Good corporate governance means increasing worker voice

Good work, mandatory equal pay audits and pay ratios deserve the same importance as maximising profits, shareholder returns and boardroom pay, Prospect vice-president Denise McGuire has told the TUC conference in Liverpool.

She was seconding a motion from Accord calling for fundamental reform of the corporate governance system.

McGuire highlighted Prospect’s own Good Work manifesto, drawn up after consultation with members and dialogue with labour market experts.

Good work

It says that good work must include:

• secure, interesting and fulfilling jobs
• a culture based on fairness and trust
• some choice and control over hours worked
• a view on the pace of work and the working environment
• a chance to develop skills
• a voice that’s listened to – a collective voice.

Equal pay gap

“Good work also demands a balance between reward and effort,” said McGuire. “But what’s the reality of pay in our workplaces? Forty years after the Equal Pay Act, the gender pay gap is increasing – it stands at 19.1%.

“For no reason other than blatant sexism, employers chose to pay women almost 20% less than men – keeping many women and their children in poverty. Over the course of a working life that sexism steals thousands and thousands of pounds from women and their families.

“And who gets that money? The shareholders and the men in the board room – that’s who.”

Prospect is pushing for mandatory equal pay audits, because the voluntary approach does not work, she said.

“Since the late 1990s, executive pay has rocketed from around 60 times the average worker’s pay to more than 175 times. The time has come to set a maximum pay ratio between the highest and lowest paid workers in an organisation.”

Workers on board

Delegates carried the motion which called for:

• directors’ primary duty to be to promote of the long-term success of the company, rather than prioritising shareholders’ interests
• shareholders’ corporate governance rights in relation to companies to be subject to a minimum period of two years of share ownership
• a legal requirement for workers to be represented on company boards as full board members
• funded time off and training so worker representatives can fulfil their roles.
• mandatory corporate reporting on measures of good work that have at least equal weight to the financial metrics that currently predominate
• mandatory equal pay audits and a maximum pay ratio between the highest and lowest paid workers in an organisation.

See also the TUC report Workers on board: the case for workers’ voice in corporate governance.