UK firms must go further on profit-sharing and company governance

If you work hard for a company, help it succeed and make a profit, then surely the owners should share a little of those profits with you and other employees. The best companies already do. Indeed, the best companies also want their staff involved in decision-making at the highest level, using their knowledge and expertise to help plot company strategy and keep senior management on their toes.

Britain has a productivity and a fairness problem. Changing the way companies work, how they take key decisions, and who is involved in those decisions is key to sorting these problems out. We lag behind the rest of the G7, bar Japan, and most of the G20 in how productive our economy is. And whilst executive pay has shot up in recent years the incomes of the rest of the workforce has struggled to keep pace just with historically low inflation.

Part of the solution involves sharing a little more of the power and profits of big business with staff at all levels. Companies like John Lewis share some of the profits they make with all their staff, giving the most junior as well as the most senior staff direct incentives to work even harder, think imaginatively and go the extra mile. Employees also get to help choose the Board, again giving staff direct responsibility for selecting those at the very top whose decisions they'll have to follow. An employee on the Board also helps to ensure the most valuable asset of any business; their staff, gets heard at the top table. This gives a greater voice to staff who have an interest in a stable business focussed on long-term success as opposed to short-term windfalls for absent owners and disengaged shareholders.

In countries like France and Germany this 'shared capitalism' is a stand out feature of their business practice. Companies like Deutsche Bank have staff on their German Board who play a positive role, while in France firms of 50 or more employees benefit from 5% of profits being shared with all staff, except recent arrivals. Both Germany and France have lower levels of inequality and levels of productivity growth UK economists fantasise about. Sharing profits and giving employees greater representation is fairer and would boost productivity and long-term economic growth. Isn't it time Britain followed suit?

Gareth Thomas is the Labour MP for Harrow West