Social Europe

politics, economy and employment & labour

  • Themes
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Labour Should Be Campaigning For A Citizens’ Wealth Fund Instead Of A Worker-Ownership Plan

Stewart Lansley 25th October 2018

Stewart Lansley

Stewart Lansley

Perhaps one of the most ambitious – and controversial proposals – floated at Labour’s conference  was the plan to give workers a small ownership stake in the companies they work for. The proposal – which would entitle workers to a dividend payment up to a maximum payment of some £500 a year – has, perhaps unsurprisingly, been castigated by business leaders. According to CBI director Carolyn Fairbairn, the proposal will ‘set alarm bells ringing in boardrooms at home and across the world.’

Under the scheme, the businesses participating would gradually become part-owned by employees (at a rate of 1% a year up to a maximum of 10%). Ultimately, the proposed ‘Inclusive Ownership Fund’ would turn businesses into John Lewis-style workplaces, with employers given potentially new voting powers over company decisions. The share dilution proposed is often less than daily movement in today’s volatile global environment.

Part of the case for expanding shareholding amongst employees is that it would help tackle growing wealth inequality (which is twice as high as income inequality) and give workers a direct stake in the companies they work for. Policies to tackle the growing concentration of wealth, much of which is unearned, are long overdue and would help rebalance an economy too long weighted in favour of boardrooms.

But is the plan outlined by John McDonnell the best way of spreading capital ownership, and its gains, across society? The answer is no. The plan only applies to companies with more than 250 employees, many of which already operate some form of employee shareholding. As McDonnell acknowledged, his plan would benefit only 11% of employees. Large sections of the workforce – including the least paid and secure, the self-employed, those in small firms and those working in the public sector – would miss out. With the cap set at £500 per worker (many large firms pay much more than this), only a small proportion of the dividends accruing to the firm-based fund would go to the workers; the lion’s share would go to the Treasury. This sounds like a heavy dose of old-fashioned statism. As some critics have argued, this can also be viewed as a new hidden tax, designed to fund wider public services, rather than a way of transforming the economy.

An alternative and much more inclusive approach to achieving a more even spread of capital ownership would be to pay the annual share issue into a citizens’ wealth fund – one owned by all citizens on an equal basis, managed by a Board of Guardian independent of the state, and offering for the first time a full citizen’s stake in the economy.

Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content.


We will never send you spam and you can unsubscribe anytime.

Thank you!

Please check your inbox and click on the link in the confirmation email to complete your newsletter subscription.

.

This would still involve share dilution, but the whole of society would benefit on an equal basis, and the state would be a facilitator rather than a player. Such an approach would have a much greater impact on the spreading of national wealth, with the annual returns from the fund paid to all citizens and not just the lucky employees of big, profitable companies. This would be one way of building a collectively owned fund on the model of the Alaskan Permanent Wealth Fund. Funded by the proceeds of oil this has paid out an annual dividend to all citizens (averaging $1100 per person a year) helping to turn Alaska into one of the most equal of US states.

As one recent study has shown this approach would, over time, build a fund that would become a significant part of the national economy. It would be also be a powerful pro-equality force. With benefits going to all, it would be much more difficult for business – parts of which are now aligned with the call for ‘an inclusive e economy’ – to attack.

For the first time ever, all citizens would hold a direct and equal stake in economic success, with the fund automatically capturing a growing part of the gains from economic activity and distributing it equally, through a regular citizens’ dividend. A fund would act as a counterforce to growing inter-generational inequities by ensuring that a growing share of national wealth is held in trust for all citizens across generations. Provided it is managed with transparency and at arms length from the state, a citizens’ wealth fund offers a new tool for social democracy, partial reform of corporate capitalism, and a new 21st century social contract between citizen, state and market.

This post originally appeared on the British Politics and Policy (LSE) blog.

