How will we ever get wealthier if we don’t own what we do?

Marc Thomas argues Wales needs to lose its reliance on the public sector to deliver real solutions for the Welsh economy

News of failing communities, cut programmes, strained investment strategies and failed inward investment programmes seems to reach us daily in Wales.


As poor as we might be — the poorest in Western Europe — the situation facing ordinary people in Wales’ communities over the next few years will inevitably worsen.


But let’s not point the finger: the reasons that we are so poor as a country are not wholly to do with Europe, Westminster or Cardiff.


It is painful to have to acknowledge the state we are in but in order to set the scene, here’s a sobering summary from the Bevan Foundation:


“In the three years to 2014/15, more than one in five people in Wales lived on a household income which was less than 60% of the median. Children continued to be at greatest risk of poverty, and arguably bear the greatest consequences from a low income, although the largest group of people on low incomes is adults of working age.”

Reliance on the public sector is a problem for us


Wales’ biggest employers are: the public sector, call centres and supermarkets. Occasionally, a manufacturing business also pops into that list.


What is clear about all of the above is that their employment models are based upon the concept that workers are trading their time for cash – and in some cases not a huge amount, at that.


In that model, there are only a few ways to improve your situation in the long term if you would like to remain in the job: get an increase in wages (which relies on the company growing) or work longer hours (which will in the long term have knock on effects for society.)


Neither option is particularly tenable without an increase in the size of the Welsh economy, which is unlikely to happen in the short term for a number of reasons which have been discussed at great depth elsewhere.


If we can agree on this, we can probably also agree that we must explore some alternative options for building businesses in Wales.


Political systems and solutions for every conceivable problem seem to exist in Wales. But as has been recently pointed out by very credible commentators, the public sector in Wales is creaking.


We must stop relying on the public sector in Wales to deliver real solutions to every problem that we face as a nation.


What would better look like?

Despite the doom and gloom of the above, it is heartening to see a growing number of organisations and businesses that are embracing a different way.


They are not looking up to the significant weight of the public sector, but horizontally where they are finding private companies and individuals who are moving towards a better Wales.


One notable example is the work done by Indycube in creating an equitable environment for self employed people and freelancers not just in Wales but also in neighbouring countries through the provision of benefits packages tailored to the needs of their members. Additionally, the community benefit society recently made news for their policy on a four day work week for employees.


It was also heartening recently to read of Caernarfon based Cwmni Da whose Managing Director Dylan Huws will, over the next five years, transfer his share holding to an employee owned trust for the benefit of the employees.


There’s also JoJo Maman Bebé and Sweetmans & Partners who are (currently) Wales’ only B Corps – or ‘better corporations’ – achieving very high standards for equitable working and giving back to the communities that they are based in.


We must create equity for communities

If we want to see real growth in Wales, it will require us to start building businesses that have community benefit in mind. That’s not to say that every company must become a co-operative or have a some kind of charitable model. There are certainly ways to build community benefit into any company structure.


But the principle is strong and proven: communities benefit when they have some ownership of the companies that they trade with and work for.


In practice, we can learn a lesson from technology companies where it is common for a share pool to be created that issues share options to employees as an addition to their salary. When the company grows, the individuals wealth also grows and that produces benefits for communities too. Putting my money where my mouth is: this is something that we are looking into at doopoll.


If for some reason, the concept of a share pool is not your thing, there are other ways to benefit communities.


I have always loved the example of Patagonia (the outdoor brand, rather than the country) who realised that parents were being affected by the cost of childcare and separation from their kids and decided to create a childcare provision within their organisation.


Similar schemes run in other companies to reduce the cost of living for employees. It’s not about creating schemes to attract new talent, but about facilitating a reduction in stress (financial, family and otherwise) for existing employees. There are many studies that indicate that happier (read less stressed) employees increase company profits.


Or what about following the example of the Mittelstand in Germany? There’s a debate about what makes Germany’s economy so successful but one theory that is dominant is that the workers are represented through a board seat given to a member of the workforce leading to more representative company decisions.


These things are all possible and whatever your political persuasion, there are ways that you can tangibly impact the level of wealth in your community.


But not just wealth for the sake of wealth. We’ve had enough of schemes which have unsuccessfully tried to do that already.


No — what will really make the difference is when private citizens take responsibility for creating companies and organisations on a local level which facilitate workers and communities to have happier, healthier and more prosperous lives.


All articles published on Click on Wales are subject to IWA’s disclaimer.

Marc Thomas is CEO of Doopoll and a trustee of the IWA

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