In recent years developments about worker participation have been gathering momentum throughout the industrialised world but especially in Western Europe. In France the report of the Government-appointed Sudreau Committee on Company Reform was published recommending radical changes in company law and company structure. The EEC published its Green Paper outlining tentative proposals about employee participation and company structure on a Community-wide basis. In Germany co-determination in decision-making was extended to companies with over 2,000 employees. In January this year the Bullock Committee, appointed by the British Government, published their recommendations on industrial democracy.
It is not too difficult to identify the factors which have given rise to the mounting concern about company structure and the related question of worker participation. Apart from the more basic reasons such as the democratisation of the workplace and the humanisation of working conditions, the recent experience of a worldwide recession has exposed the serious limitations of economic liberalism as regards curbing inflation or reducing unemployment. Indeed, the recession has given greater urgency to the search for another system of economic and social development that will combine efficiency and freedom for the citizen.
In that quest inevitably the role of industrial and commercial enterprises, as institutions of strategic importance in relation to a country's economic and social system, had to be looked at and assessed. However a justification for company reform should be sought less, perhaps, in its operational deficiencies than in developments and trends occurring in society itself. Quite simply, because a response has to be found to the rapid and profound changes that are now taking place in all industrial societies, the enterprise cannot expect to remain immune or out of step with new ideas and events. As a sub-group of the economic and social system, the enterprise cannot escape the latter's general logic of change. Indeed, it could be said that the whole question of worker participation and industrial democracy is bound up with the debate about the place of the enterprise in society.
The entitlement of workers to participate in company decision-making is based on the emerging concept of the company as a social institution, comprising a variety of interest groups such as shareholders, financiers, management, employees and consumers, each of which is indispensable to its overall welfare and success. In this light the company is no longer seen as the exclusive property of shareholders: ownership of its physical assets is no longer regarded as conferring an absolute right to exercise control without taking into account other interests such as those of employees or society generally. The power and complexity of industrial enterprise and the remoteness of decision-making have led to increasing demands for large companies to be more responsive to the needs of society in general and of their employees in particular.
Traditionally managerial prerogative has rested on property rights. Through direct ownership or through power delegated by shareholders, managers have claimed the right to manage enterprises unilaterally without reference to their employees. Nowadays the justification of managerial prerogative based on property rights is being increasingly questioned and challenged. The development of a mixed economy with a large public sector has undermined the strength of the case based on private property rights. Indeed, in large firms the link between ownership and control is now so tenuous that the property argument is decisively weakened. However, it would be wrong to assume that new concepts of the role of employees in company level decision making are just reactions to economic trends; they also derive from social changes, especially rising standards of education and higher living standards. The significance of the educational developments is not just that more people have received a basic education; the fact is that the nature of education itself has changed. Nowadays there is less concentration on formal authoritarian instruction and more encouragement towards the adoption of independent and questioning approaches so as to develop individual initiative and ability. As a result of improved living standards people's expectations as regards working conditions have also risen and they are less inclined to accept boring and repetitive jobs, inadequate provision for safety and health in their working environment and being isolated from those decisions which can have an important bearing on their livelihood.
The Worker Participation Bill accepts the principle that employees are entitled as of right to participate in the decision-making of the companies in which they work. The seven State companies in which the legislation will operate are viewed as organisations of social enterprise in which the contribution of each person, whether he or she works at desk or on shop floor, is considered on its merits. The assumption underlying the quest for improved participative systems it that the total resources of the company must be harnessed if company objectives are to be attained. For this purpose new mechanisms have to be found whereby workers' knowledge and ideas can make a valuable and positive contribution to the quality of company decisions. In this way participation should make for greater efficiency and more worth while employment. In this context management based on the traditional hierarchy principle is increasingly becoming an anachronism as new industrial structures develop. Industry in the future will tend to be organised increasingly along these lines in this general direction. The Bill now before the House is designed to provide the framework in the State sector for this evolving situation in industry generally.
One may ask why State companies were selected for implementation of the proposed legislation. The reason is that for many years now I have thought that the take-off point for worker participation in Ireland should be in the State sector. Indeed, as far back as 1968 I advocated the development of forms of industrial democracy in State companies, since it is they which approximate nearest to the ideal of the company as a social enterprise which I have already referred to.
State enterprises have already made a substantial and creative contribution to the development of our economy. Unfortunately too often their contribution does not seem to be fully appreciated or recognised as the integral part that it is of the mixed economy which has evolved here. However State enterprises must not be regarded as some kind of second-best expedient if their full potential is to be secured. I have always believed that the State companies should be different in their inspiration and management from firms in the private sector. Many of them have been set up to do jobs in the national interest and, if their pioneering role is to continue, I would like that role to include innovation in the field of industrial relations. In other words, their traditional economic contribution to the general wellbeing must now be augmented by their adopting a creative role in the development of new and progressive organisational forms. While the provisions in the proposed legislation are intended to meet the imperatives of work reorganisation which would, in turn, contribute to humanising relations in the work-place, the extension of worker participation as envisaged must also I believe have a beneficial effect on the climate of industrial relations.
One may speak positively of the achievement of the State companies in economic terms. Nevertheless, even on the most superficial examination, the conclusion is inescapable that their industrial relations record in many instances reflects to a large extent the same level of confrontation and unrest observable in the private sector. One may speculate about why this is so, but nobody who is familiar with the background can be in any doubt that the large number of unions organising a relatively small number of workers is a contributory factor.