Employee ownership: Owning the workplace, securing the future
by Sean Benstead
At the heart of the debate on community wealth building is a fundamental question about employee ownership and who or what holds the keys to wealth in our society.
In the midst of record inflation and a crisis where too few people earn enough to be able to feed their children and put a roof over their heads, tackling the unequal distribution of wealth ownership will be fundamental in helping to build a better economic model longer term.
It is this need to democratise economic ownership in a way that gives people and place a real stake in the future which was the starting point for CLES’s new report, Owning the workplace, securing the future. Based on new research, this report explores the importance of employee ownership in the Welsh economy and argues that legislation on employee ownership in Wales would powerfully demonstrate the value of devolution in enabling local policy makers to deliver on local economic ambitions.
The case for employee ownership to be a priority for the Welsh government is clear. Already committed to the foundational economy as a cornerstone of their economic strategy, focussing on employee ownership would enable the Welsh government to do so in a way that delivers a more inclusive, secure and sustainable economy.
The Welsh Programme for Government commitment to doubling the number of employee‑owned businesses – from 30 to 60 – is a welcome stepping stone, but it is too modest in its scale and ambition. Instead, we lay out a plan to look far beyond that objective with a new law inspired by the former Italian industry minister Giovanni Marcora.
Introduced in Italy in the mid- 1980s to facilitate worker buyouts of enterprises at risk of closure, the “Marcora Law” enabled collaboration between the state, co-operative sector, business owners and workers. To enable workers to purchase businesses and transform them into co-operatives the state offered unemployment benefits as a lump sum to workers who were made redundant. This mechanism resulted in 796 “worker-recovered enterprises” in Italy between 1986 and 2001. These democratic, co-operative organisations have safeguarded employment with fair pay and conditions throughout economic crises, ensured the growth of sustainable and resilient enterprise and supported local-scale economic development.
“a bespoke proposal that works for Wales”
While the Marcora Law provides an inspiring frame of reference, we recognise that limited devolved powers to the Senedd means the approach cannot (currently) be replicated in Wales. Instead, the legislation set out in Owning the workplace is a bespoke proposal that works for Wales.
Key provisions of the legislation recommended by our research include putting the objective of increasing the contribution of employee owned businesses to the Welsh economy onto a statutory footing. This would be supported by a duty imposed on the Welsh government, its relevant agencies and local authorities to promote employee ownership in economic development and business support activity. Legislation would also ensure that workers wanting to buy out all or part of a business facing closure or down-sizing would be able to access financial support and advice.
These provisions are supported by a suite of recommended policy measures designed to maximise the impact of the legislative package, including the development of a ring-fenced loan fund, to be administered by the Development Bank for Wales, and a state holding company as an alternative or accompaniment to Welsh government business grants in times of national crisis.
Since the founding of the Rochdale Pioneers, the United Kingdom has been a forerunner of co-operative enterprise but there is much to be done if employee ownership is to deliver on its potential for more inclusive, sustainable local economies. The recommendations in this report would allow Wales to build on its laudable work on the foundational economy, to become a contemporary national pioneer of employee ownership and an inspiration to the rest of the UK and beyond.