An appeal for businesses to be democratised

On 5 February, the International High-level Expert Committee on Democracy at Work submitted its report to Yolanda Díaz, the Spanish Minister of Labour and Social Economy (see press release, executive summary and comprehensive summary).
Some of what appears in the report on democracy at work will mark a milestone and should encourage debate, not just in Spain, but across the EU. This committee, chaired by Belgian sociologist Isabelle Ferreras, (see ‘A question for…’) was tasked with putting Article 129.2 of the Spanish Constitution – which describes the various forms of worker participation in a company, cooperatives and access for workers to owning the means of production – into practice.
The Minister’s view is that the task of implementing this principle remains unfinished, as no legislation was subsequently passed to create any form of financial participation or employee representation on company boards (see IR Notes 247). The committee notes that Spain is “among the least developed countries in the European Union in terms of the recognition of workers as key constituents of the economy”. The report recommends “firm democratization” as a means of enacting the provisions of Article 129.2 and “opening a path for all labour investors”, i.e. workers, “to access voice and ownership”.
As justification for the need to position citizens at the heart of a business, the experts provide “factual evidence and robust economic and political arguments to explain the necessity of public intervention in this direction”. While this article of the Constitution has something of a Marxist feel to it, the authors show that democratisation within a business can now offer a response that is more pertinent than ever to the many challenges posed by the Spanish economy, and to those inherent in one-legged capitalism, which serves only the interests of shareholders, while destroying the nine planetary boundaries one by one.
In a country like Spain, where three quarters of its surface area is now at risk of desertification, the message is a highly pertinent one. The experts advocate tackling the situation in two ways. The first way is to strengthen workers’ voice, by introducing a co-decision right for workforce representatives, and ensuring that workers have a presence on company boards.
The second one aims to make it easier for workers to access ownership of the means of production: by opening up the share capital of companies to their employees; by drawing up transition plans that will allow workers to acquire their companyʼs shares in anticipation of a founder or ownerʼs retirement; and by creating funds that will enable citizens to acquire shares. The authors argue that this would make “Spanish firms more resilient, and less dependent on extractive financial actors”.
Furthermore, and this is an innovation in the report, echoing EU debates on revision of public procurement rules, the authors suggest creating a reporting tool – the Corporate Democratic Development Index – based on two scoring scales measuring workers’ access to the decision-making process and to capital. Depending on their level of democratisation, the score achieved by companies could be used by the authorities as an incentive-based mechanism, using the bonus/malus principle, to access public subsidies, corporate tax rates, fiscal benefits, privileged access to public procurement, etc.
It is now up to the Spanish social partners to discuss these proposals, as promised by Yolanda Díaz, who is hoping for an agreement, failing which the Sanchez government will have to move forward on the basis of its commitment to legislate during this Parliament.