16 January 2012

Nick Clegg more employee ownership

Nice to see Nick Clegg is interested increasing employee ownership. Here's an article on the BBC if you haven't already heard.

Co-operatives UK welcomes the proposals by the Deputy Prime Minister, Nick Clegg, to encourage business to reward workers through shares. Giving ownership to the people who work in a business is good for them but it is also good for the economy.

Personally though when people start talking about 'responsible capitalism', I get a little worried, do they mean upgrading the way we organise and distribute our shared resources to increase the overall productivity; increase the number of people who benefit and in a more fairer way? If so great!

Or are they talking about a more marketable capitalism, slightly reframing and changing the words we use so that people like the Occupy Movement and others who are questioning the fairness in our current economic system. - Increasing CEO and Bankers pay at a time that vast stretches of the public and private sector are facing multiple year pay freezes and redundancy.

This is always the way with Govt announcements so lets see what happens and I look forward to future developments.

Practical things that would really help increase worker co-operative and employee owned businesses:
  • Simplifying and consolidating co-operative legislation to reduce the cost/complexity giving co-ops a more equal playing field. This would also make the co-operative option clearer to professionals offering advice and guidance. This is in line with the Government’s “red tape challenge” to cut down the costs and burdens on business.
  • Around one-third of all EU firms were expected to change hands in the following decade, affecting around 610,000 SMEs and 2.4 million jobs.  Just promoting and even better offering tax incentives or practical advice for worker buy-outs would increase the number of worker co-operatives, but would also ensure more jobs are kept locally and businesses are more likely to survive. (Have you seen the welsh Baker Boys TV programme). Also Around 30% business closures might be regarded as ‘transfer failures’ – viable firms which close for lack of a suitable successor – rather than simple ‘business failures’.
  • Exploring how to widen access to employee ownership to those on lower incomes, in order to promote a more participatory economy. There is already a total of around £1.2bn of annual tax incentives for employee share ownership but this is largely to the benefit of people on higher incomes, forming part of the rocketing pay packets of chief executives.If these incentives are more available and understood by people on lower incomes there will naturally be an increase in interest in worker ownership of business.


Graham said...

The succession issue is a clear opportunity. What about a 'Right to Buyout' for employees in a business succession scenario?
And enabling unemployed people to roll up benefits payments to fund cooperative start-up (cf: Marcora Law in Italy). Low cost/no cost policy options for Govt to spur economic development.

ktw said...

'Responsible capitalism' is a tautology. Capitalists can no more be responsible than a fox can be responsible about how many chickens it kills! As Noam said (sorry I do go on about it, but he talks such a lot of sense..) it's wrong to call them 'greedy capitalists' - they're not bad people, they're not 'greedy' it's they way capitalism works! Can't be reformed, we need another better way - co-operativism - where all the stakeholders benefit, not just the investors or owners!

John Atherton said...

I may be contentious here Ktw, but all worker co-op owners are 'capitalits' becuase they own their own capital.

It's what they do with it that counts.

Oh and Graham, yes what the French Govt or Italian Govt have put in place over the years would be fantastic, but tbh in the UK I would be happy with a leveling playing field anything else is a bonus.

ktw said...

WIKI says : 'There is general agreement that elements of capitalism include private ownership of the means of production, creation of goods or services for profit or income, the accumulation of capital, competitive markets, voluntary exchange and wage labour.' Capitalism in my book means that the financial resources for running business are generated by the sale of shares to outside investors. Therefore the business must generate more and more profits in order to attract investors, who are at the top of the food chain. Other stakeholders - employees, customers, the local community, the environment, get trampled on in the rush. That's why I think that co-operativism is a better way to organise business.

Boffy said...

Clegg's announcement is meaningless. What he really wants to see is small scale Co-ops, that would have no possibility of competing with Big Capital, and would be ripped off by it. What is really needed is for Worker Co-ops to be able to unite under a single Federation - preferably at least European in scope, so as to be able to effectively compete against Big Capital.

But, Clegg in his speech made clear that they would not tolerate such "Monopolistic" behaviour, nor would he tolerate effective Trade Unions acting to support such a Co-op Movement.

If Clegg really wants to encourage and facilitate the development of Worker Co-ops I have a simple challenge for him and the Tories. There is around £800 billion of workers money tied up in their Pension Funds. But they have no control over them. Control is exercised by the pension Funds, and the Banks. £800 billion would buy up more than half FTSE 100 companies. So legislate to give workers democratic control over their funds, and let them buy out some of these big companies and turn them into Co-ops!

bob cannell said...

The USA has had tax incentivised employee share ownership for decades. It hasnt made any difference to inequality nor corporate excess. But they have had Enron ( a majority employee owned corporation)and United Airways (a 100% employee owned corp where the worker owners went on catastrophic strike against their executives ??!!).

Employee Ownership only works with ownership AND control ie where at least 51% of the shares are owned by the workforce. Otherwise its just exploitation by other means.

Cooperativising SMEs with ownership succession crises is the way to go. It works for France, Spain, Sweden, Italy but not in England of course because we dont want the peasants getting ideas above their station here, do we, what what?

Capitalism is not defined by the ownership of capital nor by trading nor by free markets. Capitalism is defined by wage slavery
(Cicero wrote that whoever gives his labor for money sells himself and puts himself in the rank of slaves)
where the employer can underpay the wage slave and walk off with the surplus and so amass capital which can then be used to control workers and smaller businesses.

By this definition, worker cooperatives are not capitalist and consumer co-ops are somewhere in the middle ground.

Marx said "Tell the workers to invest in worker cooperatives rather than consumer cooperatives. The latter merely scratch at the face of capitalism, but the former undermine its very foundations." 1866 International Workingmens Association congress.

Or as Bob put it "Worker co-ops are bubbles in the bloodstream of capitalism, eventually they will give it a heart attack."

Hats off to the Employee Ownership Association for getting the deputy prime minister on their side. Ace PR work!!

bob cannell said...

Worker control over pension funds.
In the early 1990s Heseltine (DTI minister) and the leadership of the NUM met secretly. Heseltine said the government wanted rid of the National Coal Board and offered to change the law to enable the NUM to use the miners pension fund to buy the remaining coal mines and invest in the new 'clean coal' technology then being developed by the NCB.

The NUM had long been running Health and Safety management and much people management down the pits where management feared to go, so it was a logical extension.

Ever the class warriors, the NUM said "see you on the picket lines Toryboy" and we know what happened.

I was told this by someone who was present at the meeting and went on to help set up Tower Colliery.

Andy said...

The business succession market should in theory provide an opportunity to grow employee owned companies or worker co-ops.

So far though I've seen little central promotion from co-ops uk or the Enterprise Hub on this subject as most work appears focused on start ups.

The 'right to buyout' in succession issues would be great, but perhaps not practical where an owner is purely focused on price maximisation.

One other key issue which hasn't been addressed is how employee buyouts in succession scenarios can be funded. Where would you find £500K to £1mn to fund one buyout at the moment, let alone 50? I don't often agree with Mr Miliband but he's correct in suggesting that we judge people on deeds not words.