Levels of employee ownership in Scotland have hit an all-time high with almost 200 employee and worked owned businesses in the country.
Latest research commissioned by Co-operative Development Scotland (CDS) – and conducted by academics from the University of Leeds, University of New South Wales and the White Rose Employee Ownership Centre (WREOC) – reveals there are currently 195 employee owned businesses* in Scotland, including 28 worker co-operatives.
Of those, 146 are registered in Scotland and another 49 operate in Scotland but are registered elsewhere. Those Scottish-registered businesses generate a combined turnover of £691m and employ over 5,350 people.
Nearly three quarters of all transitions to employee ownership in Scotland have taken place since 2017, and 96% of the Scottish-registered EO firms use an employee ownership trust, with 17% having some direct individual ownership. The average level of employee ownership among these companies is 90%, and 63% are entirely employee owned.
In writing up the new research, the Press and Journal reported it was found that these EO businesses placed significant focus on people, job security, health, equality and wellbeing. That in turn had led to increased business turnover and improved staff retention through pandemic, a period when many other Scottish businesses had experienced the reverse.
These are encouraging new findings for CDS, part of Scottish Enterprise, who are targeting the establishment of 500 employee owned businesses in Scotland by 2030.
Head of CDS, Clare Alexander, said: “We’ve made fantastic progress to date in growing the number of EOBs in Scotland and this new data gives us a really clear picture of where we are and what we still need to achieve to reach the 2030 target. EOBs tend to be more purpose-driven, innovative and rooted in their communities than other business models, as well as being fairer, greener and more democratic places to work.
“With the National Strategy for Economic Transformation’s increased emphasis on the wellbeing economy, communities and fair work, it’s more important than ever that we raise awareness and uptake of employee ownership. It’s also a business model that punches well above its weight in terms of business resilience during times of economic crisis, profitability, productivity and staff engagement – outperforming the non-employee-owned sector in all of these measures.”
Business Minister Ivan McKee said: “It is great see this data showing the growth in employee-owned business in Scotland, which provide benefits to the people and places that they operate and these types of inclusive business outperform others in terms of their productivity, resilience and profitability while also being fairer places to work.
“In our recently published National Strategy for Economic Transformation, we committed to a review of how we best increase the number of inclusive businesses including co-operatives, social enterprises and employee-owned business. The work of Co-operative Development Scotland remains vital in promoting alternative business models and supporting businesses who wish to transition to an inclusive business model as we drive towards our target of 500 employee owned business in Scotland by 2030.”
Isabella Miller, co-chair of the employee-ownership industry leadership group Scotland for Employee Ownership (SfEO) added: “These findings are incredibly helpful in terms of better understanding the employee ownership landscape in Scotland, and I’m sure they’ll act as a springboard for a successful drive to reach the 2030 target.
“In Scotland we’re uniquely placed to nurture and grow the employee ownership sector – with CDS dedicated to helping companies learn about the model and make the transition, while SfEO is dedicated to championing the values and benefits, using its industry voice to support emerging policy, best practice and growth of this vital model for Scotland’s economy. Together we are creating the perfect environment for employee-ownership to flourish, bringing all the associated wellbeing and fair work benefits.”
To help business owners decide if employee ownership is the right exit strategy for them, CDS currently offers advice and support via a 100% funded ownership succession review and employee ownership feasibility study. Specialists are also able to advise around implementation.
* Companies are defined by CDS as employee owned businesses if there is an employee stake of at least 25% with no other single majority shareholder. This includes EOBs based and registered in Scotland, workers’ co-operatives based and registered in Scotland and worker co-operatives and EOBs headquartered elsewhere but with some operations in Scotland.