Profit Sharing for Ireland?. ESRI Memorandum Series No. 146 1981

Geary, R.C. and Dempsey, M. (1981) Profit Sharing for Ireland?. ESRI Memorandum Series No. 146 1981. [Policy Paper]

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Abstract

Profit sharing may be defined as an agreement between an employer and workers to pay a share of the profits or wealth created by the organisation in addition to wages and direct incentives. It is a recognition of the worker's right to a share in the results of the organisation, just as the right of those who provide the capital. Profit sharing is regarded frequently as a direct incentive to employees whose extra efforts can increase the profitability of an enterprise; it should not be confused with productivity schemes, however. There are many ways in which profit sharing may be operated: (i) it may be a cash distribution; (ii) it may take the form of share allocation or of share option; (iii) it may apply to all workers or to certain categories; (iv) the amount may be at the discretion of owners or determined by rule; (v) profits shared may be a fixed percentage before tax, net profit after tax, a proportion of profit over a specified minimum. The profitability of a firm depends on many factors, sufficient capital, capable management and the efforts of all the workers, therefore it would appear equitable that all interests should share in the surplus remaining after each section has been reasonably remunerated.

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