-----Original Message-----
From: Dan
Bell [SMTP:dbell@kent.edu]
Sent: Wednesday,
October 06, 1999 12:25 PM
To: EOpriv@cog.kent.edu
Subject: Re: unions, EO & privatization
Hello fellow EOPRIVers!
I would like to add a thought to
the discussion going on
about the role of unions in companies with employee ownership.
From my point of view, this is
relevant to the discussion on
Employee Ownership in Privatization, because state-owned
enterprises often have employees
represented by unions and
this can have an impact on the process.
The union role can be divided into
two areas here.
1. Union
role vis-a-vis the process of privatizing
2. Union role in the employee-owned company after
privatization has
taken place
Regarding #2 (the
post-privatization role), the union
role is no different than in any other company making
a
transition from
conventional to employee ownership.
A. Protect the individual members: Unions are the
judicial branch which
protects the rights of individuals
before the awesome power of the executive branch
(management). Even
where management is accountable
to the workers as shareholders, as are our
government
officials to the voters, an individual worker or
voter still needs judicial
protection.
B. Organize the
workers' ownership into a coherent
voting block. Where workers are merely individual
and unorganized
shareholders, their interests can
be divided and conquered.
C. Develop an ownership culture among workers:
Together
with
management, union leaders can oversee the
establishment of an employee involvement
structure,
and
an ownership education and training program,
which helps workers develop the new skills
and
knowledge
to act as owners.
Regarding #1 (privatization process
role), the union's
role is
to protect its memberships' interest, and seek
the outcome which is best for its
membership.
At a
macro-level, the union should influence laws which
establish the ground rules for privatization
which give
employees the
opportunity to participate in the new
ownership structure in a meaningful way.
At a micro-level this could be:
A. Fight privatization: The
taxpayer/voter can be convinced
that the service provided is appropriately subsidized
with
tax
dollars. There are three interests at stake: taxpayer,
consumer, worker. These three
groups overlap but are not
identical. If the taxpayer stops subsidizing, this
cost
is either
passed on to the consumer (pays more out of pocket
or loses the service), or to
the workers (reduced number
of jobs or reduced wages and benefits or both).
B. Accept the inevitable and seek
the best outcome: If the
taxpayer/voter cannot be convinced to subsidize, then
the
government
will stop providing the service. The union
can:
1. Oversee a feasibility study which shows how the
new
private company will provide the service at a price
which the market will
support. Once the amount of total
probable revenue is identified, then the union has
to
maximize the share which its members will get.
2. Negotiate the tough choices. In all
likelihood, this total
will be less than what it was before because
the
taxpayer subsidy is gone. To maintain the previous
level of income for all
the members, the new company
will have to both get more output from each worker
and
expand its activities to generate greater sales.
Otherwise, the smaller
pie will mean that the current
employees are kept at the current level of
productivity
and wages are reduced, or the current workforce
is
reduced and and the current level of productivity is
increased. Part of this
equation can include the
additional income / capital acquisition which
can
come
from an ownership stake either gifted to employees
by the state or acquired
by the employees with credit
made accessible to employees by the state.
3. Negotiate a voice in the
long term strategy of the
company. One possibility is majority employee
ownership,
but depending on co-determination laws in a
particular
country, this may not be the only option.
4. Negotiate the ability of
the union's membership to
acquire capital in the privatization deal. This
can
include the gifting of some or all of the state's
ownership to employees (a
taxpayer subsidy), and/or
providing the employees with access to credit
to
purchase the enterprise at a market price (one which
can be repaid out of the
future earnings). At a
minimum, any enterprise capital to be financed
out
of
future earnings should be sold to the employees
(and possibly the broader
community). The only reason
to seek private investors should be where
additional
investment is needed for expansion, modernization,
etc.
Just as the employees are getting a market return on
the value of the existing
assets in order to repay the
acquisition loan, the private investor should get
a
market
return on the additional assets brought to the
company with her or his
investment.
C. In some
cases, a state-owned enterprise is a profitable
entity to begin with and
actually subsidizes the state
coffers. In this case, there is no question about
the
feasibility of the new business. Union leaders should
organize an employee buyout
just as they would when any
profitable business goes on the market.
I look forward to hearing from
others on where my opinions
here make sense, and where (and why) I am off base.
Thanks
--
Dan Bell
International Program Coordinator
Ohio Employee Ownership Center
Kent State University
Kent, OH 44242
(330) 672-3028
(330) 672-4063 fax
dbell@kent.edu
http://www.kent.edu/oeoc/