In a recent speech in the City of London, Deputy Prime Minister Nick Clegg called for more firms to follow the example of John Lewis by making their employees shareholders in the company. This belief in employee ownership was, he said, a ‘touchstone’ of modern liberalism that he hoped to see become a central feature of the British economy.
As I have pointed out in previous posts, both the Conservatives and the Liberal Democrats do indeed have a long history of advocating wider ownership, which has included a commitment to greater employee ownership. Many of the arguments that have been used to justify calls for greater industrial partnership in the past – which have included higher productivity, higher profits, higher wages, fewer strikes, the distribution of economic power, and the creation of more ‘capitalists’ – were reiterated in Clegg’s speech.
But if both coalition parties have consistently advocated employee share ownership, they have been equally consistent in refusing to legislate to make it a reality. While the Liberals have switched between legislative compulsion and voluntary approaches to employee ownership (as Stuart White pointed out in an article in British Politics) even the most enthusiastic of Conservative advocates have regarded industrial partnership as a remedy ‘which the State cannot dole out with a spoon’.
The sole exception to this came during the privatisations of the 1980s, when the Thatcher administrations coupled share sales with offers of free shares to workers in the industries concerned. Privatisation aside, however, neither party has had much success in making wider employee ownership a reality. Attempts to persuade firms of the wisdom of this course have generally fallen on deaf ears.
And these most recent proposals are unlikely to break that pattern. For while Clegg has proposed to give employees a right to ‘request’ shares, there appears to be nothing in his proposals that would compel employers to accede to that request. Seeking to encourage greater employee share ownership is a noble objective – but without legislation, encouragement is unlikely to lead to action.