For many of us in the employee owned and coop sector the announcement of the “trade rights for shares” scheme was a blow. Is this the Government’s big plan to foster more employee ownership?
We expected better. Following Nick Clegg’s commitment back in January to “drive employee ownership into the bloodstream of the UK economy” and the endorsement by no less than three Government Ministers (Lamb, Clegg & Maude) of the Nuttall report, those of us in the sector thought – at last – they’ve got it! The very idea that employees should have to forgo employment rights to enjoy the rewards they help create is simply ludicrous. Where did that come from?
If only George Osborne had attended an excellent, and busy, event in Glasgow this week, he would have heard Sarah Deas of Cooperative Development Scotland say why employee ownership is so important to a healthy economy:
- Unlike a trade sale where relocation is often inevitable, the model roots the business in the community.
- The ownership stake engages the hearts and minds of employees and aligns everyone with the business
- The wealth created is distributed over a broad base of people.
Employee owned businesses enjoy a dynamic not often found in conventionally structured businesses. As in every business, the board is accountable to the shareholders. In the co-owned sector, these shareholders are largely employees. This breaks down the “them and us”. The goals of management and workforce are aligned, reinforced by the transparency and accountability that ownership brings. The Government’s idea that there would be a two tier organization, with managers who hire and fire, and a subservient contractor workforce rails against the very principles employee ownership stands for. This is a huge step back to the adversarial industrial relations environments of the seventies and eighties.
At the core of Osborne’s proposition is that share value in these companies will grow and thus compensate employees for the lack of employment security and weakened working conditions. Just about every employee owned business will tell the Chancellor that this is a faulty premise. Financial gain is not unimportant, but is not usually a priority. The fairness, the transparency, the accountability are the reasons why most employee owners produce the remarkable results that interest the researchers.
There is no doubt that the model proposed might fit with a very small number of firms who may be looking for that “flexibility”. Will this really drive the benefits of employee ownership and create a fairer, more solid and beneficial economy? I think the response so far has been overwhelmingly that it will not.