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B351 - Worker Co-Operative Bill 2011

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    B351 - Worker Co-Operative Bill 2011, TSR Labour


    Worker Co-Operative Bill 2011

    An Act allowing workers to take control of their economic lives by aiding workers to take control of their workplace under certain conditions.

    BE IT ENACTED by The Queen's most Excellent Majesty, by and with the advice and consent of the Commons in this present Parliament assembled, in accordance with the provisions of the Parliament Acts 1911 and 1949, and by the authority of the same, as follows:-

    Part I
    FORMATION


    1) Any new business wishing to become a co-operative and agreeing to the limits in section 3 will have interest on a business loan paid in the manner detailed in 2)i)

    Part II
    ACQUISITION BY CLOSURE


    2) If any business files for bankruptcy a vote must be organised by the management for the workers to purchase the business or workplace with a business loan.
    (i) government pays the interest on the loan for 10 years, at which time:
    a) If the business if profitable and employing at least the total UK based workforce it was before occupation the government continues to pay the interest for a further 10 years while the business can pay off its loan.
    b) If the business is employing less than the total UK based workforce or is not in profit an independent review will be commissioned to see if the business is progressing. If the review finds the business has little or no chance of becoming profitable, funding is withdrawn. Otherwise the government continues to pay the interest for a further 10 years at which time the business is looked at again as if it had only had its loan interest paid for once.

    Part III
    CONDITIONS


    3) All workers must be allowed to vote on any of the following:
    (i)) raising/lowering wages and bonus'
    (ii) employment of managerial staff
    (iii) firing of more than 2% of the workforce
    (iv) any firing where 50% of the workforce sign a petition to the senior management of the facility

    4) The highest wages must not exceed 5 times the wages of the lowest paid employee

    5) This includes any outsourced staff, whether UK based or otherwise.

    6) All people employed by the business will have an equal stake of the shares of the company.
    (i) Shares owned by employees of the company must equal at least 50% total shares.

    Part IV
    COMMENCEMENT, SHORT TITLE AND EXTENT


    7) COMMENCEMENT
    (i) This Act shall come into force 1st July 2011

    8) SHORT TITLE
    (i) This Act may be cited as the Worker Co-Operative Bill 2011

    9) Devolution
    (i) This shall, upon passing, be given to each national government for consideration.
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    Some may be surprised by this. No.

    It’s very vague; it’s resoundingly populist for a Party that is meant to represent the left. And overall presents a feeble representation for workers.
    I believe they should have the option for ownership irrespective of whether the Business model falls into liquidation. Moreover you haven't covered the issue of repayment of debt, assuming the firm goes bankrupt. Filing for bankruptcy doesn't automatically remove the debt.

    On a non-ideological level, this Bill has been written rather surreptitiously. 10 year interest free loans are an uncompetitive practice - If the free market model you're proposing competes against other firms.

    I'm going to take heed from a great guy here - Workers want three basic things: a good job that pays a wage of respect; a good security net if things go wrong; and peace to live their lives as they wish to. This measure is the kind of authoritarian dictate that gives the left a bad name.
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    No.

    I'd be happy to make it part of the process, but why should government be propping up bankrupt businesses that didn't work in the first place by paying for their loans? If workers and managers wish to save a company, they can do so themselves by forming a business plan that is viable to a commercial bank, else it'll be another failed business.
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    (Original post by Stricof)
    Some may be surprised by this. But - No.
    To ask you rather than your party this time, why?
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    (Original post by simontinsley)
    No.

    I'd be happy to make it part of the process, but why should government be propping up bankrupt businesses that didn't work in the first place by paying for their loans? If workers and managers wish to save a company, they can do so themselves by forming a business plan that is viable to a commercial bank, else it'll be another failed business.
    Well they are propped up for only 10 years, with the government only paying the interest. This helps keep and create jobs at minimal cost to the taxpayer. As many examples, Thinking of those in south America specifically, that have shown that this can and does work. This encourages economic growth.
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    (Original post by DayneD89)
    Well they are propped up for only 10 years, with the government only paying the interest. This helps keep and create jobs at minimal cost to the taxpayer. As many examples, Thinking of those in south America specifically, that have shown that this can and does work. This encourages economic growth.
    Yes, but the point is it encourages malinvestment. It's not particularly about the government cost, which will be fairly small. So although it may help the economy in the short-run, it merely emphasises the business cycle by encouraging malinvestment, as centrally determined interest rates, subsidies (or specific taxes), and other such things do.

