Monday, 16 January 2012

Cleggs: 'Industrial Democracy lite' a step in the right direction more still needed

It has taken too long for Clegg to identify himself with long Liberal Party tradition of employee ownership and Industrial Democracy. It would be wrong not to acknowledge that this represents some welcome movement but it fall a long way short of the proposals endorsed by the Liberal party as I will discuss later on.

The Employee Ownership Association founded by Jo Grimond (Chair) and Liberal candidate Robert Oakeshott (Chief Exec) has today published a report on the wider case for Employee Ownership

Clegg's proposals are in tune with new Labour's view about more active shareholder. The Liberal Party tradition whilst arguing for employee share ownership also argued that employees-where they owned shares or not -should have rights equal to shareholders. Here is the old policy:

'Liberal industrial policy has three objectives. Firstly, employees must become members of their companies just as shareholders are, with the same clearly defined rights. Secondly, it must be accepted that directors in public companies are equally responsible to shareholders and employees. Employees should be entitled to share in the election of the directors on equal terms with shareholders, and Works Councils representing all employees must be set up at plant level with wide powers to negotiate pay and conditions of work. Thirdly, employees should share in the profits of the company and the growth of its assets.'

This policy sets Industrial policy in a wider context-namely the desire to spread power and wealth. Influence is not dependent on share ownership but rather employees have rights because of the contribution they make to an enterprises success. It is a sign of the level of besottedness with capitalism that in Clegg's model share ownership is only factor. Finally the Liberal party policy was not a voluntary one. The Party wanted to:

The Companies Act must be amended to give all established employees in public limited companies a status comparable to shareholders. Employees must be given a share in the decisions and profits of the companies in which they work. Employees should be represented on the board of directors, or on a joint supervisory council.
So when Liberals talked of employee rights they did not have in mind just ''flexible working or parental leave' they wanted employees to have a share in decisions and not leave that just to the owners of capital.
Now none of this is to oppose full Employee Ownership. It is very much in the Liberal tradition. Interesting the EOA defines employee ownership as: “businesses in which the majority of the shares are owned directly by employees, or owned on behalf of all employees in some sort of special purpose legal entitity, such as an Employee Benefit Trust (EBT)”

Clegg quotes Mill and so shall I from Political Economy

 It would have been more interesting if he had quoted from the Keynes inspired 1928 Yellow Book which devotes a whole chapter to Co-ownership but I fancy Centre Forum may not have been a congenial place for such thought. never the less the speech is strong on taking on vested interests. Let us hope that extends to the powerful vested interests of capital. We need to be careful who funds us!

Of course the model that has interested many of us is from Mondragon in Spain. It was after a visit to that region that Grimond and Oakeshott set up the Job Ownership Ltd-later EOA. In this model the employees own the company and have to buy shares to join. So there is no way that the interest of capital-which is often short term-can trump the workers. For me to make the proposal convincing we need to amend Company Law so that the requirement is statutory-although I can think of a few vested interests who would not be comfortable with that!

1 comment:

  1. I'm in favour of Clegg's reforms: I think that giving employees power over their bosses by default leads to a British Leyland senario where the workforce ends up holding itself to ransom.

    Of course, I have my own ideas about how much further we should take these kind of reforms, which I have written about on my own blog, if you'll pardon the shameless plug.


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