Employee ownership meets outsourcing

(Cross-posted on Open Democracy.)

John Lewis’s outsourced cleaners are striking for a living wage. Recent developments are covered by Liberal Conspiracy and London Progressive Journal. The dispute has been going on for a while: here’s Polly Toynbee in the Guardian last September.

You might be inclined to file this under obvious – where in the world are cleaners not outsourced and underpaid? With John Lewis, though, it points to an important general problem with the viability of employee ownership of businesses (for readers not in Britain, the John Lewis Partnership is owned by its 81,000 employees; it is a successful operator of department stores and supermarkets.)

John Lewis employees at the annual bonus announcement

Since the 1950s, economists have speculated that a profitable employee-owned business would not grow as much as the same business would if it were owned by capitalists, because the incumbent workers would not want to dilute their individual shares of profits by adding new worker-owners. Continue reading