General Election — What Labour Should Say On Workers Rights and Industrial Democracy

The Tories say that they will protect and extend workers’ rights. It is, of course, nonsense. This is the same Tory Party that decimated workers’ rights in the 1980’s, in order to push through a massive attack on workers’ living standards; it is the same Tory Party that imposed virtual martial law on mining communities during the 1984–5 Miners’ Strike; it is the same Tory Party that has introduced further attacks on workers rights since 2010, and yet still seeks to impose further restrictions on workers ability to refuse to sell their labour-power at any price the employer dictates. Moreover, when the Tories talk about workers’ rights, what they mean is the individual rights of workers as against the collective rights of workers.

Theresa May when she assumed the position of elected dictator, last year, stood in Downing Street, and talked about having workers’ representatives on company boards. The rest of the Tory Cabinet soon forced her to drop that idea. It was, in any case, a meaningless offer. The BullockReport in 1975, proposed having 50% of company boards elected from the workforce, by the trades unions; Germany’s co-determination laws, also give workers the right to elect 50% of their company board; and the EU’s Draft Fifth Company Law Directive proposed similar legislation. Even having the right to elect half the board, in practice, puts workers in a subordinate position, because the management always retains the casting vote, and it always becomes possible for the management to divide the worker representatives. So, having just one workers’ representative on boards is mere tokenism.

But, the fact that May opened the discussion should give Labour the opportunity to walk through the door she has opened. The fact is that all firms that are incorporated are legal entities in their own right. The shareholders in these companies are only creditors of the company, no different than a bondholder, a bank that lends money to the company, or any company that lends equipment to the company, and so on. That was set out by John Kay and Aubrey Silbertson some time ago .

One of the first things that Labour should do in government is to pass new company law on Corporate Governance. It should reduce the rights of shareholders, in relation to corporate governance to that of any other creditor. In other words, they should have no right to have any say over company policy, no right to elect boards of directors, or to appoint company directors. As a legal entity, the company itself is socialised capital, and belongs to itself. Decisions on how that capital should be used belongs to the company, which, therefore, means all of the workers and managers employed in the company. It should be for those workers and managers to democratically elect boards of directors, and to appoint the company executives, to determine their pay etc.

That would have several immediate effects. Firstly, it answers the objections of Tories and the Tory media about how Labour would fund nationalisation of the water companies, rail companies, energy companies, Post Office and so on. It would face no problem, because there would no need to nationalise what, in reality, is already the property of the workers and managers in those companies. It would simply be a matter of giving those workers and managers control over their collective property, which currently is being denied them.

Secondly, it would mean that questions over fat cat pay would be more adequately addressed. Once workers in these companies decided what executives they did or did not require — and experience shows that many of these executives serve no useful purpose for companies whatsoever — they would also open up these posts to a much wider circle of people, outside the tight coterie of self-selecting elites that currently dominate those positions. It would mean that workers would only pay salaries to any such executives that they found was justified.

Thirdly, it would mean that the ability to transform the economy went much wider than the current modest proposals on utilities.

Shareholders would, of course, continue to be entitled to receive dividends on their shares. In effect all shares would become non-voting shares. Competition for capital would mean that companies would continue to have to pay market rates of interest in the form of such dividends, or shareholders would sell shares sending the company’s share price lower, and thereby making it more difficult to raise future capital by share issuance. But, companies would have the ability also to buy back shares as they do now. The difference would be that as the company bought back the shares that would benefit the company, and the workers and managers within it, not the shareholders and executives as happens now.

If workers and managers had such control over companies, then as I have set out previously, it would be beneficial for these companies not to face Corporation Tax, which would inhibit their ability to reinvest profits. The tax should instead fall on the recipients of dividends and interest, and other non-earned income.

If Labour introduced this simple and democratic measure it would mean that workers had the same democratic rights in their place of work as they have in society in general. It would mean that other trades union rights would not have to bear the weight of defending workers rights that they currently are ill equipped to endure. Once workers had democratic control over their place of work, they would be able to ensure that many of the inequities, injustices and inequalities they face would disappear, because they would be running those companies for their own mutual benefit.

But, there are still millions of small companies that are privately owned by small capitalists. These companies, because they usually cannot compete with the big companies, are often the worst culprits when it comes to paying low wages, giving workers poor conditions, and depriving them of rights. Its in these companies where unions are most needed, but where they are most often lacking. We need to give every worker not just the right to belong to a trades union, but the right to have a trades union negotiate on their behalf. In other words, we should scrap all ability of employers to deny union recognition. Even one worker in a firm should have the right to be represented by a trades union, and we should enable unions to negotiate for members across a number of companies in an area on a collective basis. That is in line with Labour’s proposals to set up industry wide collective bargaining, which already exists in a number of European countries.

Alongside it, Labour should scrap all the anti-union laws, and introduce a general Trades Union Act, that enshrines a series of trades union rights on collective bargaining and so on. Labour should also work with the TUC and Co-operative Movement to establish a Co-operative Labour Agency that would act as a monopoly supplier of labour to companies, at guaranteed rates of pay, and minimum sets of working conditions. This would remove the Tory objections to a blanket ban on zero hours contracts and other flexible working arrangements, because it would be possible for workers themselves, through such an agency to organise the working hours etc. that best suit them, rather than being pressured by employers to accept the conditions that the employer requires.

Alongside the changes to the law on corporate governance so as to give workers and managers control over their companies’ capital, Labour should also legislate to give workers the right to control their company pension funds, rather than that control resting with company executives, and more often with banks. The boards of pension funds should be elected by the workers whose money those funds administer. That would give workers a powerful source of additional money-capital, to be used to further workers’ aims of developing the economy. It would also prevent the huge sums that currently are syphoned away in commissions and other payments, and which thereby never even get invested on workers behalf.

Originally published at on May 17, 2017.

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