    Like I said, if they are to provide a viable business plan, they will be able to get funding from a commercial bank. If not, then why are we supporting them?
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    (Original post by simontinsley)
    Yes, but the point is it encourages malinvestment. It's not particularly about the government cost, which will be fairly small. So although it may help the economy in the short-run, it merely emphasises the business cycle by encouraging malinvestment, as centrally determined interest rates, subsidies (or specific taxes), and other such things do.

    Like I said, if they are to provide a viable business plan, they will be able to get funding from a commercial bank. If not, then why are we supporting them?
    Bank loans aren't that easy to get from what I've seen of business loans. It allows workers to take over their business, keeping their jobs and helping the economy and all at a minimum cost to the state.
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    That's before I even get onto the fact that Part III stops a workers co-operative from being able to propose a viable business plan in at least some instances.
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    (Original post by DayneD89)
    Bank loans aren't that easy to get from what I've seen of business loans. It allows workers to take over their business, keeping their jobs and helping the economy and all at a minimum cost to the state.
    See above for why it doesn't help the economy. It may create growth in the short-run, as artificially low interest rates might, but it's not good investment, and it merely collapses eventually because it's an inefficient allocation of resources.

    Bank loans aren't easy to get because running a profitable business is not easy. It's that simple. If the bank thinks that you won't default they have every incentive to lend you money since they reap the interest - banks want to lend, it's how they make money.
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    (Original post by simontinsley)
    That's before I even get onto the fact that Part III stops a workers co-operative from being able to propose a viable business plan in at least some instances.
    They get this help for setting up a co-operative, rather than using the standard business model. Of course this will not be viable for all industries, but those industries would either know this and not use the scheme, or not know/ignore this and use the scheme till it failed, at which point the loan is paid with the business assets. The reason for these is because it creates a happier work place, and thus a happier country. They certainly can form a viable business plan as is seen in co-operatives that include these elements around the world.

    (Original post by simontinsley)
    Bank loans aren't easy to get because running a profitable business is not easy. It's that simple. If the bank thinks that you won't default they have every incentive to lend you money since they reap the interest - banks want to lend, it's how they make money.
    There are many places that would probably make profit, but will find it hard to find a business loan simply because the bank isn't too certain. This helps them in exchange for them setting up a workplace where they all share in it's success, assuming of course it makes that success.
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    (Original post by DayneD89)
    To ask you rather than your party this time, why?
    I edited it in the first post before I saw this.
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    Despicable.
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    (Original post by Stricof)
    Some may be surprised by this. No.

    It’s very vague; it’s resoundingly populist for a Party that is meant to represent the left. And overall presents a feeble representation for workers.
    I believe they should have the option for ownership irrespective of whether the Business model falls into liquidation. Moreover you haven't covered the issue of repayment of debt, assuming the firm goes bankrupt. Filing for bankruptcy doesn't automatically remove the debt.

    On a non-ideological level, this Bill has been written rather surreptitiously. 10 year interest free loans are an uncompetitive practice - If the free market model you're proposing competes against other firms.

    I'm going to take heed from a great guy here - Workers want three basic things: a good job that pays a wage of respect; a good security net if things go wrong; and peace to live their lives as they wish to. This measure is the kind of authoritarian dictate that gives the left a bad name.
    Well they can also set up a co-operative they own without needing the business to go into bankruptcy. I will look into the more practical parts of it, I'll admit they are not my strong point so all I can say to that is I will have to do more research. What you think should be added to this is irrelevant however. This is a step in the right direction imo.

    To your last part I don't understand how you consider helping workers to take control of failing businesses is authoritarian. Care to explain?
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    Ok, i see what you are trying to do. Fair bit needs to be sorted to make it remotely viable though. Just a few questions and points for now, am rather busy, so might be missing a few things right now, so apologies if any of the questions are a bit stupid.

    2) Who decides the value of the company? Who decides whether or not the business is viable for a loan (as in, do they have to receive a loan just by deciding that they want to go into this co-operative)? Who decides the interest rate? (are we talking commercial loans? any government influence on whether or not they can be agreed, and the interest rate that can be charged?). What is the estimated government outlay on interest under this scheme? Isn't 10 years a very long time in business, to consider viability, and a long period to put the government commitment to paying interest? How much power do creditors have over this whole process?

