Democracy in the Workplace

by Frances O’Grady, Mark Langhammer and Chris Winch

Frances O’Grady talks to Mark Langhammer and Chris Winch.

First published: 16 April, 2015 | Category: Democracy, Employment & Welfare, Labour movement

This article is from Issue 59 of Soundings and is available online exclusively at New Left Project.

The TUC has recently been arguing for new initiatives on industrial democracy.  What is the significance of this?

Very often when people have a conversation about workers’ voice, they end up going back to the Bullock Report or In Place of Strife, documents written more than thirty years ago.  Today, we are actually in a very different environment, not just in terms of union membership, union density, industrial relations and so on, but in that we are also trying to crack a different problem.  Today we know that the shareholder supremacy model of corporate governance is completely bust.  The counter-argument to the Bullock Report’s proposals for greater worker representation was that shareholders own the company and are therefore the best stewards of its long-term interests.  But this argument has been left completely exposed by the massive shift in the profile of share ownership, the length of tenure of any one share holding, and, most vividly of all, by the 2008 crash.

Our job therefore is to ask different questions.  First and foremost, if the old shareholder-interest model is bust, and if we agree that it’s bust, what should take its place?  Of course, one of the reasons that it’s bust is its complete denial and waste of worker talent, intelligence and contribution to a firm.  But there is also a bigger challenge about the kind of economy that we live in: the root cause of the financial crash was the growing concentration of wealth and power in the hands of a very few free-floating, promiscuous, global masters of the universe.  I am in agreement with the increasingly large number of economists who argue that the worse inequality gets, the greater is the chance that we’ll get another crash – only next time it will be bigger and quicker.

What ‘traction’ is there in the movement, and in society today, for these ideas?  Are we as a movement incorrigibly adversarial, or are people prepared to take this on – the idea of ‘let’s help run this thing or shape this thing’?

Well, I think that there are clearly key constituencies that we need to influence and bring on board – first and foremost the trade union movement.  This debate on worker representation is ultimately about tackling inequality and the flaws of the old economic model, and about thinking of ways to build a very different model.  My discussions with union leaders on these issues have sparked an interest which would not have been as great if they had merely been positioned as being about social partnership European-style.  So it’s a very new dimension to the debate.  Some people on the left see these sorts of proposals as being a threat to trade unionism and collective bargaining, while some on the right see it as fanciful and assume that we ought to stick to bread and butter stuff and do what we do best.  Then there were people like Jack Jones, who was a genuinely intelligent and far-sighted thinker, and created a different sort of tradition for the left – one which James Larkin junior would have described as ‘intelligent trade unionism’.  I think our task is to think bigger and come up with some quite ambitious thinking, not just about how our day to day work as trade unionists could be transformed, but what contribution we could make to transforming the country.

That makes a great deal of sense to us in terms of our own understanding of Jack Jones’s importance.

I’m a big admirer of Jack.  He was a very creative thinker.  And telling the story in terms of his vision can appeal to people who might otherwise be instinctively suspicious.  The left has had to reflect on its own history and realise that there is more to these issues than many people realised the last time they were at the centre of debates.  Worker representation is not a threat to traditional collective bargaining.  Or, more to the point, a euro-style social partnership does not necessarily lead, as some feared, to co-option, and muzzled trade unionism.  We have realised that there is another strand of our history to draw on.  Unions 21, the union think tank, is also interested in these sorts of issues and doing important work on them.

As well as issuing a series of pamphlets, we have also been writing blogs and using social media to generate interest.1 And I’ve seen that others, like Labour Research, are starting to critique our work, and that’s generating a broader debate amongst activists.  A lot of the public debate has focused on our proposals for workers on boards, something the person in the street can understand, and which, the polls show, has strong public support.  There is a link between this and the High Pay Commission’s proposals for workers’ representation on the committees that set top pay.  Of course the TUC doesn’t believe that having workers on these remuneration committees would in itself transform the world, but it supports the idea because it opens up decision making to a degree of accountability and democracy.

Why shouldn’t a boss have to look their own workforce in the eye and explain why they’re getting a big pay rise, and why that’s more than most workers are getting?  As we know, the pay gap is growing massively.  So arguing for worker representation on top pay committees is a way in to generate some excitement, a sense of justifiable outrage, about who takes decisions, in whose interests, and why it is that workers are currently locked out of those decisions.  There is a lot of discussion about the need for more diversity in boardrooms – and I’m a supporter, for sure, of more women in the boardroom.  But if we are talking about women, why on earth aren’t we also talking about better representation of the people whose lives depend on decisions taken in the boardroom – workers?  If we are talking about diversity, let’s talk about it in its fullest sense.  In Britain I think that there is an almost inherited kind of nervousness about this agenda.  I think the public is way ahead of the political class on this.

