Russian Employee Ownership Recedes Only Slightly

Most state-owned enterprises in Russia were sold to their employees in the first few years of the 1990s. According to Joseph Blasi of Rutgers, a principal advisor to the Russian government on privatization, about two-thirds of all large (over 200 employee) state-owned enterprises became majority owned by their employees. While management bought a disproportionate share of the stock, the management stake was rarely over 10%; the rest was bought broadly by employees. The owners of shares hold them as individuals and can sell them as they see fit.

Blasi reports that the percentage of companies still majority owned is about 55% to 60%. Some companies have been bought by outside investors, some by their managers. While management continues to buy shares from employees in many companies, Blasi expects there will be a residual of 10% to 20% of the companies that are privatized that will remain broadly and majority employee-owned for at least several years.