From the TUC

Involving workers in key business decisions? The European way

15 Oct 2015, by Guest in Economics

At its 13th Congress held in Paris earlier this month, the European Trade Union Confederation (ETUC) launched an initiative for greater workplace democracy. In addition to promoting a better framework for worker information and consultation, the ETUC resolved for the first time to propose new ambitious standards for worker representation at board level in all firms with a European company form as part of its 2015-2019 action programme.

The setting up of worker seats on the board of their company is seen by unions across Europe as an invaluable additional channel for workers’ influence on key business decisions, important both in the search for socially responsible ways to anticipate and manage company restructuring and to foster long-termism in corporate governance. The TUC shares this view, and its 2015 Congress held last month called for a campaign for a ‘legislative framework for employee representatives to become board members and influence decision-making in companies’.

These trade union initiatives build on a long-standing European tradition of worker involvement in strategic decision-making. The updated edition of the TUC report entitled Workers’ Voice in Corporate Governance A European perspective published today shows that, far from being a German idiosyncrasy as some might think, rights to board-level worker representation are found in a majority of (19) European countries, as well as in European law and as such can be seen as a significant feature of the European social model.

In setting out existing arrangements for worker involvement in key business decisions across Europe (be it at the board, but also at the annual meeting of shareholders or within the top executive team), this report challenges some common misconceptions. In particular, worker representation at board level is not exclusively attached to the two-tier board structure composed of a management board and a distinct supervisory board, as typically found in Austria and Germany. Worker board representation is also found in boards of directors in no less than 14 countries in which either the unitary structure composed of a single board of directors is in place, like in the UK, or where the national legislation allows companies to choose between the two alternative board structures. Also, worker representation at board level is not exclusively attached to statutory systems of industrial relations which rely extensively on mandatory rules. In the Nordic countries, a decision to implement the right for workers to be represented on the board is up to workers themselves or to company level trade unions, which sparks proposals for the UK to draw inspiration from the Swedish model in particular.

This updated report thus provides valuable food for thought as to future arrangements which could best fit the UK system.