Do you think we can learn from European practices – some of which we have already experienced in Britain?  There are, for example, British workers on the boards of German companies in the UK …

Exactly! There is a myth that British culture is not compatible with the approach to worker representation taken in the most of the rest of Europe, as if French and German unions somehow have a less confrontational approach.  But since coming into this job I’ve developed close links with French and German trade unionists, and I can tell you that they are just as independent, and just as determined to get a fair deal, as British trade unionists.  But they can combine this with exercising their rights to works councils and Board representation.  The idea that codetermination has somehow softened the German trade union movement is ridiculous.  The majority of European countries now have some form of worker representation at board level, and what’s good enough for French or German workers is good enough here.  We must not be victims of our past.  We can consciously choose to construct a culture that creates more fairness and gives people a voice.  That old idea that there is a link between not having workers on boards and having high levels of strike activity was broken long ago.  If you look at the number of days lost through strike action in Britain nowadays, they are way down.  In some cases that’s good news, because disputes have been resolved fairly.  But in others it is because people are not even in a position to assert their rights.

In your contact with the Labour Party, does any or much of this resonate?

The Attlee lecture I delivered last year, in which I argued strongly for the importance of industrial democracy, got a very positive response from senior people in the Labour Party.  And the TUC has a worked-up set of detailed policies on corporate governance reform, which are about a lot more than just having workers on boards.  Our call for workers on boards is a high-profile and ambitious campaigning policy.  But it’s only one element of what we want to see.  We also want better information and consultation rights, stronger rights at work and better coverage of collective bargaining.  And I would say that there are members of the shadow front bench who are engaged on these issues.  When the High Pay Commission report came out at the end of 2011, Labour made a public commitment that when they got into office they would put workers on remuneration committees.  But they need to be able to answer the question ‘how?’, and we’ve made some detailed policy proposals on how that commitment could be delivered.  These questions immediately take you to the core, fundamental changes that are needed to introduce democracy and democratic structures in the workplace.

Would this mean changes to Company Law?  A company is a legal and political construct – and you can change it.

Exactly.  I’m not sure that everybody who made that commitment had thought through how it would be delivered.  As I pointed out, unless you have some form of independent election with workers participating, the only worker representation that you’ll get on a remuneration committee is a management rep – because they’ll be hand-picked.  You have to have some degree of democracy at work to deliver it.  Our policy proposals are closely aligned with our other aims of improving information and consultation rights, and supporting the development of works councils and representation of workers, eventually up to and including board level.  It makes sense to address that wider package as a whole.  So that’s the dialogue that’s happening now.

And how are you getting on with that?

The cause of more democracy at work is one for which unions have been pressing for a very long time.  Some might say we have high hopes but realistic expectations.  But in any case it’s definitely worth putting the issue out there.  And I think that we’ve made some progress putting it on the agenda.

Before it wasn’t on the agenda at all, and now it is.

Exactly.  We need to inoculate politicians against the idea that we need to get the CBI signed up to everything before we can make progress.  As with the campaign for a national minimum wage, another key progressive demand, there will always be outright opposition to change from some quarters of business.  So get used to it, plan for it, and have the courage of your convictions.  Of course, part of my job is also to encourage the more sympathetic employers to speak in favour of corporate governance reform, and to separate them from the ‘anti-democrats’.  Informally, I’ve spoken to lots of employers, including people leading multinational companies who are required to provide for workers’ voice in the other countries in which they operate, and do so without a problem.  And we saw similar partnership approaches in the crash, when unions came to very sensible agreements with employers to protect jobs and keep plants open – exactly the sorts of agreements that the Germans and others made.

There are firms, such as First Group, who do have workers on boards, but they are pretty rare.  In fact our current TUC President, Mohammad Taj, a bus worker, was a regional worker director for First Group.  Some companies are willing to explore how we might boost workers’ strategic voice on a voluntary basis, and if that can ‘normalise’ the conversation, it’s all to the good.  If we can create voluntary agreements, even if we don’t get the whole shebang, that’s a positive start.  If we can begin to break down workplace oligarchy, and introduce the idea that worker’s voice at a strategic level is the sensible thing to do, that’s a welcome advance.  Some of Britain’s senior HR managers agree with us that the weakness of the current legal framework is bizarre.  They genuinely believe that the workforce is their most important asset – in which case you’d be mad not to involve them at a strategic level, to hear what the workers’ concerns are and how you could best address them.  So the more mainstream the debate becomes the better, I think.

