Close to two-thirds of the eighteen labour-sponsored funds have made investments so far. By the end of 1995, the total number of investment projects was 228 in portfolios valued at approximately $823 million (see Figure 2). These data represent an increase in the number of actively investing funds (from seven to eleven — and at least two more are on the verge of making a first investment) since the first quarter of 1995, as well as an increase in dollars placed in eligible small and medium-sized firms of over $240 million.
It should be noted that total amounts invested still appear out of proportion with assets under management due partly to the majority of funds that have not yet reached capitalization thresholds necessary to prudent deal-making. Another impediment has been unresolved legal and regulatory hurdles in some jurisdictions. Investment activity is expected to intensify substantially over the remainder of 1995 and throughout 1996.
Some observers of labour-sponsored investment funds are surprised by the seemingly new desire of unions for a place in Canada’s financial system. Actually, some interest in matters of investment and financing has been present among workers and unions for most of this century. Until very recently, interest has been somewhat more pronounced in labour movements abroad than it has been in the Canadian labour movement. However, since the 1950s, there has been steady growth in the number of workers, organized and unorganized, entering capital markets everywhere. Moreover, this has transpired through an ever wider spectrum of financial institutions and instruments in most industrialized countries.
These trends are confirmed in data and illustrative national profiles provided to the CLMPC by the International Confederation of Free Trade Unions (ICFTU).
Internationally, there have been two conventional routes by which workers can become capital market entrants. First, as individuals, they can subscribe to various measures facilitating employee financial participation and ownership. Such measures are frequently sponsored by employers and allow employees to share in profits or to purchase and own some portion of a company itself. Second, enlargement of financial influence and rewards for workers can be obtained, on a collective basis, through their control over industrial pension and superannuation plans.
Before 1990, there was little diffusion of employee financial participation and ownership outside of industrial structures in a few countries. One of the exceptions is the United States where the continuing spread of employee share ownership plans (ESOPs) since the 1980s has been stimulated by legislation and tax expenditures. Under the primary ESOP model, a tax deduction enables worker trusts to borrow money by which shares in enterprises are bought. This has resulted in millions of participating Americans in over 10,000 firms, though the model does not always confer voting rights or other decision- making authority.