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29 November 2017updated 09 Sep 2021 6:21pm

Creating an industrial strategy fit for purpose

Without the input of workers, the government's industrial strategy will be a missed opportunity. 

By Frances O'Grady

The government’s white paper on the industrial strategy has arrived at long last. It’s a step forward to have an industrial strategy at all – but there’s a worrying absence of workers’ voices.

There will be an independent Industrial Strategy Council, with business representatives, investors, economists and academics from across the UK. But no mention of unions. If the government wants the industrial strategy to succeed, workers must have a voice through union representation. We should have seats on both the council and any associated working groups.

Before the strategy was published, we said the government should look to Germany. The inclusion of workers’ voice, and a seat at the table for unions, has been central to the success of German industrial strategy.

Take training. The white paper says the government will “establish a technical education system that rivals the best in the world to stand alongside our world class higher education system”, but it fails to mention a fundamental reason for success elsewhere. In Germany, long the envy of other countries when it comes to vocational training, unions have a seat at the table in deciding both the quantity and quality of apprenticeships. That union voice makes a crucial difference.

The government has based the strategy on five “pillars” – ideas, people, infrastructure, business environment, and places. And they focused it on four “grand challenges” – becoming a leader in artificial intelligence (AI), creating clean growth, shaping the future of mobility (that means driverless cars to you and me) and meeting the needs of an ageing society.

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It is good sense to target sectors that will play a major role in the future global economy. In recent years the TUC has recommended AI and clean growth as areas needing industrial strategy “missions”. Unions will seek to be an active partner in taking forward work under each of the “grand challenges”.

But it’s also important to boost the “earning power” of workers in other sectors. Most people work in service sectors, and millions of them on low pay in jobs like care provision, retail and hospitality. The strategy overlooks them. The government must address how job quality, skill requirements, productivity and pay can all be raised in these sectors too.

This is especially important if the industrial strategy is going to have positive impacts on every UK community. There are many towns where the local labour market is dominated by low-paid service sectors, with next to no employers in advanced manufacturing and technology. Raising job quality and productivity in those sectors, and those communities, is the only way we will raise the UK’s productivity across the board, and give every worker a better standard of living.

To succeed, the industrial strategy must also be properly funded. An extra £7bn for research and development is welcome, but more is needed. UK public capital investment will average 2.8 per cent GDP over the current parliament. But this will leave us far short of the 3.5 per cent GDP average for OECD nations.

Making “places” a theme is welcome, but this section of the white paper is underwhelming. The first of the proposed Local Economic Strategies won’t even be agreed until March 2019. A recent TUC project demonstrated great potential for place-based industrial strategy to identify unique opportunities in each community. We want to see this approach developed significantly as the strategy is rolled out.

We hope that the industrial strategy can now develop into a long-term framework for far-sighted and inclusive improvement to the UK economy. The fundamental vision and priorities must be shared by the main political parties, and by businesses and unions. That doesn’t mean it should pass without criticism though. And for now, the main problems we will be pushing the government to fix are lack of workers’ voices, lack of investment, and lack of strategy for low-paid and low-skilled service sector work.