How does one mainstream these discussions within the trade union movement, the Labour Party and also beyond?

There has not been much time since I became General Secretary in 2012 to deliver something in time for the 2015 election.  But I think that we’ve made some progress.  We have also drawn on our traditional routes to stimulate debate through union magazines, trade union think tanks, and our education programme – we train over 50,000 stewards every year.

One of us (Mark) was a participant in the TUC’s ‘Leading Change’ programme, which was a good programme because you were able to have quite a long term engagement with colleagues from different places and with different experiences.  We think there is scope for that kind of thing to ‘beef up’ activists’ capacity around worker voice, company construction, finance and economics, patient capital and worker economics.  Incidentally, on this course John Monks gave a lecture on Belgian trade unionism and how visible it was.  He put this down to Belgian trade unions being involved in their national insurance and pension scheme.  And he mentioned that after the war, Ernest Bevin had suggested something like the Belgian insurance scheme.

John has also written about that and I have read about it.  It’s interesting looking at the debates that people had back then.  I thought we should have gone that extra mile, should have grabbed it.  Arguably, we made a big mistake in the past in not taking up such opportunities when they were offered to us.

But we are now at a similar juncture – post crisis – when there’s all to play for ….

Yes, and sometimes I think we’re not ambitious enough.  There are times when you think you haven’t got much to lose.  When you look back at the post-war period, at that time they had the comfort of four or five trade union leaders in the Cabinet, with a much more intimate relationship and a common cause, a sense of co-determination, at the highest political level.  Clearly we are in a very different world now – although perhaps it is easy with the benefit of hindsight to look back and say, ‘Why didn’t you do more?’

It is also important, though, not to go too far the other way, in the sense of dismissing the reasons why people fear co-option of trade unions, because those are genuine fears.  We have real experience of employers using very sophisticated union avoidance and dilution techniques, and we’ve seen a very small number of cases of corruption involving employee representatives, including the famous VW case in Germany.  Now those are the exceptions not the rule, but that doesn’t mean that we should let down our guard on some of those threats.  We have to go in with our eyes open.  But when we’re presented with those sorts of historic opportunities, my judgement is that we should take them.  However we also have to make sure that we’re fit to take full advantage of them without compromising what is our core responsibility to democracy and accountability.  I believe that very strongly.  We are ultimately a democratic movement.

You’ll know the CBI objections to workers on boards.  On the one hand they say that board discussions are too complicated for workers to understand, that we’d be lost in the boardroom.  And on the other hand, they argue that worker directors would threaten the entire corporate governance system.  So which is it?  Are we too incapable and shy to make a contribution in the boardroom or are we going to tear down capitalism if we get there?  Having said that, there are very practical issues about how to train people so that they can play an effective role.  For example, I’ve never been keen on the idea of any of us on public bodies going in on our own.  It’s hard to be in a meeting on your own – which is why we want workers’ representation, not just one person.  We also have to put support mechanisms in place, so that worker directors are trained not just about knowledge but in the skills needed to operate in those environments – how you network outside of the room, how you make effective interventions.  That’s exactly what we’re looking at now in very practical terms.

To go back to that point you just made about one not being enough, do you have any sense of what the minimum would look like in a decent industrial democracy…?

I think that the bottom line is at least two worker directors on a board – on this the TUC has produced detailed papers that set out the nuts and bolts of what we are asking for and how it would work.  At a pragmatic level, we suggest starting with very large companies.  And you can bet your bottom dollar that the majority of these companies are multinationals that already have workers on boards in the other EU countries. 

In terms of union leaderships and executives, national officers, what is their position on these issues?

I think that people support it.  They’ve been very supportive of the work that we’ve done – not just in our exec but also all the way through the regions.  So they see it as common sense.  A lot of them have had mixed experiences with European Works Councils, and other kinds of mechanisms, so they know that this is not the be-all and end-all.  That’s why it’s important that we talk about it in terms of that broader package of improving workers’ voice and rights.

