Introduction
While the relative power of shareholders versus management in corporate governance is often debated, there is a , both in these debates and in reality, of workers. However, some recent developments in both the U.S. and Canada address this absence.
Notably, there have been two American legislative proposals in 2018, one by and one by , both mandating a minimum number of board seats allocated to employees. In Canada, U of T鈥檚 Centre for Industrial Relations and Human Resources convened public participation in an , which ran throughout 2022 and resulted in policy recommendations to increase worker voice in workplaces. Further, an op-ed in May 2020 on the need to has been signed by over 6,000 researchers from more than 700 universities across the world and has been turned into a on the topic.
The idea of workplace democracy can refer to a variety of proposals, including mandated seats for workers on corporate boards as in , the creation of separate boards comprised of workers, or the adoption of democratic worker co-operative structures. Further, Cynthia Estlund emphasizes that due to the ongoing re-organization of work categories, which have resulted in an increasing precarization and volatility of work and employment conditions. A workforce might therefore include full- or part-time employees, independent or dependent contractors, , as well as migrant or undocumented workers. While different mechanisms for worker participation would warrant deeper analysis across differently defined workplaces , this blog post uses 鈥渨orkplace democracy鈥� as a broad term and focuses on the general idea of increasing worker participation in decision-making.
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Economic and Social Context 鈥� COVID-19 and Technology in a Globalized and Financialized Economy
Growing recognition of the lack of worker voice in corporations is occurring in the context of recent developments that demonstrate the consequences of the longer-term decline in the power of workers. This has created a very unstable, asymmetric and 鈥榟ire-and-fire鈥� political economy which has for decades been oriented around increasing returns for investors. Worker participation in decision-making is a possible response to this situation, both to the recent developments and to the longer-term disempowerment of workers.
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COVID-19 Pandemic
The COVID-19 pandemic made the vulnerability of workers, and their importance, increasingly visible in the media and everyday life, with images of nurses, factory workers, drivers and other front-line staff as widespread as rarely before. identifies a key example in the meatpacking industry, where predominantly racialized workers were exposed to COVID-19 because their employers kept plants open and refused to adopt sufficient protections. She characterizes this as profiting at the expense of worker safety and, in the absence of government enforcement of higher health standards, lawsuits against their employers or the relevant government body were the only recourse available to workers. This example, which has comparably been reported for this industry all over the world, is emblematic of . The current, and potentially fast-passing, interest in 鈥榚ssential workers鈥� shines a light on the exclusion of workers from decision-making that directly affects their livelihood, health, and futures.
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Automation, Workforce Monitoring Technologies, and the Gig Economy
Further, the pandemic has accelerated workplace adoption of both automation and AI-powered employee monitoring software. In recent papers, both and have analyzed the effect of these developments on the very nature of work, beyond their effect on job availability and unemployment. These authors conclude that the quality of jobs, not just their availability, will be reduced as work is more and more automated or monitored through AI monitoring tools. A large contributor to this decline will be the ways in which these technologies by making them 鈥溾�� and making it harder for workers or regulation to 鈥�.鈥� These authors therefore emphasize the importance of collective labour and employment rights, with De Stefano calling for 鈥�.鈥�
Further, in her history of the gig economy, has identified that 鈥渞ather than just tell drivers what to do and how to do it, which would trigger employment status, Uber and Lyft use 鈥榩sychological inducements鈥� derived from social science and deployed remotely through algorithms to influence when, where, and how long their drivers work.鈥� Discussing alternative forms of work more generally, calls this giving employers 鈥渢he best of both worlds: the powers traditionally associated with employment鈥ithout the duties and costs associated with employment.鈥� In response to these developments, Dubal鈥檚 history of the gig economy focuses on the collective worker organizing that has emerged in response, and emphasizes the importance of giving workers a voice.
Analyzing emerging technologies, as well as the forms of gig-work they help enable, the four authors above all identify the need for collective action and worker voice. The idea of workplace democracy is therefore highly relevant to these developments, and would give workers the power to influence, or control, how new technologies are deployed and how their workplaces change in response to both technological and business developments.
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Broader Context: Collective Bargaining Limitations, Globalization, and Financialization
While the pandemic has put a spotlight on precarious workers, the concern with labour鈥檚 missing voice in how corporations are run goes back much further historically. Current calls for 鈥榳orkplace democracy鈥� emerged in response to a steady decrease in the power of workers. It is seen today as a which can respond to collective bargaining limitations, the globalization of work, and financialization.
