May’s u-turn on employee representation a missed opportunity to boost economy

At her speech at the CBI, the Prime Minister appeared to suggest that a push for employees on company boards would threaten growth. Far from it - the business case for employee representation is clear.

James Scott


In a speech today, Prime Minister Teresa May appeared to backpedal on her previous commitments to employee representation, reassuring business group the CBI that her plans were “not about mandating works councils, or the direct appointment of workers or trade union representatives on boards.”

If so, May risks missing a huge opportunity to build a shared economy that delivers for all. We believe that those who work on the shop floor, at the front desk or in the call centre have the knowledge, experience and motive to build more successful companies.

Amid the inevitable uncertainty and economic turbulence of Brexit, the British economy needs to tap this potential more than ever.

Our economy remains unproductive compared with other major economies, and has delivered stagnant incomes for years, whilst and the possibility of accruing assets – such as a home – are beyond reach.  Precarious employment conditions are now spreading.

Teresa May herself said it best back in July, when on the steps of Downing Street she said:

‘I know you’re working around the clock, I know you’re doing your best, and I know that sometimes life can be a struggle. The government I lead will be driven not by the interests of the privileged few, but by yours.

We will do everything we can to give you more control over your lives. When we take the big calls, we’ll think not of the powerful, but you.’

And yet at the CBI, Teresa May confirmed that one of a few flagship policies announced during her leadership campaign would not be delivered.  The government now has no plan to mandate workers on boards.

Far from a threat to business stability, as May seemed to imply this morning, the business case for employees on boards is a straightforward one.

First, employees have an interest in the long-term success of their employer.  Their presence on boards encourages decision making based on long-term interests over short-term gains.

Second, putting employees on boards can improve the relations between managers, owners and their workers.  This is a critical relationship for business performance.

Third, boardrooms tend towards the homogenous.  Putting employees on boards can diversify the experience of those involved in decision-making, shown to lead to better outcomes.

Beyond these arguments for worker board representation, it is only fair that workers can input into decisions taken that will have a dramatic effect on their lives.

The UK’s lack of worker board representation is unique within the major economies of Europe, and is common practice in France, Germany, Sweden, Denmark, the Netherlands and Luxembourg.  Research into the practice across Europe has found employee board representation is valued by workers and owners alike.

But this issue speaks to a larger dilemma facing the UK – and that is what type of economy we want and need in the future.  Do we want an economy where profit and wealth go to ever smaller numbers of people, and where the incentives driving collective productivity come second to the pursuit of individual riches?  Or do we want a productive economy is which wealth is shared?

Teresa May seems to have made her choice.