The landscape has also been changed dramatically by the fact that 80 per cent of workers in the private sector aren’t members of a union, so the balance of risk has changed.  I’ve had some very straight conversations with people, asking them to ‘look at the figures’.  The real threat for unions is that membership and collective bargaining coverage goes off the cliff American-style.  What you saw in the US is that membership goes down, down, down, because you’ve got no power to help anyone any more.  We end up with little union fortresses that can help members inside a particular enterprise but can’t help anybody else.  They get good pay and conditions for themselves but it stops at the company door, and increasingly they are also at risk, because workers know they can always be replaced by a non-union workforce.  Let’s ask ourselves about our performance as a movement over the last ten years – real wages are down because membership is down.  As an organiser I’m interested in the corporate governance reform agenda because I think it’s our best shot at creating embryonic democratic structures within non-union Britain.  All of us have a legitimate interest in having a democratic country, and a healthy and thriving trade union movement is a key pillar of that.

What we can be really proud of is that, despite all the battering that unions have taken, both in terms of industrial restructuring and in terms of the law, we have maintained membership at around the six million mark.  The latest figures show that, because of the cull of jobs in the public sector we’re down on membership there, but in the private sector membership is up.  Which is pretty amazing really.  I think that a lot of our organisers and stewards should take credit for that.  But the challenge we face is coming from a set of ideas and a model of capitalism that has systematically reduced the power and dignity of working people.  And, if we’re going to push back on that, it will take more than what we’re doing now.  I could have a thousand more organisers and I still wouldn’t be able to rebuild union membership sufficiently to reverse growing inequality.  In my view we need an alliance between a sympathetic government, trade unions and civic society if we’re going to push back on these extreme levels of inequality, wealth and power.  The corporate governance reform agenda is just one part of that strategy.  It is an important element in reforming the way in which our companies actually work, giving us the opportunity for every worker to have the right to a voice, but it is also important for us to have the opportunity to galvanise our wider voice as independent, democratic, trade unions. 

It’s a big challenge to be ready to take advantage of that.

So would it be a breakthrough if one of the big unions really owned this issue?

Yes.  And I think that there are senior individuals, within UNITE for example, who get it, who see that bigger picture.  And that’s very important, because it is the largest private sector trade union.

We want to ask about two big, associated, issues.  One of them is the relationship between wages and profits.  Less of GDP goes on wages now than ever before in the last thirty years, and more goes on profits.  How do we get Britain a pay rise?  The other one is rebalancing the economy – how do we do that?  Different company law, different interventions, industrial strategy, how are you tackling those issues at the moment?

These issues are addressed through our strategy to tackle the root causes of inequality.  We know that trade unions and collective bargaining are one part of the answer: one international report has suggested that the decline of trade unions accounts for about one fifth of the growing inequality gap.  Another part of the answer is an industrial strategy to create better paid, better skilled jobs and the industries that will sustain them.  Banking and finance reform is also absolutely critical to encourage patient capital.  And corporate governance is another vital strand, because as long as top directors are allowed to behave like Premier League star footballers, they just take the money and run.  And as long as shareholders remain the sole stewards of a company, companies will remain hooked on pursuit of the quick buck.  This isn’t a moral judgement, it’s a question of how our system works.  So we have to change the rules.

Unions have been engaging in solidarity bargaining for the last thirty years.

And although we still have five million earning less than the living wage, it is the middle earners who have been hit hardest proportionately.  Unions have been using our bargaining power in general to try and protect the worst paid.  But if the middle collapses we won’t be strong enough to help the working poor. 

I think we’re all clear about what needs to be done, but a lot of it requires political solutions.  We can’t do it all on our own.  So I am encouraged by Ed Miliband.  He does think seriously about these issues, and though the language he sometimes uses wouldn’t be mine – predistribution, for example – he’s absolutely right to say that the state, on an ever-reducing portion of the tax base, can’t go on mopping up after the sins of the system.  Labour now understands that you have to intervene in the market, and that is an important break with New Labour thinking.  This is not to say that everything New Labour did was bad, but it fundamentally accommodated free market liberalism in a way that hadn’t happened before.  And it failed to understand that you need a whole range of strategies to provide some kind of protection against the worst failures of the market.  For example, a degree of public ownership, a more democratic regime for companies, and a stronger tax base.  Instead we got sold individual rights as an alternative to market intervention, but individuals are never going to be strong enough to exercise them on their own.

How can the unions have more influence on the Labour Party?  Isn’t it about time that performance-related pay applied to the Labour Party?  Couldn’t you pick a couple of big ticket issues and say ‘come on guys we’re not giving our money for nothing’?  Couldn’t you try to co-ordinate getting more influence?

