What is an Employee Stock Ownership Plan?
An employee stock ownership plan is a tax qualified plan similar in certain respects to a pension or a profit sharing plan.
Those other plans are designed to invest away from the sponsoring company, while an ESOP is mandated to invest primarily
in the stock of the employer. The ESOP is the only qualified plan that can borrow money. It can purchase stock
from the sponsoring company or from its stockholders. Because of this , the ESOP is an instrument of corporate finance.
The ESOP is an employee trust to which the sponsoring corporation can make tax deductible contributions
in amount equal to principal and interest to enable the ESOP to repay the lender.
The loan can be made to the ESOP by a bank or by the corporation or even by the selling stockholder.
The lenders look the corporation for its ability to make contributions to the ESOP to service its debt.
The stock that is purchased by the ESOP is allocated to the employee participants according to their compensation.
The employee accounts are subject to a vesting schedule. If they leave before being fully vested, they forfeit some of the value
of their stock accounts and the forfeitures are reallocated to those who remain with the company.
The stock held by the ESOP of a private corporation is voted by the ESOP trustee, generally at the direction of
the ESOP administration committee appointed by the corporation’s board of directors. The employee participants vote
only on certain grave issues such as merger or liquidation.
All of this description make us more understand why ESOPs programs and its mechanisms are stated as The Ultimate in Labor Participation.

Comparable Worth: Equal Money for Equal Value =================

The goal of comparable worth is to close the earnings or pay gap by having organizations set wages for different
jobs to reflect differences in the value of the job. This value would be measured by the job’s basic characteristic, primarily skill, effort,
responsibility and working conditions instead of discrimination based on sex, race, color, religion or national origin.
The employment nondiscrimination seek to prevent discrimination based on race, gender, religion, national origin,
physical disability, and age by employers. There is also growing body of law preventing or occasionally justifying
employment discrimination based on sexual orientation. Discriminatory practices include bias in hiring, promotion,
job assignment, termination, compensation, and various types of harassment. It also contains an implicit quarantee that
each person receive equal protection of the law.
In US constitutions discrimination in the private sector is not directly constrained by the constitution,
but has become subject to a growing body of federal and state statutes.
It provides that where workers perform equal work in jobs requiring equal skill, effort, and responsibility
and performed under similar working conditions, they should be provided equal pay. It is an illegal for employers
to discriminate in hiring, dischsrging, compensation, or terms condition, and privileges of employment.

Labor – Management Cooperation ========

The International ExperienceJapan labor-management cooperation is the cooperative nature of labor relation.
They have transformed Deming’s Total Quality Control by creating Total Quality Control Circles as the main part of the concept.
The transformed TQC proved to be more effective as a management system , because it suited
The Japanese custom of group relationship, between employee to employee and management to employee.
Here we see that it is the Japanese culture which makes Japanese management different with the American management,
in particular all matters touching human relationship.
As soon as a person has passed the selection process to enter a company, he or she will become a member of the company or the group.
A member of a group is considered an organic part of the group, similar to a finger on
a person’s body. If the finger is out, the whole body feels the pain.
Based on that philosophy Japanese companies generally adhere to life time employment. Even after retirement,
the company will assist its members to find another job or activity, if they still want to work.
Even in some companies, they create a special Division of Responsibilities for Reducing Industrial Accidents.
Employers in establishing Measures to Prevent Industrial Accidents get a full support from Labor Unions and Business Organizations,
while Individual Workers support the execution of the Measures by showing their cooperation and compliance.
They work as a solid team-work, having same objective and responsibilities for the sake
of safety & health programs and the effective of company and social interest.
The above internal groups get assistance and facility from external group, including Designers, Manufacturers and
Importers and also getting support from Organizations with an Interest in Safety & Health and the Researchers to
make the Measures to Prevent Industrial Accidents accepted by all group concerns and work well under control of a required standard.

