By Melanie Sjoberg
Australia is wonderful. You had better believe it. Not only do we have the Olympics and Academy Award nominees, Australia has the largest number of share owners in the world. Forget Crown Casino, we are on the hottest roller-coaster ride in town. All you need is a few hundred dollars to spare and you can join the world of the corporate rich.
Or so the headlines would have us believe.
Reports from the Australian Stock Exchange (ASX) claim that the total number of people owning shares leapt to 7.6 million in 1999 — 53.7% of the adult population. Of these, 2.9 million made their first share purchase since 1997, largely as a result of the two Telstra sell-offs and the AMP de-mutualisation.
If you live in NSW you are likely to be warding off enticements to pick up a few more additions to your portfolio: shares in NRMA.
Just how successful is share ownership for the ordinary investor? ASX estimates 321,000 picked up their first shares with the Telstra 2 float in October. By February the value of those shares had dropped, leaving these new investors 19c per share worse off. Say you spent $4500 purchasing 1000 shares, your shares are now worth $190 less than you paid for them.
The ASX calculates that the average value of shares held is $28,000. But there is a small group of wealthy people who own and control the vast majority of shares in most corporations. So most ordinary workers own pitifully small amounts of shares.
Even the ASX warns that the "narrow portfolio" of most small-time investors exposes them to great risk.
The Australian editorialised on February 9 that this widespread public investment in shares was a welcome sign of a new maturity in financial planning. They also suggested that the long bull run of the stock market has wiped out the bad memories of the 1987 crash and that there is a substantial belief that the economy will continue to perform positively.
In other words, people are taking the hype to heart and investing, despite the lack of predictability and the poor record of the share market. The "analysts" can only explain the market with the benefit of hindsight, but ordinary workers are being encouraged to gamble their small savings.
In January, staff at Ansett proposed buying out Rupert Murdoch's 50% stock in Ansett. The company was in major upheaval and facing increased competition in the domestic market. Some staff were concerned about their future job security.
While the bid does not appear to be proceeding, it did generate a broader debate about whether workers and unions should participate in such share ownership schemes.
Gary Scarabolotti, from the Australian Employee Share Ownership Association, told ABC's PM program on January 25 that the union movement needed to broaden its focus beyond wages and conditions. He suggested that employee share ownership plans (ESOPs) are a mechanism for workers to look after their long-term wages by looking after the "factor which controls those wages": ownership.
The Business Council of Australia, the die-hard proponent of enterprise bargaining and individual contracts, also favours ESOPs. It argues that they enable workers to have greater involvement and a sense of ownership of the company. They promote ESOPs as a tool to increase productivity and improve workplace relations by encouraging employees to agree with company goals.
BCA member the Australian Gas and Light Company, for example, has an incentive scheme for employees which contains adherence to pre-set performance criteria in order to obtain shares.
But because ESOPs are used primarily to build company loyalty, they're not good investment practice. A BCA discussion paper warns that ESOPs can be risky, because they result in a narrow investment portfolio. A worker, who is already dependent on the company for wages, would extend that dependence to additional savings through an ESOP.
The real message is that it is in the interests of business profits to encourage workers to take out shares in the company they work for, in the hope that this will build greater identification with corporate goals and that they will work harder.
The recognition of this need for "connection" is a vain attempt to break down the alienation that many workers feel after spending more than eight hours a day at a job they have little control over.
But owning a small handful of shares will not improve the ability of workers to control the production process or investment decisions. Millions of Australians owning parcels of shares in Telstra have not been able to prevent the closure of many of its services to rural areas, for example.
The real decision making will still occur behind the closed doors of the company boardroom and through private conversation between directors and institutional investors.
Effective workers' control can only begin if the company is nationalised and accountable to the community as a whole, and if workers are given the right to democratically control the decisions of their companies.
That way production can be organised in such a way that workers' needs are coordinated with community and environmental priorities, rather than workers giving their hard-earned savings to shore up corporations' capital funds.