Clegg sets out vision of “John Lewis economy”

The BBC reports:

Deputy Prime Minister Nick Clegg has urged more companies to offer shares to their employees, saying it will improve productivity and unlock growth.

He told an audience in the City that the government planned to cut red tape, and reform the tax system to accommodate employee ownership.

It is hoped the measures will create what he called a “John Lewis economy”.

…The Lib Dem leader told the event hosted by the City of London Corporation and Centre Forum think tank: “We don’t believe our problem is too much capitalism – we think it’s that too few people have capital.

“We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like.

“And what many people don’t realise about employee ownership is that it is a hugely underused tool in unlocking growth.

“I don’t value employee ownership because I believe it is somehow ‘nicer’ – a more pleasant alternative to the rest of the corporate world. Those are lazy stereotypes.

“Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors”

“Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better.

“Lower absenteeism. Less staff turnover. Lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies.”

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  • John Carlisle 16th Jan '12 - 1:39pm

    Nick is absolutely right. What people do not realise is just how many cooperatives there are, even in the USA (29,000).
    However, what many do not realise is that “control” matters more to many directors than does productivity. A massive culture change needs to take place to get this to happen – not least of which is the ratio of top salaries to others’. John Lewis is 75 to 1, which to my mind is too high; whereas in Mondragon it is about 9 to 1 for the best paid going down to 6 to 1.
    However, this piecemeal approach is not the most effective. We need a business model that encompasses all the elements of pay, productivity, feelings of ownership (which need not be actual ownership) and consequent driving out of waste and continuous improvement. It is time Vince, Nick and Danny put their minds to this.

  • The Employee Ownership Association has published a report outlining the wider case for Employee Ownership

    It is also worth noting the more radical definition the report uses for an Employee ownership:

    “businesses in which the majority of the shares are owned directly by employees, or owned on behalf of all employees in some sort of special purpose legal entitity, such as an Employee Benefit Trust (EBT)”

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