Workers on boards could rein in executive pay, says TUC

Allowing workers to sit on company boards would mean top executives' pay was set at more reasonable levels, according to a new report from the Trades Union Congress (TUC).

The TUC has long argued that corporate governance laws in the UK are missing a trick by preventing worker representatives from sitting on remuneration committees. It also sees an important role for workers on boards as a way for companies to emerge stronger from the economic crisis.

The new TUC report Workers on Board - which looks at how the UK workforce might become more involved in the running of companies they work for - says that the UK's corporate governance rules have failed to keep pace with the new world of share ownership.

With over 50% of UK shares held by overseas investors, and with UK institutional investors increasingly reliant on short-term share trading as a route to profit, deciding what lies in the best long-term interests of a company can no longer be left to shareholders alone, says the report.

Instead the TUC suggests that involving employees in the running of companies would not only be a genuine break with the past and the UK's failed system of corporate governance, but would also harness the contribution of people who have the long-term development of the company at heart.

The report also highlights the fact that countries which have included the participation of worker representatives within their company structures are also economies with higher R&D investment, better employment rates, stronger economic success and lower rates of poverty.

The report, Workers on Board,  is available here.