3.5.6.3 Balancing the Negotiations for the Sharing of Wealth

(This is an archived extract from the book Patterns of Power: Edition 2)

A business's performance determines the amount of wealth it creates. It cannot control the amount which the government takes in tax, but it can control how the rest of the wealth is distributed – which would be more meaningful if it were conducted as a single negotiation:

· An inclusive negotiation would take account of the interests of the employees; transparency would be increased if the employees were represented on the boards of companies, as in Germany for example.[1]

· All employees can be incentivised to improve a business's performance, for example by profit-sharing, by employee shareholdings or by agreements which link pay to productivity.

· Shareholders and financial markets would take more of an interest in the medium-to-long-term health of businesses, and in exercising governance over the board of directors, if they moved money around less often; a financial transaction tax would incentivise them to retain their shares for longer periods (3.5.5).

A balanced negotiation would apply an appropriate weighting to the needs of employees, directors, shareholders and the future development of the business. It would have to take account of the realities of the labour market and financial markets, but it should balance them against the requirements of all the stakeholders in the business.