UNEMPLOYMENT

Theories of Unemployment
The possibility of unemployment is a central subject of macroeconomics. There are two basic issues, the first concerns to determinants of average unemployment over extended periods.
The second issue concerns the cyclical behavior of the labor market. Related to the role of firm in responding the offers of unemployed worker concerning wages, there are four possible responses the firm can make to the offer.
First, the firm can say that it does not want to reduce wages. Theories in which there is a cost as well as benefit to the firm of paying lower wages are known as ‘efficiency – wage theories.
The second possible response the firm can make is that it wishes to cut wages, but that an explicit or implicit agreement with its workers prevents it from doing so.
The third way the firm can respond to the unemployed worker’s offer is to say that it does not accept the premise that the unemployed worker is identical to the firm’s current employees. That is, heterogeneity among workers and jobs may be an essential feature of the labor market.
Finally, the firm can accept the worker’s offer. In this view, measured unemployment consists largely of people who are moving between jobs, or who would like to work at wages higher than those they can in fact obtain.
1. A Generic Efficiency Wage Model
Potential Reasons for Efficiency Wages
The central assumption of efficiency-wage models is that there is a benefit as well as a cost to a firm of paying a higher wage. Four of the most important reasons are,
First, a higher wage can increase workers’ food consumption and thereby couse them more productive.
Second, a higher wage can increase workers’ effort in situations where the firm can not monitor them perfectly.
Third, paying a higher wage can improve workers’ ability along dimensions the firm cannot observe.
Finally, a high wage can build loyalty among workers, and hence induce high effort, conversly a low wage can cause anger and sabotage.
This model shows how efficiency wages can give rise to unemployment. In addition, the model implies that the real wage is unresponsive to demand shifts. Suppose the demand for labor increases. Since the efficiency, w* is determined entirely by the properties of the effort function, e(*), there is no reason for firms to adjust their wages
2. A More General Version
With many of potential sources of efficiency wages, the wage is unlikely to be the only determinant of effort.
A natural generalization of the effort function is
e = e(w,wa,u), e1(*) > 0 e2(*) < 0 e3(*) > 0
where wa is the wage paid by other firms and u is the unemployment rate, and where subscripts denote partial derevatives.
This analysis has three important implications.
First, implies that equilibrium unemployment depend only on the parameters of the effort function, the production function is irrelevant. Second, relatively modest values of B- the elasticity of effort with respect to the premium firms pay over the index of labor market conditions- can lead to nonnegligible unemployment. Third, firms’ incentive to adjust wages or prices (or both)in response to changes in aggregate unemployment is likely to be small for reasonable cases.
3. The Shapiro – Stiglitz Model
The source of efficiency wages that has probably received the most attention is the possibility that firms’ limited monitoring abilities force them to provide their workers with an incentive to exert effort. This one presents a specific model, due to Shapiro and Stiglitz (1984), of this possibility.
Presenting a formal model of imperfect monitoring serves three purposes. First, it allows us to investigate wether this idea holds up under scrutinity. Second, it permits us to analyze additional questions, for example only with a formal model can we ask whether gtoverment policies can improve welfare.
Third, the mathematical tools the model employes are useful in other settings. The model implies the existence of equilibrium unemployment, and suggests various factors that are likely to influence it. Thus the model has some promise as a candidate explanation of unemployment.
4. Implicit Contracts.
The possibility of longterm relationships implies that the wage does not have to adjust to clear the labor market each period. Workers are content to stay to stay in their current jobsas long as their income streams they expect to obtain are preferable to their outside opportunities, because of their longterm relationship with their employers, their current wages maybe relatively unimportant to this comparison.
Consider a firm dealing with a group of workers. The firm profits are
“ = AF(L) – wL, F’(*) > 0 F”(*) < 0
where L is the quantity of labor the firm employesand w is the real wage. A is a factor that shifts the profit function. It could reflect technology, or economy wide output .
One simple type of contract just specifies a wage and then lets the firm choose employment once A is determined; many actual contract at least appear to take this form. Under such a contract, unemployment and real wage rigidity arise immediately. A fall in labor demand causes the firm to reduce employment at the fixed real wage while labor supply does not shift., and thus create unemployment. And the cost of labor does not respond because by assumption , the real wage is fixed.
5. Insider – Outsider Models.
In reality, there are two groups of potential workers. The first group –the insiders-are workers who have some connection with the firm at the time of the bargaining, and whose interests are therefore taken into account in the contract.
The second group-the outsiders- are workers who have no initial connection with the firm but who may be hired after the contract is set. This distinction may be important for both fluctuations and unemployment. If the entire labor market is characterised by insider power, greater insider power reduces employment by rising the wage and causing firms to move up their labor demand curves. Thus in this case the insider-outsider distinction provides a candidate explanation of unemployment. The more realistic case, however, is for there to be insider power only in part of the labor market., with the rest relatively competitive. But even in this case , insider power can increase average unemployment.
6. Hysteresis.
Variations in employment can give rise to dynamic in the number of insiders. Under many instituional arrangement, workers who become unemployed eventually lose a say in wage-setting; likewise workers who are hired eventually gain a role in bargaining. Thus a fall in employment caused by a decline in labor demand is likely to reduce the number of insiders, and a rise in employment is likely to increase the number of insiders. These changes in the number of insiders then effect future wage setting and employment.
