Worker directors

One of the disdvantages of using Enlgish as our ‘lingua franca’ in Ireland is that we are not exposed often enough to ideas from outside the English-speaking world. A report published last week by TASC, Good for Business? Worker Participation on Boards (PDF here), is a case in point.

The existence of worker direstors in companies in Ireland — and the rest English-speaking world to which we so often look for policy examples — and the legislation on this issue are so poor that it can easily be forgotten that not only is it normal practice in many other European countries, but actually a legal requirement in some of our fellow EU member states. The poor situation in Ireland means that it is a difficult task to undertake a study of the role and effect of worker directors in Irish companies. The sample of companies is tiny and utterly unrepresentative: in the commercial sector, worker directors exist in only a handful of state-owned companies. (Worker directors also exist in a wider range of non-commerical public bodies, although that terminology is not always used to refer to them. Examples include the vocational education committees, the National Disability Authority, and the Legal Aid Board.)

It is worth setting out some of the legal requirements in those other EU countires. In Germany, depending on the size of the firm, either one-third or half the seats on the board must be worker representatives — worker directors or their nominees; in Sweden, a company with 25 employees must have worker directors; in Austrian PLCs regardless of the size of the firm, workers have a right to a third of the seats on the board. Across the EU 27 and Norway, 12 countries provide for worker directors of some form in private forms. The little-known directives on EU-level companies also provide for worker directors.

The TASC report presents a literature review and data drawn from a focus group with nine worker directors from six companies and thirteen interviews with other people: non-worker directors, company executives, and “independent experts”. We are not told what the basis of this last group’s expertise — or, importantly, the the view that they are independent — is.

In Ireland, we are a long way from the kind of values that are reflected in the 12 other EU countries. Two details from the TASC report show how much of a hill we have to climb.

The first detail is that the five recommendations in the report do not include anything would lead to an extension of the model to be extended outside the public sector. I would have thought that this is the kind of idea that a progressive think tank should be introducing into the debate in Ireland. And the report contains a reference that shows why ding that at this time would be opportune. In discussing the legal roles of comapny directors, TASC uses not the current legislation but propoals from a draft companies bill that is expected to be introduced next year. That bill will be a massive overhaul of the Companies Acts — the draft proposals come in at over 1000 pages. (The scale of what is comming doen the line for the TDs and Senators can be seen in the time the preparation of the bill has taken. The Company Law Reform Group has been working on this for over a decade.) TASC should be calling for that process to be used to strengthen industrial democracy in Ireland.

The second detail is that a majority of the the interviewees in the study — that is, the non-worker directors, the company executives and the “independent experts” — believe that worker directors should not sit on remuneration committees. That mind-set, which sees executives as being in a different market from others — so different that it often looks like they are on a different planet — is one of the key factors that has contributed to the obscene income inequalities we see in Ireland and the rest of the English-speaking world.