UK employees’ rights must be equated with shareholders, the report says

Employees must be given equal priority to shareholders, amid fears that opaque ownership of major UK companies means the fruits of workers’ efforts will be passed on to wealthy investors and boardrooms, a report said.

Research published by TUC, the Common Wealth think tank and the High Pay Center showed that UK workers benefit relatively little from stock dividends. They want company law reforms to encourage companies to weight staff interests as much as they do to shareholders.

The report, “Do Dividends Pay Our Pensions?”, Found that the proportion of UK equities directly owned by UK pension funds fell from almost one in three in 1990 to less than one in 25 in 2018 – a drop of over 90 per cent.

During this period, the ownership of UK public companies shifted from UK pension funds to foreign owners and investors whose identities were often obscured by lax reporting rules. The authors say British workers deserve a clearer understanding of who benefits from their work and how much goes to a wealthy minority.

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For almost 20 years from 1981 to 1998, UK pension funds accounted for over a quarter of the total market value of UK listed equities. It fell to just under 13 percent before the crisis in 2008, the report said – and is now around 2.4 percent for direct ownership and 6 percent, including indirect ownership.

Shareholder returns to pension funds disproportionately benefit a wealthy minority, and individual private investors have fallen from over 50 per cent of UK equity value in the mid-1960s to below 14 per cent today.

For UK households, the richest 1 per cent own 39 per cent of total equity-based wealth, more than the poorest 90 per cent combined. Most UK-listed stocks are owned by foreign investors – up from 5.6 per cent in the mid-1970s to 55 per cent today.

Mat Lawrence, director of the Common Wealth, said: “The economic history of the decade is clear: workers have suffered while activists have risen. Ensuring that working people share in the wealth they create is fundamental to turning ‘level up’ “But critically, if companies reduce dividends and increase wages and investment, it must not be at the expense of ordinary pensioners.”

Luke Hildyard, director of the High Pay Center, said: “We need economic reforms to make big business work for the benefit of all, not just a small number of wealthy executives and investors.”

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