Worker participation in companies
Nicholas Davenport
There is no special reason why ,company directors, after they nave read the Labour Party's green paper, The Community and the Company, should have severe apoplectic fits or go out to the pub and drown their rage in drink. They must have known that s.ornething on these lines was Inevitable. The CBI have long been preparing the ground for a radical change in company legislation and the committee they S et up under Lord Watkinson Went some way towards recognising the need for more worker participation in company affairs. It Is true that they were against the two-tier board system, with workers represented on the top board, but this has been the rule in Germany for a long time and the — so beloved of our company directors — is actually proposing to make it a condition of CornUnity membership. The only vital difference between the EEC aId the Labour proposals lies in the method of election of worker directors. Under the German syslen"' worker directors are elected uY all the company employees in Feneral assembly. Under the Labour proposal they can be elected only by the use of the trade union machine — whether it be. the joint shop stewards com!rattee or some other union body. rill the Labour view nothing must De allowed to infringe the principle ,0 "single channel" representation. 'hat is the essential condition, it saYS, of worker participation. , Herein lies the sting in the Labour Party's paper which was PriePared by a working group vr\v„inen the party was in opposition. r Bruce Milian was the chairman fltzl the front bench members eluded Mr Tony Wedgwood n. That may explain why the 1:115er has aroused so much susPlcion and fright. It may be PrParing the way for a trade I;Inion take-over of company aflairs _ a coup which Mr Benn is said to be hatching in his departinent under the guise of joint lganning agreements with the top tiu r companies. It is significant hrat under the green paper
half
°Posals the workers must have a -, not a third as in Germany, of "e top board and the top board itilust have "real rather than eoretical power to supervise aspets of management" including "g term policy, the expansion
or run-down of operations and mergers or tie-ups with other companies." "Policy" long-term could obviously include anything from the tea breaks of workers to trading with Chile or South Africa or other suspect reactionary countries. In practice the scheme just would not work. It might work, of course, to the detriment of our export trade and balance of payments, but it would not work administratively unless there was complete and friendly co-operation between the two sides, which is unlikely while industrial relations remain so prickly. Incidentally, the trade unions have had much to say about the "ugly face of capitalism" when company directors misbehave. The opportunities for misbehaviour are surely enhanced when the workers occupy half the seats at the board table. Human frailties are not confined to one class as we have seen in the north of England.
As an ex-company director myself .1 would say that the twotier system—with workers occupying half the seats on the top board — is unworkable and somewhat ridiculous. It is difficult enough to get agreement on one board. If workers want representation on the board of directors I see no reason why they should not have it. Company directorships have for too long been the preserve of the "old boys brigade" and most boards have a selection of duds who have been elected through influence or family or tradition. It would not make much difference if the boards had a few trade union duds as well as capitalist duds. But it would undoubtedly help company efficiency if the trade unions were to elect outstanding workers with good brains who wanted to have a rest from the shop floor and try their hand at management. They would probably have better ideas than most directors on how to improve job satisfaction, which is one of the weaknesses of the capitalist system. The more automation is brought into the production process the more boring and tedious the factory jobs become. The Swedes have lately been experimenting in a motor factory by abolishing the production line and arranging for a complete car to be assembled by a group of workers, singing Scandinavian sagas, no doubt, as they do their
creative work. I am sure that workers on manufacturing boards could help to improve job satisfaction and remove the sense of alienation which workers now feel from their company management.
The new Companies Bill which a Labour government must bring forward in due course will no doubt incorporate a lot of the new ideas presented in this green paper. Its last Companies Act of 1967 was feeble enough and the ,Tories' attempt at a Bill was no improvement. The big question is whether the new Bill will embody the paper's main proposal for a Companies Commission to supervise the whole capital market and company world — with power to interfere in the work of selfregulating bodies and professional associations like the Stock Exchange. The commission would have far wider responsiblities than the American Securities and Exchange Commission, for it would not confine itself to the security markets but would extend its surveillance to the banking, insurance, hire purchase, building society and property fields.
My colleague Skinflint has always argued for a London SEC, and I have always been against creating a new bureaucracy which would be much less well informed and much slower to act than the Stock Exchange Council. Even a small bureaucracy — like the Takeover Panel — has produced a bundle of wordy rules which brokers often find difficult to interpret. If the new Companies Bill did what Skinflint proposed — make it illegal for a merchant bank or finance house to own both an investment or insurance department and a unit trust — the evil practices of warehousing, wheeler-dealing and insider trading would be greatly diminished and the need for a Companies Commission virtually eliminated. The new Companies Bill could then confine itself to checking obvious abuses and increasing the fund of corporate information, which is essential for both workers (including worker directors) and small investors.
There is another clause I would add to a new Companies Bill. This is my own, and I think original, proposal for a companies ombudsman. The green paper makes heavy weather of the supposed conflict between the legal rights of shareholders, who must own the business and take all the profits or losses as providers of the risk capital, and the responsibilities which their companies must owe to their employees, their customers and society at large. The conflict would disappear if the law provided for a company ombudsman to attend all company general meetings and present the case for employees, customers and society at large. He would have no right to interfere in a company's management, which is what the proposed Companies Commission would do, but would publicise any abuses he found and this publicity would be sufficient to cause wrongs to be righted and managements changed. Incidentally the company ombudsmen would be a retired financial genius, like Jim Slater. There is no better gamekeeper than an expoacher.
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