Transcript German Lessons - University of Sussex

Presentation to SPRU
Tim Page, Senior Policy Officer, TUC
24th October 2012
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From 1945 to 1979, industrial policy was part of economic
policy mix of most developed nations
Success of industrial policy mixed … so any reinvented
industrial policy must be designed to work effectively
End of 1970s, paradigm shift: Thatcher Government didn’t
believe in reforming industrial policy, it believed in abolishing
industrial policy
Nicholas Ridley, Secretary of State for Trade and Industry
under Thatcher: “What is the DTI for? I’ve got bugger all to do
and thousands of staff to help me to it.”
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DTI replaced and now called BIS; Dept of Employment
swallowed up by DWP; Treasury is the senior economic
department in government – But Treasury’s priority is tax and
spend, not industry and jobs
New Labour Government accepted neo-liberal line. TUC’s
2005 paper, ‘An Industrial Strategy for the United Kingdom’
given no more than polite hearing – not government’s role to
“pick winners”
Financial Crisis - ‘New Industry, New Jobs’
Coalition Government – back to neo-liberalism
Deficit Reduction Strategy led to double-dip recession
Industrial Strategy finally part of political discourse once
again!
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Japan set up its Ministry of International Trade and Industry
(MITI) in 1949
The “four little dragons” – Hong Kong, Taiwan, Singapore and
South Korea – pursued industrial policies of their own in the
1950s, 1960s and 1970s
China opened to the world under Deng Xiaoping - and
“globalisation” was born
In Germany, industrial policy never fell out of fashion and
manufacturing remains strong, whereas the UK has seen its
industrial base diminish since the 1970s
With low skill, low value work moving abroad and with global
industry now organised as a series of supply chains, even
economic rebalancing wouldn’t create many thousands of
manufacturing jobs
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How do we create a model of economic growth that provides
decent, well-paying jobs for those young people that do not
go to university?
In the 1960s and 1970s, manufacturing provided jobs for the
“skilled working class”. It paid decent salaries and provided
dignity at work
In recent years, some argue we have seen an hourglass
economy
Low wages at the bottom are topped up by tax credits.
Are these affordable? Do we need “pre-distribution”?
Growth in universities for decades. Vocational skills further
decreased in value.
Technical baccalaureate? University Technical Colleges?
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Central to TUC industrial policy has been the idea that
government should target the creation and maintenance of
strategic industrial sectors that are able to compete with
emerging economies, such as China and India, today and in
10, 20 and 30 years time
Which sectors? Aerospace? Automotive? Pharmaceuticals? The
industrial sectors of tomorrow (e.g. green technology)?
But how to identify tomorrow’s winners? We could borrow
from Siemens’ work on ‘mega-trends’
This offers a template for targeting the industrial sectors in
which we might specialise
◦ “What will London look like in 2020 or 2025? What are the major things that
need to change in a city like that? For Siemens, that is a kind of a headline, a
possibility to develop business.” – Harald Kern, Siemens Works Council,
Nuremberg, quoted in ‘German Lessons’.
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The UK needs to identify those sectors where we can compete
with emerging economies for decades to come, but also
those sectors where there is a reasonable expectation that
well-paid, quality jobs can be created as a result
Manufacturing is part of the solution. Apart from job creation,
manufactured goods increase international trade and
manufacturing contributes disproportionately to research and
development, so we need more manufacturing for other
reasons
Sometimes the divide between manufacturing and services is
a false divide, e.g. Rolls Royce
But what about the services sector more generally?
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Trade unions have shown less interest in the services sector,
partly because we have less history and membership in that
sector
But services could provide many of the quality jobs of the
future
The care sector is a good example. Ageing population means
demand will grow. Low pay/low skill reputation at present.
Can that change? Higher skills will make for better care sector
Wendy Carlin, ‘A progressive economic strategy’, makes the
case for labour absorbing services in the economy
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Carlin argues that productivity growth in certain important
service sectors, such as health, education and elderly care, is
systematically slower than elsewhere in the economy
If such services in constant prices rise in line with demand,
they will absorb labour. However, if we become better off as a
result of productivity increases in other sectors, whose prices
will fall, we are more able to afford the increased cost of the
services
This will increase employment, increase taxes but also
improve welfare and quality of life more generally
The TUC offers no final word on Wendy Carlin’s paper, but we
consider it an important contribution to the debate.
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An industrial strategy for jobs will require a paradigm shift
We have moved slowly, from a neo-liberal model to one
where government intervention, to support industry, is once
again part of the debate
The next stage is to lose the assumption that a successful
economy will develop quality jobs without this needing to be
an objective of policy
How do we create quality jobs? We need a focus on strategic
industrial sectors, enabling us to compete with emerging
economies, but also targeting industries that can be ‘jobrich’
Modern manufacturing is part of the solution and the UK
needs a rebalanced economy. However, manufacturing cannot
provide the millions of skilled working class jobs that it did in
the past.
We must look again at the services sector. Wendy Carlin
provides an economic model for the development of a quality
services sector
Thanks for listening!