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  1. Election 2024
27 April 2015

In power, Labour must do a better job of being pro-worker and pro-business than it has managed in opposition

If Labour wants to win an election outright ever again, if Labour cares about national renewal, it must work harder to build a common good between workers and business.

By Bryn Phillips

As a general election — and almost certainly a hung parliament — looms, it is apparent that neither Tories nor Labour have grasped the fundamental lessons of the crash, which exploded in our faces so forcefully back in 2008. Maintaining financial capital as the principle motor of growth in the economy is a fundamental failure of the current administration. As we have seen in recent years, this overdependence on the debt generated in the City leads to a form of volatility that in turn leads to chaos for business and workers alike, and, ultimately economic catastrophe. Under successive administrations, wages have stagnated for many years, leading to a doubling of family debt for workers whose job security and standard of living are constantly threatened by an economy that works only for the banks. But it doesn’t have to be this way. On the other hand, the German social market economy, with its stress on worker representation on boards of directors and its conception of value, vocation, and virtue as economic categories, sings from a more harmonious hymn sheet. Isn’t it time we joined the chorus?
One of the biggest disappointments for the left is that, over the past five years in opposition, Labour has failed to successfully develop a pro-worker position. We hear about football fans on boards, diversity, and individual rights, but not enough about the value of workers, work, or the promise of economic democracy.
Neither have we successfully developed a pro-business position. We have developed a brilliant grasp of banker-bashing rhetoric while remaining adamantly pro-City, true, but, with the exception of our pledge to endow a network of regional banks, we still lack a coherent plan for private sector growth in the regions of England outside of London. Business leaders couldn’t be clearer: They want less tax, less regulation, a more skilled workforce and less confrontational labour relations. Since 1979, Market and State power have been centralised in the Cities of Westminster and London. An age of the unaccountable power elites has unfolded before our very eyes, and other than some talk about “redistributing power”, we still don’t seem to have a long term plan to respond to it.
As they say, a desperate disease calls for a desperate remedy. What is required is a new pro-business and pro-worker political economy — and an act of parliament that would support it. This kind of approach would focus less on state regulation and be more concerned with institutional mediation. A good starting point would be building relationships between workers and employers within the governance of our largest capitalist corporations — those which employ over a thousand workers, on being less focused on punitive tax regimes and more active in generating economic value — as opposed to debt — through decentralised democratic civic institutions, such as vocational colleges. After the general election, a pro-worker, pro-business bill sounds like a very good idea.
But what would such an act contain? First, it should champion a co-determination model that offers a constructive role to organised labour and to workers through vocational training and in corporate governance. Workers are affected by the decisions of directors, so isn’t it a matter of justice that they should be represented on company boards? The same goes for smaller shareholders. And when it comes to bankruptcy proceedings, shouldn’t workers voices also be heard? This is important for the economy. Not only do countries with high levels of worker participation fare better across a range of economic factors than those with less worker participation, they experience lower poverty rates, R&D budgets are massively reduced, and firms are more resilient in the face of choppy waters. And this is not a partisan issue. Workforce representation is supported across the board (if you excuse the pun) by Tories, Orange Book Liberals, and the TUC alike. We are currently one of the only EU states to turn our backs on it.
Let’s be frank. One of the central causes behind the Thatcherite financial meltdown in 2008 was a lack of accountability and an imbalance of powers in the corporate governance of our largest firms. In the thick of it, employees are the only people with the long term experience, expertise and interest in the success of companies to generate resilience in the face of failure. There’s a cultural aspect to this too: The balance of powers is a key feature of the English political tradition. It’s there in the “mother of all parliaments”. Shouldn’t this tradition now be reconstituted in the governance of our biggest companies too? Wouldn’t troubled Tesco have benefited from the expertise and experience of its workforce in the negotiation of strategy over recent years? In true Glasmanite fashion, a pro-business, pro-worker act would mean a third of the seats on company boards would be reserved for the workforce, a third for smaller shareholders, and a third for capital.
Second, a pro-business, pro-worker act would oversee a shift in how we fund vocational training, ensuring that elite vocational colleges were set up and jointly funded by business and trade unions in a partnership of equals. This could cut our youth unemployment figures in half, bringing us closer to the picture in Germany, entrench value and skills in the workforce, and go further towards building a reconciliation between capital and labour.
Third, we should offer corporation tax cuts in exchange for paying staff the Living Wage. Labour’s manifesto commitment in this respect is commendable. It is the seed of an idea which must continue to be fed so that it blossoms for the benefit of all. This would be the third pillar of a pro-business, pro-worker act.
We now need to face facts: There is no constructive political way forward for Labour unless we reacquaint ourselves with a pro-worker, pro-business tradition and develop a new private sector-led growth strategy that can build the better Britain that Ed Miliband keeps talking about. Right now neither Labour nor Tories have addressed the root causes of the crash. We risk that devastation happening all over again. Both parties have failed to successfully develop a pro-worker position. Both have failed to deliver a truly pro-business agenda. A pro-business, pro-worker act could change all this. In the wake of the Great Recession we need to think creatively about a proper long term economic plan, not merely by indulging in soundbites. For the sake of accountability, corporate governance reform must be an urgent priority for the next government — whoever they may be. It should be tied to joint contributions from trade unions and employers to fund elite vocational colleges in a way that renews vocational training to promote real skills and a balance of powers in the economy. If we’re serious about the pro-business pro-worker agenda, then we need to think straightforwardly about how to reconcile labour with capital within institutional relationships such as these.
If Labour wants to win an election outright ever again, if Labour cares about national renewal, it must work harder to build a common good between workers and business. Our future depends upon it. That is why a pro-business, pro worker act is so important.


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