CMV: The EU should encourage new forms of governance in which companies are run by employees

Fri May 25 2018 15:00:00 GMT+0000 (Coordinated Universal Time)


Lisa Herzog

TU Munich

Professor of Political Philosophy and Theory

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The digital transformation will bring dramatic changes to the world of work. This is a historical opportunity to expand the control workers have over the way their work is organized. In capitalist firms, the control lies with the owners or with managers acting as their agents. Workers trade their right to have a say for their wages. This is, effectively, a form of “private government,” as Elizabeth Anderson has recently argued. In many European countries, and especially in the German system of co-determination, workers have greater rights. According to standard economic theory, such companies cannot exist. But exist they do, and worker representatives play a crucial role in ensuring good working conditions and fair treatment. There are still huge numbers of unemployed and underemployed people, especially young people, in Europe. Will they end up in the precarious, sometimes even exploitative, jobs of the “gig economy”, or will they be able to take control over their working lives in stable, purpose-oriented jobs?

With new communication technologies, new, horizontal forms of governing work become possible, reducing the tension between efficiency and participatory decision making. In many companies, such technologies are already used, but the power structures remain the same. Why not take the opportunity to strengthen employee rights to have a stronger say in company governance? This can take on many forms: from self-organizing teams to companies with two chambers for “labour” and capital,” as recently suggested by Isabelle Ferreras, to the old idea of cooperatives, where workers also own the company, which is being revived in the movement of “platform cooperativism.”

We need to understand better how such companies can be successful, which models work for which industries, and how new technologies can support the struggle for workplace democracy. In a capitalist environment employee-run firms are often at a disadvantage. Here, the EU could play a crucial role: it could support incentives (e.g. encouraging countries to offer tax incentives) for employee-run firms, and it could provide seed funding for experimenting with new, employee-centred structures of work-governance. The EU should also create a platform for connecting relevant agents, including scholars who study existing models, to share best practices and learn more about how employee-run companies can be successful. These steps could help create a critical mass of employee-run companies, which would prepare the ground for legislation that makes democratic governance mandatory for all firms. Arguably, with the digital transformation the old conflict between capital and labour has come back. The EU needs to take the side of labour – because labour is all of us!

Background Information

  • Workers and employee rights within the EU are already being safeguarded by a number of directives and regulations.

    • At the same time, however, there has been widespread academic and labor union criticism holding that labor conditions have been deteriorating and becoming more precarious over the past decade and employee involvement has in fact not improved as much as it should have.

    • According to the European Foundation for the Improvement of Living and Working Conditions (Eurofound) “the European debate on employee participation is currently linked to the European Commission’s concept of, and initiatives on, ‘workplace innovation’. […]

  • Some of the relevant directives and regulations already passed include: 

    • Council Directive 2001/86/EC

    • Council Regulation (EC) No 2157/2001

    • Council Directive 75/129/EEC

    • Council Directives 92/56/EEC and 98/59/EC

    • Council Directive 2001/23/EC

Read more

Employee involvement and participation at work: Recent research and policy developments revisited

EU Fact Sheet: Workers’ right to information, consultation and participation

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