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Time for workers in the boardroom

Written By: - Date published: 8:20 am, March 27th, 2012 - 20 comments
Categories: business, workers' rights - Tags:

National’s only push (if you can call such a feeble effort that) on gender equality seems to be on getting some women into the boardroom. Which is an admirable goal, and would indeed shake up the current clique and add some new ways of thinking to our companies. Personally I would think equal pay for equal work for all women would be of greater importance than getting a few to join our financial elite, but still a worthy target by itself.

But it’s not just women I’d like to add to our company, SOE and CCO boardrooms.

I’d like to add at least one worker representative on every public company, SOE or CCO board.

All too often we’ve forgotten that it takes labour plus capital to make a company work, with arch-capitalists thinking of labour – people – as just another commodity, another number in the ledger. And generally just a liability at that.

In Germany half the boards of large corporations are employee representatives. UK and US economists have been arguing for years that the German economy is about to founder, with this as a large reason – ‘the inmates are in control of the asylum!’ they say.

And yet, come the financial crisis, one country in the West is powering ahead – even while having to bail-out Greece and other parts of Europe.

In truth the German economy that was ‘struggling’ in the financial boom never was – while US GDP growth outstripped Germany, that was due to population growth – German GDP per capita growth was greater than the US’ in the decade prior to 2008.  And it was much more sustainable growth at that.

Because Germany hasn’t outsourced.

Anglo boardrooms have consistently taken short-term profits of selling factories for apartments, outsourcing and laying off workers, asset-stripping and redundancies. Germany – where only a completely united front of shareholders and management will outvote workers – has gone the route of innovation, productivity and exports.

I think it’s a route we need to carefully consider. Would Ports of Auckland be so keen on contracting out their labour if they had to explain to the employee representative director the plan before it even started? Giving workers a say would greatly improve worker relations, it would reduce the disparities of boardroom and executive pay, and provide a balance to boardroom discussions.

20 comments on “Time for workers in the boardroom ”

  1. I’m going to have to disagree with the “at least one” labour representative on boards. Go for half or go home- the point of having half a board composed of labour representatives, as voted on by employees, is that everything the board does has to involve some degree of co-operation between the executives and the labour representatives. Labour is also more likely to vote in more diverse representatives than are likely to be appointed, too.

    National wouldn’t like it, but it would undeniably improve the economy.

    • aerobubble 1.1

      National hate improving the economy when they illogically believe it will make them money (which it doesn’t). Its like because they missed making the cake they somehow are brilliant on how cake should be cooked, displayed and eaten, and worse who should eat the cake. Our over reliance on argiculture is directly related to no taxation on capital farming.

    • Ben Clark 1.2

      I tend to see this as a step-by-step thing. Yes you want half the board to be labour representatives, but you start with a minimum of one (or 10/20%, so large boards don’t sideline them too much), people see the sky hasn’t fallen in, and then you make the next step…

      And definitely agree on Labour voting in more diverse representatives. But then it would hard to vote in a less diverse lot I suppose 😉

      And those ‘financial geniuses’ in National don’t like a lot of things that would improve the economy (CGT, Cullen Fund, keeping state assets etc), I’m not sure you need a ‘but’ in that sentence 😉

      • We don’t want people to see that the sky isn’t falling, we want them to see that it’s filled with flying cars because we’re awesome. 😛 You don’t really get to see the biggest benefits of seeing labour reps in boardrooms unless the rest of the board actually needs their co-operation to get anything done.

      • Fortran 1.2.2

        Great idea for workers to have Board representation.
        In Germany it is normal in the major companies.
        In New Zealand the best way is for workers (or Iwi) or both to buy enough shares to be able to get real representation not token (like Germany).
        Iwi have now $48 billion worth of assets – they could use some of these to get serious Board representation.

  2. ianmac 2

    At least decisions would no longer be secretive. Even if the worker rep was outvoted, the Board would be unable to make decisions without accountability like POAL does. (How did they arrive at Lockout?)

  3. Colonial Viper 3

    Mr Clark. You’ve hit one for a six with this post. Just awesome.

    Agree with MW though – one worker rep is not sufficient. I suggest that you need at least one VOTING worker rep on the board, and one worker observer. The observer allows larger workplaces to be represented more fairly, and will also help prevent a single worker rep from being targetted or sidelined.

