownership Day, the Employee Ownership Association (EOA), voice of co-owned businesses in the UK, said that values the combined sales of the top 50 employee-owned companies at £20.5bn.
These companies, which include retailer John Lewis, engineering and management consultancy Matt MacDonald and the Arup Group consultants, employ a total of 150,000 people and have seen a 25.5 per cent increase in EBITDA over the last year, with a 4.5 per cent jump in productivity.
EOA chief executive Iain Hasdell said: “Employee ownership contributes some £30bn to UK GDP each year and is a growing economic force. Via the top 50 data, we are able to point to the higher productivity, profitability and employment levels of employee owned firms."

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