Distribution of prosperity and power: more democracy in the workplace

The International Seminar titled “Distribution of prosperity and power: more democracy in the workplace” took place from 20 to 23 February 2020 in Praia Grande, Sintra, Portugal. It was organized by the Centre for Training and Leisure (CFTL) and BASE – Unitarian Front of Workers (BASE-FUT), with support from the European Centre for Workers’ Questions (EZA) and the European Union. This seminar was part of the EZA project co-ordination “Future of work – changing labour relations” and counted with the presence of speakers and representatives of workers’ organisations from Spain, Italy, Lithuania, Poland, Belgium and Portugal.

The past three decades witnessed the rapid growth of inequalities in the distribution of wealth and income in Europe and the rest of the world. This inequality growth was accompanied by an increasing imbalance between the remuneration of capital and the remuneration of work – at the expense of the latter – but also by the contrast between the stagnation of real wages for the vast majority of workers and the explosive growth of wages of restricted elite of workers – such as managers and media and sport stars.

This situation not only violates our most basic sense of social justice but also causes extremely harmful consequences for the future of our democracies and our societies. Indeed, all evidences point out that unequal societies tend also to be the ones that show less social mobility and worse indicators of health, tolerance to diversity, well-being and happiness.

But the growth of inequalities and the inherent concentration of wealth also favours the capture of our democracies by economic and financial elites. The concentration of economic power translates inevitably into the concentration of political power, increasing the capacity to legitimize and naturalize inequality, to foster policies that reproduce inequalities and to socially promote the very rich. At the same time, the growth of inequality feeds phenomena of resentment, alienation, and despair, providing a fertile ground for supporting authoritarianism and open manifestations of intolerance, racism and xenophobia.

Our seminar focused on three policy tools that have historically proven to be most effective in combating inequalities: democracy in the workplace; progressive tax systems; and far-flung structures of collective bargaining It was the implementation of these policies. It was the implementation of these tools that allowed Europe to become, after World War II, a beacon of social and economic progress in the world.

Democracy in the workplace and the participation of workers in decision-making process within the institutions where they work is today seen in terms that oscillate between perplexity and outright hostility. This is, in part, the historic result of the action of coalitions of forces aiming at hindering such participation – as happened with the cooperativist movement in Portugal. But it also owes to the gradual triumph of monist currents in management, who, by failing to recognize the difference in interests between workers and employers, downplay the importance of collective action and social dialogue. This is even more regrettable as several studies have demonstrated that worker participation brings about clear benefits for productivity, worker satisfaction and health and safety in the workplace. It is thus urgent to foster the access of trade unions to workplaces and to promote a culture of participation within companies and other employing institutions.

The progressivity of tax systems is another major policy tool for fighting inequality. One of the more striking civilizational advances of the past two centuries was the transformation of taxes from a kind of extorsion, aiming at guaranteeing the state’s repressive and military capacity, into a fully-fledged mechanism for redistribution. Indeed, modern progressive tax systems operate against inequalities on two levels: directly, by targeting the richest with highest tax rates; indirectly, by using tax revenue to fund the social functions of the state (education, health, social security, culture and environmental protection) and universal public services that guarantee the well-being of the population.

Unfortunately, the efficacy of this tool has been undermined in the last three decades by the increasing weight of regressive taxes (such as VAT), by the low taxing of unproductive wealth (rents, property and capital gains) and financial capital, by the aggressive fiscal planning on the part of companies and other promotors, by fiscal competition between states and jurisdictions – even in the interior of the European Union – and by the persistence of tax havens. Such has been the weakness of the taxation of property and capital that, in Portugal, employers’ mandatory contributions for the Social Security have become more effective than taxation itself has a means to guarantee some form of contribution on the part of companies.

It is thus urgent to intensify the progressivity in the taxing of income, to increase its scope to include rents and property and to defend a higher level of fiscal harmonization between the member states of the European Union – namely by supporting the proposal for a directive on the common consolidated corporate tax base. Trade unions should also fight for a fair taxation on financial transactions and support the efforts of the European Union and the Organization for Cooperation and Economic Development (OECD) for combating tax evasion and fiscal elision. Workers organizations should also engage in the pedagogy of progressive taxation as key tool for combating inequality.

Finally, the central role of collective bargaining in reducing inequality should also be stressed. Collective bargaining allows the signing of sectorial contracts which set the reference terms for workers and companies regarding wages and working conditions. The advantages of collective bargaining are obvious for workers. Without it, workers would be completely at the mercy of the whim of the employers, who would then be free to set the contractual terms they pleased. But collective bargaining also has significant advantages for employers, as a way to prevent social dumping and unfair competition between companies.

Unfortunately, collective bargaining has been a prime target for neoliberal policies. This was the case in Portugal during the early 2010s, when the attack on collective bargaining was a key element of the adjustment program promoted by the Troika.

The result was a drastic fall both in the number of sectorial contracts signed and their scope. So deep was this fall that collective bargaining is yet to recover its pre-crisis levels, a fact that has undermined the capacity of minimum wages increase to promote a general increase of wages in the country. As a result, the proportion of workers covered by this minimum threshold has been on the rise, reaching 20% in 2019. It is thus paramount to recover the dynamics of collective bargaining, increasing the number of workers and the scope of its coverage.

This seminar concludes that the promotion and defence of these three tools must be at the heart of the agenda of workers’ organization and that all efforts should be made to spread the knowledge of it among their members and workers in general. Only with a broad-based, determined and European-wide effort will it be possible to influence public debate on this matter and to reverse the current trend of inequality growth.