Letting workers into the boardroom? Capitalists have nothing to fear

We should put workers on company boards. We should. We need to get the detail right, but having workers’ representatives present when big decisions are taken is not only a good thing in its own right but would lead to better decisions. It would be a big change in the UK, but it’s not outlandish on continental Europe.

If that doesn’t persuade you, let’s turn to what this column is all about – evidence. Do we know the impact of requiring that, for example, a third of board seats go to employees? Helpfully, in the 1990s, the Germans removed this requirement for some new firms, but kept it for similar existing ones, providing a great experiment that economists have exploited with research.

One of the big arguments against having workers on boards is that it discourages investment – capitalists might decide to invest less because they worry that they’ll have to share the returns with workers.

However, research suggests the opposite – firms with worker representation invest more, perhaps because staff have a strong interest in long-term success. Transplanting features of Germany’s model into our, very different one is far from straightforward and it’s not all good news for those who want workers on boards. The study shows it doesn’t affect wages much but does increase representation of women and reduces it for nobility… I told you it’s a good idea.

Read more from Torsten Bell’s Top of the Charts at resolutionfoundation.org

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