An Unlikely Ally? Advocating for Board Representation
Sophia Friedel |
With less than a week to go until polling day, Prime Minister Rishi Sunak and his opponent Keir Starmer, have been debating economic policies. Once again, visions for the future of the British economy and the development of sustainable growth without re-entering the European single market and also stable industrial relations emerged as one of the key elements of the election. Despite a rather unusual course for the Labour Party, which Starmer expressed in his statement to The Sunday Times only a month ago - that the Labour mission was built on the pride of working people earning a decent living and handouts of the state would not nurture the same sense of self-dignity as a fair wage - classic Labour policies also characterize the prime ministerial challenger’s programme.
By advocating for mandatory worker representation as part of a broader agenda to enhance workers’ rights and ensure fairer economic outcomes, Starmer follows in a long tradition of Labour agitation to reform industrial relations towards a more just and equitable democratic society. There was the Donovan Commission on the reform and political organisation of industrial relations in 1968 under the first Wilson administration, the Health and Safety at Work Act 1974 and the Employment Protection Act 1975 in Wilson's second term. The Committee of Inquiry on Industrial Democracy (Bullock Committee) in 1975 and the Bullock Report, finally published under Callaghan, were aimed at radical extension in the control of companies and their managements, by means of representation on boards of directors, as the then Trade Secretary Peter Shore pointed out to Hansard in August 1975. The Draft Fifth Company Law Directive of the European Union in 1972 - to harmonize employee participation in corporate governance across Europe - certainly added to the explosive nature of the issue. However, the proposal for board representation in Bullock’s Majority report has never been implemented, although a rather unusual ally for board representation emerged after the turn of the century.
Discussions about a radical reformation and (re)organisation of the UK’s industrial relations still sparked at regular intervals within the Labour party and during Labour governments, even after the missed chance by the TUC and Labour governments of 1997-2010 to establish trade unions and workers’ voice as a real political benchmark in the British economy, (noted by Frances O’Grady in her 2013 Attlee Memorial Lecture). With its “Anglo-Saxon capitalism” characterized by deregulation and liberalization, the British economy remains one of the most deregulated economies in the world. It is precisely this that needs to be reformed, as Conservative politician Theresa May surprisingly stated in a major speech in July 2016, shortly before becoming prime minister.
At the end of 2015 and beginning of 2016, the UK found itself in an unprecedented economic situation. The "sick man" of Europe, who was thought to have recovered at the end of the 20th century, was once again struggling with the problems of economic productivity and competitiveness, which were visibly exacerbated by globalization and the British debt crisis. Like many industrialized European countries, the UK was undergoing a gradual structural shift away from manufacturing and production towards a large range of services that will dominate the labour market from now on.
May’s solution lay in a more strategic role played by the state. She emphasized the need for a fairer economy and suggested reforms to corporate governance, including the introduction of worker representatives on company boards. As part of her broader agenda to address economic inequality and to create a more inclusive capitalism, she regarded state intervention and regulation, following the example of the Federal Republic of Germany, as the clear goal for long-term prevention of irresponsible and reckless management behaviour and the careful review of all associated political measures.
Of course, May’s proposal faced significant pushback from within her own party. Many Conservatives, particularly those with strong pro-business leanings, argued that such reforms could hinder business flexibility and decision-making efficiency. They feared that having workers on boards might lead to conflicts of interest and disrupt the traditional hierarchical structures that, in their view, underpinned successful corporate governance. As a result, this aspect of May’s reform agenda was eventually watered down.
Labour Party reactions to May’s proposals were as much restrained as they were mixed. While the idea of worker representation aligned with Labour’s long-standing advocacy for workers’ rights and inclusive governance, many in the party viewed her proposal as too modest. Labour leaders argued that the scale of the reform was insufficient to bring about meaningful change in the balance of power within companies. They proposed more radical measures, such as requiring significant employee ownership stakes and broader changes to the corporate governance framework to ensure genuine worker influence.
Both internal opposition and external criticism of Theresa May’s support for worker representation on company boards prevented a real political expansion of employee rights in the UK. Her proposal, though aligned with contemporary concerns about inequality, seemed to be too radical and clashing with conservative economic principles for her own party and too conservative for Labour. The debates surrounding her position underscore the enduring complexities and political sensitivities involved in reforming corporate governance to include worker representation and workers’ voice to strive for greater industrial democracy.
None of May’s successors ever dared to make such a progressive advance. The more voluntary, business-led approach with emphasis on flexibility and minimal regulatory burden, as supported by Prime Minister Sunak, shows the continuing significant divergence of views on worker representation on company boards, once again making workers’ voice an unmissable subject for the labour movement.
Please note: Views expressed are those of the author.About the author
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