What is our approach to Co-determination?

As a party, we have long advocated a cooperative relationship between labour and capital rather than an adversarial and hierarchical one, where the investor, the manager, and the worker are partners in the industry.
Such a vision was expressed in our 1964 manifesto, with the statement:
“Employees must be given a share in the decisions and profits of the companies in which they work. [they] should be represented on the board of directors, or on a joint supervisory council”.

This vision has deeper roots in the Party’s history for in 1908, the Liberal government passed the Port of London Authority (PLA) Act, which mandated worker representation in the corporate governance of the PLA.
We should do more to revive this facet of ourselves, particularly with regards to co-determination.

We should have a detailed, comprehensive policy on this topic, and not be afraid to call for what the Alliance manifesto of 1983 deemed “industrial democracy”.

Rather than requiring “all UK-listed companies and all private companies with more than 250 employees to have at least one employee representative on their boards”, as our latest manifesto put it, we should be bolder and learn from our European neighbours, specifically Norway and to a lesser extent Slovakia and Slovenia.

In the case of the latter two, companies with over 50 employees (a medium-sized business by UK standards) are required to have one-third of their board members be made up of employee representatives. This makes co-determination more accessible to more workers, as even in medium-sized firms, many employees lack face-to-face interactions with their employer and thus any informal influence over corporate governance.

In the case of Norway, employee representation rises in parallel with the size of the firm. With 30 to 50 employees, there is one employee director. Firms with over 50 employees, one-third of seats are reserved for employee directors, and over 200, an extra employee seat.

I propose a synthesis of the two, whereby formal employee participation in corporate governance rises with the size of the company ( as measured by the current definition of micro, small, medium and large enterprises). One-third of members of company boards in firms with 50 employees should be elected by workers, with the share rising to half for firms with over 250 employees. Tax credits should be provided to small firms (10-49 employees), to encourage employee representation in their boards, as a way of gently shaping the corporate governance of larger small businesses to prevent sudden changes if they transition into medium-sized firms.

Employees should no longer be passive in corporate governance, as the 1945 manifesto put it “[The Worker] must become a partner and acquire economic citizenship”.

* William Francis is a Liberal Democrat member & activist, former vice-President of the University of Lincoln Liberal Democrat society (2018-2019) & candidate for the Lib Dems for Glebe ward in the City of Lincoln local elections 2019.

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  • I agree entirely with the approach.
    A few questions. How would you ensure employee representation for local councils or government departments. And how about outsourcing, which means that the real decisions are being taken elsewhere as far as the outsourced employees are concerned.

  • Having worked for most of my life in businesses that provide outsourced services I would argue that the outsourced worker would want representation on the board of their employer, not the client where they may be working. Crucially pay and conditions will be set by their employer and by being on the board they would have influence on how the outsourcing business tenders for services, and what it stipulates in client contracts in favour of it’s employees.

  • When the policy of workers in company boardrooms was Labour’s it was “far left social engineering”.
    When did that change?

  • Gordon Lishman 20th Feb '20 - 8:19am

    My essay in “The Wolves in the Forest”, published last year by the Social Liberal Forum, argues a detailed case for a structure of statutory representation of workers, including works councils as well as board membership. It also addresses participation in public and voluntary sector organisations. £9.99 from SLF website.
    It looks back to Liberal Party policies as did Dr Stuart White’s essay in the previous publication “Four go in Search of Big Ideas”. SLF £9-50..

  • William Francis 19th Feb ’20 – 11:14pm………@expats…..A formal co-determination policy was introduced via the Bullock report, under the auspices of the Wilson and later Callaghan governments ( who are seen as traitors to socialism by the far left) which was deeply opposed by the Marxist lead “Institute for Workers’ Control”………………

    As I remember it was the CBI, who opposed absolutely everything in the Bullock report, and the election of Thatcher’s (‘only capitalism matters’) government that ‘put the kibosh’ on any progress rather than a disparate group of Marxists..

  • William Wallace 20th Feb '20 - 9:36am

    We have neglected cooperation, co-ownership, mutual and non-profits: an important sector which has been squeezed over the past 40 years. For example, many charities have closed care homes, leaving what ideally should be a non-profit activity more and more dependent on profit-seeking financial owners. We should be putting this among our highest priorities in policy development.

  • It’s good to see William, Michael and Gordon championing the policy of employee participation and share ownership…. and yes…. it has been neglected in recent years.

    Jo Grimond’s campaign was what first drew me to the party nearly sixty years ago in Spen Valley and Huddersfield……. but it goes back much further than that. Theodore Taylor (a one time Liberal M.P. who lived to be 102 until 1952) started the scheme in his mills in Batley and Birstall well over 100 years ago. I remember my Dad, who worked for him before the war, saying what a great old man he was.

    It’s time to resurrect a distinctive liberal policy and for the party to rediscover some of its distinctive radical roots.

  • I do wonder how much less attractive companies will become to potential investors if they know that a large proportion of the directors owe their primary loyalty to the workforce, rather than to the long-term prosperity of the company.
    Of course, you could argue that workforce representatives would be seek the long-term good of the company that employs that workforce.
    But how does that work in a world where the company’s long-term success and even survival is very likely to be dependent on automation and cost reductions that will cost much of the workforce their jobs.
    Of course, you could respond that the company SHOULD prioritise the maintenance of the workforce over the company’s long-term success and even survival.
    But in that case those jobs may not be around for long anyway.
    And if the business is far less attractive to new investors, that too makes it far more difficult for the company to survive in difficult conditions.
    And of course if the business does fails we have seen how often it can take the workforce’s pensions down with it.

  • @Mohammed Amin you raise some interesting points. Company Law (Companies Act 2006) as currently constituted has the prime duty of directors towards the company as being to act in the best interests of members (shareholders) as a whole, which would seem to cover that point. It also requires them to avoid conflicts of interest and to consider the needs of employees in pursuit of that goal.

    Where employees are also members, the separate interests become more muddied, of course.

  • Peter Hirst 20th Feb '20 - 1:49pm

    If we prioritised employee involvement, it would increase the squeeze on Labour something that might improve our electoral standing and facilitate other policy areas where cooperation is essential.

  • Social Liberals have supported the ideas of “co-determination” and “co-ownership” for decades. Lets hope that Liberal Democrats can develop these ideas to help give employees and home dwellers more control over their own lives. We have long supported co-ops, employee partnerships, mutual societies, social enterprises and employee reps on Boards of Directors. Lets move forward with these policies for a more democratic future!

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