Our thinking

Labour isn’t working (but nor is stakeholder capitalism)

24 June, 2022

We’re not used to strikes. In an era of low inflation, low interest rates and a (relatively) low cost of living, they were an infrequent occurrence. But we will have every opportunity to get used to them, as wages fail to keep pace with the cost of living and companies look to manage their labour costs through making savings that workers are unhappy with. 

It’s disappointing, but not just because strikes cause disruption. The truth is that we hoped that the much used (and abused) term “stakeholder capitalism” meant we’d found better ways to navigate these disputes. If stakeholder capitalism means anything, it means balancing the needs of all your different groups – not just investors, but suppliers, employees, regulators and customers. Sure, in the short term there may be trade offs and negotiation, but they should be understood by everyone as a necessary step towards a more balanced approach to sustainability in its broader sense.  

No one wants strikes, at least in principle. Workers want to be working and to be paid, fairly, and business owners want to be able to run their business so they can pay them.  But that only happens when there is trust, shared purpose and a belief in the fundamental good faith of the other group.  

Perhaps it was naïve to think we’d moved from the antagonistic labour relations of the Seventies towards a more collaborative model, but clearly the veneer of stakeholder capitalism is very thin. If it was embedded, then fair pay, fair treatment and a shared understanding of and agreement on priorities between businesses and employees would be part of every business’s approach, high on the list of ESG material issues. Conversations about purpose wouldn’t just take place in the board room, but would happen each day throughout the business, and between employees and the decisions taken would flow through the business from top to bottom. Just as we hope the energy crisis delivers more sustainable energy, even as it threatens to deliver less, this inflationary shock could be the catalyst needed to turn shared value into something more tangible and durable.  

By Claire Jost