Worker Representation on Company Boards

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I was reading an interesting ebook about the future of UK Labour (pdf) and came across an interesting policy of having worker representation on boards:

So policies like a cap on interest rates, worker representation on company boards or policies for a living wage are good ideas. But we need to explain why they are things we, the Labour Party, are putting forward. A cap on interest rates reflects the belief that there are some ways of making money that societies should not accept. Worker representation on boards is an assertion that shareholders’ interests should be balanced with those of other stakeholders in society. Campaigning for a living wage expresses the idea that people should be treated with respect, not exploited as commodities. Too often we give the impression that such ideas are concessions to one wing of our party. They are not – they are affirmations of the values that we should hold dear.

(Revitalising our message: “What matters” is more important than “what works”, by David Lammy, Labour’s Future, p.12 – my emphasis.)

Was worker representation on company boards actually a policy of UK Labour? Or was it just an idea from David Lammy?

Now, perhaps someone with greater Google-fu can track down a copy of Labour’s election manifesto – I can’t find one. The only thing I could find was The Guardian’s sarcastically annotated version, and this policy:

Creating a shareholding society

We want Britain’s workers to have a stake in their company by widening share ownership and creating more employee-owned and trust-owned businesses. We want to see a step change in the role of employee-owned companies in the economy, recognising that many entrepreneurs would like to see their companies in the hands of their employees when they retire. We will review any outstanding barriers to formation of more employee-companies like the John Lewis Partnership.

(Source: The Guardian’s annotated version)

I’ve never heard of the John Lewis Partnership, but I looked it up. And it looks interesting. But it does not equate to worker representation on company boards.

In the sector that I work in – the union for tertiary education – this state of affairs already exists. University boards (called “senates” or “councils”) are made up of government appointed and independent members, and elected student and staff representatives. This ensures that universities are more responsive (in theory) to their diverse constituencies.

Now, the higher education sector is fairly unique – with the weight of their academic history, prominence of alumni and student involvement in governance, and their role as public institutions. However, the last fifteen years or so have seen universities become increasingly corporate in nature and private in funding sources.

While there is more and more resistance from university executives and senior management to staff and student representatives (or indeed, any interference from board/council members at all), it does seem to be a workable, successful model

I’m also aware that some European companies, particularly the major car manufacturers in Germany, have long had worker representation on their boards. I don’t know much more, although I’d like to if anyone has more information.

Is worker representation on company boards a feasible policy more widely? A pipe dream? A threat to corporate governance? A union power grab?

David Lammy’s framing of the policy – it is “an assertion that shareholders’ interests should be balanced with those of other stakeholders in society” – is powerful and persuasive.

I’d like to know more about this policy – was it a UK Labour policy? What do you think? Are there any other examples of this working (or not working)?

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