WHO’S MY BOSS?

Workers to sit on corporate boards

Q
Elizabeth Warren wants workers to be 40% of corporate boards

IF ONLY I WAS THE BOSS. It’s a thought every worker often has, but knows getting to be boss is about as likely as Andrew Scheer taking up organic gardening. Well, maybe not. The idea that workers should have a say in running the businesses they work in is not so easy to ridicule or ignore any more.

A recent poll of more than 3,300 American likely voters found  a majority (53 percent) would support allowing employees at large companies to elect representatives to those companies’ boards of directors, thus giving employees a direct, democratic say in how the company is run.

The idea is overwhelmingly supported by Democrats (71 percent to 10 percent opposed), along with a plurality of independents. While self-identified Republicans reject the idea—but only very narrowly.

The survey allowed for open-ended responses. Supporters argued repeatedly that putting worker on boards would better serve the interests of workers., that codetermination is more “democratic,” and that it would “give employees a voice.” One respondent who voted Obama in 2012 and Trump in 2016 said: “Execs tend to forget about the little guy and focus too much on high profits.”

Workers on the board an election issue

U.S. Senator Elizabeth Warren has made the idea part of her platform in her run to become the Democrats’ choice to run for president. Warren’s vision is to ensure that the benefits of success of U.S. companies is broadly shared, and not just limited to shareholders.

Warren would increase corporate responsibility by requiring companies with more than $1 billion in revenue to get a federal corporate charter carrying a commitment to a broad range of stakeholders, including employees and the communities in which the businesses operate.

In addition, Warren would require federally chartered companies to let workers elect 40% of board members. Other aspects of the proposal include an aim to limit stock buybacks and stock-based compensation.

Old news in Europe

All of this is “old news” in Europe. Fifteen of the 35 countries in the OECD (Organization for Economic Cooperation and Development) have some form of mandatory worker representation on corporate boards. However, no country comes anywhere near the 40% worker representation mark Warren proposes.

Germany probably has the most aggressive and well-developed of what is called the codetermination system. In large German companies of 2,000 or more employees, half of supervisory board members are elected by workers, with the other half and the chair elected by shareholders. Companies are also required to allow works councils elected to represent workers in day-to-day disputes over work conditions, layoffs, etc.

In Britain Theresa May, pledged during her 2016 campaign to become prime minister, to pass a law to allow workers to be represented on company boards. She never did.

Jeremy Corbyn, the leader of the Labour Party in Britain, has pledged to give workers a “real say” in how companies are run and help combat a “reckless corporate culture”.

If elected, a Labour government would force both private and public companies with a workforce of 250 or more to set aside at least one third of places at the boardroom table for worker representatives, with a minimum of two.

In France all state-owned companies and large private companies must have at least one employee representative at board level. This is in addition to representatives of employees holding shares and employee representatives who can be present at board meetings, but are not board members.

There must be one employee representative, where there are up to 12 board members, and two where there are more than 12.

French President Emmanuel Macron, after months of confrontation with labor unions, is considering even more changes to corporate governance laws to strengthen workers’ participation on company boards.

In Canada, the 2015 Federal Jurisdiction Workplace Survey found that at least 72% of unionized companies, with over 20 employees, had at least one joint labour-management initiative in place. None of which included anything like putting workers on the company board of directors.

Levelling the balance of power

Studies have found that codetermination and “works councils” lead to higher wages, less short-termism, greater productivity, even higher levels of income equality, as well as and overall shift in both power and corporate earnings away from shareholders and toward workers.

A study for Denmark, Sweden, and Norway shows that companies with workers on their boards were able to find ways to reduce labour costs after the 2018 financial crisis without resorting to mass firing.

It is said, “nothing can resist and idea whose time has come.” Has that time come for putting workers on corporate boards? The outcome of the coming elections in the USA and Britain may show us that it has.

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