    BTW another reason Germany is winning is that of the Euro – as industry in Italy, Greece and Spain is declining hurt by a strong Euro which is out of their sovereign government’s control, German industry is winning that work.

    However, as consumer and industrial demand in the “periphery” collapses, German economic growth will likewise falter.

  4. thatguynz 4

    +1.  Like your thinking Ben!

  5. Dr Terry 5

    Employees must not only have a place on boards of management, they must also “partake” of the benefits their productivity helps bring about (i.e. minor “shareholders”).
    N.Z. leaders have nothing like the intelligence of the Germans in order to bring about something relatively straight forward (or they are mostly residing in Australia).

  6. hoom 6

    The only women that National is getting into the boardroom are Shipley, Boag & various other Nat/ACT party hacks via extremely dodgy political selections.

  7. David H 7

    Well Boag is now a pariah so forget that.

  8. burt 8

    Ben Clark

    I think the question simply put: Could such an idea catch on here?

    Is NO. There is a reason why I say that, look at the history of ACC.

    You will see that originally it was a copy of the German workers compensation scheme originally put in place by Bismarck circa 1900. If you look into this now you will see that Germany still has pretty much the same ‘base’ scheme in place today. We had to make it “better” and pretend we could afford a luxury no other country in the world can justify.

    We would suffer the same problem here – a good idea that works would be twisted and distorted into some popularity device used to bolster the chances of [xyz political party] retaining power in tough political times.

    • Colonial Viper 8.1

      We had to make it “better” and pretend we could afford a luxury no other country in the world can justify.

      We afford it just fine, mate. In fact its so profitable, the corporates want to take the work over.

      Unlike the US where hundreds of billions go to private insurance profits and private law suit fees. Now that’s what I call truly “unaffordable”.

    • burt 8.2

      Right, of course. Monopoly suppliers being profitable is good….

      • McFlock 8.2.1

        Well, given that the govt were talking about raising ACC levies in order to enable private insurers to compete, I’m not sure you can realistically argue monopolistic price gouging by ACC.
        Not that it will stop you arguing it, I recognise… 

      • Colonial Viper 8.2.2

        Right, of course. Monopoly suppliers being profitable is good….,

        They are building up assets and capital which are being used for the public (not private) good. So yeah no problems there. Unless you are a privateer looking for profits for your own pocket of course, in which case it’d fuck you off.

    • Foreign Waka 8.3

      Burt, sorry you are wrong. Germany, Austria and the Scandinavian countries have also included the dentist to general care, gynecologist, specialist services and physio. Also, surgeons are of very high standard.Yes, they have a few years ago introduced fees as we have but the health system is carried by taxes which are specifically earmarked at collection (wages)point. NZ has its own solution by having established a no fault system where the money is being used in a very efficient way to look after the people in need and not after the back pocket of lawyers. Considering that the tax is not broken down into contributions for health, pension and general I find that ACC is a pretty ingenious invention. By the way, even when all the “departmentalised” tax contributions are added they are not more than we pay.

  9. Reagan Cline 9

    Great post Ben. Getting people thinking about what goes on elsewhere that could benefit us here.
    Shearer has made a start by focussing on Finland and Brownlee is helping people widen their horizons by finding out more about Finland and thinking things through.
    We will not find all the answers here among ourselves. Bear in mind our geographic isolation and dearth of home-grown ideas (except for the maori way, which could be our salvation if the shit really does hit the fan).
    Revere ideas ! I remember overhearing one jewish woman saying to another “you are full of good ideas”
    When would those of us who would call ourselves “New Zealand European” say this ?
    The Labour Party, which is the only political party with a history of deliberately setting out to enable people to lead good lives (no ?) needs to get its act together and start appealing to people with what really matters in this part of the world.
    Get real Labour Party !!!!! Forget about the number of votes and get people thinking about a programme. Show some daring !

  10. Foreign Waka 10

    Prerequisite to such approach is that all participants are adults. Is it replicable in NZ? I am not sure, as I have not met many people of all ages that would qualify. Besides, it would also require some good old fashion work ethic. What is however certain, is that Germany is coming out of this financial disaster better than many, many OECD countries. Makes you think.

  11. Rhema Vaithianathan 11

    Great post. Completely agree – and given the dismal standards of management in New Zealand, I think there is a stronger case since workers are as (if not more) interested in the quality of management than capital owners. By encouraging broader governance, the Board will have better information about who are bad managers. Weeding out bad management is crucial to improving productivity and wages.

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