2016 11 Editorial

Labour, the Unions and Workers on the Board: A Defining Moment

The election of Jeremy Corbyn has pushed the centre ground of British politics to the left. Teresa May, ever the eagle-eyed opportunist, was quick to spot this and is occupying the space she believes will bring electoral rewards to the Tories. With the latest Tory slogan ‘A country that works for everyone’ and warm words about looking after the working class, she is clearly appealing to UKIP and Labour voters who feel that they were neglected by previous governments, both Labour and Tory. Most of this is mere rhetoric. We have yet to see concrete proposals before we can be convinced that she means what she says. However, her promise to protect employment rights, once Britain leaves the EU, and to put workers on the boards of companies, ought to be a cause of concern for Corbyn and Labour. It is now up to Corbyn and Labour to flesh out policies on these which would be more in workers’ interests.

Thirty nine years ago the Bullock Inquiry on Industrial Democracy published its findings. It proposed a scheme for employee representation on the boards of companies with at least 2,000 employees. Bullock proposed a formula whereby equal proportions of shareholder and employee representatives would be elected and a third element with more than one member from outside these two groups should be co-opted. This was the ‘2x + y’ formula.

Bullock arose from a need to accommodate the industrial strength of the trade unions in ways that were not merely disruptive. It foundered on the fact that the unions were blind to the consequences of the exercise of untrammelled collective bargaining. They were comfortable with ‘management’s right to manage’. Labour’s support was at best lukewarm and ‘left wing’ politicians like Neil Kinnock denounced the Bullock proposals as an invitation to class collaboration. A year before, the German social democrats had radically extended industrial democracy in German firms, introducing the structure that has worked so well for Germany until the present day. But Labour and the unions were not interested in what Johnny Foreigner was up to, even if it worked.

The failure of Bullock led, within two years, to Thatcherism and the long decline of the trade union movement and a transition from irresponsible trade unionism to thoroughly irresponsible capitalism, to such an extent that an incoming Tory Prime Minister has felt obliged to revive the spirit of Bullock and to propose putting workers on the board.

The TUC has been ably and courageously led for several years by its General Secretary, Frances O’Grady. She has consistently campaigned in the teeth of an apathetic, if not hostile trade unions movement for workers on the board of British firms. Labour Affairs interviewed her just two years ago and it was clear then that she was serious about pushing the agenda for industrial democracy. Since then, the TUC has developed its plans for industrial democracy in Britain into a coherent and radical proposal. In this issue of Labour Affairs we publish a summary of these proposals. The time has now come for industrial democracy in this country after a bleak 39 years of trade union decline. Can the trade unions and the Labour Party avoid repeating this dismal history?

It cannot be stressed too much that what Theresa May is proposing, for all its vagueness, is way to the left of anything that ‘Red Ed’ Miliband, let alone Blair and Brown, would have dared to contemplate. The idea that workers could have a say in how their companies should be run would, in their view, have enraged the right wing press and was thus inadmissible. As with the new training levy, the Tories have now outflanked Labour on the left on economic issues. They have positioned the Blairites in the Parliamentary Labour Party looking utterly irrelevant to contemporary British politics.

So-called ‘Red Toryism’, which had some brief publicity after the Coalition government took office, seems to have actually put down roots in a way that Maurice Glasman’s ‘Blue Labourism’ never did in the Labour Party. Consequently the Blairites appear to have nothing coherent to say about the Tory proposals. The TUC and Jeremy Corbyn on the other hand have welcomed them. This makes them relevant to Britain’s problems and its politics in a way that the ‘realistic’ parliamentary party cannot be.

There is no doubt that most capitalists and a good section of the Tories will fight to emasculate May’s proposals. They are used to being irresponsible capitalists and would like to remain that way. If the trade unions and Labour are apathetic, the current move to industrial democracy will surely fail. Jeremy Corbyn needs to realise that industrial democracy is not just ‘nice but not necessary’ It is the key to making both Labour and the trade unions relevant to British politics once again.

The TUC’s proposals are realistic and well thought out. They propose that one third of directors on company boards should be elected by employees for firms of 250 employees and above. This would cover approximately half the British economy by GDP. For firms with between 250 and 100 employees, an employee ballot would trigger provision for worker representation in the same proportion as in larger firms, thus bringing a large proportion of the British economy into industrial democracy. The TUC argues that not only should worker representation be a matter of natural justice given the stake that workers have in their firms in terms of their livelihoods, but worker representation would discourage groupthink, a short term approach to profitability and share price, and would encourage investment.

The report could have gone further and pointed out that workers on the board will be able to promote measures to increase productivity through investment in worker know-how, pushing the company’s products up the value chain and making them more competitive internationally, as well as improving the wages of workers currently languishing in low-skill low quality employment. This is why the TUC’s intention to push workers on the board deep into the small and medium size enterprise (SME) sector of the economy is so important. The TUC has carefully researched the European experience of industrial democracy and is able to show how successful it has been in other parts of Europe. The UK is currently one of the most backward countries in Europe on economic issues. As far as possible, it excludes ordinary workers from decision making.

These are the issues that need to be stressed. Corbyn should work closely with Frances O’Grady on this. Both need to do the necessary work to bring the rest of the trade union movement around to push for this opportunity. Unfortunately this in itself is no mean challenge. Much of the trade union movement has failed to learn the lessons of the Bullock fiasco. The Tories need to be confronted with the TUC’s radical but realistic proposals and to concede as much as possible.

In one sense the TUC’s proposals are more radical than Bullock, who confined his proposals to large companies. However, both Labour and the unions ought to revisit the Bullock 2x + y formula for board representation. This would give workers numerical parity with shareholders on the board and the ‘y’ component could involve other stakeholders such as consumers. Theresa May has said that she wishes to have a wider range of interests represented on company boards and the Bullock formula could be put to her as a challenge.

In 1977, workers on the board appeared to the Wilson and Callaghan governments as a way of accommodating trade unions strength. In 2016 it appears as a way of restraining irresponsible capitalism. The sad truth is that organised labour has had little or nothing to do with the way in which the climate of opinion has changed, apart possibly from the persuasive work of the TUC, which may or may not have had an effect beyond the labour movement. It has had everything to do with the way in which unrestrained capitalism has made the lives of many British citizens almost unbearable. It is a measure of the Tories’ political skill that they have seen this and responded to it while leaving Labour standing. This is make or break time for the Corbyn leadership. He has a golden opportunity to prove he is a leader determined to show that Labour is the party that looks after the interests of working people.