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Scotland's 146 employee-owned businesses have a combined turnover of £691m

New research commissioned by Co-operative Development Scotland (CDS) 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, 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 one 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.

Companies are defined as EOBs if there is an employee stake of at least 25%, with no other single majority shareholder.

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.

CDS is pushing to increase the number of EOBs in Scotland to 500 by 2030, in line with the Scottish Government’s Programme for Government 2021 commitment.

The organisation's head Clare Alexander said: “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 added: “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.”

Scotland is the third largest growth region in the UK for EOBs, with the sector here increasing by 13% since June 2020.

The top five sectors for Scottish-registered EOBs are:

  • Professional, technical and scientific
  • Manufacturing
  • Wholesale and retail
  • Construction
  • Information and 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 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.

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