In Europe, could more stocks given to the workers help compensate for wages that have stagnated in much of Europe, boosting exchange traded funds (ETFs) and the stock market in general?

Voestalpine, a metal working company in Austria that makes up 4.8% of iShares MSCI Austria (EWO), has set the example, as factory visits have turned into financial briefings, and employees have now become shareholders.

Many Europeans lack faith in free markets such as those in the United States or Great Britain, and they do not rely on them to address the problems with of capitalism with more free market solutions, explains Carter Dougherty for The New York Times.

More stock in the hands of the workers could help compensate for wages that have stalled in much of Europe, even as the stock markets rally. In Ireland, the United States and the United Kingdom, the ratio of employee shareholders is 20-30%, compared to 6-7% in both Austria and Germany. German and Austrian labor contracts are more focused on wages.

In Germany, unions have been resisting the idea of employee stock ownership – they don’t like  that wage increases would be substituted with stocks. German unions have instead favored profit-sharing. Automaker Volkswagen, which is 3.2% of iShares MSCI Germany (EWG), gave its employees a bonus of 3,700 euros that was linked to its operating earnings. To make stock ownership catch on, Germany’s two main political parties are considering tax incentives.


The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.