New data reveals clearest picture yet of Employee Ownership in Scotland
New research commissioned by Co-operative Development Scotland (CDS), part of Scottish Enterprise, has given the clearest picture yet of Scotland’s employee-owned businesses* (EOBs) and their economic contributions
Conducted by academics from the University of Leeds, University of New South Wales and the White Rose Employee Ownership Centre (WREOC), the new census reveals there are currently 195 EOBs operating in Scotland, comprised of 146 Scottish-registered EOBs (including 27 workers’ co-operatives) and 49 non-Scottish-registered EOBs (including 1 workers’ co-operative).
Findings also revealed that the 146 Scottish-registered EOBs have a combined turnover of £691m and employ more than 5,350 people. Of these, the 27 Scottish-registered workers’ co-operatives have a combined turnover of £30m and employee more than 350 people.
CDS is the arm of Scotland’s enterprise agencies (Scottish Enterprise, Highlands and Islands Enterprise and South of Scotland Enterprise) that supports company growth through collaborative and employee ownership business models. Employee ownership gives employees a meaningful stake in their organisation together with a genuine say in how it is run.
These new findings will act as a baseline for a stronger-than-ever push by CDS to increase the number of EOBs in Scotland to 500 by 2030, in line with the Scottish Government’s Programme for Government 2021 commitment.
Head of Co-operative Development Scotland, 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.”
Scotland is the third largest growth region in the UK for EOBs, with the sector here increasing by 13% since June 2020. CDS is the only dedicated service in Scotland aimed at supporting business growth through more employee ownership and co-operative business models.
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 as EOBs 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.
Notes to editors
- Pic1: Glasgow-based digital agency Spider Online announced its move to employee ownership in February 2022. Pictured L-R are team members Ross Hamill, Lesley Connelly and David McNee.
- Pic2: Dunfermline-based ventilation company Paul Heat Recovery Scotland transitioned to employee ownership in February 2021. Pictured (centre) is Director Stefan Huber with two of the employee trustees.
- Pic3: Aberdeen, Dundee and Angus based IT provider ITWORX announced its transition to employee ownership in November 2020. Pictured L-R are company founders Philip Mowatt and Jill Ross.
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Notes to Editors:
Additional research findings
The top five sectors for Scottish-registered EOBs are:
- Professional, Technical & Scientific
- Wholesale & Retail
- Information & Communication
Of the current crop of Scottish EOBs, 80% transitioned to employee ownership from 2014 onwards, when the Finance Act established the Employee Ownership Trust. Nearly three-quarters of all employee ownership transitions have occurred since 2017.
Of the Scottish-registered EOBs, 96% utilise an employee ownership trust, with 17% having some direct individual ownership. The average level of employee ownership among these companies is 90%, however 63% are entirely employee owned.
All Scottish-registered EOBs have some form of employee participation in their governance – something which is not typically the case at non-employee-owned firms:
- 82% of companies with a trust have one or more employee trustees
- 58% have employee directors
- 44% have regular meetings of employee shareholders
Research findings published by CDS last year (conducted by the University of St Andrews) showed that EOBs were more resilient than non-employee owned businesses during the Covid-19 pandemic. A significant focus on people, job security, health, equality and wellbeing led to increased business turnover and improved staff retention at a time when many businesses experienced the opposite.
Co-operative Development Scotland (CDS) is the arm of Scotland’s enterprise agencies that supports company growth through collaborative and employee ownership business models. An employee-owned business is one in which the employees hold the majority of the shares either directly or through an employee ownership trust. Selling to employees allows owners to manage their exit and achieve fair value while safeguarding the long-term future of the company. Employee ownership gives employees a meaningful stake in their organisation together with a genuine say in how it is run. It roots business in Scotland, drives performance and delivers economic wellbeing.
About Scottish Enterprise
Scottish Enterprise is Scotland's national economic development agency. We’re committed to growing the Scottish economy for the benefit of all, helping create more quality jobs and a brighter future for every region.
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