In the Spring Statement, The Chancellor of the Exchequer, Philip Hammond, announced that the government would investigate ways they can help the least productive businesses in the UK learn from, and catch up with the most productive.
He isn’t wrong to talk about productivity levels in the UK – the Independent reported in 2017 that British workers were 27% less productive than their German counterparts – but his analysis of the causes, and solutions, to Britain’s productivity crisis is missing a key part of the jigsaw.
The Co-operative Party is clear that companies and organisations in which employees have a real influence, in particular where this comes in parallel with an ownership stake, are more productive than organisations where this is not the case. When profits and power are shared, commitment levels among workers are increased because of the extra financial gain they get if the company is successful.
And this belief if borne out in practice. The Employee Ownership Association (EOA) says that “because they’re co-owners, staff in employee owned businesses tend to be more entrepreneurial and committed to the company and its success.”
This can be seen in the performance of employee‑owned companies. The Employee Ownership Index (EOI) compares the share price performance of companies that are more than 10% owned by employees or employee trusts with the performance of FTSE Companies. Since 1992 the EOI has outperformed the FTSE by an average of 10% a year. In cash terms, an investment of £100 in the EOI in 2003 would have been worth £754 in 2014. The same investment in the FTSE would have been worth just £280.
Labour’s manifesto in 2017 recognised the benefits of alternative models of ownership in its pledge to double the size of the co-operative sector. With recent YouGov polling showing that 68% of people in work feel they have no control in their workplace, there is clear appetite to make this promise a reality.
Going forward, the Government would do well to reflect on the benefits of giving employees a meaningful stake in their business. Not only would a more diverse ecology of ownership models achieve a more inclusive growth that delivers rewards more fairly, the appropriate incentives, support, and funding for employee-ownership would support significant growth in Britain’s productivity.