Championing workers’ rights

  • Views
  • Friday, 15 Jul 2016

WOW, Malaysian companies will certainly recoil in horror at the suggestion that workers’ representatives should sit on the boards of companies.

Is that not a conflict of interest? How can workers’ representatives and union leaders be allowed to sit on company boards when they should be fighting each other? That would be a typical response.

Union members or workers themselves will also recoil in shock: “How do we trust the leaders who sit on the board? Would they not betray workers when they enjoy the trappings of a board member?”

Well, such a proposal does not originate from me. It actually comes from the new British Prime Minister Theresa May. She said, “Under my leadership, the Conservative Party will put itself -- completely, absolutely, unequivocally -- at the service of working people.”

Warning that existing boardrooms are often made up of “narrow social and professional circles” who fail to provide adequate scrutiny of how firms are run, she promised to change that system so that Britain would have not just consumers represented on company boards, but workers as well.

“We’re the Conservative Party, and yes, we’re the party of enterprise and we need an economy that works for everyone.”

May’s comments about economic inequality were refreshing, especially as she is from the Conservative Party -- regarded as the party of business.

It must be noted that workers’ representatives on company boards is nothing new.

In Europe, workers’ board representation is an accepted and valued part of corporate governance. In 19 European countries, workers have the right to sit on company boards, and in 13 countries these rights are extensive in that they cover private and public limited companies as well as state-owned enterprises.

Countries with stronger worker participation rights -- meaning widespread rights for board representation, workplace representation and collective bargaining -- do better in terms of their employment rate, expenditure on research and development, lower risk of poverty or exclusion, plus a whole range of other indicators.

Company workers are also more likely to understand how the company and its practices will be viewed by the public. There is evidence from across Europe that including workers on company boards is associated with lower levels of executive pay.

There is also evidence from Denmark that workers’ representatives on boards are more likely than shareholder representatives to take broader stakeholder interests -- including community interests and environmental impacts -- into account.

Obviously some British companies are lukewarm in their response but other prominent businessmen have hinted that the attitude of business leaders might have changed since the issue of income disparity reared its ugly head.

The issue has been raised in various parts of the business world, with Bank of America and international investment firm Pimco reportedly warning their clients last month that the gap between rich and poor could spark a further anti-establishment backlash.

According to Sir Mike Rake, the chairman of BT and Worldpay, “If you’d asked me 18 months ago I would have said business leaders were not at all receptive but there is now a huge awareness among people I speak to, who are mainly in the FTSE 100, that we need to do something about this gap.

“It was shown in stereophonic sound in the referendum that there is a lack of trust in the establishment, politicians and business,” he was reported as saying.

JD Wetherspoon pub chain founder and chairman Tim Martin said: “The current system is far too much of an old boys’ network. Boards need to be more aware of what consumers think and in most businesses like ours you need to be aware of what your employees think.”

Another company’s spokesman said that in most of its businesses, it was a well-established practice to have an employee director chosen by the workforce on the board and that the company found it useful to have employees’ voice on the board.

The UK Trade Union Congress has long argued for workers to be given seats on company boards and remuneration committees. Workers have a clear interest in the long-term success of their companies and deserve a bigger say.

“This move would inject a much-needed dose of reality into boardrooms,” it said in response to May’s call.

A report on workers’ representation on boards in Ireland found that their contribution on employment relationships was particularly valued by other board members, as was their operational knowledge of the enterprise.

The same research found that worker directors were felt to be loyal, trustworthy and diligent, and their contribution was viewed as positive and unique by over three-quarters of respondents; almost all respondents had never heard of a breach of confidentiality or conflict of interest in relation to worker directors.

In Malaysia? We still have public-listed companies going out to bust unions and sack union leaders. It just shows how backwards we are.

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Metro , East Malaysia , labour


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