The UK’s sovereignty problem lies in the workplace, not Brusselsby Mat Lawrence / June 21, 2016 / Leave a comment
Read more: The future of trade unions
Many people in the UK suffer from a daily loss of control. However, this disempowerment does not come via the European Union, but in the workplace. This reflects the strange division of our economic lives: under the UK’s model of debt-fuelled capitalism, we are granted freedom and choice as consumers, yet hierarchy, inequality and order are imposed on us at work.
The appalling evidence of abuse at the Sports Direct warehouse in Derbyshire exposed recently exemplifies that division. Workers were subject to intense and intrusive disciplining systems, with staff punished for spending too long in the bathroom and even for falling ill. These Dickensian working conditions were made possible by marrying unequal economic power with the monitoring technologies of the 21st century. The “culture of fear” over missing work was such that one woman ended up giving birth in the toilets.
While extreme, the examples were symptomatic of problems in the wider economy. One-third of all employees are fearful at work in some way, while a majority of people lack a say over the decisions influencing their working life and are disengaged at work. Among EU countries, the UK ranks above only Bulgaria, Estonia, Latvia and Lithuania in the involvement of employees in decision-making.
This is an economic as much as an ethical concern. As the IPPR has argued, sharp inequalities in terms of agency and voice help underpin the UK’s chronically poor productivity performance. However, it is also a political challenge. These inequalities are not natural or inevitable. How power, risk and reward are distributed in a workplace between participants—management, employees, shareholders, customers and other stakeholders—varies widely depending on the model of firm.
Consequently, the choice of what type of firm and workplace to promote is a political one. If progressives want to give people have greater power over their lives—see the success of Vote Leave’s “control” messaging—they should start by democratising economic power within the workplace. They could take three steps: strengthening employee voice, reforming and broadening corporate governance, and spreading ownership.
Strengthening employee representation is an obvious area for improvement. More collective bargaining would help ordinary workers have a voice in setting pay and conditions. This could be done by legislation making these agreements legally binding in specific sectors or indeed the entire economy. Then, employers and employees would jointly negotiate pay and conditions. While trade union membership in the UK is higher than the European average, our legal framework means that we have comparatively low levels of collective bargaining.
Reframing the legislation could improve the strength of ordinary workers. UK trade unions could learn from their American cousins and become savvier in organising among marginalised employees. The union-led “Fight for $15”—which advocates for that minimum wage—is a good example of traditional union activity married to innovative social media and campaigning techniques. Low-wage service-sector workers, such as at Sports Direct, would be one obvious group to engage with such an approach.
However, while stronger unions would be a critical countervailing power, progressives cannot rest their strategy on their revival. Currently only 16 per cent of private sector workers are covered by collective bargaining, and the solidarity culture that underpinned traditional union strength has been deliberately fragmented, both by political action and economic change. Rebuilding union presence will take time and patience, and recovery is not guaranteed.
Another avenue for reform is corporate governance, which shapes how power, accountability and voice are structured within a company. The UK’s corporate governance regime is too narrow. Shareholders and management are too dominant relative to other stakeholders. Broadening governance rights would be one step to recognising the wide range of contributors to the life of a firm and would help deepen the legitimacy of decision-making. From having workers on the board to allowing work councils to set conditions and working practices, there is an array of options to pursue.
Finally, progressives need to reopen questions of ownership. Ownership is intimately connected to who has voice and reward in the workplace and broader society. Yet ownership of share capital by individuals in the UK has plummeted from nearly 40 per cent to only 12 per cent of the total since the 1980s. Redressing this—for example by incentivising employee share ownership or collective profit sharing within the firm—would help rebalance power in the firm and spread ownership.
More than that, while the shareholder model of the firm is likely to dominate for the foreseeable future, progressives should seek to expand alternative models such as employee-owned firms, co-operatives or mutuals. In each of these, the firm is organised in a way that capital becomes more responsive to labour, and as such helps give greater power to ordinary employees. Wishing it will not make it so however. Progressives need a clear strategy to overcome legislative, financial and cultural barriers if more diverse ownership models are to flourish. The introduction of an employee Right to Buy, which IPPR has previously recommended, would be one place to start.
Regardless of the referendum result, the desire to have greater control and power will remain a strong sentiment in politics. With future trends likely to concentrate economic power in the absence of policy intervention, the erosion of personal sovereignty in the workplace is likely to accelerate. In response, progressives should explore democratising the firm to spread power and reward.