Stewart Lansley

Stewart Lansley is  author of the The Richer, the Poorer: How Britain Enriched the Few and Failed the Poor (Bristol University Press). He is a visiting fellow at the University of Bristol, a council member of the Progressive Economy Forum and a fellow of the Academy of Social Sciences.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

Home ・ Politics ・ Labour Should Be Campaigning For A Citizens’ Wealth Fund Instead Of A Worker-Ownership Plan

Most Popular Posts

schools,Sweden,Swedish,voucher,choice Sweden’s schools: Milton Friedman’s wet dreamLisa Pelling
world order,Russia,China,Europe,United States,US The coming world orderMarc Saxer
south working,remote work ‘South working’: the future of remote workAntonio Aloisi and Luisa Corazza
Russia,Putin,assets,oligarchs Seizing the assets of Russian oligarchsBranko Milanovic
Russians,support,war,Ukraine Why do Russians support the war against Ukraine?Svetlana Erpyleva

Most Recent Posts

Gazprom,Putin,Nordstream,Putin,Schröder How the public loses out when politicians cash inKatharina Pistor
defence,europe,spending Ukraine and Europe’s defence spendingValerio Alfonso Bruno and Adriano Cozzolino
North Atlantic Treaty Organization,NATO,Ukraine The Ukraine war and NATO’s renewed credibilityPaul Rogers
transnational list,European constituency,European elections,European public sphere A European constituency for a European public sphereDomènec Ruiz Devesa
hydrogen,gas,LNG,REPowerEU EU hydrogen targets—a neo-colonial resource grabPascoe Sabido and Chloé Mikolajczak

Other Social Europe Publications

The transatlantic relationship
Women and the coronavirus crisis
RE No. 12: Why No Economic Democracy in Sweden?
US election 2020
Corporate taxation in a globalised era

ETUI advertisement

Bilan social / Social policy in the EU: state of play 2021 and perspectives

The new edition of the Bilan social 2021, co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), reveals that while EU social policy-making took a blow in 2020, 2021 was guided by the re-emerging social aspirations of the European Commission and the launch of several important initiatives. Against the background of Covid-19, climate change and the debate on the future of Europe, the French presidency of the Council of the EU and the von der Leyen commission must now be closely scrutinised by EU citizens and social stakeholders.


AVAILABLE HERE

Eurofound advertisement

Living and working in Europe 2021

The Covid-19 pandemic continued to be a defining force in 2021, and Eurofound continued its work of examining and recording the many and diverse impacts across the EU. Living and working in Europe 2021 provides a snapshot of the changes to employment, work and living conditions in Europe. It also summarises the agency’s findings on issues such as gender equality in employment, wealth inequality and labour shortages. These will have a significant bearing on recovery from the pandemic, resilience in the face of the war in Ukraine and a successful transition to a green and digital future.


AVAILABLE HERE

Foundation for European Progressive Studies Advertisement

EU Care Atlas: a new interactive data map showing how care deficits affect the gender earnings gap in the EU

Browse through the EU Care Atlas, a new interactive data map to help uncover what the statistics are often hiding: how care deficits directly feed into the gender earnings gap.

While attention is often focused on the gender pay gap (13%), the EU Care Atlas brings to light the more worrisome and complex picture of women’s economic inequalities. The pay gap is just one of three main elements that explain the overall earnings gap, which is estimated at 36.7%. The EU Care Atlas illustrates the urgent need to look beyond the pay gap and understand the interplay between the overall earnings gap and care imbalances.


BROWSE THROUGH THE MAP

Hans Böckler Stiftung Advertisement

Towards a new Minimum Wage Policy in Germany and Europe: WSI minimum wage report 2022

The past year has seen a much higher political profile for the issue of minimum wages, not only in Germany, which has seen fresh initiatives to tackle low pay, but also in those many other countries in Europe that have embarked on substantial and sustained increases in statutory minimum wages. One key benchmark in determining what should count as an adequate minimum wage is the threshold of 60 per cent of the median wage, a ratio that has also played a role in the European Commission's proposals for an EU-level policy on minimum wages. This year's WSI Minimum Wage Report highlights the feasibility of achieving minimum wages that meet this criterion, given the political will. And with an increase to 12 euro per hour planned for autumn 2022, Germany might now find itself promoted from laggard to minimum-wage trailblazer.


FREE DOWNLOAD

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us on social media

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube