Employee ownership predicted for one in 20 firms

KEVIN SCOTT

AS many as five per cent of all Scottish businesses could ultimately be owned by their employees, according to the director of a public body that offers advice on transitioning.

The prediction, from Sarah Deas of Co-operative Development Scotland, comes on EO Day (Employee Ownership Day).

There are currently just 86 businesses in Scotland that use the model, including the likes of John Lewis and ARUP, but Ms Deas expects that to sharply increase.

The latest business to adopt the model is newly established social care provider Caledonia Social Care, which launches today.

With projected turnover of £2.5 million, Caledonia Social Care will focus on the provision of care at home support, including the provision of dementia specific services.

CDS says as many as 16,000 businesses will be seeking to transfer ownership in the next five years, something Ms Deas called a “succession timebomb”.

It can be linked to the number of baby boomers reaching retirement age and considering succession plans for their businesses.

“We need to reach a critical point where the structure becomes as normal as a management buyout,” she said.

CDS expects to see one business per month over the next year transfer ownership to its employees.

Ms Deas said there is sufficient data from university studies to suggest a five to 10 per cent sustained uplift in productivity compared to a conventionally owned business.