Every day, when workers enter their companies and organizations, they experience a significant decrease in their rights. From being citizens with fundamental rights like freedom of speech and voting, they become employees in a company ruled by authority rather than democracy. The capitalist organization of the firm fits uneasily with democracy.
To smooth this daily transition from citizen to subordinate and back, all European countries have developed systems of industrial democracy. Employees have rights that protect them against arbitrary employer decisions. Unions, collective bargaining and information and consultation procedures further give a voice to employees and their representatives in company decisions. But is this enough?
Voices for workers’ involvement in company decisions
In three EU countries, France, the United Kingdom and Belgium, voices are being heard that this no longer suffices. Workers need to have a real say in company decision-making – at the level where those decisions affecting them are taken. But how should this be done?
In 2013, the French socialist government of François Hollande passed legislation giving workers the right to be represented in large private companies’ boards by one or two members. French workers already had such a right on state-owned companies’ boards, but this law extended it to the private sector affecting companies or groups with 1,000 employees in France or 5,000 worldwide. In 2016, Theresa May unequivocally presented her plan to put workers in company boards in her Corporate Governance Reform. Because, as she said, “We need an economy that works for everyone”.
More recently, in Belgium, the French-speaking Socialist Party (PS) presented its plan to put employees in the command hub of the company. According to its president Elio Di Rupo, this should “give an alternative to capitalism”. At almost the same time, the Flemish-speaking Green Party (Groen) also put forward its plan to involve employees on company boards. Evita Willaert explains “The Green party wants to strengthen democracy by giving citizens and consumers a larger say in policy. (…), This means that representatives of employees contribute in company decisions. That’s why the Green party proposes to reserve at least one seat on company boards for employee representatives.”
For France, the right for workers to sit on private companies’ boards was a novelty in a country where industrial relations are characterized by confrontation between management and labour rather than cooperation. For the UK and Belgium, these are new voices in the debate after the discussions on industrial democracy in 1970s seemingly fell by the wayside. None of these two countries has a law giving the right to employees to send representatives where the real strategic decisions are made: usually, the company board. For the EU, however, this is not new. Many countries (14 of all 31 EEA countries) have laws that give a direct voice to employees in company decision-making of private and state-owned companies. The German Mitbestimmung is the most famous example of such systems.
So, do the new developments and voices in France, the UK and Belgium finally signal some kind of upward convergence? Are these laggards of boardroom industrial democracy catching up with the European peloton that left somewhere in the 1970s? Hopefully, but probably not just yet.
‘Decaf’, voluntary, mainstream or radical?
The short recent experience within French private sector companies already shows structural limitations to equipping workers with real weight on the board. Only large companies are concerned (and even they might circumvent the rules) and workers can only appoint one or two board members, putting them in an uncomfortable minority. Furthermore, by law board members cannot have any other representative mandate. They cannot be members of the works council or trade union. This effectively isolates them from those she/he is supposed to represent. In essence, the current French system can be seen as a decaffeinated version of co-determination. One could improve the design and effectiveness of co-determination à la française, but the prospects are gloomy. Macron’s reform of the labour code recently weakened other company-level bodies of collective representation without increasing workers’ participation levels on company boards. After that legislative flop, some see two forthcoming reforms (the legislative proposals Nouvelle entreprise et nouvelles gouvernances and Plan d’action pour la croisssance et la transformation des entreprises respectively promoted by Potier and Lemaire) as the next compulsory “rendez-vous” to push forward workers’ participation demands. It remains to be seen if they are finally picked in that context.
Turning to the UK, once May became prime minister she quickly rowed back on her strong statements about changing decision-making in companies. What came out of a lengthy process of watering down is a meagre Green Paper on Corporate Governance Reform, proposing three options: employers could establish a consultative committee with (among others) workers; or assign a non-executive director “looking after” employee interests, or comply with enhanced non-financial reporting. The power of the shareholders will hardly be affected by any laws forthcoming after the Green Paper’s consultations.
The proposal of the Belgian Green party goes beyond the voluntarist approach and puts forward an obligation for companies to take employees onto their boards. Their proposal is not so extensive and is framed within a more general and mainstream plea to involve citizens, consumers, clients and workers more generally. In public transport this means giving a voice to the travelers, in homes for the elderly they want to involve the residents, and in private sector companies putting workers on the board. It gives a direct voice to workers in company decisions but doesn’t shift the balance of power. Shareholder representatives retain the majority and can keep on pushing their agenda. Implementing this would put Belgium in the European mainstream in terms of co-determination. But the fact that only about five sentences are dedicated to the proposal suggests that it’s not a political priority for the party.
Next to the ‘decaf’, the voluntary and the mainstream, there is the radical. The Belgian (French-speaking) PS wants to put workers in the drivers’ seat of companies, next to the shareholders. It wants to establish a brand-new corporate legal form called ‘the co-decision company’. Such companies would need to install a decision-making body with two ‘chambers’: one for the workers and one for the shareholders. All the important company decisions would have to be taken by majority votes within both chambers. Their proposal mirrors bicameral parliamentary systems. To be clear, not all companies would be obliged to transmute into co-decision companies. This option would co-exist with other types of companies in which shareholders/directors would continue to make the decisions on their own.
This proposal would clearly give real decision-making power to workers as a collective with distinct interests, and would allow workers alone to block decisions of the board without needing political alliances with shareholders. Obviously, this would be a radical step in comparison to even the most advanced German system. But such a radical proposal raises many questions. Co-decision comes with co-liability: how far would workers (and their unions) want to take on that responsibility? And what would be the role of trade unions, collective bargaining and the right to strike in such co-decision companies?