The Rise of Employee Ownership in the UK – Key Stats and Trends

As businesses search for innovative ways to boost productivity, engagement, and long-term sustainability, employee ownership is gaining significant traction in the UK. But what is driving this trend, and how does it benefit both employees and businesses?

What is Employee Ownership?

Employee ownership is a business model where the company's employees hold a significant or controlling stake in the business. This can be achieved through various structures like Employee Ownership Trusts (EOTs) or direct share ownership, where workers become stakeholders and actively share in the company’s profits and decision-making processes. This model isn't just about profit-sharing; it’s about giving employees a genuine voice in shaping the future of the business. Let's dive into some of the key statistics and trends that highlight why this movement is rapidly growing in the UK.

Key Stats That Highlight the Growth of Employee Ownership in the UK

1. The UK’s Employee-Owned Sector is Booming

   • The number of employee-owned businesses in the UK has more than tripled in the last decade, growing from just under 100 companies in 2013 to over 700 today.

   • This growth is projected to continue, with experts predicting that the sector could expand to over 5,000 employee-owned businesses by 2030.

     
     

2. Significant Contribution to the Economy

   • Employee-owned businesses contribute approximately £30 billion to the UK economy every year.

   • These companies have proven to be 40% more resilient during economic downturns, bouncing back faster than their non-employee-owned counterparts.

     
     

3. Higher Levels of Employee Engagement and Satisfaction

   • Surveys indicate that 70% of employees in employee-owned companies report higher job satisfaction compared to those in traditional business models.

   • Employee-owned businesses see up to a 50% reduction in staff turnover, highlighting a greater sense of loyalty and commitment among team members.

     
     

4. Boost in Business Performance and Productivity

   • Research shows that employee-owned businesses experience 5-10% higher productivity than traditionally structured companies.

   • Companies that transition to employee ownership have, on average, seen a 25% increase in profitability within the first two years of the change.

     
     

Trends Driving the Rise of Employee Ownership

1. Increased Focus on Sustainable and Ethical Business Practices

   • Modern businesses are placing a greater emphasis on sustainability, ethical practices, and social impact. Employee ownership aligns perfectly with these values by fostering a culture of accountability, transparency, and community involvement.

     
     

2. The Shift Towards Purpose-Driven Workplaces

   • Today’s workforce, especially Millennials and Gen Z, values purpose over wages. Employee ownership models empower these generations by giving them a say in how the company operates and a share in its success.

     
     

3. Supportive Government Policies and Tax Incentives

   • The UK government has introduced tax advantages for companies that transition to employee ownership. For example, sellers to Employee Ownership Trusts may be eligible for Capital Gains Tax (CGT) relief, and employees can receive tax-free bonuses under specific conditions.

     
     

4. Post-Pandemic Business Resilience

   • The COVID-19 pandemic highlighted the importance of agile and resilient business models. Employee-owned companies demonstrated their ability to adapt quickly to changing circumstances, making them more attractive to investors and entrepreneurs seeking stability.

     
     

Benefits of Employee Ownership for Companies and Employees

• For Companies: Improved productivity, higher profitability, increased innovation, and stronger employee retention rates.

  
  

• For Employees: Greater job security, a direct share in profits, a stronger sense of purpose, and the opportunity to influence the company’s future direction.

The Future of Employee Ownership in the UK

The movement towards employee ownership in the UK shows no signs of slowing down. As businesses look for ways to stay competitive in a rapidly changing landscape, more are expected to adopt this model to unlock the potential of their workforce and create more sustainable growth.

If you're considering transitioning your business to an employee ownership structure or simply want to learn more about the benefits, be sure to contact us to discuss further.