European Trade Union Institute, ETUI.

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Democracy at work: economic advantage

Figure 4.4 Democracy at work and productivity

Description

Democracy at work: moreproductive employees, a higherlabour force participation rate andmore innovative companies

A typical criticism of democracy at work is that, according to economic theory, it is by definition inefficient. According to this line of thinking, workers will use any power they have within the firm to increase their own well-being at the expense of the company and its shareholders (Jensenand Meckling 1979; Gorton and Schmid 2004). Therefore,companies will be most efficient if control of the firm is left to shareholders and managers. 

A contrasting view is provided by the industrial democracy approach (Freeman and Lazear 1995; Klemsdal et al. 2017).  According to this view, worker participation increases the ability of companies to use the experience, tacit knowledge and on-the-spot improvisation of the employees that make ‘planned work’ possible despite the unpredictability of the ‘real world’. Workers are more motivated and committed when they can exercise ‘voice’ and power within the firm.  Therefore, companies with worker participation are moreproductive and innovative than companies without it.

more information in  Benchmarking Working Europe 2019 - Chapter 4 Democracy at work

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Date of publication
2019
Themes
Work organisation , Workers participation

Keywords

Work organisation

Contacts

Mehmet Koksal

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