Regarding collective bargaining in the United States, identifies the legal concept of an employer鈥檚 鈥渃ore of entrepreneurial control鈥�. This doctrine enforces a divide between the roles of labour and management, which excludes employees from real participation in corporate governance and limits their power. He therefore advocates for worker participation in management as an innovative new approach.
Further, workplace democracy is seen as a response to globalization, which has undermined labour power and regulation. In that vein, Harry has identified globalization as causing formative changes in labour law, meaning that it 鈥渢ransform[s] the institutions, structures and processes through which those rules are made and administered.鈥� He outlines how many policies to increase a country鈥檚 relative competitiveness, as necessitated by globalization, have undermined the power of unions and workers. While the analysis above focuses on the declining power of organized labour in North America, globalization has also enabled . Further, have identified that current private governance approaches to supply chain governance fail to actually improve labour standards. These governance frameworks are typically voluntary, corporate-led initiatives, which indicates that workers do not participate in their creation either in their role as workers or in their role as citizen of states who could regulate these activities.
Given the decline of organized labour and the failure of supply chain governance to address exploitation, the idea of workplace democracy may be an appealing approach to regaining power. The integration of workers into company management, preferably throughout entire supply chains, would embed a voice for labour into decision-making, which might help counter the difficulties that globalization has caused for labour in both the Global North and South.
Complementing this analysis, and have identified dire consequences for labour resulting from financialization since the 1970s . In particular, financialization increased the orientation of firms towards maximizing shareholder value, which , Braun and, , have linked to workplace fissuring and wage stagnation. This analysis resonates with identification of workers as 鈥渓abour investors鈥� who actually make the investments of 鈥渃apital investors鈥� productive. While corporate law empowers and regulates capital investors, there are no such mechanisms for labour investors. Ferreras argues for correcting this problem through the establishment of worker boards in firms to create what she calls 鈥�.鈥� This focus on the role of capital versus labour investors demonstrates how worker participation in management might counteract financialization and potentially counter its . Such changes to corporate governance might of course be contested, which will be explored in the following section.
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Conflicting Views
Proponents of workplace democracy believe in its potential to both respond to current issues, such as pandemic vulnerability and the integration of artificial intelligence into the workplace, and counter longer-term trends that have shifted power away from workers. Worker participation could therefore reduce economic inequality and improve both working conditions and job security. Further, beyond these instrumental benefits, workplace democracy can be seen as a good in itself. This analysis, grounded in worker autonomy and democratic principles, aligns with Elizabeth Anderson鈥檚 conception of that are currently run in an authoritarian way. Though Anderson focuses on alternative reforms, conceiving of the workplace as a government informs Ferreras鈥� emphasis on the . This argument, based in equality and democratic participation, is particularly salient given the of workplace hierarchy, with management and , whereas the employees are more diverse but have no decision-making power.
This principled argument for workplace democracy, as well as the instrumental reasons outlined above, both have their detractors. These counter-arguments can be categorized into ones that deem changes to workplace participation unnecessary and those who are actually opposed to it.
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Counter-Arguments: Workplace Democracy is Unnecessary
Responding to democracy-based arguments for worker voice, some claim that 鈥溾�� to ensure worker autonomy. Since employees can work for a different firm if they do not like the conditions of their current one, there is no need for them to participate in managing their own workplace. This argument is identified in both 鈥檚 book and , with each pointing out that it ignores the many barriers to switching jobs that often make exit an undesirable and unrealistic option.
A second counter-argument deems worker participation unnecessary since corporate directors and managers can already consider workers when balancing stakeholder interests. , makes this argument against worker participation on company boards. Lipton, who has been a leading voice in the current 鈥�, claims that it is a step too far because the endorsement of a stakeholder approach to management 鈥渨ill obviate the need for it and similar efforts.鈥� Under his vision corporate managers would 鈥渆xercise their business judgement in considering and reconciling the interests of various stakeholders鈥� while promoting the value of the corporation. While this approach would maintain streamlined decision-making by keeping power in the hands of managers, it seems unlikely to provide all the benefits of workplace democracy. Firstly, there is a difference between having someone else consider your interests and actually participating in decision-making. Secondly, corporate managers are appointed by boards of directors which are elected by shareholders, so workers and workplace democracy advocates might justifiably be skeptical that stakeholderism delivers on the promise of workplace democracy.
The final counter-argument, which may come from either opponents or supporters of labour power, is that workers already have a voice in corporate governance due to the financial power of pension funds. David Webber, in his 2018 book, , argued that unions and workers can regain power by leveraging these pools of 鈥渓abour鈥檚 capital.鈥� While Webber鈥檚 book is not a response to the idea of workplace democracy, it is conceivable that this source of worker voice could be used to argue against the need for additional employee participation in corporate governance. However, , as well as , have demonstrated that pension funds have actually contributed significantly to financialization and show that there is little prospect of redirecting them towards labour interests.
