German lessons for the British economy

Tony Burke argues that the government has many lessons to learn from Germany, and presents a new report from the TUC which aims to do just that.


The UK needs a new manufacturing eco-system, bringing together policies on skills, procurement, growing small firms and identifying strategic sectors, if we are to rebalance the economy and compete in the global age – so says a new report by the TUC.

The report ‘German Lessons’ (doc) is a new major study which looks at what the UK can learn from Germany, the most successful manufacturing nation in Europe. The study and report was carried out with the support of Unite and IG Metall in Germany.

The TUC interviewed senior managers, German works council representatives and union officials as well as Unite union shop stewards and reps in a range of world class companies, including Volkswagen, Siemens, Bentley, ThyssenKrupp, BASF, Airbus and BMW.

‘German Lessons’ calls for an economic model that is widely seen as fair among employers and trade unions.

It’s hard to imagine Germany putting up with the social divisions that the UK has endured since the 1980s. The study also calls for a major role for strong, well-organised trade unions and strong employers’ organisations.

In Germany, strong unions were able to support both their companies and their members when it mattered most – during the worst economic crisis since the 1930s.

If relationships are tested most in times of difficulty, the relationship between German manufacturing companies and their unions including IG Metall passed the test with flying colours.

The report echoes Unite’s campaign for manufacturing contained in its policy document ‘2020 Vision’ (pdf) for UK to specialise in a number of targeted, high skill, high value manufacturing sectors, rather than try to be a ‘jack of all trades, but master of none’.

We also need to support key industries in the context of tackling climate change and where small companies can grow into medium sized manufacturing companies, supplying large exporters and becoming a British version of the German ‘Mittelstand‘ they must be supported to do so through government policy.

Procurement policy must be guided by the principle that every pound of taxpayers’ money must contribute to jobs, skills and the strength of the British economy.

A procurement policy that is simply based on ‘cheap and cheerful’, lowest cost, offering nothing to the long-term development of the British economy, has no place if our industries are to reach new levels of competitiveness.

But as well as setting out policy details, ‘German Lessons’ shows what a positive attitude to manufacturing looks like.

None of the companies the TUC interviewed feared the growth of the BRIC countries especially the powerhouses of China and India.

Instead, they saw it as an opportunity for their businesses.

Of course, those new markets require tough decisions about future investment, but trade union members on works councils in Germany fight hard to defend their members at home, while also supporting their companies growth.

There has been a lot of talk in by the Government about rebalancing the economy.

British manufacturing has fallen more sharply than its competitors.

That didn’t happen by accident, it was allowed to happen by those in charge. It is time to turn the tide. We can’t do it quickly, and it won’t be easy, but the prize is worth it.

The government, and indeed the Labour opposition, should hear this message.

See also:

We need to save manufacturing, but manufacturing won’t save usDaniel Elton, January 13th 2012

Manufacturing’s recovery ends before it startsTony Burke, January 10th 2012

Cameron sells out UK manufacturing for his loony backbenchersTony Burke, December 12th 2011

CBI survey shows glimmer of hope in UK manufacturingTony Dolphin, August 24th 2011

McFadden turns on Tory manufacturing policyJacob Lister, January 26th 2010

14 Responses to “German lessons for the British economy”

  1. BevR

    RT @leftfootfwd: German lessons for the British economy

  2. Robert CP

    German lessons for the British economy: by @unitetheunion's @TonyBurke2010

  3. David Carter

    An interesting read and although I agree with the need to rebalance the economy by boosting other sectors I don’t think the manufacturing sector can be a long term solution for our economy. High skill manufacturing can obviously be a source of a large amount of employment however it is, in my opinion, foolish of the companies at the TUC to assume that the BRIC countries won’t eventually catch up (“None of the companies the TUC interviewed feared the growth of the BRIC countries especially the powerhouses of China and India”).
    Despite the fact that it requires a high level of skill it is still easier and quicker to train someone in high-tech manufacturing, being able to achieve the skills necessary to do the job in a work placement. However, the skills needed in a more academic job, for example in financial services, requires several years in higher education to attain. This means that the BRIC countries will sooner catch up and possibly over take Germany’s manufacturing than it will Britain’s financial services.
    Manufacturing, as I stated before, can be a relatively short-term solution and may even be beneficial to our science sector by providing more British investors their research, for example as pointed out in the above post, of green technologies. However, the manufacturing of the products will eventually be out sourced as the education and the level of skills improve in the BRIC countries especially the rising powers of China and India.
    One thing we do have left are some of the top universities in the world. According to the Times top 400 universities in the world rankings 2011-2012 we have three of the top ten universities in the world, (the rest are in the US). We have an opportunity to build on this expertise and reputation to create a long-term industry. There should be more emphasis and investment put into the sciences to establish a stronger market position on the research and development of the high-tech industries rather than the manufacturing of the products; much like Silicon Valley in the USA. The benefit of this of course would be that although the rising powers would eventually catch up with the quality of higher education and more ideas would originate from those countries given their much larger populations, we would already have an entrenched research industry. Furthermore, research is based around an idea produced by a person and can’t be outsourced and so our research industry would continue regardless.

    Please comment back. I’m very interested in other people’s opinions, especially their opinions on my opinions!

  4. London IWW

    UK : Lessons Germany can give the British economy | #Labour #Unions

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