Daniel Monaghan explores how the UK can be a world-leading nation in promoting a more inclusive, equitable and democratic economy post Covid-19.
The Coronavirus has had an impact on every business in the UK. Whether it’s through
closing down their operations, increasing their demand or forcing new innovation – no
business has been left untouched. Businesses across the UK and globally have had to adapt
in a far greater manner than during the Global Financial Crisis in 2008, as seen by
manufacturers altering their production to focus on medical goods, such as ventilators, or
pubs providing delivery services for the first time ever.
However there have been sectors which have been unable to innovate or adapt, due to the
inherent nature of their business. One such sector is aviation, which has been particularly
badly hit by the crisis – with many airports closing, airlines grounding their fleets, and
aircraft manufacturers suffering shut down. This has led to calls from the industry for multi-
billion-pound bailouts to save their ailing businesses from total collapse.
Yet these calls for bailouts leave a sour taste, after years of mis-management which still
continues to this day. In particular, airlines have pursued a strategy of share buybacks for
executives and major dividend pay-outs which have left them with poor contingency funds
for economic downturns. Additionally, major airlines have sought Government bailouts
whilst requesting staff go unpaid for a significant period of time. These malpractices have
been by no means limited to just the aviation industry and have become far too common
throughout the global economy.
Despite all this, aviation is a vital industry for the UK and will be one of the sectors needed
to rejuvenate the economy post-Coronavirus. However, we must not go back to how it was
before, nor repeat the mistakes of the 2008 bailout programmes – which failed to
implement lasting changes to the economic system.
In order to create a more equitable and fair economy, the Government should structure any
bailouts as equity stake buyouts in these businesses. The equity stake purchase would
provide the businesses with liquidity to help them through the crisis and secure jobs in the
UK and in the wider supply chain.
Unlike 2008, the equity stake should not be sold back to the business directly or to stock
market investors. Instead it should be ring-fenced for the entire workforce of the company,
with each and every member of staff receiving an equal share. The share should not be
tradable, but will instead be purchased by incoming staff, on a one for one basis. As a result,
this new approach would enable employees to receive all the benefits of a shareholder –
including a regular dividend and voting rights on major company decisions. This would give
employees greater control over their working lives, reducing the level of precarious and low
paid work which has harmed wage growth and productivity over the last 10 years
throughout the UK. The changes would not just benefit employees, but could help to
produce long-term benefits for businesses as well, as co-operative models of ownership are
shown to improve employee retention, productivity and long-term business survival.
By setting the precedent with bailouts, the UK can be a world-leading nation in promoting a
more inclusive, equitable and democratic economy post-Coronavirus. The economic
disruption will provide an opportunity for a reset which may be the most pivotal since the
Second World War. We should not waste the opportunity to implement meaningful and
lasting change for the good of society.