3.5.6.3 Rebalancing Negotiations for Sharing Wealth

(This is a current page, from the Patterns of Power Edition 3 book contents.  An archived copy of this page is held at https://www.patternsofpower.org/edition03/3563.htm)

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 with worker-participation in Germany for example:

“Employee representatives have a right to seats on the supervisory board of larger companies – one-third in companies with 500 to 2,000 employees, half in companies with more than 2,000.”

  • 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. As noted previously, 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 (3.5.6.5).  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.

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