UK Government urged to restore fairness to workers

UK Government

A report by the TUC was also suggested that boardrooms should include seats for workers, directly elected from a firm’s workforce

The UK Government is being urged to take measures to restore fairness to workers, including having employees on boards and reforming company law.

A report by the Trades Union Congress (TUC) and two think tanks said the balance between the interests of a firm’s workforce and its shareholders has ‘tilted’ too far towards shareowners and away from the people who create the wealth.

For nearly 20 years from 1981, UK pension funds accounted for more than a quarter of the total market value of UK listed shares, but this steadily declined to just under 13% before the financial crisis in 2008, said the report.

It now stands at around 2.4% for direct ownership and 6% with indirect ownership included, research indicated.

The remaining shareholder returns to pension funds disproportionately benefit a wealthy minority, with the richest 20% of UK households by income owning half of pension wealth in the UK, it was suggested.

The report’s authors said directors’ duties should be rewritten to remove the current requirement to prioritise the interests of shareholders over those of other stakeholders.

When making decisions, boardrooms should promote the long-term success of the company as their primary aim and be legally obliged to give as much weight to the interests of their staff and other stakeholders as they do to shareowners, said the report.

It was also suggested that boardrooms should include seats for workers, directly elected from a firm’s workforce.

TUC general secretary Frances O’Grady said: Working people deserve a fair share of the wealth they create. This should come through wages, pensions, and reinvesting profits to safeguard the future of the firm and its workforce.

She said: But in the last two decades, wages have stagnated. Pension schemes have been curtailed with the loss of defined benefits, and the connection between UK pensions and UK shares and dividends has been severed.

Mat Lawrence, director of think tank Common Wealth, said: The economic story of the decade is clear: workers have suffered while asset-owners have surged.

Ensuring working people share in the wealth they create is fundamental to turning ‘levelling up’ from rhetoric to reality, but critically, if companies reduce dividends and increase wages and investment, this mustn’t come at the expense of ordinary pensioners, he said.

Lawrence said: With pension wealth inequality so high, the stock market is starkly disconnected from ordinary savers.

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