Financial participation by employees can make a contribution to effective personnel policies but it has to be viewed in the context of the particular circumstances of each company. I would take the view that financial participation should not be seen as a substitute but should form part of an overall approach to sound personnel policies, in which other measures are also necessary for the achievement of increased worker motivation and harmonious industrial relations. Financial participation must, therefore, be set in a broader context involving communication and consultation between management and workers on all aspects of the business.
The budget decision to abolish the tax incentives associated with employee share schemes was based on a Government commitment to undertake a radical overhaul of the entire tax code. This overhaul, involving a systematic curtailment of tax exemptions, shelters and allowances, is designed to ensure that income in whatever form it may be received is subject to tax and is taxed on a broadly comparable basis. One of the factors which influenced the budget decision was that in many cases the schemes were tax driven rather than participation driven.