Why ministers should look to Germany when shaping our industrial strategy

There, political parties, businesses and unions work together and share a commitment to prosperity.

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This week, we expect to see publication of the government’s white paper on industrial strategy.

For inspiration, the government could do a lot worse than look to Germany. Political parties, business and unions share a commitment to industrial success. And they sit down together to develop industrial strategy.

It means workers have a say. It means a stable consensus can be formed across government, business and workers. And it makes it is possible to look decades ahead and plan for the long-term success of the economy.

Some of our long-term challenges and opportunities are already very clear. Lord Stern told us back in 2006 that by 2050, the global market for low carbon technologies could be worth at least $500bn. The TUC report, ‘Powering Ahead’, described how Germany’s Energiewende (energy transition) programme is already planning a green technological revolution, with the support of companies and unions, to secure a major share of that market.

Next week’s industrial strategy must consider how can we bring a share of that wealth to the UK. Britain could create great new jobs, and powerful new industries, through action to meet climate change targets if we develop our green technology sectors in the same way.

When digital technologies such as artificial intelligence and the “internet of things” are discussed in the UK, it is usually alongside the dystopian fear of robots taking our jobs. But a German white paper on the future of work, to which businesses, unions, churches and other interested parties contributed, focused on how the drive towards digital technology can proceed without net job losses.

At Airbus in Germany, management and unions have reached an agreement to ensure no worker loses their job, or suffers a pay cut, because of digitalisation. It challenges both the employer and unions. Managers can’t take the easy option of firing workers replaced by automation. They must instead think creatively about retraining and redeployment that can add value. And unions must be flexible and creative too, safe in the knowledge that while work might change, their members’ jobs are secure.

Germany also has a hugely impressive vocational training system, which has been established for decades. But Britain lags behind the EU average for investment in training for workers and jobseekers. We need to catch up.

What ties all this together is Germany’s ‘social partnership’ approach. Unions work with companies and government to plan industrial development. If Airbus cannot simply fire workers whose jobs might be threatened by robots, it’s because unions use their seat at the table to demand that management aims higher. If German apprenticeships are world class, it’s because unions help to set the standard, ensuring that quality remains high.

German unions remain fully independent and focused on their members interests. Yes, they work alongside management, sometimes supporting them. But they also challenge them, and sometimes they resist them. The benefits are there for all to see: Germany is Europe’s powerhouse economy, developing green industries, providing new wealth and delivering good jobs for workers. Unions can be proud of their part in this success, and the decent work it has protected, and created, for their members.

So the chance this week to set in motion as similar approach for the UK must not be wasted. And with the major UK political parties, business organisations like the CBI and EEF, and trade unions all in support of a UK industrial strategy, we have the best chance in decades to make it happen.

It should be supported by a parallel programme of corporate governance reform that goes beyond the government’s current timid plans. As the economist Mariana Mazzucato told an IPPR conference last week, robots are not new arrivals. Automation has been changing work for at least 200 years. But this time around many firms are not reinvesting the profits they make in the future of their companies. The profits are siphoned off for short-term private profit, instead of boosting pay packets and investing in long-term British prosperity.

And it must also be supported by public investment in modern infrastructure. The UK currently trails the OECD average of 3.5 per cent of GDP, putting in just 2.7 per cent annually. This means we are not keeping up with a changing world of high-speed transport connections, super-fast broadband, green homes, and low carbon energy.

The Chancellor must use this week’s Budget to demonstrate that the government is as serious as it claims to be about industrial strategy, by matching the OECD average and investing in Britain’s future.

Frances O'Grady is general secretary of the TUC