This is a result of structural forces in the finance industry: to eventually meet retirement obligations, pension funds must pursue consistent returns, which leads to pushing the envelope in terms of their investments. As pension funds became powerful investors in public, and then private equity, they developed an interest in shareholder value maximization and financial liberalization. This contributed to financialization, which hurt workers and undermined their power in the corporation. Further, pension fund control is often delegated to asset managers whose profit interest is in increasing their assets under management, rather than aligning investments with the interests of workers. Ultimately, Braun concludes that 鈥渓abour鈥檚 capital鈥� is unlikely to be a strong source of labour power. This analysis indicates that, despite the size and influence of pension funds, they do not provide a significant voice for workers in corporate governance and cannot replace the role workplace democracy could play.
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Opposition to Worker Participation
In addition to arguments that workplace democracy is unnecessary, there are also those who are opposed to it. First among these arguments is the idea that it would be inefficient, as decision-making might have more steps and corporate board meetings might be more contentious. This is a and is the reason Anderson barely considers the idea of workplace democracy in her book . While the merit of this argument depends on what type of worker participation is considered, it is reasonable to worry that decision-making processes might become slower and more complicated to some degree. While this is an important consideration, efficiency considerations need to be tempered with analysis of the organization鈥檚 objectives and the goals of its constituents. This is especially relevant given the potentially divergent interests of workers and shareholders, and given recent . While shareholders may want decision-making to take as little time as possible in order to increase the productivity of the firm, workers may be okay with additional bureaucracy in exchange for increased participation. Accordingly, while efficiency is important, particularly when competing with other firms, it does not necessarily supersede other values that would be served by workplace democracy.
Another argument against workplace democracy comes from two widespread beliefs about owning shares in a corporation. First is the idea that shareholding confers ownership over a corporation, and that corporations should therefore be controlled by shareholders or managed for their benefit. Second is the belief that, because they do not sign a fixed contract, only shareholders take a risk by engaging with a company and therefore must have control rights. In responses to a 2019 Boston Review forum on the role of the 鈥楢merican Corporation鈥� in relation to economic and political divisions, and claimed that this view is incorrect. Instead they outline that corporations own themselves, share ownership merely conveys certain defined rights, shareholders are not the only stakeholders taking risks. However, both emphasized that belief in shareholder ownership and exclusive risk remainds widespread. Given the prevalence of these beliefs, they may contribute to ongoing prioritization of shareholders and consequent opposition to workplace democracy.
Finally, although not an intellectual argument against workplace democracy, entrenched interests are likely to pose a significant barrier to the redistribution of power that workplace democracy would entail. Increased decision-making power for workers would constrain the decision-making of incumbent management and boards, who might therefore resist changes. They would be unlikely to accept worker participation, and instead might lobby against legislative change. Further, if workers secured a role in decision-making, shareholders would lose their primacy in corporate governance, and therefore might similarly oppose worker participation.
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Conclusion
Overall, there are strong arguments in favour of workplace democracy based on both its expected effects and the idea of democratic participation itself. Most arguments against it appear relatively easy to dismiss, although concerns about decision-making efficiency remain valid. This issue merits attention, but concern with efficiency must be informed by an examination of which, and whose, goals the corporation aims to pursue efficiently. For employees, difficult but transformative changes to decision-making would likely be well worth the , not to mention the concrete workplace improvements that might be secured. If the status quo were reversed, it is hard to imagine workers voluntarily giving up participation rights for the sake of efficiency.
That being said, it must be recognized that this would constitute a significant change in corporate governance which is already facing significant resistance. The pursuit of workplace democracy might therefore be incremental and take a variety of forms. These forms could include on corporate boards, , or the pursuit of more direct worker control such as exists in . While most proposals discussed above focus on top-down legislative changes to corporate governance, more grassroots approaches should also play a part, such as growing the societal role of co-ops and social economy organizations, or demanding participation through collective bargaining. These approaches might be less susceptible to resistance, as they would not require legislative action but could rather work on building momentum over time to demonstrate the viability of workplace democracy. Decentering the top-down approach would also be compatible with inclusive, pre-figurative, and participation-driven models of that have been emerging over the past few decades.
To keep this important dialogue open, diverse approaches should be taken to pursuing various kinds of workplace democracy. While hostile responses from corporate directors and shareholders might be expected, the benefits of more democratic workplaces, in terms of both outcomes and democratic participation, are worth the effort.