General Election 2015: IOD slams Labour’s “obviously counterproductive” profit-sharing policy plans

 
Lynsey Barber
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John Lewis Partnership style profit-sharing schemes are being considered by Labour (Source: John Lewis)

Potential Labour party plans to force companies to share profits with staff have been slammed by the Institute of Directors as “counterproductive” and a deterrent to investment.

The policy to force firms with over 50 employees to set up profit-sharing schemes in the style of John Lewis is reportedly being considered by Ed Miliband in a bid to level out economic growth more evenly among the workforce,

“We cannot believe that the Labour leadership will take such an obviously counterproductive measure seriously,” said Simon Walker, the director general of the Institute of Directors, responding to the report.

“Employee profit-sharing can work well for companies who choose it, but it has to be up to them. This idea would give companies with 49 employees a very strong incentive not to grow. Far from this being a model to follow, the French government is actually attempting to reduce the bureaucracy that kicks in at 50 workers because they know it is damaging job creation,” said Walker.

"The UK has a productivity problem, but it cannot be solved with a quick fix, and certainly not with a policy which could only deter investment,” he added.

According to shadow minister Gareth Thomas, the Labour and Co-operative Party MP for Harrow West who has also been linked to a potential run for mayor of London, the policy has already been adopted by the Labour-affiliated Co-op party and is now being considered at the highest levels within Labour.

He told the Guardian: “While there are some great British companies such a John Lewis who succeed through a shared economic approach to business growth, too many still base their models on low wages and low skills.This has contributed to an economy where hard work too often doesn't lead to higher wages for the working majority, but simply gets funnelled into greater rewards for those at the very top.

“Through allowing employees to share in the profits that get made, a John Lewis approach would allow Britain to better harness the effort and commitment of the whole workforce,” he said.

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