The Case for Employee Board Level Representation in Ethiopian Corporate Governance System

Abstract

The participation of workers in the management of companies brings benefits.  Many European jurisdictions have recognized workers’ involvement in the management of firms in diverse forms and to varying degrees. The board level representation is believed to be the strongest of all the mechanisms. In some jurisdictions the laws require a full and legally mandated representation of employees in supervisory boards of the largest firms. Several other countries also have corporate laws that allow the representation of workers in a board room. As a result, a recent discourse in corporate governance deals with a multi stakeholders including the labour.  However, the mainstream corporate governance discourse in Ethiopia is restricted to discussions mainly from the perspective of shareholders. By disregarding employees as stakeholders in corporate governance of their firms, Ethiopian laws stand in a sharp contrast to the approach of corporate governance that allows a board level representation of firms’ workers. This article shall, by examining experiences of some European jurisdictions and analyzing the relevant Ethiopian legislations, questions whether Ethiopia's prohibition of board level employee representation in corporate governance of share companies is justified. It also inquires whether the European style of employee board level participation is feasible in Ethiopia or an alternative (practical) style of employees’ board level participation should be crafted.

Keywords: Corporate governance, board structure, employee representation, Ethiopia

DOI: 10.7176/JLPG/84-02

Publication date: April 30^th 2019