Democracy at work

Progressives should seek to change the law to allow workers to elect representatives to company boards, writes James Doran.

In the aftermath of the EU referendum in 2016, Theresa May promised to bring about a revolution in corporate governance: the incoming prime minister declared that workers should be represented on company boards.

This was an unusual policy for a Conservative leader to advocate, but polls indicated majority support even among Tory voters. The last time the question had been seriously raised in British politics was after the Bullock Report on industrial democracy, set up by Labour in the 1970s.

The most prominent example of worker representation in corporate governance is the German system of mitbestimmung, which has survived conservative governments and serves as an example for social-democratic and socialist governments elsewhere in Europe.

Though there was a Tory manifesto commitment in 2017, it was a watered-down version of the policy as it was initially announced by May. As it turned out, the Tories had no intention of ‘getting codetermination done’ and other priorities prevailed.

Among trade unions, there was some suspicion of May’s motivations in raising the issue and scepticism that anything positive could result from a Tory government trying to change industrial relations.

But codetermination is not and should not be seen as a replacement for collective bargaining over pay and conditions by free and independent trade unions. Rather, it is another means by which workers can advance their interests.

It is reasonable to suppose that, if implemented, there could be an effort by employers to seek to bypass existing arrangements with their workforces – to replace collective bargaining with mere consultation on the future of the enterprise. It’s understandable that this potential for the policy to be used against workers’ self-organisation should cause concern among trade unionists.

But workers seeking union recognition could use the process of electing representatives to make the case to their colleagues for the desirability of collective bargaining over pay and conditions. The very existence of elections to company boards would provide the opportunity for trade unions to publicise the benefits of worker solidarity.

Labour adopted codetermination as party policy at its conference in 2018. But since the party is now ‘under new leadership’, there’s presently no way of knowing what is to be kept of previous manifesto commitments. Now that the Tories are silent on the issue of corporate governance, it could be very easy for Labour to adopt a defensive position rather than make a positive offer to extend democracy at work.

It is almost certainly the case that the May government’s talk of codetermination went nowhere because of the fear that it would lead to the growth of trade-union representation and, given much of organised labour’s affiliation to the Labour Party, potentially cement a revival of social-democratic politics in Britain.

Codetermination does not mean that workers’ representatives could overrule those who own or fund organisations, but it would enfranchise those who are currently excluded from corporate governance. It does not involve the extension of the centralised power of the state over the individual, but allows the democratisation of organisations that exist only because the state grants those who own and control them the privilege of limited liability.

Labour is not the only progressive party that has advocated codetermination: it could be part of a reform agenda that could attract the support of the Liberal Democrats, with their traditional support for industrial co-partnership, and the Greens, who are committed to codetermination as one of their long-term goals, and both the SNP and Plaid Cymru have made manifesto commitments to the policy in the recent past. 

Some companies voluntarily give workers representation in corporate governance, in particular co-operatives. Ewan McGaughey, reader in law at King’s College London, points out that ‘almost all universities – no matter how imperfect, forgotten or opaque – ensure staff have votes at work’.

This experience of codetermination in the UK is often overlooked, as is the presence of worker representatives as trustees on the boards of pension funds. But it’s not enough for democracy at work to be a quirk of individual enterprises or industries. 

We need to go further in deepening our democracy and make it a part of the rules for how companies and statutory bodies operate. Labour’s sister parties in other states have successfully worked to change company law and introduce forms of worker representation, policies which have remained in place even when conservative parties have been returned to office.

Since other progressive parties have taken similar positions in the past – the Liberal Democrats, the Greens and others – if Labour is not in a position to introduce the policy on its own, there’s no reason to suppose it could not attract cross-party support.

As Jon Cruddas writes in his new book, The Dignity of Labour, which comes with positive reviews from Keir Starmer and Lisa Nandy, ‘democracy at work could be the “Big Idea” for Labour, with codetermination at the heart of economic strategy’.

James Doran is a Labour Party member. He has written for Novara Media and LabourList.

Compass welcomes Jon Cruddas MP to the It’s Bloody Complicated podcast on Tuesday 25th May, to discuss his new book and the future of the workplace. Find out how to attend.

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