Workers, bosses, and the taxman… all in it together?

The ‘employee-ownership’ scheme announced by George Osborne has to be one of the most transparent uses of ‘smoke and mirrors’ by the government that I have witnessed in a long time. When I initially read what was being proposed I thought that it was maybe a joke that had originated from a spoof website. I was to be greatly disappointed.

The scheme, which would apply to new, small businesses, was glibly launched by Osborne at the Conservative conference with the following statement – “Get shares and become owners of the company you work for. Owners, workers, and the taxman, all in it together. Workers of the world unite!”…. An unholy trinity if ever there was one.

In short, the scheme would mean that in exchange for receiving tax-free shares worth between £2,000, and £50,000, employees would:

• Sacrifice their right to any redundancy payment.
• Lose their right to launch a claim of unfair dismissal.
• Lose their rights to negotiate any ‘flexible working opportunities’.
• Lose the right to ask for time off for training.
• Have rights associated with maternity leave changed to benefit employers.

The mainstream media has been awash with the views of the political and boss classes regarding the pros and cons of the scheme. On the whole, its reception has been at best, lukewarm.

As you would expect, the trade unions et al, have been ‘up in arms’, and rightly so. It is little more than a cynical confidence trick designed to give workers the illusion of having a stake in their workplace, when in reality they will have nothing of the sort, and will lose valuable rights and protection that workers have fought for, over the last century or so. It is the equivalent of chasing fool’s gold.

The following is a short vignette to show how I believe the scheme will affect workers who sign up for it:

“John has just left college; he starts work at a small IT business and decides to swap his employment rights for £5,000 of company shares. He now believes himself to be a part owner of the business, and that he and his boss now have a shared interest. He has no worries over his lost rights as he isn’t planning on being unfairly dismissed, and now he is an owner, he will work really hard to make sure the business is a success and that he is not made redundant.

What he did not consider when he signed up for the scheme was that the shares do not become ‘real’ shares, in the sense of being able to sell them or receive dividends, until he has worked at the company for 5 years.

What do you think will happen at the end of five years? Yes, you guessed it, the ‘real’ owners will either dismiss him, or make his post redundant as they cannot afford for those ‘Mickey Mouse’ shares to become the real thing. Unfortunately for John, he is no longer entitled to claim unfair dismissal, or fight redundancy. So he will be left with absolutely nothing, despite being promised ‘ownership’ by the government and the bosses.

Let us assume that John stays on past the five year point. There is no such thing as a guaranteed dividend. He could own the shares for a life time and never receive a penny. Creative accountancy and skulduggery from the ‘real owners’ will ensure the shares are worthless, and never pay out. The same type of trickery will be applied should he ever try and sell his shares.

So to re-cap, John would receive a derisory number of shares, that would give him no say whatsoever in the running of the business, that are worthless, that can be manipulated quite legally to ensure dividends are never paid, and that have little or no resale value, if indeed the worker remains employed long enough to sell the shares, which would be doubtful.

All this in exchange for his basic employment rights. The government of the day does not give anything away to workers. Any new government initiatives, cuts, streamlining, reconfigurations, or new policies, will almost always tip the balance in the favour of the bosses, whilst occasionally flicking a few crumbs from the bosses table in the direction of the working class. "

On paper, the employee ownership scheme is no different. Yet the ambivalent response from ‘business’ would suggest they don’t see much value in the scheme. Not that I particularly care what the bosses stand to gain.

From the governments perspective the benefits of this hair-brained scheme are not anything that is immediate, or that will lead to tangible or significant financial gain any time soon.

The real benefits of the scheme (if it happens) will be that it will be yet another wedge that is driven between workers. It will create a two-tier workforce – those with rights, and those without – at all employers who sign up to it. It is an open attempt to divide the working class, and to create a belief amongst workers that a place at the bosses’ trough is just around the corner, yet it will never come.
That snake oil salesman George Osborne is correct about one thing… the need for workers to unite. Not in their aspirations to become faux business owners, but to reject and fight his contemptible and divisive scheme before it ever gets off the ground.