The European Community attaches importance to more widespread use of financial participation schemes without seeking active harmonization or a reduction in the existing wide range of available schemes. Encouragement at Community level of schemes for employees financial participation is to be seen as a means of achieving a better distribution of the wealth generated by enterprises, while encouraging greater involvement of employees in the performance of their companies. With regard to the impact of such schemes, there are grounds for supposing that they have positive effects on employee motivation and productivity, and on the competitiveness of enterprises. Council Recommendation 92/443/EEC of 27 July 1992 concerning the promotion of employee participation in profits and enterprise results (including equity participation) calls for direct involvement of European Union (EU) Member States and the social partners. More specifically, the Recommendation invites the Member States to: (1) ensure that legal structures are adequate to allow the introduction of the forms of participation referred to in the recommendation; (2) consider the possibility of according incentives such as fiscal or other financial advantages to encourage the introduction of certain schemes; (3) promote the introduction of participation schemes by facilitating the provision of appropriate information for all potentially interested parties; (4) take account of experience acquired elsewhere in the European Community when selecting the types of scheme to be promoted; (5) ensure that the social partners have a wide range of schemes or arrangements to choose from; (6) ensure that this choice can be made at a level which, taking account of national practice, is as close as possible to the employee and to the enterprise; (7) encourage consideration of the key issues set out in the report annexed to the proposal when new financial participation schemes are being prepared or when existing schemes are being reviewed; (8) examine, after a period of three years following adoption of the Recommendation, the data available at a national level on the development of financial participation by employees and to communicate the results to the Commission; and (9) Enhance the social partners awareness of these matters. On 8 January 1997 the Commission adopted a report on the promotion of participation by employed persons in profits and enterprise results (including equity participation) in EU Member States (PEPPER II - 1996). The positive effects of PEPPER schemes (promoting participation by workers in profits and enterprise results) on profitability are widely recognized. Profit sharing invariably goes hand in hand with increased productivity. The divergence of policies adopted by Member States must be seen in the light of their traditions and practices with regard to financial participation: (1) France and the United Kingdom have a long tradition of encouraging financial participation. (2) Ireland, the Netherlands, Finland, Germany, Spain and Italy have started to promote the establishment of PEPPER schemes. (3) In the other Member States, PEPPER schemes have been discussed, but official government support has been limited. Most legislation on promoting financial participation schemes involves incentives such as fiscal or other financial advantages: tax-free issue of shares or bonds to employees; tax-free allowances on distributed profits; exemption from social security contributions, etc. Some countries offer these incentives to both employers and workers. Legislation in some Member States makes tax concessions subject to certain conditions: minimum percentage of personnel covered by the scheme; eligibility criteria; retention periods, etc. The report proposes a number of ideas to be explored with a view to the furthering of PEPPER schemes: development of national framework laws, clarification of the distinction between wages subject to social charges and the advantages derived from PEPPER schemes; wider eligibility; action via the social partners; fostering of information exchange between Member States, etc. At the moment there is no regular exchange of information between Member States either on legislation or good practices