Corbyn to back proposal giving workers 5% of company profits

Labour leader Jeremy Corbyn is said to be supporting a bill that would force medium and large companies to share at least 5% of their profits with their...

Labour leader Jeremy Corbyn is said to be supporting a bill that would force medium and large companies to share at least 5% of their profits with their employees. According to the Independent on Sunday, Mr Corbyn has given private indications of support for the bill, which could ensure employees in major supermarkets and high street chains received up to £1,200 more a year.

The ten-minute rule motion, called Profit-sharing and Company Governance (Employees Participation), builds on a policy developed by the Co-operative Party for its 2015 Manifesto. Gareth Thomas, Labour/Co-op MP for Harrow West will present the bill to parliament on 26 January under the ten-minute rule.

“The bill would help to ensure that the lessons from some of Britain’s most successful businesses were embedded in every company, ensuring profits and power are shared,” said Mr Thomas. “Most people have seen little change in their pay packet over the last decade, whilst income at the very top has soared. Employees at all levels of a business should enjoy fairer rewards from the profits their hard work creates.

A 2015 report named John Lewis as the country’s largest co-operative
A 2015 report named John Lewis as the country’s largest co-operative

“Giving employees a greater say and ensuring that everyone has an incentive to drive up profits boosts productivity – where Britain lags far behind other G7 countries – by aligning the interests of all employees. There is growing evidence that more democratic companies such as John Lewis, which operate profit-sharing schemes and has employees on the board, often outperform their plc rivals.

“In short, we need to champion a shared capitalism which promotes long term business growth and profitability, places more value on the work of all staff, and ensures power isn’t just the preserve of the highest paid.”

Claire McCarthy, Co-operative Party general secretary, added: “Britain is in desperate need of a pay rise, with workers facing the longest decline in living standards in a generation.

“As co-operators, we know the solution. We need an economy where everyone has a stake, with the benefits of success fairly shared. As set out in our 2015 Manifesto, and championed by Gareth Thomas and others, we’ll be working to ensure that profit sharing and employee ownership are both central to our vision for a new economy.”

Ten-minute bills are a type of private members’ bill that enable backbench MPs to make a case for a new bill in a short speech. Parliament can also hear an opposing speech before deciding whether the bill should be introduced. If approved, the bill can have its first reading. In December 2013 Gareth Thomas introduced a ten minute bill to create an Armed Forces Credit Union. As with most ten minute rule bills, the motion did not progress beyond a second stage. Nevertheless, the bill brought attention to the issue, which was then discussed in the two houses, gaining cross-party support. An Armed Forces Credit Union was launched in October 2015.

The bill that will be put forward by Mr Thomas next week follows a similar proposal by Jeremy Corbyn. Speaking at the Fabian Society New Year conference on 16 January, Mr Corbyn proposed restricting companies from distributing dividends until they pay all their workers the living wage.

A recent poll commissioned by the Co-operative Party showed that 76% of respondents believed large employers should be required to share profits with their staff. Of these, 46% were strongly in favour. Only 8% of those surveyed opposed the idea.

The Labour Party is particularly examining the proposal as part of its review of employment rights.

Commenting on the findings, Co-operative Party chair Gareth Thomas said:

“My Bill would help to ensure that the lessons from some of Britain’s most successful businesses are embedded in every company, seeing profits and power are shared, as they are in employee owner businesses like John Lewis.

“Most people have seen little change in their pay packet over the last decade, whilst income at the very top has soared. Employees at all levels of a business should enjoy fairer rewards from the profits their hard work creates.

“Giving employees a greater say and ensuring that everyone has an incentive to drive up profits boosts productivity – where Britain lags far behind other G7 countries.

Claire McCarthy
Claire McCarthy

“In short, we need to champion a shared economy which promotes long term business growth and profitability, places more value on the work of all staff, and ensures power isn’t just the preserve of the highest paid.”

Co-operative Party general secretary, Claire McCarthy, who commissioned the polling, added:

“Britain is in desperate need of a pay rise, with workers facing the longest decline in living standards in a generation. We need an economy where everyone has a stake, with the benefits of success fairly shared.

“With Co-operative MPs including Gareth Thomas leading the way, we’ll be working to ensure that ideas from our 2015 manifesto, including profit sharing and employee ownership, are central to Labour’s vision for a new economy.”

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