ADRIAN WEIR reviews the latest TUC booklet, edited by J Williamson, C Driver & P Kenway, on corporate governance reform
THE TUC has set out a four-point campaign called Respect at Work on employment rights that it hopes will inform the debate in the run-up to next year's general election.
The four elements are:
n Stemming the tide of casualisation, including ending the abuse of zero-hour contracts and winning equal pay for agency workers
n Abolition of employment tribunal fees
n A new framework of employment rights, including reversal of the coalition attack on statutory redundancy and Tupe and bringing about unfair dismissal protection from day one
n Improved worker voice, including promotion of collective bargaining, better information and consultation rights and, worker directors.
It is in connection with the fourth point that this booklet has been launched by the TUC, a collection of essays on reforming corporate governance that includes some discussion about the possibility of worker directors in Britain.
There is now no question that reform of the way our large corporations are managed is clearly overdue.
A recent study by the High Pay Centre found that directors' pay was now running at almost 180 times that of the lowest-paid workers.
The booklet points out that, 30 or so years ago, directors' pay may have seemed reasonable in relation to other wage earners, but it has grown exponentially under neoliberalism, prompting some to argue that if they could have got away with this before they probably would have done, but there were social brakes preventing them from doing so. These brakes are now gone.
At the public launch of the book, Labour shadow business minster Ian Wright MP was moved to promise a worker representative on company remuneration committees and even Tory Jesse Norman MP spoke about crony capitalism - the broken link between corporate reward and company performance.
Readers will soon discover that the debate on reform of corporate governance may be divided into two schools of thought - reform to improve economic performance and reform to provide worker voice, although of course there is some crossover between the two positions.
In the former camp, some reformists argue against the corporate greed discussed above. Others are more concerned about moving away from a duty to solely promote shareholder value and open up duties to other stakeholders, which is the central thesis of the booklet.
An exclusive focus on shareholder value is said to promote short-termism in that directors in Britain work to the publication of quarterly reports and eschew long-term measures that may not synchronise with a quarterly reporting structure.
Corporate bonuses are structured to short-term results. Further, how does the advent of high-frequency share trading in the Anglo-US world fit in with the long term?
Colin Crouch's essay also raises the dubious practice of private equity investment delisting stock exchange-listed companies, often to strip out the assets before returning the significantly poorer corporation to the market.
The crossover for advocates of improved economic performance and worker voice is found with those who argue that an involved workforce with access to the highest levels of decision-making bring to the table knowledge and information otherwise unavailable to management. Worker voice is the key to open improved performance.
There are statutory provisions for worker directors in 19 European countries - 14 with widespread rights across the public and private sectors - Austria, Croatia, Czech Republic, Germany, Denmark, Finland, France, Hungary, Luxembourg, Netherlands, Norway, Sweden, Slovenia and Slovakia plus a further five with more limited rights - Greece, Ireland, Poland, Portugal and Spain.
It's clear from this list that although worker directors do not guarantee improved economic performance, those countries that are economic high-flyers are also the ones that have a system of industrial democracy that includes worker directors.
Michael Gold's essay argues that our system of corporate governance denies to workers the fourth element that makes a democratic whole.
First, we have civil citizenship, the rights to individual freedom. Second, we have political citizenship, the right to vote. And third, we have social citizenship, the right to social welfare, which is gradually being eroded.
In Britain, what is missing is citizenship at work, which meaningful participation rights, including worker directors, would go some way in meeting.
At the level of mobilising workers to support the demand for a voice, we should leave the argument linking worker directors with improved economic performance slightly to one side, important though it is - see Frances O'Grady's essay on promoting a high-investment, high-skill and high-productivity economy.
We should shift the argument to a rights issue, workers' rights to seats on the board to act as a countervailing power to the obsession with short-termism and boardroom excess.
These issues have contributed to the crisis, a crisis under which working people are bearing the brunt with overbearing austerity measures and attacks on their limited rights at work.
Adrian Weir is assistant secretary of the Campaign for Trade Union Freedom on whose website this article first appeared: www.tradeunionfreedom.co.uk. The TUC booklet is downloadable as a pdf via www.tuc.org.uk