7. Search and Matching Models
This section presents a model of firm and worker heterogeneity and the matching process. Because modeling heterogeneity requires abandoning many of our usual tools, even a basic model is relatively complicated. As a result, the model here only introduces some of the issuses involved.
Search and matching model offer a straight forward explanation for average unemployment; it may be the result of continually matching workers and jobs in a complex and changing economy. Thus, much of observed unemployment may reflect what is traditionally known as frictional unemployment.
Because this economy is not Walrasian, firms’ decision concerning whether to enter have externalities both for workers and for other firms. Entry makes it easier for unemployed workers to find jobs, and increases their bargaining power when they do. But it also makes it harder for other firms to find workers, and decreases their bargaining power when they do. As a result, there is no presumption that equilibrium unemployment in this economy is efficient.
8. Emperical Applications
Contracting Effects on Employment.
We discussed two views of how employment can be determined when the wage is set by bargaining. In the first, a firm and its workers bargaian only over the wage, and the firm chooses employment to equate the marginal product of labor with the agreed upon wage, this arrangement is inefficient. The second view is tha the bargaining determines how both employment and the wage depend on the conditions facing the firm.
Interindustry Wage Differences.
The basic idea of efficiency wage models is that firms may pay wages above market clearing level. If there are reason for firms to do this, those reason are unlikely to be equally important every where in the economy. Motivated by this observation, Dickens and Katz (1987) and Krueger and Summers (1988) investigate whether some industries pay systematically higher wages than others. The hypothesis that estimated interindustry wage differences reflect unmeasured ability cannot easily account for all of the findings about this differences.
Unemployment in New Era.
(New Vision and Critiques of previous concept on Unemployment)
Unemployment levels are increasing dramatically in many parts of the world in New Era. Why is this, and can it be avoided? The permanently unemployed have no income, and many choose the alternative of income by countering the law. Unemployment is an unbalance between the supply and the demand of working hours.
Many times a good definition of a problem points to where to look for a solution. If we define unemployment as "a great amount of people without jobs", that is a correct definition, but not a helpful one. We all know that the efficiency of all types of machines is increasing yearly. We need fewer people to produce the same goods. Work time has been reduced in the past 200 years from about 12 hours a day to less then 8 hours per day and the working week from 7 days to 5. We also know that what is abundant has low value.
When a high percentage of unemployment exists, these persons have to look for other means of income. In some countries unemployment compensation works well, but that is not a solution for the long run. Also money can be borrowed from one's family or from neighbors, but in that way they then have extra costs. Finally there is crime, which always increases when there is lack of work. Possibly the biggest drawback of unemployment is the demoralization of unemployed persons, who feel that they are of no use anymore and that nobody needs them. All this is costly for a society and could be eliminated if we eliminate unemployment. Much more could be said on this point but I believe that we are all aware that large scale unemployment is something we and our society cannot tolerate.
The impact of technological progress.
The main reason for the high level of unemployment is technological progress. Don't get me wrong; progress is good and it makes life easier. But if every year we produce the same amount of goods with fewer people in a few years far less working hours are needed to produce all the goods that are required. The historical trend has been to use less and less working hours per week. If we do not continue this trend, the supply of working hours is greater than the demand. An oversupply of working hours means they are worth less, wages and salaries get reduced. Also many persons are out of work; their working hours are no longer needed. Those that are out of work have no income and therefore the demand for goods goes down. With fewer sales, less gets produced, more persons are laid off. This is a vicious circle that accelerates unemployment and produces crime.
The way to stop this and have everybody working, is to continue the historical trend; is to distribute the available work between all persons that want to work. This we can do if each person works fewer hours per week. The Government could level a tax on overtime, be it paid or voluntary, and on hours worked above a certain level per week. If there is, say, 9% unemployment, this level should be 9% less hours per week, than what is worked at present.
Would the enterprises agree to this? By paying no overtime, the labor costs are lower. By having an increased demand for goods, sales and production would be higher. By working many shifts per day, seven days a week, the machines would work always and investment would be lower. Working night hours and weekend hours is not pleasant. But by working fewer hours per week, more hours are available to be with the family, for entertainment, sports and hobbies. Wages and salaries would be higher since there would be no oversupply of working hours.
Some say that by increasing exports we can generate a greater need for working hours. If increased exports are balanced by increased imports, nothing is gained. Hours gained by exports are lost by imports that replace local products. If exports are not balanced, a local oversupply of foreign currency results, changing the currency relations in the long run, which in turn balances the value of exports with imports. Some say, create more jobs by creating new products. But people can only buy new products if they have money, and to have more money there must be low unemployment and high salaries.
It is absolutely necessary to eliminate unemployment. This should be done for the benefit of those now unemployed, and also to reduce costs due to unemployment compensation, social disturbances and criminality, and to increase demand and production. For this, the weekly working hours should be reduced until the available work is shared by all. One way to accomplish this, is to create an additional tax to be paid by those enterprises having persons working hours (paid for or voluntary) beyond the "social" working hours.