    3) Seems rather redundant to have these controls in a co-operative structure (some moreso than others, depending on the size of the business). Not neccessarily agreeing or disagreeing, just not sure if it is neccessary.

    4) Just an imposition of the proposers particular set of values in regards employment, so no. It would be very rare that in this type of business, there would be such wage difference, but there are legitimate reasons that there could be (and as this is a workers co-operative, rather than a government organisation, shouldn't it be up to the workers how much they offer to pay someone?)

    6) How will this work for people coming in to the business?
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    (Original post by Eru Iluvatar)
    Ok, i see what you are trying to do. Fair bit needs to be sorted to make it remotely viable though. Just a few questions and points for now, am rather busy, so might be missing a few things right now, so apologies if any of the questions are a bit stupid.

    2) Who decides the value of the company? Who decides whether or not the business is viable for a loan (as in, do they have to receive a loan just by deciding that they want to go into this co-operative)? Who decides the interest rate? (are we talking commercial loans? any government influence on whether or not they can be agreed, and the interest rate that can be charged?). What is the estimated government outlay on interest under this scheme? Isn't 10 years a very long time in business, to consider viability, and a long period to put the government commitment to paying interest? How much power do creditors have over this whole process?

    3) Seems rather redundant to have these controls in a co-operative structure (some moreso than others, depending on the size of the business). Not neccessarily agreeing or disagreeing, just not sure if it is neccessary.

    4) Just an imposition of the proposers particular set of values in regards employment, so no. It would be very rare that in this type of business, there would be such wage difference, but there are legitimate reasons that there could be (and as this is a workers co-operative, rather than a government organisation, shouldn't it be up to the workers how much they offer to pay someone?)

    6) How will this work for people coming in to the business?
    They do get the first 10 years to prove themselves after the company goes bankrupt. I'll have to put something in about the value of the business, but yes it would be a commercial loan, to be taken out by the business, but with the government paying the interest for a certain time on that loan. Perhaps a gradient of time lengths should be implemented dependent on the size of the loan and thus the interest that would have to be paid. Yes, I'm thinking out loud.

    Workers co-operatives tend to employ more staff as they grow and as the workers are in control of the business leads to a happier working life, which is the hopeful outcome of this bill.

    Part of being a co-operative is to improve the lives of workers. This control would of course rule out co-ops for some industries, but I feel this cap helps the workers avoid exploitation in the industries this is aimed at helping.

    They would become employed by the business, so this would apply to them.
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    If a business goes bankrupt, then what makes you think that worker ownership will make it successful again?

    Why should wages be subject to democracy? Surely it is between you and the boss what your wages are....

    Why should workers have a say in selecting managerial staff?

    And why must the highest wage not exceed five times that of the lowest salary? Good quality, experienced managerial staff are expensive. Unskilled labourers are not.
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    I'm not opposed to workers co-operatives. I am opposed to state backed workers co-operatives. Nuff said? :tongue:


    (Original post by DayneD89)
    They get this help for setting up a co-operative, rather than using the standard business model. Of course this will not be viable for all industries, but those industries would either know this and not use the scheme, or not know/ignore this and use the scheme till it failed, at which point the loan is paid with the business assets.
    As it's the workers who decided whether or not to use the scheme, it matters not what the industry thinks, if the workers want relative job security for the next ten years then they'll go for it regardless if it's viable or not - let's be honest, no worker in their right mind would refuse job security for the next ten years if given the choice between that and compulsory redundancy.


