2014, Labour’s year of…workers on boards

Jim Sheridan MP

I am a proud trade unionist and have been fighting for workers rights since long before I came into Parliament. There is always a role to be played by trade unions in negotiating with management on behalf of their member.

Countries across the EU have mandatory systems in place to give employee representatives a place on company boards. It is a system that is good for business, good for consumers and most of all, fair for employees.

Board-level decisions have a huge impact on employees. It is obvious that they should have a say in the decision-making process. This, in turn, would help employers to make good decisions that work for everyone. Negotiations would take place before it is too late, and profit-obsessed directors may stop to think about employees as well as shareholders when signing on the dotted line.

We would see fewer days lost to strikes. Just compare Germany, which had 3.7 days lost to strike per 1000 employees in 2008, to the UK, which had 28 days lost in the same year.

Even Jim Ratcliffe, of Ineos, said what happened in Grangemouth would not have happened in Germany. He praised the good working relationship between the unions and management. But what I see in the UK is companies returning to Dickensian scenes where profit overrides everything. Is that the 21st century UK we want to live in? Or do we want our workers to have a meaningful say in their own futures, their own livelihoods?

Employees can contribute to boards in significant ways as they have a much better understanding of the shop floor.  In Sweden, employee representatives said that they have become a specialist on the board, in the same way that there are specialists in accountancy or strategy. One FTSE 100 company in the UK, FirstGroup, does have employees on its board, and the outgoing chair, Martin Gilbert, said: “the few drawbacks are greatly outweighed by the benefits and having this two-way channel of communication has positively impacted on the running of FirstGroup”.

Employee representatives would make the UK fairer for all. They would reduce the excessive salaries we have seen in recent years: energy bosses raking in millions while crippling their customers with eye-watering price rises; or bankers gambling with customers’ money while raking in bonuses despite their losses. While in Germany, the boss of Volkswagen, Martin Winterkorn, saw his bonus for 2012 cut by 20 per cent.

German companies often place short-term shareholder dividends much lower on the list of priorities. They look towards the future and towards stronger and more stable growth. What suits the interests of employees suits the interests of the economy as a whole.

The reality is directors do not have that link to ordinary people that employee representatives may well have. They could make businesses more socially responsible in more ways that just through their own employees’ rights.

Directors won’t like it, but it is time the UK economy started working for everyone, not just the 1%.

But to make this happen, we need some legislation in place.

I led a debate in Parliament late last year, calling on the government to start looking at this model as a way to move us towards more responsible capitalism. Ed Miliband has been absolutely right in trying to move us in that direction.

The Employment Minister was quite promising in her reply. She agreed with the benefits for both employees and directors. She said all the right words about the benefits of diversity and the desire to avoid another Grangemouth.

But, as they say, actions speak louder than words. And what spoke to me loudest from that debate was the lack of government action. The Minister was unwilling to push companies further down this road, despite all the benefits. She would have preferred companies to take employee representatives on voluntarily. But as my colleague, Andrew Smith, remarked, those companies that are most reluctant might be the ones that could benefit from it the most.

Companies and Government need to start treating workers like grownups, and give them the responsibility and respect they well and truly deserve.

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