Obviously the TUC seeks to engage with all political parties, and a series of policy conversations have taken place with Labour.  We’re making progress in some key areas.  We’ve made real progress with our proposal that the Low Pay Commission should have powers to bring unions and employers together in industries where we have the evidence that we ought to pay more, to set a higher statutory remuneration package.  We’ve looked to build cross-party support, and to win support on that from some employers.  And, though it’s hard to believe, you couldn’t even mention the term ‘industrial policy’ even five, ten years ago – it was a dirty word.  So I’m happy that we’ve helped put industrial policy back on the map.  Tax and spending policy is a little trickier.

The Tories have managed to hegemonise this issue of the social security budget, but a lot of it, you could argue, is socialism for the rich, for companies that don’t want to pay their workers properly, greedy landlords and so on.  Can we get the Labour Party to be a bit bolder on that issue?

Well, to be fair to Ed, he personally understands that point, that actually the problem here is not just low, but unfair, pay.  Unions have done a lot to make living standards a key issue that every politician now has to address, but we also have to come up with practical policies to solve the problem.  So on the doorstep voters probably don’t give a fig about the details of what we’re saying about the Low Pay Commission being given new powers, but they do want real improvements in their living standards and reducing the welfare bill, and our proposals to the Commission are our practical policy for delivering that.  I think we’ve seen a generation of politicians, across the board, who have felt powerless in the face of a globalised economy, and are afraid of companies who can threaten to ship out and punish governments who try to rein them in.  But that does not mean that you have to give up.  On the contrary, you have to be even more determined.

If the Conservatives remain in power, what would be your concerns about further restrictions on trade union activity?

Well, they’ve been very upfront about that, haven’t they?  And we’ve been upfront in our responses.  I genuinely worry that this is about a deeper attack on democracy and dissent and civil liberties – although proposing a threshold on ballots that no other democratic election process would have to meet does mean that we are being singled out.  But I am most concerned about their proposals on picket lines, which have the potential to criminalise trade unionists on picket lines – places where local government workers, firefighters and so on have gathered recently.  Quite often people are gathering together in numbers higher than the six that would be legally allowed in their new proposals, and it has not been a problem, the police know it’s not a problem.  People gather on the town hall steps, outside a fire station – that’s what you would expect people to do.  But as the seventh person visiting the picket line, I could find myself outside the law.  What’s even more worrying here is the link to the Data Retention and Investigatory Powers Bill: criminalising certain behaviours in respect of industrial disputes would then allow snooping on their mobile phones, and other forms of surveillance.  That has very profound implications for civil liberties in this country.  It suggests we’re going down a very authoritarian route.  I’m absolutely certain that the public don’t see trade unions as the problem.  On the contrary, they see over-mighty corporations as the problem.  The public is worried about inequality and the very, very wealthy individuals who are distorting our democratic process, not trade unions, which are made up of ordinary working men and women.  So these attacks don’t make any sense – and there are elements within the Conservative Party who also think it’s a mistake to demonise trade unions.

I think there’s still a very strong current within the Tory Party that thinks that trade unions are an obstacle to the working of the market and I don’t think that’s gone away.

Yes, and I also think there’s class prejudice, and it’s getting worse out in society.  I suppose, when you look at who holds the reins in the Conservative Party, it’s not surprising. 

Just to finish off, when you get to the end of your term, hopefully your first term, where would you like to see the trade union movement?

I’d like it to be bigger, stronger.  Although I’ve known for a long time about Jim Larkin senior, Jim Larkin junior is someone I’ve only just begun learning about, and I very much like that notion of intelligent trade unionism.  Though I don’t think that it’s all just about ideas – sadly.  If it was only about the strength of our argument, we would be in a hell of a lot stronger place than we are now as a movement.

Ideas alone aren’t sufficient.  But I’d like us to be respected as a thinking, intelligent movement.  I want Britain to become a more equal and democratic country – it’s as simple as that really.  I do feel very proud of the trade union movement.  There have been times when no-one else has been really fighting for ordinary working people.  We’re never going to go away.  But we can’t take our future for granted.  And there’s a lot we can do for ourselves.

Frances O’Grady is General Secretary of the TUC.  Mark Langhammer is Director of ATL Northern Ireland.  Chris Winch is Professor of Educational Philosophy and Policy, King’s College London.

This is an edited version of an interview first published in Labour Affairs 3 No 250 September 2014.  The interview took place in August 2014.

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