    3) All workers must be allowed to vote on any of the following:
    (i)) raising/lowering wages and bonus'
    (ii) employment of managerial staff
    (iii) firing of more than 2% of the workforce
    (iv) any firing where 50% of the workforce sign a petition to the senior management of the facility
    This is absolutely ludicrous. Look at BA for an example of why this won't work, were their board not as strong willed and sensible (keeping aside hundreds of millions in savings)as they are, their "workers" would have bankrupted them for their own selfish needs i.e free long haul flights. It works in south america because people have been brought up knowing they can't expect anything to be given to them, so therefore are able to look at things from a business viability perspective. We've got a culture in this country, since Beveridge, of having everything you need (NEED being the important word here) provided regardless of what effort you put in, so people will and do only look at what they get out of it. Sad, but absolutely, 100% true, and I challenge anybody to prove otherwise.

    b) If the business is employing less than the total UK based workforce or is not in profit an independent review will be commissioned to see if the business is progressing. If the review finds the business has little or no chance of becoming profitable, funding is withdrawn. Otherwise the government continues to pay the interest for a further 10 years at which time the business is looked at again as if it had only had its loan interest paid for once.
    If the business is not in profit after 10 years, it does NOT take an "independent review" (that's laced with incredulity there) to decide if the business is "progressing". The business is not in profit after ten years. Fail, don't waste time trying to revive it, unless it can pay for management consultancies to come in and audit it itself, then there's no way a government should fund something like that. "Independent review".
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    (Original post by Smack)
    If a business goes bankrupt, then what makes you think that worker ownership will make it successful again?

    Why should wages be subject to democracy? Surely it is between you and the boss what your wages are....

    Why should workers have a say in selecting managerial staff?

    And why must the highest wage not exceed five times that of the lowest salary? Good quality, experienced managerial staff are expensive. Unskilled labourers are not.
    Because the workers can bring new ideas into the business.
    Clues in the title. The idea is that the bosses also work for the worker.
    See above
    Indeed, but it keeps the wages of workers going up. This isn't aimed at skilled industry, but rather at low level industry.


    (Original post by Indievertigo)
    As it's the workers who decided whether or not to use the scheme, it matters not what the industry thinks, if the workers want relative job security for the next ten years then they'll go for it regardless if it's viable or not - let's be honest, no worker in their right mind would refuse job security for the next ten years if given the choice between that and compulsory redundancy.
    Depends if they can make job security for themselves, and if they don't manage the company well it will simply fail again. No, they wont lose much, but nor will they gain much and the state doesn't have to pay too much.

    This is absolutely ludicrous. Look at BA for an example of why this won't work, were their board not as strong willed and sensible (keeping aside hundreds of millions in savings)as they are, their "workers" would have bankrupted them for their own selfish needs i.e free long haul flights. It works in south america because people have been brought up knowing they can't expect anything to be given to them, so therefore are able to look at things from a business viability perspective. We've got a culture in this country, since Beveridge, of having everything you need (NEED being the important word here) provided regardless of what effort you put in, so people will and do only look at what they get out of it. Sad, but absolutely, 100% true, and I challenge anybody to prove otherwise.
    Of course they can mess up the company. While this isn't aimed at anything like BA (which is something I'll have to discuss including in the bill) simply because an industry like that needs highly skilled and thus highly paid workers, In that example they could have forced their 'bosses' to destroy the business. There is however a difference between putting pressure on the people making the decision and actually making it. If their decisions could force them out of a job I think they would take on board advice from the managerial staff. Also, south America isn't the only continent with examples of these style co-ops, and the same can't really be said of places like Canada.

    If the business is not in profit after 10 years, it does NOT take an "independent review" (that's laced with incredulity there) to decide if the business is "progressing". The business is not in profit after ten years. Fail, don't waste time trying to revive it, unless it can pay for management consultancies to come in and audit it itself, then there's no way a government should fund something like that. "Independent review".
    I'm guessing most businesses that weren't in profit after 10 years wouldn't pass this review, but for those employing too few people, or businesses that have been growing steadily for those 10 years, but are not quite yet in profit this could be beneficial.
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    (Original post by DayneD89)
    Because the workers can bring new ideas into the business.
    Can they? Typically it is management that brings the ideas into the company, because typically it is managers that are best at that sort of thing, hence why they are managers.


    Clues in the title. The idea is that the bosses also work for the worker.
    But that's not how business actually work. The boss works for his boss, who works for this boss, who works for the shareholders.


    Indeed, but it keeps the wages of workers going up. This isn't aimed at skilled industry, but rather at low level industry.
    But all industry needs at least some people with the skills to make the right decisions.
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    In principle I definitely agree with this. It seems to keep people employed and solves unemployment for a a medium term period if the economy takes a sharp turn downwards again which can only be a good thing in helping the rest of the economy.
Updated: February 21, 2011
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