The Economist in an article on 20 June 2020 Bedlam, bumbling or boldness quoted a speech made in January by Antonio Guterres, Secretary-General of the United Nations, listing what in his view were the four main challenges facing the world.
He listed 1) the worst geostrategic tension in years (heightened significantly since his speech); 2) the planet is burning and an existential crisis is close to a point of no return (the effects of climate change); 3) rising global mistrust, often spilling into hatred, amid discontent over inequality and the sense that among too many that globalisation is not working, and; 4) the dark side of digital technology threatens to invade privacy, disrupt work and unleash lethal autonomous machines in war. To these four, The Economist added a more recent fifth, Covid-19.
The Australian government has policies of some sort for and is taking action on all but one of these five, namely the third, the mistrust arising from perceived inequitable distribution of the spoils. To enough people (the majority, I suspect) in enough countries, it’s unacceptable that a very small few have benefited enormously from the economic system during the last three decades while the overwhelming majority have had scarcely any pay rises. It’s something we should be debating because until it is addressed, I doubt that populism, with all its ill thought out destruction, will recede.
When she became UK Prime Minister in 2016, Theresa May promised to do something about CEOs’, bankers’ and others’ perceived excessive pay but then quietly dropped the idea. Perhaps vested interests intervened or maybe it’s just a very difficult issue to fix.
No business wants government telling them what they can pay their employees (and directors) so how can government set the scene and then let businesses get on with it and fix the problem satisfactorily? Tax reform isn’t going to do it; we need something more.
I’m not a lawyer or organisational psychologist but I do wonder whether it’s time to seriously consider having employee-elected directors on boards. I don’t envisage that Pete from production or Sharon from the shop floor be suddenly elevated to the boardroom but professional directors elected by employees to represent their interests. If that didn’t result in a distribution of the spoils that was accepted as equitable by employees broadly, they could elect different directors.
Some issues to overcome that I can readily foresee include how it would work for groups, especially global companies, what proportion of employee versus shareholder elected directors should there be and what sort of reporting back to the employees would be necessary.
I think we need to have a debate about this third challenge, and soon. After the Second World War, Britons voted Winston Churchill out of office, feeling that after all they’d been through it was time for change. Maybe post-Covid 19, Australians will feel it’s time to change the economic system and even elect a populist government.