Worker-directors 'should not be forgotten' during privatisations


A MOVE towards greater privatisation in semi-State companies should not be used as an excuse to remove worker-directors from their boards, Ceann Comhairle Seán Barrett has said.

Speaking at the publication of a report examining the participation of worker-directors in Ireland, Mr Barrett said fears when the idea was first mooted in the 1970s that the appointment of worker-directors would lead to board takeovers by trade unions seeking to interfere with business interests proved to be incorrect.

He said no semi-State firm had “gone down the tubes” because there were worker-directors on its board and that firms in the private sector could only benefit from having advice and knowledge from the shop floor at board level.

“Even if we are moving more and more towards privatisation of some of our commercial State companies, the practice of having worker-directors on the board should not be forgotten,” he said.

The report by the independent think-tank Tasc found the vast majority of directors in semi-State firms considered worker-directors to be loyal to their company, trustworthy and diligent. Their contributions were viewed as being positive and unique, the report states, with worker-directors serving as something of a two-way conduit at times of industrial conflict.

Dr Aoife Ní Lochlainn, lead researcher on the report, said more than half of the respondents to a survey conducted during her research considered the contrary voice of worker-directors to be important as it helped promote a diversity of opinion.

Most worker-directors did not feel they were treated differently to regular directors but that their exclusion from audit and remuneration committees, largely to avoid potential conflicts of interest, remained a “thorny issue”, Dr Ní Lochlainn said.

The report, commissioned by the National Worker Director Group, recommends the practice of appointing worker directors be extended across the public sector.

It also says skills audits should be held and independent directors appointed on the basis of talents and experience; and that workers be told of the role and obligations of the worker-director at election time in order to ensure they do not face unrealistic expectations.

The Worker Participation Act 1977-78 (which allows for worker-directors nominated by trade unions or elected by employees) is confined to State-owned enterprises. Dublin Airport Authority, the ESB, RTÉ, An Post, the National Disability Authority and Dublin Port Company are among the semi-State firms and agencies where it applies.

Mr Barrett said the banks could have learned from having worker-directors on their boards over the last decade as even “dogs on the streets” were saying the way in which they were operating was unsustainable. “If we had those who were serving behind a counter in a bank, the everyday people, saying this is crazy stuff maybe those at board level would have taken note,” he said.

Commentators such as UCD professor of corporate governance Niamh Brennan have argued that conflicts of interest for elected worker-directors were systematic and undermined their ability to carry out their duties.