Employee ownership in companies as a partial solution to Finland’s challenges (summary)

Thousands of Finnish businesses face an uncertain future as their owners approach retirement age. It is estimated that one in three generational transitions fails, resulting in the loss of jobs and business opportunities.

This memorandum proposes employee ownership as one means of accelerating economic growth in Finland. We suggest exploring a model in which individuals who were previously employees gradually become decision-making owners in their workplace. This approach offers a complementary solution for business continuity, particularly in cases where successors cannot be found within the family or on the open market.

Employee ownership carries several socially desirable characteristics. Beyond its potential to drive economic growth, it can also serve as a tool for regional, social, and sustainable development. International experience suggests that employee-owned companies tend to combine productivity, growth orientation, and longevity. For the individuals involved, employee ownership offers a low-risk opportunity to build wealth – even, and especially, in cases where they have no prior assets.

Employee ownership is typically rooted in the same geography as the people involved. Their vested interest in local vitality acts as a counterbalance to otherwise mobile regional and international capital, potentially stabilising regional development.

To become more widespread, employee ownership requires supportive legal structures or equivalent frameworks. In addition, some form of incentive or catalyst is needed to encourage current owners to consider employee ownership as an alternative to traditional business sales—and to ensure the availability of bridge financing and support for the transition.

The memorandum’s key recommendation is that Finland formally recognises employee ownership in legislation and considers incentives to support its wider adoption. Several EU countries, including Denmark and Slovenia, are already developing legal models to promote employee ownership.

As the most suitable model for Finland remains unclear, we propose a practical pilot. This would provide a basis for refining legislation and potential incentives to meet the needs of Finnish businesses.

Employee ownership is a long-term structural growth policy that does not necessarily increase public expenditure. If successful, it strengthens economic growth, safeguards existing jobs, and supports regional vitality.