Worker representation on boards and remuneration committees should be mandatory for all major companies. Worker representation can help to ensure that the interests and views of workers are taken into account on issues including pay and conditions. It can improve decision making by increasing diversity of thought and experience. In countries such as Germany where these policies already exist, there is lower inequality and evidence of companies having a better record of acting in the public interest.
There is an urgent need for us to move from a stakeholder to a shareholder model of capitalism. From Davos to the Business Roundtable, some of the world’s most powerful businesspeople are also calling for this. This now needs to move from action to words. In the UK we advocate reforming the Companies Act to change the responsibilities of directors from being legally required to prioritise shareholders to one where the interests of workers, consumers, wider society and the environment are given equal priority.
There is strong evidence of a correlation between the strength of trade unions in a country and lower inequality. In the UK the gap between the lowest and highest paid at listed companies began to grow rapidly in the 1980’s with the introduction of anti-union legislation and the decline of trade union membership which has followed. This trend only began to slow down following the 2008 global economic crisis. While trade union membership in the UK has increased in the past three years, levels remain low compared to comparable European countries. We believe that expanding trade union and collective bargaining coverage is crucial to tackling the twin scourge of low pay and excessive executive pay.
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